FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 21, 1999
THC HOMECARE, INC.
(Exact name of registrant as specified in its charter)
Utah 1-11534 48-1092064
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation
or organization)
3261 S. Highland Drive, Suite 613, Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 796-1016
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 3. Bankruptcy.
Order Approving Disclosure Statement. On January 21, 1999, the United
States Bankruptcy Court for the District of Nevada (the "Bankruptcy Court")
entered its Order Approving the Debtors' Amended Joint Disclosure Statement
and Fixing Time for Filing Acceptances or Rejections of Debtors' Amended Joint
Plan of Reorganization. Under the terms of the Debtors' Joint Plan of
Reorganization (the "Plan"), the Company will merge with Safe Environment,
Inc. to form a new company ("Newcorp"). If the Plan is confirmed by the
Bankruptcy Court, the administrative expenses of the Company will be paid in
full, allowed priority claims will be paid in 60 equal monthly installments
plus 8% per annum until paid, and allowed unsecured claims will receive a pro
rata share of at least 5% of the common stock of Newcorp. The Company does
not believe it has any secured claims remaining at this time. Upon
confirmation of the Plan all outstanding stock of the Company and any rights
to acquire the stock will be canceled and extinguished. A copy of the Plan
and Disclosure Statement are attached as Exhibit 2.1 and Exhibit 2.2,
respectively, and are incorporated by reference. The Bankruptcy Court
established February 16, 1999 as the last day for filing acceptances or
rejections of the Plan. The confirmation hearing on the Plan is currently
scheduled for 2:30 p.m., February 23, 1999.
Item 5. Other Events.
Monthly Financial Information. The Company is required to file unaudited
monthly financial statements with the Bankruptcy Court. The financial
statement for the period from January 1, 1999 to January 31, 1999 (the
"Financial Statement") is attached as Exhibit 28.1, and are incorporated
herein by reference. The Financial Statement is filed with the Bankruptcy
Court on a limited informational basis, are unaudited, and do not include all
of the information and disclosures required by generally accepted accounting
principles for complete financial statements. The results of operations for
the Financial Statement are not necessarily indicative of results of
operations for a full year.
Item 7. Financial Statements and Exhibits.
Exhibits
See the Index to Exhibits which is incorporated herein by reference.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THC HOMECARE, INC.
By: /s/Charles McLaughlin
Charles McLaughlin, Chairman of the
Board of Directors
Date: February 12, 1998
<PAGE>
INDEX TO EXHIBITS
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Exhibit No. Description of Exhibits
2.1 Debtors' Joint Plan of
Reorganization Filed Herewith
2.2 Debtors' Joint Disclosure
Statement Filed Herewith
2.3 Order Approving Debtors' Filed Herewith
Amended Joint Disclosure
Statement and Fixing Time
for Filing Acceptances or
Rejections of Debtors'
Amended Joint Plan of
Reorganization, Combined
with Notice Thereof
28.1 Unaudited financial Filed Herewith
statements of the Company
for the period from
January 1 to
January 31, 1999
</TABLE>
Charles A. Beckham, Jr.
Texas Bar No. 02016600
James W. Brewer
Texas Bar No. 02965200
Kemp, Smith, Duncan & Hammond, P.C.
P.O. Box 2800
El Paso, Texas 79999-2800
(915) 533-4424
(915) 546-5360 FAX
Brian Holthus
State Bar No. 2720
Jolley, Urga, Wirth & Woodbury
3800 Howard Hughes Parkway
Sixteenth Floor
Las Vegas, Nevada 89109
(702) 699-7500
(702) 699-7555 FAX
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
<TABLE>
<S> <C> <C>
In re:
MEDMART OF NEVADA, INC. f/d/b/a ) Case Nos. 97-21412-RCJ
TOTAL HOME CARE, HEALTH INDUSTRIES, INC., ) to 97-21415-RCJ
f/d/b/a M-D MEDICAL CENTERS, )
OXYCARE, INC., and ) Chapter 11
TOTAL HOMECARE, INC. a/k/a THC Homecare, Inc., ) JOINTLY ADMINISTERED
)
Debtors. )
</TABLE>
DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION
TO THE COURT, CREDITORS AND PARTIES IN INTEREST:
Medmart of Nevada, Inc., f/d/b/a Total Home Care, Health Industries,
Inc., f/d/b/a M-D Medical Centers, Oxycare, Inc., and Total Homecare, Inc.
a/k/a THC Homecare, Inc., the Debtors and Debtors-in-Possession in these
jointly administered Chapter 11 cases (the "Debtors"), submit this their
Debtors' Amended Joint Plan of Reorganization under Chapter 11 of the United
States Bankruptcy Code, as follows:
ARTICLE I
Definitions
1.01 Administrative Expense: Those expenses described in Section 503 of
the Bankruptcy Code.
1.02 Allowed Claim: A claim with respect to which: (a) a proof of claim
has been filed with the Court on or before the Bar Date fixed by the Court, or
(b) scheduled in a list of creditors prepared and filed with the Court
pursuant to Rule 1007 and not listed as disputed, contingent, or unliquidated
whether as to liability or amount; and in either case, a claim (i) to which no
objection to the allowance thereof has been filed within any applicable period
of limitation fixed by Bankruptcy Rule 3003, an order of the Court, or the
Plan, or (ii) which has been allowed by order of the court that has become
final and is no longer subject to appeal.
1.03 Allowed Priority Claim: An Allowed Claim for which the holder is
entitled to priority under Section 507 of the Bankruptcy Code.
1.04 Allowed Secured Claim: An Allowed Claim against the Debtors that
is secured by a lien on property in which the bankruptcy estates have an
interest or subject to setoff under Section 553 of the Bankruptcy Code, to the
extent of the value of such creditor's interest in the estate's interest in
such property, or to the extent of the amount subject to setoff, as the case
may be.
1.05 Allowed Unsecured Claim: An Allowed Claim against the Debtors
that is not an Allowed Priority Claim or an Allowed Secured Claim, including
the unsecured portion of under secured claims as described in Section 506(a)
of the Bankruptcy Code.
1.06 Bankruptcy Code: The United States Bankruptcy Code as codified at
11 U.S.C. § 101, et seq.
1.07 Bar Date: The deadline to file proofs of claim in these jointly
administered cases as established by the Bankruptcy Court.
1.08 Confirmation Date: The date upon which an order confirming the
Plan is entered.
1.09 Debtors: Medmart of Nevada, Inc., f/d/b/a Total Home Care, Health
Industries, Inc., f/d/b/a M-D Medical Centers, Oxycare, Inc., and Total
Homecare, Inc. a/k/a THC Homecare, Inc.
1.10 Effective Date: Eleven (11) days following the Confirmation Date.
1.11 Invacare: Invacare Credit Corporation and Invacare Corporation
collectively.
1.12 Newcorp: The surviving company upon the merger of Total Homecare,
Inc. a/k/a THC Homecare, Inc. with Safe Environment, Inc.
1.13 Plan: The Debtors' Amended Joint Plan of Reorganization filed in
this case.
1.14 Safe Environment, Inc.: A Nevada corporation which will be merged
with Total Homecare, Inc. following confirmation. Safe Environment, Inc. is
engaged in the business of providing unexploded ordnance removal services to
make the environments of formerly active military bases and battlefields
worldwide safe for use by their general populations.
1.15 Sale Proceeds: The proceeds of the sale of substantially all of
the Debtors' assets to Sierra Health Services, Inc. pursuant to the Court's
Order Regarding Debtors' Motion to Sell Substantially All Assets Outside the
Ordinary Course of Business Free and Clear of Liens entered on August 29,
1997.
ARTICLE II
Classification of Claims
2.1 Class One -- Allowed Claims Under Section 507(a)(1) of the
Bankruptcy Code. Class One consists of the unpaid Administrative Expenses
incurred by the Debtors during the course of these jointly administered
bankruptcy cases. The only remaining Class One claims are the unpaid fees and
expenses for the Debtors' professionals. The claims of the Debtors'
professionals are subject to Court approval.
2.2 Class Two --Allowed Priority Claims other than Class One claims.
Class Two consists of all claims entitled to priority under Section 507 of the
Bankruptcy Code other than administrative expenses. The Debtors believe the
only creditors in Class Two are tax claimants.
2.3 Class Three --Allowed Secured Claims. The Debtors believe there
are no longer any Class Three claims.
2.4 Class Four --Allowed Unsecured Claims. Class Four consists of
allowed non-priority unsecured claims against the Debtors.
Upon confirmation of the Plan the Debtors will analyze the Schedules and
Proofs of Claim to determine which of the unsecured creditors hold Allowed
Claims. Additionally, the Debtors reserve the right, before and for a period
of 180 days following, the Effective Date to object to claims or to have the
Court determine the claim amount of any creditor for purposes of receiving any
distribution under the Plan.
2.5 Class Five-- Claims of equity interest owners in the Debtors.
ARTICLE III
Treatment of Claims and Interests
3.1 All Administrative Expenses will be paid in full in cash upon
the later of; 1) the Effective Date, or 2) the date on which the Court
approves the Administrative Expense; except as otherwise agreed by the Debtors
and the Administrative Expense claimant. The Administrative Expense claims
for the Debtors' professionals shall be paid only to the extent approved by
the Court. Unless otherwise agreed by the Administrative Expense claimant,
approved Administrative Expenses shall be paid pro rata prior to any
distribution be made to any other creditors. Class One claims are not
impaired.
3.2 All Allowed Class Two Claims shall be paid in equal monthly
installments over a period of sixty (60) months, with payments based on a
sixty (60) month amortization. Interest shall not accrue on the Allowed Class
Two Claims from the Filing Date through the Effective Date. Interest shall
accrue on the Allowed Class Two Claims from the Effective Date at the rate of
8% per annum until paid. The Debtors may prepay any Allowed Class Two Claim
at any time without penalty. All Allowed Class Two Claims shall release any
and all liens, claims, charges and assessments they have or hold upon payment
of their Allowed Claims. Class Two claims are impaired.
3.3 The Debtors believe there are no Class Three creditors. To the
extent any Class Three claims remain the Debtors surrender any collateral
remaining in possession of the Debtors to the Class Three claimant in full
satisfaction of the Class Three claim, as of the Effective Date. Class Three
claims, to the extent there are any, are impaired.
3.4 All Allowed Unsecured Claims shall receive a pro rata share of
at least five percent (5%) of the common stock in Newcorp. Newcorp will not
issue fractional shares, therefore each pro rata share to be distributed to an
unsecured creditor shall be rounded up to the nearest share. The stock will
be unrestricted and assignable. However, Newcorp shall not be obligated to
register such shares or to maintain registration of such shares. All future
income and profits of Newcorp are to be contributed to Newcorp and any value
to the Class Four creditors will lie solely in stock appreciation and value.
No interest, penalties, late charges or additional charges (such as
attorneys fees or costs of collection) shall be allowed on any Unsecured Claim
subsequent to the Filing Date, unless specifically allowed in this Plan. All
claims of creditors arising out of the rejection of executory contracts or
unexpired leases must file a proof of claim within thirty (30) days after the
Effective Date. If a proof of claim arising out of the rejection of an
executory contract or unexpired lease is timely filed it shall be included in
Class Four. Class Four claims are impaired.
3.5 The Class 5 creditors will receive no distribution under the
Plan. All presently outstanding stock of each of the Debtors and any rights
to subscribe or purchase stock from any of the Debtors, whether characterized
as shares, warrants, options, or any other equity type interest, shall be
canceled and extinguished effective as of the Effective Date. The Class 5
claims are impaired.
3.6 In addition to the foregoing, the Debtors, both as debtors in
possession and as reorganized after confirmation of this proposed Plan, are
obligated to pay U.S. Trustee quarterly fees based upon their disbursements in
accordance with the sliding scale set forth at 28 U.S.C. Section 1930(a)(6).
These fees accrue throughout the pendency of the cases until entry of a final
decree. U.S. Trustee fees paid prior to confirmation of a plan of
reorganization will be reported in operating reports required by 11 U.S.C.
Sections 704(8), 1106(a)(1), 1107(a) and the United States Trustee
Guidelines. All U.S. Trustee quarterly fees accrued prior to confirmation of
a plan of reorganization will be paid by on or before the effective date of
the plan pursuant to 11 U.S.C. Section 1129(a)(12). All U.S. Trustee fees
accrued post-confirmation will be timely paid on a calendar quarter basis and
reported on post-confirmation reports required by Local Rule 3020. Final fees
will be paid on or before the entry of a final decree in these cases. Based
upon the Debtors' disbursements during the pendency of these cases, it is
anticipated that the Debtors will owe approximately $19,000.00 in U.S. Trustee
fees on the proposed Effective Date of the Plan and $600.00 for each quarter
thereafter until entry of a final decree.
ARTICLE IV
Implementation of the Plan
4.1 Substantive Consolidation. Upon confirmation of the Plan
effective as of the Effective Date, the Chapter 11 cases filed by the Debtors
shall be consolidated and all assets and liabilities of the Debtors shall be
consolidated for all purposes and deemed to be assets and liabilities of the
consolidated debtors. Any claim filed against any of the Debtors and any
obligation of the Debtors shall be deemed to be an obligation of the
consolidated debtors, and all duplicate claims or obligations shall be
eliminated. All obligations of the Debtors to each other shall be
eliminated. The cases shall be consolidated under the case styled and
numbered In re Total Homecare, Inc., case number 97-21413.
4.2 Within sixty days after the Effective Date Total Homecare, Inc.
and Safe Environment, Inc. shall be merged. Solely for purposes of this Plan,
the surviving corporate entity shall be called "Newcorp". However, the
surviving entity may continue to operate or act under the names of the
Debtors; and the surviving entity may file pleadings and otherwise appear in
this case and in contested matters and adversaries in this case under the
names of the Debtors. At least five percent of the common stock in Newcorp
shall be distributed to holders of Allowed Unsecured Claims in accordance with
Paragraph 3.4. Notwithstanding the above, at its sole option upon the
completion of due diligence, Safe Environment, Inc. may elect not to merge
with Total Homecare, Inc. In the event Safe Environment, Inc. chooses not to
merge with Total Homecare, Inc., Total Homecare, Inc. shall be liquidated
under the supervision of its sole director, Charles McLaughlin. In the event
of liquidation, any proceeds of liquidation shall be distributed to creditors
pursuant to priorities described in Section 507 of the Bankruptcy Code.
4.3 Title to all of the estate property of the consolidated Debtors
(except as otherwise provided under the Plan) shall be vested in consolidated
Debtors after confirmation. Upon the merger of Total Homecare, Inc. and Safe
Environment, Inc., all of the property and assets of the consolidated Debtors
shall be vested in Newcorp. Charles McLaughlin shall manage the consolidated
debtors post-confirmation. The management of Safe Environmental, Inc. shall
manage Newcorp.
ARTICLE V
Additional Provisions
5.1 Executory Contracts and Unexpired Leases: All executory contracts
and unexpired leases shall be deemed rejected upon confirmation of the Plan,
if not previously rejected either by order of the Bankruptcy Court or by
operation of law under the terms of the Bankruptcy Code. All parties
asserting a claim against the Debtors arising out of the rejection of an
executory contract or unexpired lease must file a proof of claim within thirty
(30) days after the Effective Date. The Debtors must file any objection to a
Proof of Claim arising out of rejection, within thirty (30) days after it is
filed. If a Proof of Claim is timely filed and no objection is filed to its
allowance, or the Court enters a final order allowing the Proof of Claim, the
claim will become a Class Four claim.
5.2 Vesting of Property: Upon confirmation of the Plan and except as
otherwise provided herein, all of the property of the Chapter 11 estate shall
vest in the consolidated debtors.
5.3 Retention of Jurisdiction: Until full consummation of the Plan, the
Bankruptcy Court shall retain jurisdiction for the following purposes:
1. The determination of all questions and disputes regarding
title to and beneficial ownership of the assets of the estate, and
determination of all causes of action, controversies, disputes, or conflicts,
whether or not subject to action pending as of the date of confirmation,
between the Debtors and any other party in interest.
2. The correction of any defect, curing of any omission, or
reconciliation of any inconsistency in the Plan, the order of confirmation, or
other document or instrument as may be necessary to carry out the purposes and
intent of the Plan.
3. The modification of this Plan after confirmation.
4. The enforcement and interpretation of the terms and
conditions of this Plan.
5. The entry of any order necessary to enforce the title,
rights, and powers of the Debtors and the Debtors-in-Possession, and to impose
such limitations, restrictions, terms, and conditions as the Bankruptcy Court
may deem necessary.
6. The determination of any and all claims and causes of action
arising under Sections 544, 545, 547, 548, 549, and 553 of the Bankruptcy
Code
5.4 Discrepancies: In the event of a discrepancy between the terms of
the Plan and the Disclosure Statement, the terms of the Plan shall control.
5.5 Future Income: All income of the consolidated debtors shall be paid
to the consolidated debtors.
5.6 Claims and Actions: All claims and causes of action, if any,
including any claims arising under state or federal law or under the
Bankruptcy Code, held by the Debtors shall be retained by and remain the
property of the consolidated debtors and may be brought by Total Homecare,
Inc.. Upon the merger of Total Homecare, Inc. and Safe Environment, Inc., all
claims and causes of action shall be vested in Newcorp. All actions of any of
the Debtors and/or the consolidated debtors under Sections 544, 545, 547, 548
549, and 553 of the Bankruptcy Code shall vest in Newcorp upon the merger of
Total Homecare, Inc. and Safe Environment, Inc., and Newcorp is hereby
expressly authorized to file and prosecute any and all such actions following
said merger.
5.7 Waiver: Nothing contained herein shall constitute a waiver or
release of any claim, counterclaim, or dispute that the Debtors may have
regarding the validity of any claim or lien by way of a subsequent adversary
proceeding or amendment to the Plan in the event this Plan is not confirmed as
filed. The treatment outlined in this Plan is for the purposes of this Plan
only and only in the event of confirmation of this Plan, and Debtors reserve
the right to provide for different treatment of any claim in any amended or
supplemental plan submitted by the Debtors under this or any other chapter of
the Bankruptcy Code.
5.8 Other Definitions: Except as expressly provided herein (as allowed
under the Bankruptcy Code), reference is hereby made to the definitions set
forth at Section 101 of the Bankruptcy Code.
5.9 Final Decree: A Final Decree closing this case shall be
automatically entered without further notice or hearing after the expiration
of a ninety (90) day period following the Effective Date of the Plan, unless
the Debtors or a party in interest move, for cause shown, for an enlargement
of the ninety day period.
5.10 Trustee Fees: The Debtors shall be responsible for payment of fees
incurred pursuant to 28 U.S.C. § 1930(a)(6).
ARTICLE VI
Compliance With Confirmation Requirements
6.01 Compliance With Laws and Good Faith: The Debtors believe that the
Plan complies with all provisions of Chapter 11 and any other applicable
provision of the Bankruptcy Code, that the Plan has been proposed in good
faith and not by any means forbidden by law, and that all fees, charges, or
amounts required to be paid before confirmation have been paid.
ARTICLE VII
Allowance of and Objections to Claims and Interests
7.1 The Debtors have scheduled, to their knowledge, all claims and
interests. The failure of any claimant or holder of an interest that is
scheduled to file a proof of claim or proof of interest before the Bar Date
set by the Court will be deemed agreement to the manner and amount in which
the claim or interest was scheduled, except that a secured creditor will be
entitled to the benefits of Section 506 of the Bankruptcy Code in the event
its collateral is of a value in excess of its claim, and except that any claim
scheduled as disputed, contingent or unliquidated for which no Proof of Claim
is filed by the Bar Date shall not be allowed.
7.2 The Debtors shall have until ninety days following confirmation
to object to any creditor's claim.
DATED: October 29, 1998.
Respectfully submitted,
MEDMART OF NEVADA, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
HEALTH INDUSTRIES, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
OXYCARE, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
TOTAL HOMECARE, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
KEMP, SMITH, DUNCAN & HAMMOND, P.C.
P.O. Drawer 2800
El Paso, Texas 79999-2800
(915) 533-4424
(915) 546-5360 (FAX)
By: /s/ Charles A. Beckham, Jr.
CHARLES A. BECKHAM, JR.
State Bar No. 02016600
JAMES W. BREWER
State Bar No. 02965200
Brian Holthus
Jolley, Urga, Wirth & Woodbury
3800 Howard Hughes Parkway
Sixteenth Floor
Las Vegas, Nevada 89109
(702) 699-7500
Attorneys for the Debtors
Charles A. Beckham, Jr.
Texas Bar No. 02016600
James W. Brewer
Texas Bar No. 02965200
Kemp, Smith, Duncan & Hammond, P.C.
P.O. Box 2800
El Paso, Texas 79999-2800
(915) 533-4424
(915) 546-5360 FAX
Brian Holthus
State Bar No. 2720
Jolley, Urga, Wirth & Woodbury
3800 Howard Hughes Parkway
Sixteenth Floor
Las Vegas, Nevada 89109
(702) 699-7500
(702) 699-7555 FAX
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
<TABLE>
<S> <C> <C>
In re:
MEDMART OF NEVADA, INC. f/d/b/a ) Case Nos. 97-21412-RCJ
TOTAL HOME CARE, HEALTH INDUSTRIES, INC., ) to 97-21415-RCJ
f/d/b/a M-D MEDICAL CENTERS, )
OXYCARE, INC., and ) Chapter 11
TOTAL HOMECARE, INC. a/k/a THC Homecare, Inc., ) JOINTLY ADMINISTERED
)
Debtors. )
</TABLE>
DEBTORS' AMENDED JOINT DISCLOSURE STATEMENT
TO THE COURT, CREDITORS AND PARTIES IN INTEREST:
Medmart of Nevada, Inc., f/d/b/a Total Home Care, Health Industries,
Inc., f/d/b/a M-D Medical Centers, Oxycare, Inc., and Total Homecare, Inc.
a/k/a THC Homecare, Inc., the Debtors and Debtors-in-Possession in these
jointly administered Chapter 11 cases (the "Debtors"), submit this their
Debtors' Amended Joint Disclosure Statement as follows:
ARTICLE I
Introduction
1.01 Purpose of This Disclosure Statement. The Debtors provide this
Debtors' Amended Joint Disclosure Statement (hereafter the "Disclosure
Statement") to all of their known creditors and parties in interest pursuant
to Section 1125 of the Bankruptcy Code. The purpose of this Disclosure
Statement is to provide adequate information of a kind, and in sufficient detail
, as far as is reasonably practicable in light of the nature and history of
the Debtors and the condition of the Debtors' books and records, that would
enable a hypothetical reasonable investor typical of holders of claims or
interests of the relevant class to make an informed judgment concerning the
Debtors' Joint Plan of Reorganization ("the Plan"). This Disclosure Statement
is prepared pursuant to 11 U.S.C. Section 1125, which requires that it contain
"adequate information" about the Debtors so that creditors and interest
holders may make an informed judgment about the Plan. Please refer to the
Plan for the definitions of various terms contained therein.
Except as specifically stated to the contrary, this Disclosure Statement
has been prepared from information submitted by the Debtors and their agents.
1.02 Voting. To accept the Plan, you should place an "X" in the space
following "Accept" on the Ballot enclosed with this Disclosure Statement. To
reject the Plan, you should place an "X" in the space following "Reject" on
the Ballot. Ballots must be served on Charles A. Beckham, Jr., Kemp, Smith,
Duncan & Hammond, P.C., P.O. Box 2800, El Paso, Texas 79901, on or before the
deadline set out in the Ballot.
1.03 NO REPRESENTATIONS CONCERNING THE DEBTORS,
AND IN PARTICULAR ABOUT FUTURE OPERATIONS OR
PROPERTY VALUES ARE AUTHORIZED BY THE DEBTORS
OTHER THAN AS SET FORTH HEREIN. ANY
REPRESENTATION OR INDUCEMENT MADE TO SECURE
ACCEPTANCE OF THE PLAN, OTHER THAN AS
CONTAINED IN THIS DISCLOSURE STATEMENT,
SHOULD NOT BE RELIED UPON BY ANY CREDITOR.
THE RECORDS KEPT BY THE DEBTORS ARE NOT
WARRANTED OR REPRESENTED TO BE WITHOUT
ANY INACCURACY OR OMISSION, ALTHOUGH
EVERY EFFORT HAS BEEN MADE TO MAKE
THIS DISCLOSURE STATEMENT ACCURATE AND
COMPLETE. THE INFORMATION CONTAINED HEREIN
AND IN ANY EXHIBITS ATTACHED HERETO HAVE NOT
BEEN AUDITED OR VERIFIED EXCEPT WHERE
SPECIFICALLY STATED, AND THE EXHIBITS ATTACHED
TO THE PLAN AND THE SCHEDULES AND STATEMENTS
OF AFFAIRS FILED IN THIS PROCEEDING HAVE LIKEWISE
NOT BEEN SUBJECT TO AN AUDIT OR OTHERWISE
VERIFIED BY A THIRD PARTY UNLESS SPECIFICALLY
EXPRESSED TO THE CONTRARY. ALL REFERENCES TO
ACCOUNT, LOAN, AND CLAIM BALANCES REFERENCED
HEREIN AND ON DEBTORS' SCHEDULES ARE BASED
UPON DEBTORS' RECORDS, AND THEREFORE, THEY
MAY BE SLIGHTLY INACCURATE OR OTHERWISE
NOT THE SAME AS BALANCES REFLECTED IN THE
CREDITORS' OWN RECORDS.
THE COURT'S APPROVAL OF THIS DISCLOSURE
STATEMENT DOES NOT CONSTITUTE AN
ENDORSEMENT OF ANY OF THE REPRESENTATIONS
CONTAINED IN EITHER THE DISCLOSURE STATEMENT
OR THE PLAN, NOR DOES IT CONSTITUTE AN
ENDORSEMENT OF THE PLAN ITSELF.
ARTICLE II
Definitions
2.01 Administrative Expense: Those expenses described in Section 503 of
the Bankruptcy Code.
2.02 Allowed Claim: A claim with respect to which: (a) a proof of claim
has been filed with the Court on or before the Bar Date fixed by the Court, or
(b) scheduled in a list of creditors prepared and filed with the Court
pursuant to Rule 1007 and not listed as disputed, contingent, or unliquidated
whether as to liability or amount; and in either case, a claim (i) to which no
objection to the allowance thereof has been filed within any applicable period
of limitation fixed by Bankruptcy Rule 3003, an order of the Court, or the
Plan, or (ii) which has been allowed by order of the court that has become
final and is no longer subject to appeal.
2.03 Allowed Priority Claim: An Allowed Claim for which the holder is
entitled to priority under Section 507 of the Bankruptcy Code.
2.04 Allowed Secured Claim: An Allowed Claim against the Debtors that
is secured by a lien on property in which the bankruptcy estates have an
interest or subject to setoff under Section 553 of the Bankruptcy Code, to the
extent of the value of such creditor's interest in the estate's interest in
such property, or to the extent of the amount subject to setoff, as the case
may be.
2.05 Allowed Unsecured Claim: An Allowed Claim against the Debtors
that is not an Allowed Priority Claim or an Allowed Secured Claim, including
the unsecured portion of undersecured claims as described in Section 506(a) of
the Bankruptcy Code.
2.06 Bankruptcy Code: The United States Bankruptcy Code as codified at
11 U.S.C. § 101, et seq.
2.07 Bar Date: The deadline to file proofs of claim in these jointly
administered cases as established by the Bankruptcy Court.
2.08 Confirmation Date: The date upon which an order confirming the
Plan is entered.
2.09 Debtors: Medmart of Nevada, Inc., f/d/b/a Total Home Care, Health
Industries, Inc., f/d/b/a M-D Medical Centers, Oxycare, Inc., and Total
Homecare, Inc. a/k/a THC Homecare, Inc.
2.10 Effective Date: Eleven (11) days following the Confirmation Date.
2.11 Invacare: Invacare Credit Corporation and Invacare Corporation
collectively.
2.12 Newcorp: The surviving company upon the merger of Total Homecare,
Inc. a/k/a THC Homecare, Inc. with Safe Environment, Inc.
2.13 Plan: The Debtors' Joint Plan of Reorganization filed in this
case.
2.14 Safe Environment, Inc.: A Nevada corporation which will be merged
with Total Homecare, Inc. upon confirmation of the Plan. Safe Environment,
Inc. is engaged in the business of providing unexploded ordnance removal
services to make the environments of formerly active military bases and
battlefields worldwide safe for use by their general populations.
2.15 Sale Proceeds: The proceeds of the sale of substantially all of
the Debtors' assets to Sierra Health Services, Inc. pursuant to the Court's
Order Regarding Debtors' Motion to Sell Substantially All Assets Outside the
Ordinary Course of Business Free and Clear of Liens entered on August 29,
1997.
ARTICLE III
History of the Debtors
Med-Mart of Nevada, Inc. is a Nevada corporation. Med-Mart of Nevada,
Inc. provided home health care services and supplies, primarily lease and sale
of durable medical and respiratory goods and services, and had its principal
place of business in Las Vegas, Nevada. Health Industries, Inc. is an Arizona
corporation. Health Industries, Inc. provided home health care services and
supplies, primarily lease and sale of durable medical and respiratory goods
and services, and had its principal place of business in Phoenix, Arizona. On
the Filing Date Health Industries, Inc. also operated two pharmacies.
Oxycare, Inc. is an Arizona corporation. Oxycare, Inc. provided respiratory
and home health care goods and services, and had its principal place of
business in Phoenix, Arizona. Med-Mart of Nevada, Inc., Health Industries,
Inc., and Oxycare, Inc. collectively had over 100 employees and served a
customer base of over 5,000 health care providers and health care
customers.
Total Homecare, Inc., also known as THC Homecare, Inc., is a Utah
corporation. Total Homecare, Inc. was originally incorporated under the name
Medmarco, Inc., however the Articles of Incorporation were amended to change
the name to THC Homecare, Inc. Total Homecare, Inc. is the parent of the
other Debtors and of Dignicare, Inc. Dignicare, Inc. is a defunct Arizona
corporation. Total Homecare, Inc. is a publicly-traded company. However,
subsequent to the bankruptcy filing trading of stock in Total Homecare, Inc.
was suspended.
Prior to the filing of their bankruptcy cases, the Debtors were indebted
to Heller Financial, Inc. in the amount of approximately $1,857,907.04.
Heller Financial, Inc. asserted a lien on virtually all of the Debtors'
assets. In addition the Debtors were indebted to several other secured
creditors and numerous unsecured creditors. The Debtors collectively listed
approximately $2,400,000.00 in unsecured debt in their original Schedules.
Prior to the bankruptcy filing all proceeds of the Debtors' accounts
receivable and sale of inventory were placed in a "lock-box" account for the
benefit of Heller Financial, Inc. In February of 1997 Heller Financial, Inc.
"froze" the lock-box account and filed suit against the Debtors in Federal
District Court in Illinois. The Debtors then filed for relief under Chapter
11 of the Bankruptcy Code on February 28, 1998. The Debtors attempted to
reorganize in bankruptcy. Efforts to refinance the Heller Financial, Inc.
debt and to emerge from bankruptcy were unsuccessful. It was ultimately
determined that a sale of the Debtors' assets would yield the highest return
to creditors.
ARTICLE IV
Significant Legal Events in the Chapter 11 Cases
On the first day of the case, in order to obtain operating capital the
Debtors filed their Motion for Authority to Incur Post-Petition Debt Secured
by Super-Priority Lien on Property of the Estate and Memorandum in Support
Thereof ("Motion for Authority"). Pursuant to the Motion for Authority, the
Debtors sought authority to borrow approximately $184,000.00 from Heller
Financial, Inc. The Court approved the Motion for Authority on February 28,
1997. Subsequently, the amount of the post-petition borrowing was increased
to approximately $221,000.00.
On March 13, 1997 the Debtors filed their Motion for Authority to Use
Cash Collateral ("First Cash Collateral Motion"). Pursuant to the First Cash
Collateral Motion, the Debtors sought authority to use cash collateral for
ninety (90) days. The Court approved the use of cash collateral for ninety
(90) days pursuant to the terms of the Interim Order Authorizing the Debtors
to Use Cash Collateral and Granting Adequate Protection Pursuant to Section
361 and 363 of the Bankruptcy Code entered on March 20, 1997. Subsequent cash
collateral orders authorized the use of cash collateral to July 28, 1997.
On March 21, 1997 the Debtors filed their Motion for Authority to Incur
Post-Petition Debt Secured by Junior and Senior Liens and Memorandum in
Support Thereof ("Carraway Motion"). In their Carraway Motion the Debtors
sought Court approval of a post-petition loan of $225,000.00 from William
Carraway, a director of Total Homecare, Inc. On April 10, 1997 the Court
entered its Order Authorizing the Debtors to Incur Post-Petition Debt Secured
by Junior and Senior Liens ("Carraway Order"). Pursuant to the Carraway Order
William Carraway loaned the Debtors $225,000.00.
On July 17, 1997 the Debtors filed their Debtors' Motion to Sell
Substantially All Assets Outside the Ordinary Course of Business Free and
Clear of Liens and Memorandum in Support Thereof ("Motion to Sell"). In their
Motion to Sell the Debtors sought Court approval of a sale of substantially
all assets of the operating Debtors to NEWCO, an affiliate of Philadelphia
Investment Corporation. A hearing was held on the Motion to Sell on August
15, 1997. At the hearing a competing offer from Sierra Health Services, Inc.
("Sierra") was approved, and the Debtors were authorized to sell the assets
and operations described in the Motion to Sell to Sierra for $3,200,000.00.
The sale closed on August 29, 1997. Most of the sale proceeds were used to pay
secured creditors and administrative expenses.
On April 10, 1997 the Debtors filed their Complaint to Determine Extent
and Validity of Purported Lien, to Avoid Lien and for Declaratory Judgment
("Invacare Complaint"), seeking declaratory relief against Invacare regarding
the purported liens of Invacare on the Debtors' assets. Invacare had asserted
a secured claim of $865,945.80. On September 25, 1997 the Debtors filed their
Motion for Approval of Compromise and Settlement With Invacare Credit Corporatio
n and Invacare Corporation Regarding Complaint to Determine Extent and
Validity of Purported Lien, to Avoid Lien and for Declaratory Judgment
("Invacare Motion to Settle"). In the Invacare Motion to Settle the Debtors
sought approval of an agreement whereby Invacare's secured claim was reduced
to $175,000.00, with the balance of Invacare's claim to be treated as
unsecured. The Invacare Motion to Settle was granted by the Court by order
entered on October 31, 1997.
On August 14, 1997 the Debtors filed their Complaint to Determine
Extent and Validity of Purported Lien, to Avoid Lien and for Declaratory
Judgment ("Riceberg Complaint"), seeking declaratory relief against Harvey B.
Riceberg regarding the purported liens of Mr. Riceberg on the Debtors'
assets. Mr. Riceberg had asserted a secured claim of approximately
$160,000.00. On February 5, 1998 the Debtors filed their Motion for Approval
of Compromise and Settlement With Harvey B. Riceberg Regarding Complaint to
Determine Extent and Validity of Purported Lien, to Avoid Lien and for
Declaratory Judgment ("Riceberg Motion to Settle"). In the Riceberg Motion to
Settle the Debtors sought approval of an agreement whereby Mr. Riceberg's
secured claim was reduced to $39,000.00, with the balance of Mr. Riceberg's
claim to be treated as unsecured. The Riceberg Motion to Settle was granted
by the Court by order entered on April 9, 1998.
On October 6, 1997 the Debtors filed their Amended Motion for Approval of
Compromise and Settlement With Bergen Brunswig Drug Company ("Bergen
Motion"). In the Bergen Motion the Debtors sought approval of an agreement to
reduce the secured claim of Bergen Brunswig from $439,616,00 to $275,000.00.
The Bergen Motion was granted by the Court by order entered on December 10,
1997.
ARTICLE V
Financial Information
The Debtors have sold all of their assets relating to their business operat
ions. The Debtors' remaining assets consist of; 1) approximately $30,000.00
in cash, 2) their interest in a Proof of Claim filed in the Chapter 7
bankruptcy case of Charleston Operating Company, Inc., case number
95-23985-RCJ pending in the United States Bankruptcy Court for the District
of Nevada, and 3) their interest in any avoidable transfers under the
Bankruptcy Code. The Debtors' Proof of Claim in the bankruptcy case of
Charleston Operating Company was in the amount of $107,085.40 plus interest.
The Debtors have been informed they will likely recover approximately 20% of
their claim. Therefore, the Debtors value this asset at $21,417.00.
The Debtors are currently analyzing their financial records to determine
if they have any avoidable transfers that could be recovered for the benefit
of the estate and creditors. Based on a preliminary review of transfers made
within ninety days of the Filing Date, the Debtors believe the following
entities may have received available transfers pursuant to Sections 544, 547,
548 and 549 of the Bankruptcy Code: AT&T Wireless, B&F Medical Products,
Bergen Brunswig Drug Company, Foxtail Enterprises, Invacare Credit
Corporation, McGaw Corporation, Pride Health Care, Inc., Progressive Medical
Technologies, Puritan Bennett Corporation, Quickie Designs, Inc., Ross
Laboratories, Sandoz Nutrition, Sunmed Service, Inc., Sunrise Home Care, Air
Liquide, AmeriSource Corporation, Bristol Myers Squibb Company, Cardinal
Health Care, Colorplast Corporation, Graham Field, Firebird Fuel, Roger Olson
Company, US West Communications, American Express, Arthur Andersen, Coast
Business Credit, Durham, Evans, Jones & Pinegar, Johnson & Associates, ABC
Distributing, Inc., Camp International, Inc., CellularOne, ColoPlast, Inc.,
Creative Medical Technology, Hollister, Inc., Hospital Specialty Company, Q&K
Services, and Sunwest Medical Center. This list is not intended to be
exclusive, and the Debtors reserve the right to pursue other parties for
avoidable transfers if the facts warrant. Based on the Debtors records at
this time, however, the foregoing list contains the parties against which
there may be avoidable transfer actions. All of the avoidance actions will be
assigned to Newcorp. Newcorp will determine in its sole discretion whether
any particular transfer should be pursued, based on the amount of the
transfer, the likelihood of recovery, solvency of the entity and any other
factors the reorganized Debtor believes appropriate. The Debtors have no
estimate of value of their avoidable transfers at this time, and therefore
value this asset at $0.
ARTICLE VI
Classes of Creditors
The following is a list of the various classes of creditors dealt with in
the Plan. Reference should be made to the Plan for details concerning the
proposed specific treatment of each class.
6.1 Class One -- Allowed Claims Under Section 507(a)(1) of the
Bankruptcy Code. Class One consists of the unpaid Administrative Expenses
incurred by the Debtors during the course of these jointly administered
bankruptcy cases. The Debtors have paid various administrative claims during
the course of their Chapter 11 cases, including such claims arising out of
rejection of unexpired leases, certain health care reimbursement claims, and
approved fees and expenses of their professionals. The only remaining claims
in this Class are the unpaid fees and expenses for the Debtors'
professionals. The Class One claimants are Kemp, Smith, Duncan & Hammond,
P.C., attorneys for the Debtors, and Jolley, Urga, Wirth & Woodbury, local
counsel for the Debtors. The Debtors estimate their unpaid professional fees
will total approximately $40,000.00. The claims of the Debtors'
professionals are subject to Court approval.
6.2 Class Two --Allowed Priority Claims other than Class One claims.
Class Two consists of all claims entitled to priority under Section 507 of the
Bankruptcy Code other than administrative claims. The Debtors believe the
only creditors in Class Two are tax claimants. According to the Debtors'
Schedules the tax claimants holding Allowed Priority Claims are as follows:
Oxycare, Inc. -None: Health Industries, Inc. -Arizona Department of Revenue,
$8,599.75, City of Mesa, Arizona, $293.26, City of Phoenix, Arizona,
$1,168.51, City of Scottsdale, Arizona, $722.40: Medmart of Nevada, Inc.
- -State of Nevada Department of Taxation, $12,938.00: Total Homecare, Inc.
- -None. The Class Two claims total $23,721.92. Additionally, the Debtors may
owe a sum to the Internal Revenue Service, however the amount is unknown.
6.3 Class Three --Allowed Secured Claims. The Debtors scheduled the
following secured creditors in their Schedules: Advanta Leasing Corporation,
Ainsep Corporation, Bank of America Arizona, N.A., Bergen Brunswig
Corporation, Copelco Capital, Inc., Everest & Jennings, Inc., Heller
Financial, Inc., M & C Leasing, Clark County Assessor, and Wells Fargo f/k/a
First Interstate Bank. Each of the Allowed Secured Claims have been satisfied
either by payment of the Allowed Secured Claim from the Sale Proceeds or by
surrender of the collateral which secured the Allowed Secured Claim.
Therefore, there are no longer any creditors in Class Three.
6.4 Class Four --Allowed Claims of Unsecured Creditors. Class Four
consists of allowed non-priority unsecured claims against the Debtors. In
their Schedules and Supplemental and Amended Schedules F the Debtors scheduled
their total Unsecured Creditors as follows: Total Homecare, Inc. -$685,897.58:
Medmart of Nevada, Inc. -$1,106,338.56: Oxycare, Inc. -262,801.18, and Health
Industries, Inc. -$1,685,328.17. Some of the claims of Unsecured Creditors
were listed as contingent, unliquidated, and/or disputed. Additionally,
Invacare, Bergen Brunswig Drug Company and Harvey B. Riceberg have Allowed
Unsecured Claims pursuant to the compromise motions described in Article Four
above.
Upon confirmation of the Plan the Debtors will analyze the Schedules and
Proofs of Claim to determine which of the Unsecured Creditors hold Allowed
Claims. Additionally, the Debtors reserve the right, before and for a period
of 180 days following, the Effective Date to object to claims or to have the
Court determine the claim amount of any creditor for purposes of receiving any
distribution under the Plan.
6.5 Class Five-- Claims of equity interest owners in the Debtors.
Total Homecare, Inc., a/k/a THC Homecare, Inc. Total Homecare, Inc. is a
publicly traded corporation. As of January 2, 1997 Total Homecare, Inc. had
114 active shareholders and 530,382 shares outstanding.
Total Homecare, Inc. owns 100% of the stock in Medmart of Nevada, Inc.,
Health Industries, Inc., and Oxycare, Inc.
6.6 In addition to the foregoing, the Debtors, both as debtors in
possession and as reorganized after confirmation of the proposed Plan, are
obligated to pay U.S. Trustee quarterly fees based upon their disbursements in
accordance with the sliding scale set forth at 28 U.S.C. Section 1930(a)(6).
These fees accrue throughout the pendency of the cases until entry of a final
decree. U.S. Trustee fees paid prior to confirmation of a plan of
reorganization will be reported in operating reports required by 11 U.S.C.
Sections 704(8), 1106(a)(1), 1107(a) and the United States Trustee
Guidelines. All U.S. Trustee quarterly fees accrued prior to confirmation of
a plan of reorganization will be paid by on or before the effective date of
the plan pursuant to 11 U.S.C. Section 1129(a)(12). All U.S. Trustee fees
accrued post-confirmation will be timely paid on a calendar quarter basis and
reported on post-confirmation reports required by Local Rule 3020. Final fees
will be paid on or before the entry of a final decree in these cases. Based
upon the Debtors' disbursements during the pendency of these cases, it is
anticipated that the Debtors will owe approximately $19,000.00 in U.S. Trustee
fees on the proposed Effective Date of the Plan and $600.00 for each quarter
thereafter until entry of a final decree.
ARTICLE VII
Treatment of Claims and Interests
Reference should be made to the Plan for full details concerning
classification and treatment provided for any particular claim or interest.
The following is only a summary.
7.1 All Class One Administrative Expenses will be paid in full in
cash upon the later of; 1) the Effective Date, or 2) the date on which the
Court approves the Administrative Expense (for professional fees); except as
otherwise agreed by the Debtors and the Administrative Expense claimant. The
claims for the Debtors' professionals shall be paid only if and when approved
by the Court. Unless otherwise agreed by the administrative claimant approved
Administrative Expenses shall be paid pro rata prior to any distribution be
made to any other creditors. Class One claims are not impaired.
7.2 All Allowed Class Two Claims shall be paid in equal monthly
installments over a period of sixty (60) months, with payments based on a
sixty (60) month amortization. Interest shall not accrue on the Allowed Class
Two Claims from the Filing Date through the Effective Date. Interest shall
accrue on the Allowed Class Two Claims from the Effective Date at the rate of
8% per annum until paid. The Debtors may prepay any Allowed Class Two Claim
at any time without penalty. All Allowed Class Two Claims shall release any
and all liens, claims, charges and assessments they may have or hold upon
payment of their Allowed Claims.
7.3 The Debtors believe there are no Class Three creditors. To the
extent any Class Three claims remain the Debtors surrender any collateral
remaining in possession of the Debtors to the Class Three claimant in full
satisfaction of the Class Three claims. Class Three claims, to the extent
there are any, are impaired.
7.4 All Allowed Unsecured Claims shall receive a pro rata share of
at least five percent (5%) of the common stock in Newcorp. Newcorp will not
issue fractional shares, therefore each share to be distributed to an
unsecured creditor shall be rounded up to the nearest share. All future
income and profits of Newcorp are to be contributed to Newcorp and any value
to the Class Four creditors will lie solely in stock appreciation and value.
The Debtors believe the stock to be issued for Allowed Unsecured Claims
will be exempt from certain securities laws under Section 1145 of the
Bankruptcy Code. The stock will be voting stock. The stock will be
unrestricted and assignable. Newcorp shall not be obligated to register such
shares or to maintain registration of such shares.
No interest, penalties, late charges or additional charges (such as
attorneys fees or costs of collection) shall be allowed on any Unsecured Claim
subsequent to the Filing Date, unless specifically allowed in the Plan. All
claims of creditors arising out of the rejection of executory contracts or
unexpired leases must file a Proof of Claim within thirty (30) days after the
Effective Date. If a Proof of Claim arising out of the rejection of an
executory contract or unexpired lease is timely filed and no objection is
filed to its allowance, or the Court enters a final order allowing the Proof
of Claim the claim shall be included in Class Four. Class Two claims are
impaired.
7.5 The Class 5 creditors will receive no distribution under the
Plan. All presently outstanding stock of each of the Debtors and any rights
to subscribe or purchase stock from any of the Debtors, whether characterized
as shares, warrants, options, or any other equity type interest, shall be
canceled and extinguished effective as of the Effective Date. The Class 5
claims are impaired.
ARTICLE VIII
Means for Implementation of the Plan
Upon confirmation of the Plan effective as of the Effective Date, the
Chapter 11 cases filed by the Debtors shall be consolidated and all assets and
liabilities of the Debtors shall be consolidated for all purposes and deemed
to be assets and liabilities of the consolidated debtors. Any claim filed
against any of the Debtors and any obligation of the Debtors shall be deemed
to be an obligation of the consolidated debtors, and all duplicate claims or
obligations shall be eliminated. All obligations of the Debtors to each other
shall be eliminated. The cases shall be consolidated under the case styled
and numbered In re Total Homecare, Inc., case number 97-21413.
Within sixty (60) days after the Effective Date Total Homecare, Inc.
and Safe Environment, Inc. shall be merged. Safe Environment, Inc. is engaged
in the business of providing exploded and unexploded ordnance removal services
and environmental cleanup services at formerly active military bases and
battlefields to render the locations safe for use by the general population.
A 1997 balance sheet for Safe Environmental, Inc. is attached hereto as
Exhibit "A". Solely for purposes of the Plan, the surviving corporate entity
shall be called "Newcorp". However, the surviving entity may continue to
operate or act under the names of the Debtors; and the surviving entity may
file pleadings and otherwise appear in this case and in contested matters and
adversaries in this case under the names of the Debtors. At least five
percent of the common stock in Newcorp shall be distributed to holders of
Allowed Unsecured Claims in accordance with Paragraph 7.4. Notwithstanding
the above, at its sole option upon the completion of due diligence, Safe
Environment, Inc. may elect not to merge with Total Homecare, Inc. In the
event Safe Environment, Inc. chooses not to merge with Total Homecare, Inc.,
Total Homecare, Inc. shall be liquidated under the supervision of its sole
director, Charles McLaughlin. In the event of liquidation, any proceeds of
liquidation shall be distributed to creditors pursuant to priorities described
in Section 507 of the Bankruptcy Code.
Title to all of the estate property (except as otherwise provided under
the Plan) shall be vested in the consolidated Debtors upon confirmation. Upon
the merger of Total Homecare, Inc. and Safe Environment, Inc., all of the
property and assets of the consolidated Debtors shall be vested in Newcorp.
Charles McLaughlin shall manage the consolidated Debtors post-confirmation
pending the proposed merger. The current management of Safe Environmental,
Inc. shall manage Newcorp.
ARTICLE IX
Executory Contracts and Unexpired Leases
The Debtors rejected several executory contracts and unexpired leases
during the course of these Chapter 11 cases. The Debtors believe that their
rights and duties under all executory contracts and unexpired leases which
were not rejected, have been undertaken by Sierra Health Services, Inc. as
part of its purchase of assets pursuant to its purchase of the assets of the
Debtors. To the extent the Debtors are a party to an executory contract or
unexpired lease it shall be deemed rejected upon confirmation of the Plan.
All parties asserting a Claim against the Debtors arising out of the
rejection of an executory contract or unexpired lease must file a proof of
claim within thirty (30) days after the Effective Date. The Debtors must file
any objection to a Proof of Claim arising out of rejection, within thirty (30)
days after it is filed. If a Proof of Claim is timely filed and no objection
is filed to its allowance, or the Court enters a final order allowing the
Proof of Claim, the claim will become a Class Four claim.
ARTICLE X
Alternatives to Plan and Liquidation Analysis
10.1 Alternatives to the Plan include continuation of the Chapter 11
case; conversion to a liquidation bankruptcy; or dismissal of the
proceedings. The Debtors believe the proposed Plan is in the best interest of
all creditors and the Debtors. The Debtors do not favor any alternatives to
the Plan at this time. In arriving at that conclusion, the Debtors assess the
alternatives as follows:
a. If the case were continued in Chapter 11, continuation in Chapter
11 would not further reduce the number of creditors or the amount of unsecured
claims. Administrative expenses would increase.
b. The Debtors believes that a liquidation bankruptcy would not be in
the interest of all parties. A Chapter 7 liquidation may result in additional
liquidation expenses not present under the Plan. The Debtors believe there
would be little or no distribution to creditors in a Chapter 7 case. The
Debtors make this assumption because their cash and the estimated value of
their claim in the Charleston Operating Company bankruptcy case, likely will
not be sufficient to pay administrative and priority claims in full. Although
the Debtors may also hold avoidable transfers which could be recovered for the
benefit of creditors, to the extent these proceeds were to exceed the
administrative and priority claims the Debtors believe the value of stock in
Newcorp being offered to unsecured creditors would exceed the value of such
proceeds.
c. Dismissal of the proceedings would, in the judgment of the
Debtors, also lead to an unsatisfactory result. Dismissal would inevitably
result in a piecemeal liquidation of the Debtors' property, with delayed
benefit to unsecured claimants.
10.2 This Disclosure Statement describes alternatives to the Plan;
however, the creditors may only vote for or against the Plan. The vote on the
Plan does not include a vote on alternatives to the Plan. There is no
assurance what turn the proceedings will take if the Plan fails to win
acceptance. Creditors should consult counsel of your choice if they have
questions concerning the Plan and reorganization process.
ARTICLE XI
Tax Consequences
The federal income tax aspects of reorganization under Chapter 11 are
complicated and uncertain, and it is not possible to present in this
Disclosure Statement a detailed analysis of the tax consequences of the
actions contemplated by the Plan. Consequently, each creditor and interest
holder is urged to consult its own tax advisors with respect to the
consequences of the Plan.
ARTICLE XII
Required Vote for Reorganization
Voting on the Plan is by classes. Unimpaired classes are deemed to have
accepted the Plan. At least one class of impaired claims must vote to accept
the Plan in order for the Plan to be confirmed. Acceptance by a class
requires acceptance by at least two-thirds (2/3) in amount and more than
one-half (1/2) in number of the allowed claims held by the members of the
class. If any class of impaired claims fails to accept this Plan, the Debtors
may attempt to invoke the so-called "cram down" provisions of Section 1129(b)
of the Bankruptcy Code.
ARTICLE XIII
Feasibility and Risk to Creditors
The Debtors believes the Plan is feasible and confirmable pursuant to
Section 1129 of the Bankruptcy Code. However, there is a risk with respect to
the stock to be distributed in Newcorp. As with any investment in a new
entity, there is substantial risk that Newcorp will not be a successful
business.
ARTICLE XIV
Miscellaneous Terms of the Plan
14.1 A Final Decree closing this case shall be automatically entered
without further notice or hearing after the expiration of a ninety (90) day
period following the Effective Date of the Plan, unless the Debtors or a party
in interest move, for cause shown, for an enlargement of the ninety day
period.
14.2 The Debtors shall be responsible for timely payment of fees
incurred pursuant to 28 U.S.C. § 1930(a)(6).
14.3 The Debtors shall have until ninety days following confirmation
to object to any creditor's claim. The Debtors are currently analyzing the
creditor's claims. At this time the Debtors do not intend to object to any
creditor's claim.
14.4 Until the Court closes the Debtors' cases, the Court will retain
jurisdiction of this bankruptcy case for all matters necessary and appropriate
to the carrying out of the purposes of the Bankruptcy Code and the Plan,
including the following: (i) to classify, allow, disallow, subordinate or
otherwise rule upon claims and matters relating thereto, (ii) to determine all
matters arising out of property of the estate, the Plan and this case, (iii)
to recover all assets and properties of the Debtors, (iv) to modify, enforce
or interpret the Plan or orders or pleadings filed in this case, (v) to enter
orders appropriate to conclusion and closing of this case, (vi) to correct any
defect, inconsistency, or omission in the Plan or Order confirming the Plan,
and (vii) to decide issues concerning tax and reporting issues relating to the
Plan.
DATED: October 29, 1998.
Respectfully submitted,
MEDMART OF NEVADA, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
HEALTH INDUSTRIES, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
OXYCARE, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
TOTAL HOMECARE, INC.
By: /s/ Charles McLaughlin
CHARLES MCLAUGHLIN, Chairman of the Board
KEMP, SMITH, DUNCAN & HAMMOND, P.C.
P.O. Drawer 2800
El Paso, Texas 79999-2800
(915) 533-4424
(915) 546-5360 (FAX)
By: /s/ Charles A. Beckham, Jr.
CHARLES A. BECKHAM, JR.
State Bar No. 02016600
JAMES W. BREWER
State Bar No. 02965200
Brian Holthus
Jolley, Urga, Wirth & Woodbury
3800 Howard Hughes Parkway
Sixteenth Floor
Las Vegas, Nevada 89109
(702) 699-7500
Attorneys for the Debtors
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Safe Environment, Inc.
We have audited the accompanying balance sheet of Safe Environment, Inc.
(a development stage company) as of June 30, 1997. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express
an opinion on the balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principals used and significant
estimates made by management as well as evaluating the overall balance sheet
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Safe Environment, Inc. (a
development stage company) as of June 30, 1997, in conformity with generally
accepted accounting principles.
/s/ Peter C. Cosmas, CPA's
Peter C. Cosmas, CPA's
400 Madison Ave.
New York, New York 10017
July 16, 1997
<PAGE>Safe Environment, Inc.
(a development stage company)
Balance Sheet
June 30, 1997
<TABLE>
<S> <C>
Assets
Current assets:
Cash and cash equivalents 47,138
Prepaid expenses 9,137
Total assets 56,275
Liabilities and Stockholders
Equity
Current liabilities:
Accounts payable 3,150
Accrued expenses 1,025
Total current liabilities 4,175
Stockholders' equity
Preferred stock,
$.01 par value
5,000,000 shares authorized,
none issued
Common stock, $.01 par value
50,000,000 shares authorized,
1,104,200 shares issued and
outstanding 11,042
Additional paid-in-capital 41,058
Total stockholders' equity 52,100
Total liabilities and
stockholders' equity 56,275
(See accompanying notes to balance sheet)
</TABLE>
<PAGE>Safe Environment, Inc.
(a development stage company)
Notes to Balance Sheet
June 30, 1997
1. Description of Business and Basis of Presentation
Safe Environment, Inc. ("The Company") located in Manasas, Virginia was
incorporated under the laws of the State of Nevada on March 26, 1997. The
Company is engaged in locating, removing and disposing of unexploded ordnance,
such as bombs, land mines, grenades and ammunition. Initially the Company
will concentrate on the site remediation work required in connection with the
closure of domestic U.S. military facilities. It then expects to expand to
similar work in connection with the closure of overseas bases of the U.S.
military. Finally, it expects to expand to the removal of land mines on a
worldwide basis. To date, the Company's primary activities have involved the
establishment of its operations, recruiting of personal and pursuit of its
development programs. To date there are no revenues and accordingly, it is
classified as a development - stage company.
2. Stockholders' Equity
Preferred Stock
The 5,000,000 shares of preferred stock authorized are undesignated as to
preferences, privileges and restrictions. As the shares are issued, the Board
of Directors must establish a "series" of the shares to be issued and
designate the preferences, privileges and restrictions applicable to that
series.
Common Stock
The Company's Articles of incorporation, as amended, provide for the
issuance of 50,000,000 shares of common stock, having a par value of $.01 per
share, at the time of incorporation. The Company recognizing the
approximately two years of planning and development efforts by its two
founders, issued each of them 500,000 shares of the common stock at a price of
one cent (.01) per share. In addition the Company issued each of them stock
options to purchase additional shares of common stock at an exercise price of
$.25 per share.
<PAGE>
Safe Environment, Inc.
(a development stage company)
Notes to Balance Sheet
June 30, 1997
(continued)
Stock Option Plans
The Company has adopted two stock option plans for key employees,
including the founders. One of the plans is an incentive stock option plan
and the other plan is a performance option plan. The company issued each of
its two founders stock options under the plan to purchase 500,000 shares at a
price of One dollar ($1.00) per share at any time prior to December 31, 1999.
The Company has also agreed to issue each of the stock options under the
performance option plan to purchase 500,000 shares at an option price of one
cent ($.01) per share, subject to them meeting the performance goals
required. These performance options have not been granted to date, however,
because the performance goals to be achieved have not been established by the
Board of Directors.
Warrants
As of June 30, 1997 the Company has issued warrants to purchase up to
383,400 shares of common stock at exercise prices ranging from $.50 to $1.00
per share to certain investors, legal counsel and an investment broker. The
value of these warrants is not material.
3. Subsequent events
The Company is in the process of offering Units, each unit consisting of
twenty (20) shares of the common stock of the Company, Twenty (20) "A" Common
stock purchase warrants, fifteen (15) "B" Common Stock purchase warrants,
fifteen (15) "C" Common stock purchase warrants and twenty (20) "D" Common
stock purchase warrants, each exercisable for a period ending December 31,
1997 for the purchase of one (1) share of the Company's common stock at the
following exercise prices.
<PAGE>
Safe Environment, Inc.
(a development stage company)
Notes to Balance Sheet
June 30, 1997
(continued)
"A" Warrants $.50
"B" Warrants .675
"C" Warrants .875
"D" Warrants 1.00
These units are being offered pursuant to the provisions of Rule 504 of
Regulation-D, and have not been registered under the Securities Act of 1933.
Charles A. Beckham, Jr.
Texas Bar No. 02016600
James W. Brewer
Texas Bar No. 02965200
Kemp, Smith, Duncan & Hammond, P.C.
P.O. Box 2800
El Paso, Texas 79999-2800
(915) 533-4424
(915) 546-5360 FAX
Brian Holthus
State Bar No. 2720
Jolley, Urga, Wirth & Woodbury
3800 Howard Hughes Parkway
Sixteenth Floor
Las Vegas, Nevada 89109
(702) 699-7500
(702) 699-7555 FAX
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEVADA
<TABLE>
<S>
<C> <C>
In re:
MEDMART OF NEVADA, INC. f/d/b/a ) Case
Nos. 97-21412-RCJ
TOTAL HOME CARE, HEALTH INDUSTRIES, INC., ) to 97-21415-RCJ
f/d/b/a M-D MEDICAL CENTERS, )
OXYCARE, INC., and
) Chapter 11
TOTAL HOMECARE, INC. a/k/a THC Homecare, Inc., ) JOINTLY
ADMINISTERED
)
Debtors.
)
</TABLE>
ORDER APPROVING DEBTORS' AMENDED
JOINT DISCLOSURE STATEMENT AND FIXING
TIME FOR FILING ACCEPTANCES OR
REJECTIONS OF DEBTORS' AMENDED JOINT
PLAN OF REORGANIZATION, COMBINED
WITH NOTICE THEREOF
On October 30, 1998, Medmart of Nevada, Inc., f/d/b/a Total Home Care,
Health Industries, Inc., f/d/b/a M-D Medical Centers, Oxycare, Inc., and
Total
Homecare, Inc. a/k/a THC Homecare, Inc., the Debtors and
Debtors-in-Possession, filed their Amended Joint Disclosure Statement,
referring to the Debtors' Amended Joint Plan of Reorganization. On December
1, 1998 the Court considered whether the Amended Joint Disclosure Statement
contained adequate information regarding the Debtors' Amended Joint Plan of
Reorganization. The Court is of the opinion that the Amended Joint
Disclosure
Statement does contain adequate information regarding the Debtors' Amended
Joint Plan of Reorganization; therefore,
IT IS ORDERED, ADJUDGED AND DECREED, and notice is hereby given, that:
1. The Amended Joint Disclosure Statement filed by Medmart of
Nevada,
Inc., f/d/b/a Total Home Care, Health Industries, Inc., f/d/b/a M-D Medical
Centers, Oxycare, Inc., and Total Homecare, Inc. a/k/a THC Homecare, Inc.
dated October 30, 1998, is approved.
2. February 16, 1999 is fixed as the last day for filing written
acceptances or rejections of the Amended Joint Plan of Reorganization.
3. Within 1 day after the entry of this Order, the Amended Joint
Disclosure Statement, the Amended Joint Plan of Reorganization, a copy of
this
Order, and a ballot conforming to Official Form 14 shall be mailed to
creditors, equity security holders, and other parties in interest, and shall
be transmitted to the United States Trustee, as provided in Fed. R. Bankr. P.
3017(d).
4. February 23, 1999, at 2:30 p.m., is fixed for the hearing on the
confirmation of the Amended Joint Plan of Reorganization.
5. February 16, 1999 is fixed as the last day for filing and serving
pursuant to Fed. R. Bankr. P. 3020(b)(1) written objections to confirmation
of
the First Amended Plan of Reorganization.
Dated: January 13, 1999
/S/ROBERT C. JONES
UNITED STATES BANKRUPTCY JUDGE
APPROVED
<PAGE>
Submitted by:
JOLLEY, URGA, WIRTH & WOODBURY U.S. TRUSTEE
By:/s/BRIAN E. HOLTHUS By:/s/BARRY JENKINS
Brian E. Holthus, Esq. Barry Jenkins
3800 Howard Hughes Pkwy., #1600 600 S. Las Vegas Blvd., #430
Las Vegas, NV 89109 Las Vegas, NV 89101
Attorneys for Debtors
SUBMITTED BY:
Kemp, Smith, Duncan & Hammond, P.C.
P.O. Box 2800
El Paso, Texas 79999-2800
(915) 533-4424
(915) 546-5360 FAX
By: /s/ Charles A. Beckham, Jr.
CHARLES A. BECKHAM, JR.
Attorneys for the Debtors
<TABLE>
THC HOMECARE (CONSOLIDATED)
BALANCE SHEET
01/31/99
<CAPTION>
ASSETS
<S>
<C> <C>
CURRENT ASSETS:
Cash 28,472.34
Trade Accounts Receivable 0.00
Reserve for Bad Debt 0.00
Inventories (Net) 0.00
Total Current
Assets 0.00
RENTAL EQUIPMENT (NET) 0.00
PROPERTY AND EQUIPMENT (NET) 0.00
DEPOSITS
0.00
INTERCOMPANY
0.00
TOTAL ASSETS
28,472.34
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES
<S>
<C> <C>
CURRENT LIABILITIES:
Current Portion L/T Debt 50,347.16
Accounts Payable 2,572,050.55
Accrued Liabilities 49,576.28
Total Current Liabilities
2,671,973.99
LONG - TERM DEBT, Net of Current 817,818.13
LONG-TERM DEBT RELATED PARTY 131,463.21
OTHER LIABILITIES
49,050.00
STOCKHOLDER'S EQUITY:
Common Stock 4,047.40
Additional Paid-In Capital 1,830,225.38
Common Stock Warrants/Options 668,104.40
Accumulated Deficit (6,144,210.17)
Total Stockholder's Equity
(3,641,832.99)
TOTAL LIABILITIES & S/H EQUITY 28,472.34
</TABLE>
