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I. II.

The Plan of Reorganization. A description of the debtor. A. The debtor is: an individual (or, if a joint petition, a husband and wife); a partnership consisting of (identify the general partners and any limited partners, and the percentage interest of each); a corporation (identify the state in which chartered, and the officers and directors). If the debtor is a corporation, state whether the debtor is reorganizing and continuing its business, or liquidating its assets and not continuing its business. Describe the principals. 1. Their background. 2. Their annual salary, compensation, draw or other remuneration, including fringe benefits. 3. Their legal relationships, if any, with the debtor, e.g., lessor, lessee, creditor of the estate, debtor of the estate. a. If any such relationships exist, fully explain the details. b. If a lessor-lessee relationship exists, disclose the rental paid or received by the debtor and whether it is a fair rental. Describe the debtor's business, its industry group and the causes for the Chapter 11 filing.




Post-petition events of significance. A. B. Disclose all post-petition transfers outside the ordinary course of business. Provide summaries of the important details of cash collateral, post-petition financing and adequate protection orders. Explain any litigation during the case.



The disclosure statement shall provide the information required in the order and format

listed herein. If any required information does not apply or is not available, the disclosure statement shall so indicate explicitly.


Assets and Liabilities A. Provide a liquidation analysis, as set forth in the following hypothetical example: Market Value and Forced Sale Value $500,000(M) $200,000(FS) 15,000(M) 10,000(FS) Amount of Secured Claim 400,000

Creditor Describe the Holding Collateral Lien Equipment Hypothetical National Bank Seller Finance Company (1st)

Equity 100,000(M) 0(FS) -------


Forklift A


Hypothetical ------National Bank (2nd) Inventory Imaginary State Bank 300,000(M) 50,000(FS)


6,000(M) 0(FS) 0 0 Security interest disputed Ditto



Imaginary State Bank Imaginary State Bank

20,000(M) see above 20,000(FS) 80,000(M) see above 20,000(FS) _________ $106,000 $ 0

0 0 0



Total equity if fair market value used = Total equity if forced sale value used = B.

State the risks, conditions and assumptions regarding the stated values. If appraisals have been done, disclose appraised values and the dates of the appraisals; otherwise, state the basis of the valuation (e.g., "SEV valuation.") Identify all potential claims and causes of action, including claims against insiders and avoidance actions. For each such cause of action, estimate the value of any expected recovery and the expected costs of such litigation. (The anticipated net value of any litigation that the debtor intends to pursue should be included in the liquidation analysis contained in paragraph A above.) If the debtor does not intend to pursue any such claims, state the reasons. List and describe the priority claims including anticipated administrative expense claims of all types.




E. F.

Provide a total of all non-priority unsecured claims, including undersecured claims. If any debt is guaranteed by anyone or if anyone is liable with the debtor on any debt, identify: (1) the guarantor or codebtor; (2) the nature and amount of debt involved, (3) the collateral securing the debt or the guaranty, and (4) the value of such collateral.


Details regarding implementation of the plan. A. Provide meaningful summaries of financial information in a consistent format for at least the following periods: 1. Three years pre-petition, if possible. 2. Post-petition to date. 3. If the plan proposes that the company will continue in business, projections for the period of payment proposed by the plan (i.e. if the plan proposes payment even 3 years, submit projections for the following 3 years), together with assumptions underlying those projections. If the plan proposes that the business will continue, state who will be in charge and the compensation to be paid to each, including fringe benefits. State the tax ramifications for the continuing entity if the plan is confirmed.


C. VI.

Legal requirements, as follows: (The following 2 pages shall be copied verbatim into the disclosure statement.)



Voting procedures

Under the Bankruptcy Code, the only classes that are entitled to vote to accept or reject a plan are classes of claims, or equity interest, that are impaired under the plan. Accordingly, classes of claims or interests that are not impaired are not entitled to vote on the plan. Creditors that hold claims in more than one impaired class are entitled to vote separately in each class. Such a creditor will receive a separate ballot for all of its claims in each class (in accordance with the records of the Clerk of the Court) and should complete and sign each ballot separately. A creditor who asserts a claim in more than one class and who has not been provided with sufficient ballots may photocopy the ballot received and file multiple ballots. Votes on the plan will be counted only with respect to claims: (a) that are listed on the Debtor's Schedules of Assets and Liabilities other than as disputed, contingent or unliquidated; or (b) for which a proof of claim was filed on or before the bar date set by the Court for the filing of proofs of claim (except for certain claims expressly excluded from that bar date or which are allowed by Court order). However, any vote by a holder of a claim will not be counted if such claim has been disallowed or is the subject of an unresolved objection, absent an order of the Court allowing such claim for voting purposes pursuant to 11 U.S.C. 502 and Bankruptcy Rule 3018. Voting on the plan by each holder of a claim or interest in an impaired class is important. After carefully reviewing the plan and disclosure statement, each holder of such a claim or interest should vote on the enclosed ballot either to accept or to reject the plan, and then return the ballot by mail to the debtor's attorney by the deadline previously established by the court. Any ballot that does not appropriately indicate acceptance or rejection of the plan will not be counted. A ballot that is not received by the deadline will not be counted. If a ballot is damaged, lost, or missing, a replacement ballot may be obtained by sending a written request to the debtor's attorney. B. Acceptance

The Bankruptcy Code defines acceptance of a plan by an impaired class of claims as acceptance by the holders of at least two-thirds in dollar amount, and more than one-half in number, of the claims of that class which actually cast ballots. The Bankruptcy Code defines acceptance of a plan by an impaired class of equity interests as acceptance by holders of at least two-thirds in number of the equity interests of that class that actually cast ballots. If no creditor or interest holder in an impaired class votes, then that class has not accepted the plan.




11 U.S.C. 1129(a) establishes conditions for the confirmation of a plan. These conditions are too numerous and detailed to be fully explained here. Parties are encouraged to seek independent legal counsel to answer any questions concerning the Chapter 11 process. Among the several conditions for confirmation of a plan under 11 U.S.C. 1129(a) are these: 1. 2. Each class of impaired creditors and interest must accept the plan, as described in paragraph VI.B., above. Either each holder of a claim or interest in a class must accept the plan, or the plan must provide at least as much value as would be received upon liquidation under Chapter 7 of the Bankruptcy Code.


Modification The debtor reserves the right to modify or withdraw the plan at any time before confirmation.


Effect of confirmation If the plan is confirmed by the Court: 1. Its terms are binding on the debtor, all creditors, shareholders and other parties in interest, regardless of whether they have accepted the plan. 2. Except as provided in the plan and in 11 U.S.C. 1141(d)(5): (a) In the case of a corporation that is reorganizing and continuing business: (1) All claims and interests will be discharged. (2) Creditors and shareholders will be prohibited from asserting their claims against or interest in the debtor or its assets. (b) In the case of a corporation that is liquidating and not continuing its business: (1) Claims and interests will not be discharged. (2) Creditors and shareholders will not be prohibited from asserting their claims against or interests in the debtor or its assets. (c) In the case of an individual or husband and wife: (1) Claims will be discharged, except as provided in 11 U.S.C. 523 and 1141(d)(3). (2) Creditors will be prohibited from asserting their claims except as to those debts which are not discharged or dischargeable under 11 U.S.C. 523 and 1141(d)(3).

See Part II-A of this Disclosure Statement to determine which of the above paragraphs applies in this case.