UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF MISSOURI
In re: ) In Proceedings under Chapter 11
)
FARMLAND INDUSTRIES, INC., ) Case No. 02-50557
FARMLAND FOODS, INC., ) Case No. 02-50561
SFA, INC., ) Case No. 02-50562
FARMLAND TRANSPORTATION, INC., ) Case No. 02-50564
FARMLAND PIPE LINE COMPANY, ) Case No. 02-50565
)
Debtors. ) Joint Administration
DISCLOSURE STATEMENT FOR DEBTORS'
SECOND AMENDED JOINT PLAN OF REORGANIZATION, AS MODIFIED
--------------------------------------------------------
Gregory D. Willard, Esq. Laurence M. Frazen, Esq.
David M. Unseth, Esq. Cynthia Dillard Parres, Esq.
Cullen K. Kuhn, Esq. Robert M. Thompson, Esq.
BRYAN CAVE LLP BRYAN CAVE LLP
211 North Broadway, Suite 3600 1200 Main Street, Suite 3500
St. Louis, Missouri 63102-2750 Kansas City, Missouri 64105
Attorneys for Debtors and Debtors-in-Possession
Dated: October 31, 2003
TABLE OF CONTENTS
Page
I. INTRODUCTION........................................................... 1
A. General.......................................................... 1
B. Voting Instructions And Procedures............................... 1
1. Voting Procedures, Ballots And Balloting Deadline............ 1
2. Voting Record Date........................................... 3
3. Voting Multiple Claims....................................... 3
4. Incomplete Ballots........................................... 3
5. Defects And Irregularities................................... 3
6. Confirmation Hearing......................................... 3
7. Recommendations.............................................. 4
II. HISTORY AND STRUCTURE OF THE DEBTORS................................... 5
A. Introduction..................................................... 5
B. Description Of The Debtors' Businesses........................... 6
1. Meat Processing And Marketing................................ 6
2. Crop Production Business..................................... 7
3. Petroleum Business................... ....................... 8
4. Other Businesses............................................. 9
C. Historical Financial Results.....................................10
D. Events Leading To Chapter 11.....................................11
E. General Corporate Structure......................................11
F. Pre-Petition Secured Debt Obligations............................11
III. THE CHAPTER 11 CASE....................................................11
A. Continuation Of Business Operations After The Petition Date......11
B. Corporate Management.............................................12
C. First Day Orders.................................................13
D. DIP Financing And Use Of Cash Collateral.........................14
E. Appointment Of The Bankruptcy Committees.........................14
1. Creditors' Committee.........................................14
2. Bondholders' Committee.......................................15
F. Key Employee Retention And Incentive Target Plan.................15
G. Marketing and Disposition of the Debtors' Assets.................15
1. Asset Sales Authorized To Date...............................15
2. Disposition Of The Pork Business.............................22
3. Disposition Of The Beef Interests............................25
4. Other Business Operations....................................27
H. Case Administration..............................................28
1. Claims Information And Estimates.............................28
2. Claims Agent.................................................28
3. Balloting Agent..............................................28
4. Claims Transfer Procedures...................................28
I. Significant Business And Legal Matters...........................29
1. Procedures For Workers' Compensation Claims..................29
2. Procedures for Mechancs' Lien Claims.........................29
3. Proposed Termination Of Certain Employee Benefits............29
4. Propsoed Settlement With U.S. EPA ...........................30
5. Pending Environmental Claims.................................31
6. Adjudication Regarding Subordinated Certificates.............32
7. Insurnace Proceeds For Albert Lea Plant......................32
8. Pending Litigation and Automatic Stay........................33
IV. SUMMARY OF THE PLAN.....................................................34
A. Introduction.....................................................34
B. Classification Of Claims And Interests...........................35
C. Treatment Of Claims And Interests And Summary Of Distributions
Under The Plan...................................................36
D. Provisions Governing Distributions...............................44
1. Distributions................................................44
2. Interest On Claims...........................................45
3. Means Of Cash Payment........................................45
4. Distributions On The Initial Distribution Date...............45
5. Distributions On A Subsequent Distribution Date..............45
6. Distributions On The Final Distribution Date.................46
7. Delivery Of Distributions; Undeliverable Distributions.......46
8. Tender Of Securities And Instruments; Reinstatement of
Preferred Shares; Cancellation of Trust Indentures...........47
9. Withholding And Reporting Requirements.......................48
10. Setoffs......................................................48
11. No Recourse..................................................49
12. Transactions On Business Days................................49
13. No Distributions In Excess Of Allowed Amounts Of Claim.......49
14. Intercompany Advances; Intercompany Claims...................49
E. Implementation of the Plan.......................................50
1. Continued Existence of the Debtors; Vesting Of Assets........50
2. Funding For The Plan.........................................51
3. Accounts.....................................................52
4. Liquidating Trust; Liquidating Trustee.......................52
5. Post-Confirmation Committee..................................53
6. Effectuating Documents; Further Transactions.................54
7. Exemption From Certain Transfer Taxes........................54
8. Releases and Related Matters.................................54
9. Closing Of The Chapter 11 Case...............................55
10. Rights of Action.............................................55
F. Pension Benefits and Retiree Benefits............................56
G. Establishment Of Class 11 Distribution Pool; Minority Foods
Shares; Establishment of Industries Distribution Pool............57
H. Treatment Of Executory Contracts and Unexpired Leases............58
1. Rejected Executory Contracts And Unexpired Leases............58
2. Rejection Damages Bar Date...................................58
3. Assumed Executory Contracts And Unexpired Leases.............58
4. Payments Related To Assumed Executory Contracts And
Unexpired Leases.............................................59
I. Disputed, Contingent and Unliquidated Claims.....................59
1. Prosecution of Objections to Claims........................59
2. Treatment of Disputed Claims; Disputed Claims Reserves.....60
3. Estimation.................................................60
J. Conditions Precedent To Confirmation And Consummation Of
The Plan.........................................................60
1. Conditions To Effective Date...............................60
2. Waiver of Conditions.......................................61
3. Notice of Effective Date...................................61
K. Payment Of Certain Fees And Expenses.............................61
1. Professional Fee Claims....................................61
2. Administrative Claims......................................62
3. Fees and Expenses of the Indenture Trustees................62
4. Statutory Fees.............................................62
L. Modifications Of The Plan; Severability Of Plan Provisions.......62
M. Successors And Assigns...........................................63
N. Revocation, Withdrawal, Or Non-Consummation......................63
O. Dissolution Of The Bankruptcy Committees.........................64
P. Terms Of Injunctions Or Stays....................................64
V. CONFIRMATION OF THE PLAN...............................................64
A. Introduction.....................................................64
B. Voting...........................................................64
C. Acceptance.......................................................65
D. Confirmation Of The Plan.........................................65
1. Best Interests Of Holders Of Claims And Interests............66
2. Financial Feasibility........................................72
3. Acceptance By Impaired Classes...............................72
4. Cram Down....................................................72
5. Classification Of Claims And Interests.......................74
E. Effect Of Confirmation Of The Plan...............................74
1. No Discharge...............................................74
2. Release of Assets..........................................74
3. Exculpation And Limitation Of Liability....................74
4. Bindng Effect..............................................75
F. Retention of Jurisdiction........................................75
VI. CERTAIN FACTORS TO BE CONSIDERED.......................................75
A. Risk That Distributions May Be Less Than Estimated By Debtors....76
B. Risk Of Non-Confirmation Of The Plan.............................77
C. Non-Consensual Confirmation Of The Plan..........................77
D. Conditions Precedent To The Occurrence Of The Effective Date.....77
E. Liquidation Of The Debtors' Assets...............................77
F. Litigation Risks.................................................77
G. Alternatives To The Plan.........................................77
VII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................78
A. Certain Federal Income Tax Consequences to the Debtors...........78
1. Transfer Of Assets To The Liquidating Trust..................78
2. Merger Of Foods Industries...................................79
3. Cancellation Of Industries Common Shares.....................79
4. Cancellation Of Indebtedness And Reduction Of Tax
Attributes...................................................81
5. Alternative Minimum Tax......................................82
B. United States Federal Income Tax Consequences To Holders
Of Claims And Interests..........................................82
1. Holders Of Allowed Claims And Interests Receiving
Consideration ...............................................82
2. Holders Of Industries Common Shares..........................84
3. Holders Of Old Securities Of Foods...........................85
4. Holders Of Old Securities Of Transportation, SFA And
Pipeline ....................................................85
5. Holders Of Subordinated Claims...............................85
6. Distributions In Discharge Of Accrued Interest...............86
7. Information Reporting And Backup Withholding.................86
C. Tax Treatment Of The Liquidating Trust...........................87
1. Classification Of The Liquidating Trust And Ownership Of
Beneficial Interests In Liquidating Trust....................87
2. Tax Reporting................................................87
VIII. CONCLUSION.............................................................89
TABLE OF APPENDICES
Appendix A Second Amended Joint Plan of Reorganization, as Modified
Appendix B Historical Statements
Appendix C Organization Structure of the Debtors
Appendix D Liquidation Analysis for the Debtors
Appendix E Orders Related to Non-Debtor Owned Properties
DISCLAIMER
THIS DISCLOSURE STATEMENT AND ITS RELATED DOCUMENTS ARE THE ONLY
DOCUMENTS AUTHORIZED BY THE BANKRUPTCY COURT TO BE USED IN CONNECTION WITH
THE SOLICITATION OF VOTES ACCEPTING THE DEBTORS' SECOND AMENDED JOINT PLAN
OF REORGANIZATION, AS MODIFIED, DATED OCTOBER 31, 2003 (AS MAY BE FURTHER
AMENDED OR MODIFIED, THE "PLAN"). NO REPRESENTATIONS HAVE BEEN AUTHORIZED
BY THE BANKRUPTCY COURT CONCERNING THE DEBTORS, THEIR BUSINESS OPERATIONS
OR THE VALUE OF THEIR ASSETS, EXCEPT AS EXPLICITLY SET FORTH IN THIS
DISCLOSURE STATEMENT.
THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF
THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATED TO THE PLAN, EVENTS IN
THE CHAPTER 11 CASES AND FINANCIAL INFORMATION. THIS DISCLOSURE STATEMENT
IS NOT INTENDED TO REPLACE CAREFUL AND DETAILED REVIEW AND ANALYSIS OF THE
PLAN OR SUCH STATUTORY PROVISIONS, DOCUMENTS OR FINANCIAL INFORMATION, BUT
IS RATHER INTENDED ONLY TO AID AND TO SUPPLEMENT SUCH REVIEW. THIS
DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED PROVISIONS SET FORTH IN THE PLAN (WHICH IS INCLUDED AS APPENDIX A
HERETO). IN THE EVENT OF A CONFLICT BETWEEN THE PLAN AND THIS DISCLOSURE
STATEMENT, THE PROVISIONS OF THE PLAN SHALL GOVERN. ALL HOLDERS OF ALLOWED
CLAIMS IN VOTING CLASSES ARE ENCOURAGED TO REVIEW THE FULL TEXT OF THE PLAN
AND TO READ CAREFULLY THIS ENTIRE DISCLOSURE STATEMENT, INCLUDING ALL
APPENDICES ANNEXED HERETO, BEFORE DECIDING WHETHER TO VOTE TO ACCEPT OR TO
REJECT THE PLAN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF
THE DATE HEREOF, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF. THE
DEBTORS DO NOT WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN,
INCLUDING THE FINANCIAL INFORMATION, IS WITHOUT ANY MATERIAL INACCURACY OR
OMISSION.
THE SOLICITATION PERIOD PURSUANT TO THIS DISCLOSURE STATEMENT WILL
EXPIRE AT DECEMBER 5, 2003 (THE "BALLOTING DEADLINE"). TO BE COUNTED,
BALLOTS MUST BE ACTUALLY RECEIVED IN ACCORDANCE WITH THE VOTING
INSTRUCTIONS BY THE BALLOTING AGENT ON OR BEFORE THE BALLOTING DEADLINE.
PLEASE SEE THE DISCLOSURE STATEMENT FOR THE VOTING INSTRUCTIONS. BALLOTS
WILL NOT BE ACCEPTED VIA FACSIMILE OR ELECTRONIC MAIL.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION
1125 OF THE BANKRUPTCY CODE AND RULE 3016 OF THE BANKRUPTCY RULES AND NOT
NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAW OR OTHER
NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS BEEN NEITHER APPROVED NOR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), NOR HAS
THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED
HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR
TRANSFERRING CLAIMS OR INTERESTS OF THE DEBTORS SHOULD EVALUATE THIS
DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY
WERE PREPARED. HOLDERS OF CLAIMS AND INTERESTS SHOULD NOT CONSTRUE THE
CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS,
FINANCIAL OR TAX ADVICE. EACH SUCH HOLDER SHOULD, THEREFORE, CONSULT WITH
ITS OWN LEGAL, BUSINESS, FINANCIAL AND TAX ADVISORS AS TO ANY SUCH MATTERS
CONCERNING THE SOLICITATION, THE PLAN AND THE TRANSACTIONS CONTEMPLATED
THEREBY.
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR
THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT BE CONSTRUED AS AN
ADMISSION, STIPULATION OR WAIVER, BUT RATHER AS A STATEMENT MADE IN
SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE
IN ANY NON-BANKRUPTCY PROCEEDING.
IF THE PLAN IS CONFIRMED BY THE BANKRUPTCY COURT AND BECOMES
EFFECTIVE, ALL HOLDERS OF CLAIMS AND INTERESTS (INCLUDING THOSE WHO
REJECTED OR WHO ARE DEEMED TO HAVE REJECTED OR ACCEPTED THE PLAN AND THOSE
WHO DID NOT SUBMIT BALLOTS TO ACCEPT OR TO REJECT THE PLAN) SHALL BE BOUND
BY THE TERMS OF THE PLAN.
I. INTRODUCTION
A. GENERAL
Farmland Industries, Inc., Farmland Foods, Inc., Farmland
Transportation, Inc., SFA, Inc. and Farmland Pipe Line Company
(collectively, the "Debtors") hereby propose the following disclosure
statement (the "Disclosure Statement") pursuant to section 1125 of the
Bankruptcy Code, for use in the solicitation of votes for the Debtors'
Second Amended Joint Plan of Reorganization, as modified (as may be further
amended or modified, the "Plan").
This Disclosure Statement sets forth certain information regarding the
Debtors' operations and finances, the Debtors' need to seek Chapter 11
protection and the utilization of the Debtors' assets. This Disclosure
Statement also describes the terms and provisions of the Plan, including
potential alternatives to the Plan, certain effects of confirmation of the
Plan and the distributions proposed to be made under the Plan. In addition,
this Disclosure Statement discusses the confirmation process and the voting
procedures that the holders of Allowed Claims and Allowed Interests in the
Voting Classes must follow for their votes to be counted.
CAPITALIZED TERMS USED AND NOT DEFINED HEREIN SHALL HAVE THE MEANING
ASCRIBED TO THEM IN THE PLAN UNLESS THE CONTEXT REQUIRES OTHERWISE.
The Bankruptcy Court has approved this Disclosure Statement as
containing "adequate information" in accordance with section 1125(b) of the
Bankruptcy Code to enable a hypothetical, reasonable investor holding an
Allowed Claim in each of the relevant Voting Classes to make an informed
judgment about the Plan.
B. VOTING INSTRUCTIONS AND PROCEDURES
1. VOTING PROCEDURES, BALLOTS AND BALLOTING DEADLINE
Under the Plan, all holders of Allowed Claims and Allowed Interests in
Classes 4, 5, 7, 9, 10, 11, 12, 14, 16 and 19 (the "Voting Classes") are
Impaired and entitled to vote on the Plan. Holders of Claims in each of
Classes 1, 2, 3, 6 and 8 are Unimpaired under the Plan and are deemed to
have accepted the Plan. Holders of Claims and Interests in Classes 13, 15,
17 and 18 are conclusively deemed to accept the Plan as proponents of the
Plan. For a description of the Classes of Claims and Interests and their
treatment under the Plan, see Section IV.C, Treatment of Claims and
Interests and Summary of Distributions under the Plan.
ONLY PERSONS WHO HOLD CLAIMS AND INTERESTS ON THE RECORD DATE ARE
ENTITLED TO RECEIVE A COPY OF THIS DISCLOSURE STATEMENT. ONLY PERSONS WHO
HOLD ALLOWED CLAIMS AND ALLOWED INTERESTS IN THE VOTING CLASSES ON THE
CONFIRMATION DATE ARE ENTITLED TO VOTE WHETHER TO ACCEPT THE PLAN.
Separate pre-addressed return envelopes have been supplied for the
Ballots. Holders of Allowed Claims and Allowed Interests in the Voting
Classes should take care to use the proper preaddressed envelope to ensure
that Ballots are returned to the proper address. In most cases, each Ballot
enclosed with this Disclosure Statement has been encoded with the amount of
the Allowed Claim for voting purposes (if the Claim is now or hereafter
determined to be a Disputed Claim this amount may not be the amount
ultimately allowed for purposes of distribution) and the Debtor and the
Class to which the Claim or Interest has been attributed. PLEASE CAREFULLY
FOLLOW THE DIRECTIONS CONTAINED ON EACH ENCLOSED BALLOT. ALL VOTES TO
ACCEPT OR TO REJECT THE PLAN MUST BE CAST BY USING THE BALLOT ENCLOSED WITH
THIS DISCLOSURE STATEMENT. In order for a Ballot to be counted, it must be
completed, signed and sent in the enclosed pre-addressed envelope to the
"Balloting Agent" so as to be received by the Balloting Deadline at the
following address:
if by mail to:
Bankruptcy Management Corporation
Attn: Farmland Voting Agent
P.O. Box 905
El Segundo, California 90245-0905
if by hand delivery or overnight delivery to:
Bankruptcy Management Corporation
Attn: Farmland Voting Agent
1330 East Franklin Avenue
El Segundo, California 90245
If you are a holder of an Allowed Claim or an Allowed Interest in a
Voting Class and (i) did not receive a Ballot, (ii) received a damaged
Ballot, (iii) lost your Ballot, (iv) have any question about balloting
procedures, or (v) wish to obtain, at your own expense (unless otherwise
specifically required by Bankruptcy Rule 3017(d)), an additional copy of
the Plan or this Disclosure Statement, please contact:
Bankruptcy Management Corporation
Attn: Farmland Voting Agent
1330 East Franklin Avenue
El Segundo, California 90245
(888) 909-0100
ONLY PROPERLY COMPLETED AND SIGNED BALLOTS RECEIVED BY THE BALLOTING
AGENT PR10R TO THE BALLOTING DEADLINE WILL BE COUNTED FOR PURPOSES OF
DETERMINING WHETHER EACH VOTING CLASS HAS ACCEPTED THE PLAN. ANY BALLOTS
RECEIVED AFTER THE BALLOTING DEADLINE WILL NOT BE COUNTED, NOR WILL ANY
BALLOTS RECEIVED BY FACSIMILE OR ELECTRONIC MAIL BE COUNTED. The Balloting
Agent will prepare and file with the Bankruptcy Court a certification of
the results of the balloting with respect to the Plan.
Your vote on the Plan is important. The Bankruptcy Code requires as a
condition to confirmation of a plan of reorganization that each class that
is Impaired under such plan vote to accept such plan, unless the "cram
down" provisions of the Bankruptcy Code are employed. The Debtors have
reserved their right to seek to "cram down" the Plan on non-accepting
Impaired Classes of Claims and Interests. See Section V.D.4, Cram Down.
2. VOTING RECORD DATE
The record date for voting on the Plan is 5:00 p.m. (Kansas City time)
on October 8, 2003 (the "Record Date").
3. VOTING MULTIPLE CLAIMS
Any person who holds Allowed Claims in more than one Voting Class is
required to vote separately with respect to each such Voting Class in which
such person holds an Allowed Claim. Please use a separate Ballot to vote
all Allowed Claims in each Voting Class.
4. INCOMPLETE BALLOTS
Any Ballot received which is not signed or does not indicate either an
acceptance or a rejection of the Plan shall be an invalid Ballot and shall
not be counted for purposes of determining acceptance or rejection of the
Plan.
5. DEFECTS AND IRREGULARITIES
Unless otherwise directed by the Bankruptcy Court, all questions as to
the validity, form, eligibility (including time of receipt), acceptance,
and revocation or withdrawal of Ballots will be determined by the Debtors
in their sole discretion, whose determination will be final and binding.
Unless the Ballot being furnished is timely submitted to the Balloting
Agent by the Balloting Deadline, together with any other documents required
by such Ballot, the Debtors may, in their sole discretion, reject such
Ballot as invalid and, therefore, decline to use it in connection with
seeking confirmation of the Plan by the Bankruptcy Court. In the event of a
dispute with respect to a Ballot, any vote to accept or reject the Plan
cast with respect to such Ballot will not be counted for purposes of
determining whether the Plan has been accepted or rejected, unless the
Bankruptcy Court orders otherwise. The Debtors reserve the right to reject
any and all Ballots not in proper form. The Debtors further reserve the
right to waive any defects or irregularities or conditions of delivery as
to any particular Ballot. The interpretation (including the Ballot and the
respective instructions thereto) by the Debtors, unless otherwise directed
by the Bankruptcy Court, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with delivery of a
Ballot must be cured within such time as the Debtors (or the Bankruptcy
Court) determine. Neither the Debtors nor any other person will be under
any duty to provide notification of defects or irregularities with respect
to deliveries of Ballots nor will any of them incur any liabilities for
failure to provide such notification. Unless otherwise directed by the
Bankruptcy Court, delivery of such Ballots will not be deemed to have been
made until such irregularities have been cured or waived.
6. CONFIRMATION HEARING
THE BANKRUPTCY COURT WILL HOLD THE HEARING REGARDING CONFIRMATION OF
THE PLAN (THE "CONFIRMATION HEARING") COMMENCING ON DECEMBER 16, 2003 AT
2:30 P.M. AT THE UNITED STATES BANKRUPTCY COURT, CHARLES EVANS WHITTAKER
COURTHOUSE, 400 E. 9TH STREET, KANSAS CITY, MISSOURI 64106, BEFORE
BANKRUPTCY JUDGE JERRY W. VENTERS. The Confirmation Hearing may be
adjourned from time to time without further notice other than by
announcement in the Bankruptcy Court on the scheduled date of such hearing.
At the Confirmation Hearing, the Bankruptcy Court will (i) determine
whether the requisite vote has been obtained for each of the Voting
Classes, (ii) hear and determine objections, if any, to the Plan and to
confirmation of the Plan that have not been previously disposed of, (iii)
determine whether the Plan meets the confirmation requirements of the
Bankruptcy Code, and (iv) determine whether to confirm the Plan.
Any objection to the confirmation of the Plan must be in writing and
must comply in all respects with the Notice accompanying this Disclosure
Statement.
7. RECOMMENDATIONS
THE DEBTORS SUPPORT CONFIRMATION OF THE PLAN AND URGE ALL HOLDERS OF
ALLOWED CLAIMS AND ALLOWED INTERESTS IN THE VOTING CLASSES TO ACCEPT THE
PLAN.
II. HISTORY AND STRUCTURE OF THE DEBTORS
A. INTRODUCTION
Industries, founded in 1929 and formally incorporated in Kansas in
1931, is a farm supply cooperative and a processing and marketing
cooperative. Its principal executive offices are at 12200 North Ambassador
Drive, Kansas City, Missouri 64163.
Industries was originally founded as the Union Oil Co. when six
farmer-owned cooperatives joined together to buy and distribute petroleum
products. It continued to grow over the years, becoming known as the
Consumer Cooperative Association. In 1966, the company changed its name to
"Farmland Industries, Inc." By its 72nd anniversary in 2001, Industries was
one of the nation's largest companies, with annual revenues of $11.8
billion. As of the Petition Date, Industries functioned as a farm-to-table
agribusiness company. The other Debtors are subsidiaries of Industries.
As of the Petition Date, the Debtors conducted business primarily in
two operating areas. First, on the output side of the agricultural
industry, they operated as a processing and marketing cooperative. Second,
on the input side of the agricultural industry, they operated as a farm
supply cooperative.
The output side of the Debtors' business consisted of the processing
and marketing of pork products, through Foods, and the processing and
marketing of beef products, through Farmland National Beef Packing Company,
L.P. ("National Beef"), which was 71.2% owned by the Debtors. In 2002,
approximately 73% of the hogs and 23% of the cattle processed by Foods and
National Beef, respectively, were supplied by the Debtors' cooperative
members. Substantially all the pork and beef products that Foods and
National Beef sold in 2002 were processed in plants they own or lease.
As of the Petition Date, the Debtors' farm supply operations consisted
of two principal product divisions: crop production and petroleum.
Principal products of the crop production division were nitrogen and
phosphate-based fertilizers and, through an ownership interest in a joint
venture, a complete line of insecticides, herbicides and mixed chemicals.
Principal products of the petroleum division were refined fuels, propane
and petroleum refining by-products. The Debtors manufactured approximately
80% of the dollar value of their crop production and petroleum products
sold in 2002. Approximately 82% of the crop production products and 23% of
the petroleum products sold in 2002 were sold through the Debtors' ventures
to farm cooperative associations which are members of Industries and who,
in turn, distribute these products primarily to farmers and ranchers.
The farm supply businesses of the Debtors have been highly seasonal.
Historically, the majority of sales of crop production products occur in
the spring and fall. Margins for refined petroleum fuels historically has
been concentrated in the summer.
The Debtors competed for market share with numerous participants of
various sizes and with various levels of vertical integration, and product
and geographical diversification. Competitors in the crop production
industry include global producers of nitrogen- and phosphate-based
fertilizers, major chemical companies and product importers and brokers. In
the petroleum industry, competitors include major oil companies and
independent refiners. The pork and beef processing industries are comprised
of a large variety of competitive participants.
B. DESCRIPTION OF THE DEBTORS' BUSINESSES
1. MEAT PROCESSING AND MARKETING
The Debtors' meat processing and marketing businesses were primarily
conducted by Foods and National Beef. National Beef is not a Debtor in
these Chapter 11 proceedings.
a) Pork Processing and Marketing
Foods is a food processor, supplying fresh pork and processed meat
products to U.S. retailers, foodservice operators, industrial accounts and
international customers. Started in 1959, Foods began as,a one-facility hog
slaughtering operation and has grown to be the sixth largest pork processor
in the United States, with three plants that have an annual slaughter
capacity of 7.5 million hogs. In addition to processing and marketing fresh
pork, Foods also processes and markets branded pork and processed meats,
including bacon, processed ham products, fresh and processed sausage
products and specialty deli meats. These products are marketed under a
variety of brand names including: Farmland, Farmstead, OhSe, Maple River,
Carando and Roegelein. Product distribution is through national and
regional retail and food service chains, distributors and in international
markets. Although Foods does not directly own any hog production
facilities, during the 1990's Foods synthetically vertically integrated
into hog production through contractual arrangements with farmer-owned hog
production operations.
Foods' slaughtering facilities are located in Denison, Iowa, Monmouth,
Illinois; and Crete, Nebraska. During 2000, 2001 and 2002, Foods
slaughtered approximately 7.4 million, 6.4 million and 6.9 million hogs,
respectively. Facilities to further process primal beef and pork cuts are
located in Springfield, Massachusetts; New Riegel, Ohio; Wichita, Kansas;
and Carroll, Iowa. Foods leases and operates two "case ready" facilities,
which are located in Salt Lake City, Utah and Omaha, Nebraska. Foods also
has a "case ready" co-packaging arrangement at a facility in Madison,
Wisconsin. ("Case ready" refers to meat products which are prepared to the
specifications of retailers and which do not require additional preparation
work prior to sale by the retailer). In aggregate, Foods has the capacity
to produce close to 3 billion pounds of pork products, representing
approximately 15% of projected 2002 U.S. pork production. Foods enjoys a
customer base that includes such blue-chip retailers as Wal-Mart, which has
allowed Foods to increase its sales of branded and other value-added
products.
b) Beef Processing and Marketing
Industries first invested in National Beef in 1993. National Beef
engages in meat packing and processing and is the fourth largest beef
packer in the United States. As of the Petition Date, Industries directly
or indirectly owned 71.2% of the ownership interests of National Beef (the
"Beef Interests"). Operating from five facilities, National Beef produces
fresh, frozen, and "case-ready" branded and nonbranded products for
domestic consumption as well as foreign consumption in 25 countries. It has
two main slaughtering facilities and a portion-control facility in Kansas,
one "case-ready" facility in Pennsylvania and a second "case-ready" facility
in Georgia. During 2000, 2001 and 2002, National Beef slaughtered
approximately 2.7 million, 2.8 million and 3.1 million cattle,
respectively. National Beef's products include fresh and frozen beef, boxed
beef and "case ready" beef. Product distribution is through national and
regional retail and food service chains, distributors and in international
markets. National Beef estimates that slightly more than 55% of its sales
are to the retail sector and approximately 30% of its sales are to the
foodservice sector.
National Beef has four wholly-owned subsidiaries and owns a
controlling interest in Kansas City Steak Company, L.L.C., a
portion-control company that provides steaks to premium steak houses in the
United States and directly to consumers via mail-order catalogs. In
addition, through a wholly-owned subsidiary, National Beef owns a 47.5%
interest in aLF Ventures, LLC, a joint venture with DMV International. aLF
Ventures, LLC holds the worldwide exclusive rights to market activated
lactoferrin, a natural product that has been recently granted "Generally
Recognized as Safe" status by the Food and Drug Administration for use in
protecting fresh beef from bacteria such as E. coli.
2. CROP PRODUCTION BUSINESS
As of the Petition Date, the Debtors manufactured nitrogen-based
fertilizer at five U.S. facilities and, through a 50% owned joint venture,
Farmland MissChem, Limited ("FMCL"), operated an off-shore facility in the
Republic of Trinidad and Tobago. The operating domestic nitrogen plants
were located in Enid, Oklahoma; Dodge City, Kansas; Coffeyville, Kansas;
Fort Dodge, Iowa; and Beatrice, Nebraska. The Debtors also owned nitrogen
fertilizer plants in Lawrence, Kansas and Pollock, Louisiana, which were
permanently shut down prior to the Petition Date. The Debtors also owned a
50% interest in two phosphate fertilizer manufacturing joint ventures:
Farmland-Hydro, LP ("FHLP"), a joint venture in Florida, and SF Phosphates,
Limited Company ("SF Phosphates"), a joint venture with operations in Utah
and Wyoming. Substantially all of the Debtors' domestic fertilizer
production is sold to Agriliance LLC, an agronomy marketing joint venture
in which the Debtors have an indirect minority ownership interest.
Due to unfavorable market conditions during 2002, the Debtors
temporarily curtailed production of nitrogen-based fertilizers at various
production plants. Also, the Debtors experienced mechanical problems at the
Coffeyville, Kansas nitrogen facility which limited production to 70% of
the facility's planned capacity. As a result, the production plants in
aggregate operated at approximately 63% of their capacity during the 2002
fiscal year. Annual anhydrous ammonia production of nitrogen-based plant
foods for fiscal years 2000, 2001 and 2002, including Industries' 50% share
of the output of Farmland MissChem Limited, totaled approximately 2.9
million tons, 2.4 million tons and 2.1 million tons, respectively.
Prior to the Petition Date, Industries closed its Lawrence, Kansas and
Pollock, Louisiana plants. These two plants contributed 29% of Industries'
total anhydrous ammonia production capacity.
Each of the operating domestic nitrogen fertilizer plants had capacity
to further process anhydrous ammonia into upgraded nitrogen products (UAN
solutions, urea and liquid nitrogen). In 2000, 2001 and 2002, production of
these upgraded products was approximately 1.8 million tons, 1.8 million
tons and 1.5 million tons, respectively.
In May 2003, the Debtors sold four of the domestic nitrogen fertilizer
production plants and all of its interest in Farmland MissChem, Limited to
Koch Nitrogen Company. The Debtors entered into a contract to sell the
closed Pollock, Louisiana plant. See Section III.G.1.r, Nitrogen
Fertili!ZerAssets. The only nitrogen facilities the Debtors currently own
are (i) the Lawrence, Kansas facility, which facility is no longer
manufacturing nitrogen-based fertilizer, and (ii) the Coffeyville, Kansas
facility, which facility in fiscal 2002 accounted for approximately 12% of
the Debtors' anhydrous ammonia production, approximately 34% of the
Debtors' UAN production and approximately 18% of the Debtors' total
nitrogen production.
In November 2002, the Debtors sold their interest in the FHLP
phosphate fertilizer operations to Cargill.
Industries and J.R. Simplot ("Simplot") each own a 50% interest in SF
Phosphates. The SF Phosphates plant produces monoammonium phosphate and
super phosphoric acid with annual production for 2000, 2001 and 2002 of
543,000 tons, 553,000 tons and 536,000 tons, respectively. Under the joint
venture agreement, Industries and Simplot each purchase 50% of SF
Phosphates' production. Industries sells its share of such production to
Agriliance LLC. On July 30, 2002, Simplot filed a complaint for declaratory
judgment against Industries in the Bankruptcy Court, Adversary Proceeding
No. 02-4147 (the "Simplot Litigation"). In this proceeding, Simplot asserts
that, by operation of Utah Revised Limited Liability Company Act,
Industries' commencement of the Chapter 11 Case caused Industries to
forfeit governance rights in SF Phosphates. Industries believes that this
Utah state law is preempted by the Bankruptcy Code and, as a result,
Industries maintains its governance rights in relation to SF Phosphates.
Industries is currently in the process of selling the SF Phosphates
Interest to Simplot, subject to higher and better bids. See Section
111.G.1.ee, Sale of SF Phosphates Interest. In connection with such sale,
Industries and Simplot had entered into a settlement agreement that, among
other things, (i) amends the various transfer restrictions contained in the
operating agreement for SF Phosphates, (ii) provides that the transferee of
the SF Phosphates Interest will become a substitute member of Industries,
with full voting rights, and (ii) provides for Industries, SF Phosphates
and Simplot to release each other from all claims (other than purchases and
sale of products in the ordinary course of business).
Industries continues to have a 50% ownership interest in United
Country Brands ("UCB"), and UCB has a 50% ownership interests in Agriliance
LLC. Industries' 50% ownership interest in UCB is reduced by 13.1% of the
Agriliance LLC crop production products earnings which, in the past, were
allocated to Wilbur-Ellis Company and are now allocated to CHS
Cooperatives. Agriliance LLC markets and distributes a complete line of
crop production products, including nitrogen and phosphate-based plant
foods, as well as a complete line of crop protection products such as
insecticides, herbicides and mixed chemicals. Industries continues to sell
substantially all of its crop production products, including its share of
SF Phosphates' production, to Agriliance LLC at a formula price based on
the prevailing market price.
3. PETROLEUM BUSINESS
Industries participates in the petroleum industry as a mid-continent
refiner and, through November 30, 2001, participated as a wholesale
distributor of petroleum products. The principal products of this business
segment are refined fuels, propane and by-products of the petroleum
refinery.
Industries manages and operates a petroleum refinery at Coffeyville,
Kansas with approximately 95,000 barrel per day capacity. The refinery
converts crude oil into refined products such as gasoline, diesel fuel, and
distillates. Production at the refinery accounted for approximately 90% of
Industries' refined fuel sales in 2002. Substantially all of the refined
fuels produced at the refinery are sold to CHS Cooperatives at a formula
price tied to market value.
4. OTHER BUSINESSES
Industries participates in various other businesses, including the
following:
a) Feed
Industries has an 8% ownership interest in Land O'Lakes Farmland Feed
("LOLFF"). LOLFF is a leading market producer of animal feed in the United
States, producing both commercial and lifestyle feed for a variety of
animals, including dairy cattle, beef cattle, swine, poultry, horses and
other specialty animals such as laboratory and zoo animals. LOLFF markets
animal feed products under the Land O'Lakes Feed label. Through its
wholly-owned subsidiary Purina Mills LLC, LOLFF also markets animal feed
(other than dog and cat food) under the leading brands in the industry:
Purina, Chow and the "Checkerboard" Nine Square logo. As of December 31,
2002, LOLFF operated a geographically diverse network of 100 feed mills and
distributed its animal feed nationally through approximately 1,300 local
cooperatives, through approximately 3,500 independent dealers operating
under the Purina brand name and directly to customers.
b) Domestic Grain
Industries currently owns or leases the following grain storage
terminals: (i) 5.823 million bushel capacity storage terminal in
Hutchinson, Kansas; (ii) 18.307 million bushel capacity storage terminal in
Hutchinson, Kansas; (iii) 10.039 million bushel capacity storage terminal
in Kansas City, Kansas; (iv) 11.988 million bushel capacity storage
terminal in Topeka, Kansas; (v) 10.502 million bushel capacity storage
terminal in Wichita, Kansas; (vi) 5.072 million bushel capacity storage
terminal in Lincoln, Nebraska; (vii) 0.847 million bushel capacity storage
terminal in Omaha, Nebraska; (viii) 7.700 million bushel capacity storage
terminal in Enid, Oklahoma; (ix) 11.036 million bushel capacity storage
terminal in Enid, Oklahoma; (x) 16.007 million bushel capacity storage
terminal in Enid, Oklahoma; (xi) 15.289 million bushel capacity storage
terminal in Enid, Oklahoma; (xii) 3.226 million bushel capacity storage
terminal in Amarillo, Texas; (xiii) 1.413 million bushel capacity storage
terminal in Black, Texas; (xiv) 15.341 million bushel capacity storage
terminal in Ft. Worth, Texas; (xv) 21.980 million bushel capacity storage
terminal in Ft. Worth, Texas; (xvi) 9.842 million bushel capacity storage
terminal in Hereford, Texas; (xvii) 3.223 million bushel capacity storage
terminal in Galveston, Texas; and (xviii) 1.095 million bushel capacity
storage terminal in Wellington, Kansas (collectively, the "Grain
Elevators"). Each of the Grain Elevators is currently leased (or subleased)
to ADM/Farmland, a wholly-owned subsidiary of Archer-Daniels-Midland
Company, Inc. ("ADM"), pursuant to a master lease (the "Grain Elevator
Master Lease"). The Grain Elevator Master Lease has the following basic
components: (i) ADM/Farmland leases the Grain Elevators for an initial term
of five years, with four five-year options to renew; (ii) Industries
receives a fixed payment equivalent to depreciation, amortization and taxes
related to the Grain Elevators; and (iii) Industries receives a variable
component equal to 50% of the earnings from the Grain Elevators and is
responsible for 50% of the losses related to the operation of the Grain
Elevators. During the past year, ADM/Farmland reported losses of
approximately $16 million related to the operation of the Grain Elevators.
Industries is currently conducting an audit of this previous year's
operations to verify the validity of these reported losses and expects such
an audit to be completed in October 2003.
c) International Grain
Industries owns a number of foreign subsidiaries (collectively
referred to as "Tradigrain"), which were engaged in international grain
operations through February 2002. Subsequent to February 2002, Industries
has overseen the orderly windup of Tradigrain operations and assets. This
process continues and should be substantially completed by December 2003.
C. HISTORICAL FINANCIAL RESULTS
Set forth in Abbendix B is selected historical financial data for each
of the Debtors for the nine-month period ended May 31, 2003, for the
three-month period ended August 31, 2002, for the nine-month period ended
May 31, 2002, and for the years ended August 31, 1999, 2000 and 2001. The
financial statements for the years ended August 31, 1999, 2000 and 2001
were included in Industries' Annual Report on Form 10-K filed with the SEC.
D. EVENTS LEADING TO CHAPTER 11
In the 1990's, the Debtors pursued an expansion strategy that
emphasized acquisition of new businesses and expansion of existing
operations. This strategy resulted in rising corporate expenses and
increased debt. The combination of higher debt levels and decreased
earnings left the Debtors vulnerable to an economic downturn.
In 2001, the Debtors' management implemented a strategic initiative
called Navigating Tomorrow, designed to reduce debt and secure the
long-term financial success of the Debtors.
During the twelve months ended February 28, 2002, Industries reduced
its debt (including off balance sheet debt related to its Coffeyville
nitrogen facility) by over $500 million, the largest reduction in the
cooperative's history. General and administrative expenses were reduced by
approximately $29 million, or 38%. Cash flow reached a five-year high,
increasing more than $400 million from 2000.
Notwithstanding these cost reductions, the Debtors experienced
liquidity problems due to the underperformance of certain business
segments. Principally, margins available in fertilizer manufacturing eroded
dramatically.
Lack of rain in the wheat belt that hampered fertilizer demand, low
commodity prices, and continued volatility in domestic natural gas prices
resulted in the Debtors' Crop Production business segment reporting a loss
of $78 million for the first six months of fiscal year 2002.
During the year leading up to the Petition Date, nitrogen fertilizer
prices dropped significantly. Ammonia prices fell approximately 55 percent
and urea prices decreased 49 percent between the fall of 2001 and the
Petition Date.
Despite strong financial performance by the meat segment of the
Debtors' business, losses in the fertilizer business caused severe cash
flow problems for the Debtors. During the first five months of calendar
year 2002, the Debtors' liquidity situation continued to erode as
fertilizer sales did not develop as expected.
The operating losses in the Debtors' crop production and petroleum
businesses, coupled with planned maintenance on the Debtors' Coffeyville,
Kansas refinery, significantly hampered cash flow during the spring of
2002. In Industries' Quarterly Report on Form 10-Q for the quarter ended
February 28, 2002 (filed with the SEC), Industries stated that it may not
be able to generate sufficient cash flow from operations to avoid covenant
defaults under the Pre-Petition Credit Agreement at the end of the third
quarter or maintain its ability to borrow under the Pre-Petition Credit
Agreement and might be forced to seek protection from creditors if
conditions did not improve. Concerns regarding the Debtors' financial
condition led to increased cash demands and more restrictive payment terms
from trade creditors, as well as increased demands for early redemptions of
subordinated debt, which adversely affected the Debtors' ability to fund
ongoing operations and service debt. Because of this liquidity crisis, the
Debtors filed their respective Chapter 11 petitions.
On May 31, 2002, the Debtors filed voluntary petitions for protection
under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The
filings were made in order to facilitate the restructuring of the Debtors'
trade liabilities, debt, and other obligations. The Debtors continue to
manage their businesses as debtors-in-possession.
E. GENERAL CORPORATE STRUCTURE
Industries is a farm supply cooperative and a processing and marketing
cooperative that is incorporated in the state of Kansas. Industries owns
virtually all of the stock of the other Debtors, which are incorporated in
Kansas, Missouri and Arkansas. In addition, Industries owns interests in
several other subsidiaries and joint ventures. A current organizational
chart of the Debtors is attached hereto as Appendix C.
F. PRE-PETITION SECURED DEBT OBLIGATIONS
On February 7, 2002, Industries, Foods and a syndicate of banks
entered into the PrePetition Credit Agreement. As of the Petition Date, the
Debtors were indebted under the PrePetition Credit Agreement in the
approximate amount of $399.7 million (consisting of $233.0 million in
revolving loans, $31.7 million of letters of credit obligations and a
$135.0 million term loan) plus additional fees and expenses. The
Pre-Petition Credit Agreement was secured by substantially all of the
Debtors' major assets, including accounts receivable, inventories,
property, plant and equipment and intangible assets. Capital derived from
the Pre-Petition Credit Agreement was used for capitalizing fixed assets
and working capital and other operating expenses.
III. THE CHAPTER 11 CASE
A. CONTINUATION OF BUSINESS OPERATIONS AFTER THE PETITION DATE
On May 31, 2002, the Debtors filed petitions for relief under Chapter
11 of the Bankruptcy Code. Since the Petition Date, the Debtors have
continued to operate as debtors-in-possession subject to the supervision of
the Bankruptcy Court and in accordance with the Bankruptcy Code. The
Debtors are authorized to operate their business in the ordinary course of
business. Transactions outside of the ordinary course of business require
Bankruptcy Court approval.
An immediate effect of the filing of the Debtors' bankruptcy petitions
was the imposition of the automatic stay under the Bankruptcy Code which,
with limited exceptions, enjoins the commencement or continuation of all
collection efforts by creditors and the enforcement of liens against
property of the Debtors. This relief provides the Debtors with the
"breathing spell" necessary to assess and reorganize their business. The
automatic stay remains in effect, unless modified by the Bankruptcy Court,
until consummation of a plan of reorganization.
B. CORPORATE MANAGEMENT
The current executive officers of Industries are as follows:
Robert B. Terryv is President and Chief Executive Officer of
Industries. Mr. Terry was appointed to his present position in May 2002.
Previously he was Executive Vice President, General Counsel & Corporate
Secretary. Mr. Terry joined Industries in 1989.
Steven R. Rhodes is Executive Vice President and Chief Financial
Officer of Industries. Mr. Rhodes was appointed to his present position in
May 2002. Previously he held various positions in North American Grain,
Transportation, and Corporate Divisions of Industries. Mr. Rhodes joined
Industries in 1979.
Stanley A. Riemann is Executive Vice President of Industries and
President of Crop Production. Mr. Riemann was appointed to his present
position in May 1999. Previously he held various positions in the Crop
Nutrients and Crop Protection areas. Mr. Riemann joined Industries in 1974.
Robert W. Schuller is Vice President, General Counsel and Corporate
Secretary of Industries. Mr. Schuller was appointed to his present position
in May 2002. Mr. Schuller joined Industries in 1994 in the Legal Division.
J. Randall Vance is Vice President and Treasurer of Industries. Mr.
Vance was appointed to his present position in July 2002. Previously he
served as Assistant Treasurer. Mr. Vance joined Industries in 1991.
Dennis M. Alt is Vice President, Strategic Projects of Industries. Mr.
Alt was appointed to this position in June 2002. Before his appointment,
Mr. Alt was an Associate General Counsel in Industries' Legal Division.
Prior tore-joining Industries in 2002, he was a shareholder with Stinson
Mag & Fizzell.
George Richter is Vice President of Industries and President of the
Pork Division. Mr. Richter was appointed to his present position in 1999.
Previously he served as Vice President, Sales and Marketing for Foods. Mr.
Richter joined Industries in 1971.
Timothy R. Daugherty is Vice President, Administration of Industries.
Mr. Daugherty was appointed to his present position in June 2002.
Previously he served as Vice President and President of World Grain and as
Vice President of Marketing for a geographic territory that included
Kansas, Colorado and Utah. Mr. Daugherty joined Industries in 1985.
C. FIRST DAY ORDERS
On the Petition Date, the Debtors filed several motions seeking
certain relief by virtue of socalled "first day orders". First day orders
are intended to facilitate the transition between a debtor's pre-petition
and post-petition business operations by approving certain regular business
practices that may not be specifically authorized under the Bankruptcy Code
or as to which the Bankruptcy Code requires prior approval by the
Bankruptcy Court. The first day orders obtained in these cases are typical
for large Chapter 11 cases.
The first day orders in the Chapter 11 Cases authorized, among other
things:
a) Joint administration of each of the Debtor's bankruptcy
cases;
b) The DIP Credit Agreement, on an interim basis (the
"Interim DIP Order");
c) The retention of the following professionals to serve
on behalf of the Debtors: (i) Bryan Cave LLP, as bankruptcy counsel; and
(ii) Bankruptcy Management Corporation, as claims agent;
d) The maintenance of the Debtors' bank accounts and
operation of their cash management systems substantially as such systems
existed prior to the Petition Date;
e) Payment of employees' accrued pre-petition wages and
employee benefit claims;
f) Continued utility services during the pendency of the
Chapter 11 Case;
g) The continued retention of professionals regularly
employed by the Debtors in the ordinary course of business;
h) The maintenance of certain pre-petition customer
programs and practices;
i) Administrative expense treatment for certain holders of
valid reclamation claims;
j) The payment of certain pre-petition tax claims;
k) The payment of certain pre-petition critical trade
vendor claims;
1) The payment of certain pre-petition obligations to
sales brokers; and
m) The payment of certain obligations under the Packers
and Stockyards Act.
D. DIP FINANCING AND USE OF CASH COLLATERAL
Subsequent to the Petition Date, the Debtors and a syndicate of banks
entered into the DIP Credit Agreement, which was subsequently revised and
approved by the Bankruptcy Court, to provide up to $306.0 million in
post-petition financing. The credit facility created under the DIP Credit
Agreement (the "DIP Credit Facility") expires on the occurrence of an event
that constitutes a commitment termination date (as defined in the DIP
Credit Agreement) or, if no such event has occurred, on November 30, 2003.
The DIP Credit Facility was authorized by the Bankruptcy Court on an
interim basis pursuant to the Interim DIP Order, and on a final basis
pursuant to an order dated July 2, 2002 (the "Final DIP Order").
The DIP Credit Facility is collateralized by a first priority priming
lien on all assets of the Debtors including all real, personal and mixed
property, both tangible and intangible, but excluding rights in respect of
avoidance actions approved by the Bankruptcy Court under the Bankruptcy
Code. The DIP Credit Agreement allows for super priority administrative
expense claim status in the Chapter 11 Case with priority over certain
other administrative expenses of the kind specified or ordered pursuant to
provisions of the Bankruptcy Code. The DIP Credit Agreement also includes
various restrictive covenants prohibiting the Debtors from, among other
things, incurring additional indebtedness, permitting any liens or
encumbrances on property or assets, making investments, or becoming liable
for any contingent obligations. Subsequent to the execution of the DIP
Credit Agreement, cash received by the Debtors from their operations was
used to pay, in full, the revolving loans outstanding under the
Pre-Petition Credit Agreement.
On or about January 14, 2003, the Debtors filed their Motion for Order
Authorizing First Amendment to DIP Credit Agreement, seeking authority to
enter into a first amendment to the DIP Credit Agreement (the "First DIP
Amendment"). The First DIP Amendment granted the Debtors the ability to
request additional time necessary to formulate the necessary analyses
required for the Plan and this Disclosure Statement in exchange for, among
other things, certain reductions in availability under the DIP Credit
Facility, certain principal reduction payments under the DIP Credit
Facility and schedules and timelines for the marketing and sale of certain
of the Debtors' assets. On March 3, 2003, the Bankruptcy Court entered an
interim order approving the First DIP Amendment. On April 17, 2003, the
Bankruptcy Court entered its Memorandum Opinion and Order, approving the
First DIP Amendment on a final basis.
As of October 24, 2003, the Debtors had borrowings under the DIP
Credit Agreement of $0, and $10.5 million of the facility was being
utilized to support letters of credit. The Debtors are currently seeking
Bankruptcy Court approval of a replacement letter of credit facility.
The financial institutions party to the DIP Credit Agreement allege
that they have future contingent obligations that have not yet been
adequately addressed in the Plan. The Debtors believe that this issue will
be addressed at or prior to the Confirmation Hearing.
E. APPOINTMENT OF THE BANKRUPTCY COMMITTEES
1. CREDITORS' COMMITTEE
On June 7, 2002, the United States Trustee appointed the Creditors'
Committee. The Creditors' Committee is currently comprised of the following
members: BP Companies; Sempra Energy Trading Corp.; Cap Gemini Ernst &
Young; PSC Industrial Outsourcing Inc.; Packaging Corporation of America;
and Ray K. Pardun. The Creditors' Committee has retained the law firms of
Akin Gump Strauss Hauer & Feld LLP and Husch & Eppenberger as its counsel.
2. BONDHOLDERS' COMMITTEE
On June 7, 2002, the United States Trustee appointed the Bondholders'
Committee. The Bondholders' Committee is currently comprised of seven
members: J P Morgan Chase Bank, as Indenture Trustee; DeSoto County
Cooperative; UMB Bank, NA; Farmland Insurance; Robert A. Reseigh; Peter S.
Hancock; and Keith A. Sharf. The Bondholders' Committee has retained
the law firms of Foley & Lardner and Polsinelli Shalton & Welte as its
counsel.
F. KEY EMPLOYEE RETENTION AND INCENTIVE TARGET PLAN
Following the Petition Date, the Debtors' management has sought to
maximize value for creditors in these reorganization proceedings. Part of
this process necessarily includes marketing certain of the Debtors' assets
and businesses for potential sale. The sale process, as with any sale
process, will likely lead to the loss of employment by many of the Debtors'
key employees. In essence, many of the Debtors' key employees have been
asked to work tirelessly toward the elimination of their own employment.
Without protection against sudden loss of income, many of those individuals
comprising the Debtors' key personnel (the "Key Employees") may have been
forced to seek alternative employment to protect the well being of
themselves and their families. Such a premature loss of these Key Employees
would obviously have had a devastating impact on the Debtors' ability to
maximize recoveries to creditors. Moreover, the economic cost to replace
these Key Employees, both in terms of actual dollars spent and lost
productivity, could have been enormous.
Accordingly, to provide the financial security that enabled these Key
Employees to continue working diligently to maximize the value of these
estates, the Debtors determined that it was necessary and appropriate to
offer incentive compensation to these Key Employees. Therefore, with input
from the Bankruptcy Committees and other constituent groups, the Debtors
proposed their Key Employee Retention and Incentive Target Plan (the "KERIT
Plan"). The KERIT Plan provides incentive compensation and retention
payments to the Key Employees critical to the ongoing operation of the
Debtors' businesses. The maximum potential incremental cost of the KERIT
Plan to the Debtors is approximately $8 million. The KERIT Plan payments
were structured to maximize the likelihood that the Key Employees would
remain in the employ of the Debtors for the period of time required for a
successful outcome in the Chapter 11 Cases. By order dated November 4,
2002, the Bankruptcy Court approved the KERIT Plan.
G. MARKETING AND DISPOSITION OF THE DEBTORS' ASSETS
1. ASSET SALES AUTHORIZED TO DATE
The Debtors are currently marketing and selling substantially all of
their assets. To date, the Bankruptcy Court has authorized the Debtors to
sell certain of their assets, including the following:
a) Warehouse Assets in Port Lavaca, Texas
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including assets associated with a warehouse in Port
Lavaca, Texas, together with the assumption and assignment of certain
executory contracts and unexpired leases. Helena Chemical Company made the
highest and best offer for these assets. The Bankruptcy Court subsequently
authorized the sale of these assets to Helena Chemical Company for a
purchase price of $588,550.
b) Warehouse Assets in Memphis, Tennessee
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including assets associated with a warehouse in Memphis,
Tennessee, together with the assumption and assignment of certain executory
contracts and unexpired leases. Agriliance LLC made the highest and best
offer for these assets. The Bankruptcy Court subsequently authorized the
sale of these assets to Agriliance LLC for a purchase price of $5,302,500.
c) Assets in Iowa, Louisiana and Mowata, Louisiana
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets located in Iowa, Louisiana and Mowata, Louisiana,
together with the assumption and assignment of certain executory contracts
and unexpired leases. G&H Seed Company made the highest and best offer for
these assets. The Bankruptcy Court subsequently authorized the sale of
these assets to G&H Seed Company for a purchase price of $440,000 plus
certain inventory and receivables.
d) Assets in Minden, Louisiana
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets located in Minden, Louisiana. Minden Farm and Gardens,
LLC made the highest and best offer for these assets. The Bankruptcy Court
subsequently authorized the sale of these assets to Minden Farm and
Gardens, LLC for a purchase price of $266,500 plus certain inventory and
receivables.
e) Assets in Clarksdale, Mississippi
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets located in Clarksdale, Mississippi. Rayburn and Sons,
Inc. made the highest and best offer for these assets. The Bankruptcy Court
subsequently authorized the sale of these assets to Rayburn and Sons, Inc.
for a purchase price of $20,881.
f) Pipeline Assets in Kansas
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets related to a 32-mile segment of pipeline from Caney,
Kansas to Neodesha, Kansas. Cherokee Basin Pipeline, L.L.C. made the
highest and best offer for these assets. The Bankruptcy Court subsequently
authorized the sale of these assets to Cherokee Basin Pipeline, L.L.C. for
a purchase price of $875,000.
g) Farm Supply Store in Collins, Mississippi
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including the Farm Supply Store a/k/a Collins Farm
Supply, consisting of an office, warehouse, 400-ton capacity dry fertilizer
storage shed, 4 1/2 acres of land, furniture, fixtures and equipment in
Collins, Mississippi. Richard Woolwine made the highest and best offer for
these assets. The Bankruptcy Court subsequently authorized the sale of
these assets to Richard Woolwine for a purchase price of $175,000 plus 45%
of the wholesale price for the inventory.
h) Grain Elevator in Paul, Idaho
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including a steel elevator with a 245,000 bushel
capacity located on 1.82 acres of land in Paul, Idaho. Magic Valley
Produce, Inc. made the highest and best offer for these assets. The
Bankruptcy Court subsequently authorized the sale of these assets to Magic
Valley Produce for a purchase price of $290,000.
i) Ownership Interest in Flag, Inc. and Flag, L.P.
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including 2,500 shares of common stock of Flag, Inc. and
the Debtors' 24.75% limited partnership interest in Flag, L.P. Flag, L.P.
made the highest and best offer for these assets. The Bankruptcy Court
subsequently authorized the sale of these assets to Flag, L.P. for a
purchase price consisting of (i) $204,000 in cash, (ii) 388 shares of $25
par value common stock of Industries, and (iii) $170,500 non-negotiable
qualified patronage equity credits issued by Industries.
j) Assets Utilized by Farmland Transportation Operations
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including the transportation equipment, inventory, shop
and office equipment and customer lists utilized by Farmland Transportation
Operations, together with the assumption and assignment of executory
contracts and unexpired leases related to these assets. Cenex Harvest
States Cooperatives made the highest and best offer for these assets. The
Bankruptcy Court subsequently authorized the sale of these assets to Cenex
Harvest States Cooperatives for a purchase price of $1,300,000, plus the
value of truck and tractor parts inventory.
k) Fertilizer River Terminal Warehouse in North Little Rock,
Arkansas
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including the liquid and dry fertilizer river terminal
warehouse located in North Little Rock, Arkansas and various assets used in
connection with the operations, together with the assumption and assignment
of executory contracts and unexpired leases related to these assets.
HelmFertilizer Corporation made the highest and best offer for these
assets. The Bankruptcy Court subsequently authorized the sale of these
assets to HelmFertilizer Corporation for a purchase price of $2,775,000.
1) Fertilizer River Terminal Warehouse in Sugar Creek,
Missouri
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including the dry fertilizer river terminal warehouse
located in Sugar Creek, Missouri and the decommissioned facilities for the
storage or liquid fertilizer and anhydrous ammonia. At an auction held on
February 24, 2003, LaFarge North America, Inc.. was the highest and best
bidder for these assets. The Bankruptcy Court subsequently authorized the
sale of these assets to LaFarge North America, Inc. for a purchase price of
$1,000,000.
m) Ownership Interest in Farmer's Grain Terminal, L.L.C.
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including the Debtors' 48% ownership interest in
Farmer's Grain Terminal, L.L.C., a grain storage and handling joint venture
located in Slater, Missouri, together with the assumption and assignment of
certain executory contracts related to these assets. At an auction held on
January 13, 2003, Fletcher Grain Company, Inc. was the highest and best
bidder for these assets. The Bankruptcy Court subsequently authorized the
sale of these assets to Fletcher Grain Company, Inc. for a purchase price
of $825,000.
n) Fertilizer Warehouse in Greenville, Mississippi
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including a fertilizer warehouse located in Greenville,
Mississippi. At an auction held on March 21, 2003, United Agri-Products,
Inc. d/b/a UAP Midsouth was the highest and best bidder for these assets.
The Bankruptcy Court subsequently authorized the sale of these assets to
United AgriProducts, Inc. d/b/a UAP Midsouth for a purchase price of
$3,130,000.
o) Ownership Interest in National Carriers, Inc.
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including the Debtors' 99.44% ownership interest in
National Carriers, Inc., a trucking company located in Liberal, Kansas that
operates approximately 975 tractors and 1,175 trailers. At an auction held
on March 10, 2003, Farmland National Beef Packing Company L.P. was the
highest and best bidder for these assets. The Bankruptcy Court subsequently
authorized the sale of these assets to Farmland National Beef Packing
Company L.P. for a purchase price of $5,050,000.
p) Vacant Land in East Lawrence, Kansas
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, including approximately 179 acres of vacant land located
in East Lawrence, Kansas. After consideration of all of the circumstances,
the Debtors identified a lead bid in the amount of $5,040,000. At an
auction, Eastside Acquisitions LLC was the highest and best bidder for
these assets. The sale of this vacant land to Eastside Acquisitions LLC
closed on June 25, 2003.
q) Grease Plant Assets in North Kansas City, Missouri
The Bankruptcy Court authorized the sale of certain furniture,
fixtures, leasehold improvements, computer hardware and software, office
supplies, telephone numbers, business records and goodwill associated with
a lubricating grease manufacturing and packing plant in a leased industrial
complex in North Kansas City, Missouri to N L Grease, LLC, for
consideration consisting of the following acts by N L Grease, LLC: (i)
hiring 7 of the 10 employees currently working at the plant; (ii)
reimbursing the Debtors the lesser of $40,000 or the actual cost of
severance benefits for those employees of the plant not hired by N L
Grease, LLC; and (iii) entering into a new lease with the landlord for the
real estate upon which the plant operates.
In conjunction with this sale, Cenex Harvest Sale Cooperatives has
elected to exercise its option to purchase the equipment located at this
plant for the sum of $1,000 and to purchase the raw material inventory,
work in progress and finished goods inventory at cost, estimated to be
approximately $1,307,000.
r) Nitrogen Fertilizer Assets
The Debtors retained UBS Warburg LLC C"UBS") as financial advisor
charged with the marketing of the following: (i) certain assets associated
with the anhydrous ammonia production and terminal facilities owned or
leased by the Debtors in Kansas, Nebraska, Oklahoma, Minnesota, Iowa,
Texas, Illinois and Louisiana (the "Domestic Fertilizer Assets"), and (ii)
certain of the Debtors' interests in an anhydrous ammonia production
facility in The Republic of Trinidad and Tobago (the "Foreign Fertilizer
Assets" and, together with the Domestic Fertilizer Assets, the "Fertilizer
Assets". After identifying potential purchasers of the Fertilizer Assets,
the Debtors and UBS initiated discussions with these potential purchasers.
After consideration of all of the circumstances, the Debtors identified
Koch Nitrogen Company ("Koch") as the "stalking horse" bidder for the sale
of the Domestic Fertilizer Assets and the Foreign Fertilizer Assets.
The Bankruptcy Court approved auction and bidding procedures for the
sale of the Fertilizer Assets, including the assumption and assignment of
certain executory contracts and unexpired leases related to the Fertilizer
Assets. Pursuant to these auction and bid procedures, the Debtors conducted
an auction of Fertilizer Assets on March 26-27, 2003. At the conclusion of
the auction, the Debtors determined that: (i) Koch made the highest and
best bid for substantially all of the Domestic Fertilizer Assets for an
estimated purchase price of $131,171,548, consisting of an estimated
$98,102,912 in cash and an estimated $33,068,636 in assumed liabilities,
together with additional consideration consisting of various amendments to
its asset purchase agreement; (ii) Koch made the highest and best bid for
the Foreign Fertilizer Assets for an estimated purchase price of
$128,617,030. The Bankruptcy Court authorized the sale of the Domestic
Fertilizer Assets and the Foreign Fertilizer Assets to Koch on April 17,
2003.
Also in connection with the auction for the Fertilizer Assets,
Vanguard Synfuels, LLC made the highest and best bid for the ammonia plant
in Pollock, Louisiana for a purchase price of $2,040,000; and CF
Industries, Inc. made the highest and best bid for the ammonia terminal in
Devils Lake, North Dakota for a purchase price of $200,000. The Bankruptcy
Court authorized the sale of these assets to Vanguard Synfuels, LLC and CF
Industries, Inc. on April 30, 2003 and June 3, 2003.
s) Possible Disposition of the Grain Elevators
The Debtors have been engaged in discussions with the Bankruptcy
Committees regarding a possible disposition of the Grain Elevators. The
Debtors have received an appraisal of the Grain Elevators and are awaiting
the completion of an audit of ADM/Farmland's previous year's operations.
Until such time as the audit has been completed and have been reviewed by
the Debtors and the Bankruptcy Committees, disclosure of the terms of any
possible disposition of the Grain Elevators would not be constructive for
this sale process.
t) Crop Production Phosphate Assets
Prior to August 31, 2002, the board of directors of Industries
authorized the sale of substantially all of the assets of Farmland Hydro.
Subsequent to August 31, 2002, Industries and Norsk Hydro a.s, the other
50% owner of Farmland Hydro, signed an agreement with Cargill Fertilizer,
Inc. under which Cargill agreed to purchase substantially all the assets
and assume substantially all the liabilities of Farmland Hydro. The
Bankruptcy Court approved the sales agreement in October 2002. This
transaction was consummated in November 2002.
u) Miscellaneous Assets
On September 27, 2002, the Bankruptcy Court entered its Order
Approving Procedures For Sale of Miscellaneous Assets of Debtors Pursuant
to Section 363 of the Bankruptcy Code (the "Miscellaneous Assets Order"),
pursuant to which the Bankruptcy Court approved certain procedures for the
sale of certain miscellaneous assets of the Debtors without further
Bankruptcy Court authorization. To date, the Debtors have concluded sales
totaling approximately $973,000 pursuant to the Miscellaneous Assets Order:
v) Anhydrous Ammonia Trailers
On February 27, 2003, the Bankruptcy Court entered its Order Approving
Procedures For Sale of Trailers Pursuant to Section 363 of the Bankruptcy
Code (the "Trailer Sale Order"), pursuant to which the Bankruptcy Court
approved certain procedures for the sale of the Debtors' fleet of anhydrous
ammonia trailers. To date, the Debtors have concluded sales of
approximately 243 trailers, generating net sale proceeds in excess of $4.8
million.
w) Assets in Hastings, Nebraska
The Bankruptcy Court approved auction and bid procedures for the sale
of certain assets, located in Hastings, Nebraska. Pursuant to these auction
and bid procedures, the Debtors held an auction of these assets on May 12,
2003. The Bankruptcy Court authorized the sale of these assets to
Equalizer, Inc. on May 19, 2003 for $1,925,000.
x) Ownership Interest in Alton Grain Terminal, LLC
On April 30, 2003, the Bankruptcy Court entered its Order Approving
the Sale of Debtors' 14% Membership Interest in Alton Grain Terminal, LLC,
an entity that owns and operates a grain handling and storage facility in
Alton, North Dakota, to Alton Grain Terminal, LLC, for the purchase price
of $530,950.
y) Ownership Interest in Southern Farm Fish Processors, Inc.
On February 25, 2003, the Bankruptcy Court authorized the Debtors to
vote their 100 % interest in Southern Farm Fish Processors, Inc. ("SFFP"
in favor of the sale by SFFP of substantially all of SFFP's assets, which
include a 10 acre parcel of land, a building, equipment, inventory and
accounts receivable associated with a catfish processing plant in Eudora,
Arkansas to Arkansas Catfish Growers, LLC ("ACG"), and to compromise
certain claims in connection with such asset sale. The purchase price for
these assets was $200,000 plus the value of the inventory and accounts
receivable.
z) Ownership Interest in Alliance Farms, LLC
On December 10, 2002, the Bankruptcy Court authorized the Debtors to
vote their 34.7% interest in Alliance Farms, LLC, a limited liability
company formed for the purpose of hog production, in favor of the marketing
of Alliance Farms, LLC's assets.
aa) Ownership Interest in Northeast Arkansas Oil Company, LLC
The Bankruptcy Court entered its Order authorizing the Debtors vote
their 100 % interest in Northeast Arkansas Oil Company, LLC ("NEA") in
favor of the sale by NEA of substantially all of NEA's assets, which
include leasehold rights, fixtures and equipment used in the operation of
the Newport Tiger Mart Truck Stop in Newport, Arkansas, to Magness Oil Co.
for the purchase price of $537,500.
bb) Outstanding Loan to Perryton Equity Exchange
The Bankruptcy Court approved a compromised settlement of a loan due
the Debtors by Perryton Equity Exchange of Perryton, Texas. The approximate
outstanding loan value of $6.8 million was settled for the amount of $5.5
million cash. The settlement was completed in December 2002.
cc) Sale of Major Plant Components and Spare Parts in
Lawrence, Kansas
The Bankruptcy Court approved (i) auction and bid procedures for the
sale of the major components related to a fertilizer plant located in
Lawrence, Kansas, including an ammonia plant, two nitric acid plants and a
urea plant (the "Lawrence Plant Components"), and (ii) auction procedures
for the sale of certain spare parts, supplies and ancillary equipment
associated with the Lawrence Plant Components (the "Lawrence Spare Parts").
In accordance with the auction and bid procedures for the Lawrence
Plant Components, the Debtors are authorized to enter into one or more
agreements for the sale of the Lawrence Plant Components, subject to higher
and better offers and Bankruptcy Court approval. The Debtors continue to
market the Lawrence Plant Components to interested parties. To date, the
Debtors have not entered into any definitive agreement for the sale of any
of the Lawrence Plant Components.
In accordance with the auction procedures for the Lawrence Spare
Parts, the Debtors conducted an auction of the Lawrence Spare Parts on
October 24 - 25, 2003, which auction netted sale proceeds of approximately
$1.25 million.
dd) Sale of Coffeyville Assets
The Debtors have entered into an asset purchase agreement with an
affiliate of Pegasus Partners II, L.P. for the purchase and sale of the
Coffeyville Assets. Subject to higher and better bids, the cash purchase
price for the Coffeyville Assets is $22 million. The aggregate
consideration for the Coffeyville Assets is estimated to be as much as $281
million, including cash, payments of up to $85 million for crude oil and
other raw materials, materials in process and finished products, an
earn-out of up to $40 million based on net cash flow (if any) from closing
until December 31, 2007, and assumed liabilities, including potential
claims under environmental laws. On September 25, 2003, the Debtors filed a
motion with the Bankruptcy Court, requesting authority to sell the
Coffeyville Assets in accordance with certain auction and bid procedures,
including the assumption and assignment of designated contracts and leases
.. By order dated October 10, 2003, the Bankruptcy Court approved the
auction and bid procedures for the sale of the Coffeyville Assets, which
provide that, in the event that qualifying competing bids are received by
the Debtors, an auction will commence on November 3, 2003. To the extent
that any of these designated contracts or leases is subsequently excluded
from the sale of the Coffeyville Assets and rejected by the Debtors, there
exists the risk that the counterparties to any such rejected contracts or
leases could assert significant rejection damage claims against the
Debtors. Section 5.1(c) of the Plan provides the procedures for the
disposition of the Coffeyville Assets in the event that the Debtors own the
Coffeyville Assets on the Effective Date.
Adversary proceedings are now pending in the Bankruptcy Court to
resolve the extent, validity and priority of various mechanics' liens,
materialmans' liens and artisans' liens filed against portions of the
Coffeyville Assets. See Section III.I.2, Procedures For Mechanics Lien
Claims.
ee) Sale of SF Phosphates Interest
The Debtors have entered into an asset purchase agreement with Simplot
for the purchase and sale of the SF Phosphates Interest for consideration
totaling approximately $64.5 million, subject to higher and better bids. On
September 30, 2003, the Debtors filed a motion with the Bankruptcy Court,
requesting authority to sell the SF Phosphates Interest in accordance with
certain auction and bid procedures. By order dated October 9, 2003, the
Bankruptcy Court approved the auction and bid procedures for the SF
Phosphates Interest, which provide that, in the event that qualifying
competing bids are received by the Debtors, an auction will commence on
November 3, 2003.
2. DISPOSITION OF THE PORK BUSINESS
a) Evaluation of a Possible Sale of the Pork Business
The Debtors retained Goldsmith Agio Helms ("Goldsmith") to, among
other things, assist the Debtors in exploring a possible sale of the Pork
Business. Goldsmith held numerous discussions with officers and key
employees involved with the Pork Business, reviewed financial and
non-financial information on the Pork Business, and worked with management
to prepare a Confidential Memorandum on the Pork Business (the "Goldsmith
Confidential Memorandum"). While the Goldsmith Confidential Memorandum was
being prepared, Goldsmith contacted numerous potential strategic and
financial buyers to determine their level of interest in acquiring the Pork
Business. Confidential and other business information was provided to
interested parties. Several interested parties made initial indications of
interest in the Pork Business.
b) Evaluation of a Possible Reorganization of the Pork
Business
The Debtors also retained Trinity Capital, LLC ("Trinity") to, among
other things, assist the Debtors in evaluating options for the
reorganization of the Pork Business, including the valuation of the Pork
Business, conducting due diligence of the operations and assets of the Pork
Business, identifying and reviewing prospective alliance partners
(including negotiations with such potential alliance partners and any
financing relating thereto), and advising and assisting with business plans
and the presentation of such plans. As part of this process, various
producer groups were solicited. Ultimately, no producer group made a
proposal to purchase an ownership interest in the Pork Business.
c) Sale of the Pork Business
Following discussions with interested parties, the Debtors, in
consultation with the Bankruptcy Committees, reviewed both the sale and
reorganization options and concluded that a sale of the Pork Business
provided the greatest opportunity to maximize value for the Estates. On
July 14, 2003, Foods and Industries entered into an Asset Sale and Purchase
Agreement (the "Pork Purchase Agreement") with KC Acquisition, Inc. and
Smithfield Foods, Inc. (collectively, "Smithfield") pursuant to which Foods
and Industries agreed to sell the Pork Business in accordance with Section
363 of the Bankruptcy Code. The sale of the Pork Business will be
consummated through the sale of substantially all the assets of the Pork
Business.
The Pork Purchase Agreement provides that the purchase price for the
Pork Business will be $363,500,000. Smithfield has deposited $35,000,000 in
an escrow account (the "Pork Escrow Deposit") for the benefit of Industries
and Foods.
On July 15, 2003, the Debtors filed a motion with the Bankruptcy Court
(the "Sale Motion"), requesting entry of an order: (i) approving the
proposed auction and bid procedures (the "Auction and Bid Procedures");
(ii) approving a $10,000,000 break-up fee (the "Pork Break-lip Fee") to be
paid to Smithfield in the event that the Pork Purchase Agreement is
terminated as a result of the acceptance of a competing bid; (iii)
approving the form and manner of notice; (iv) authorizing the sale of the
assets of the Pork Business free and clear of liens, claim and encumbrances
(subject to higher or better offers); and (v) approving the assumption and
assignment of executory contracts and leases in connection with such sale.
A hearing with respect to the Sale Motion was held July 29, 2003, and
pursuant to order dated July 31, 2003 (the "Sale Procedures Order"), the
Bankruptcy Court approved the Sale Motion, subject to final approval of the
sale of the Pork Business.
With respect to competing bids, the approved Auction and Bid
Procedures contemplate, among other things, that:
o Any person submitting a competing bid demonstrate evidence of
committed financing and otherwise demonstrate its ability to
consummate the proposed transaction in a time period acceptable
to Industries and Foods;
o Any competing bid be in writing, identify proposed changes to
the terms and conditions of the Pork Purchase Agreement and
identify: (i) the bidder, (ii) the consideration, and if such
consideration includes non-cash consideration, the bidder's
opinion as to its cash equivalency and method of determination
thereof, (iii) financial information with respect to the bidder
and its ability to consummate the proposed transaction and (iv)
all terms and conditions of the competing bid;
o Any competing bid include information and representations
regarding compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended;
o To be a "higher or better offer," any competing bid be at least
$374,500,000 (which represents Smithfield's offer, plus the Pork
Break-Up Fee, plus $1,000,000) and not (i) be subject to terms,
conditions or restrictions unacceptable to Industries and Foods,
or (ii) require any break-up fee, termination fee, or any
similar buyer protections;
o Any competing offer include an earnest money deposit which
equals or exceeds the Pork Escrow Deposit, or if the competing
bid is for less than all of the assets of the Pork Business,
then the earnest money deposit shall be no less than 10% of the
competing bid; and
o Any competing bid be submitted prior to 5:00 p.m. Central Time
on September 12, 2003 (the "Pork Competing Bid Deadline");
Before the Pork Competing Bid Deadline, Debtors received a competing
bid from Ambassador Acquisition Company, LLC, an indirect wholly-owned
subsidiary of Cargill, Incorporated (the "Cargill Bid"), which provides for
a purchase price of $385,000,000 for the Pork Business. Debtors, after
consultation with the Official Committee of Unsecured Creditors, the
Official Committee of Bondholders, and Debtors' financial advisors and
attorneys, determined that the Cargill Bid met the requirements of the
Auction and Bid Procedures. Accordingly, an auction (the "Auction") was
scheduled for October 12, 2003.
With respect to the Auction, the approved Auction and Bid Procedures
contemplate, among other things, that:
o Overbids must be in amounts at least $1,000,000 in excess of the
prior bid, and Smithfield will be allowed to match each and
every overbid;
o The Pork Break-up Fee shall be taken into account in determining
the amount bid in each round of bidding;
o Debtors shall determine, in their sole and absolute discretion
(subject to Bankruptcy Court approval), the highest bid for the
Pork Business, whether that bid be for the Pork Business in bulk
or the aggregate of bids for parcels of the Pork Business; and
o If for any reason the highest bidder fails to consummate the
acquisition of the Pork Business pursuant to an accepted bid,
then the next highest or best bid for the Pork Business shall
automatically be deemed the accepted bid and Debtors may sell
the Pork Business to such bidder as soon as commercially
reasonable without further order of the Bankruptcy Court.
At the conclusion of the Auction, the Debtors determined that
Smithfield made the highest and best bid for the Pork Business.
Smithfield's bid includes cash consideration of $367.4 million and certain
additional consideration. As part of its prevailing bid, Smithfield agreed
to assume the Farmland Industries, Inc. Employee Retirement Plan (the
"Farmland Pension Plan". The Debtors believe that Smithfield's assumption
of the Farmland Pension Plan resolves the PBGC Claims filed by the PBGC.
On October 28, 2003, the Bankruptcy Court entered its order
authorizing the sale of the Pork Business to Smithfield. The following is
an unofficial transcript of the October 28, 2003, comments of Debtors'
counsel at the hearing with respect to matters supplemental to the sale of
the Pork Business: "Mr. Frazen: Yes. The last item - there are two items.
They're both related to the same matter. It's the motion to approve an
agreement between Farmland Industries, the Official Committees, and Foods
management, and the request for an expedited hearing and a request to file
two documents under seal in connection with them. And, the issue addressed
by this motion arises under the following background. Immediately prior to
the auction, the management of Foods expressed certain concerns relating to
the compensation of the Foods management employees had received and their
rights under the Debtors' KERIT or incentive plan that the court had
approved on November 6th. In light of the auction on October 12th and the
desire to have a smooth transition to a new buyer, the parties sat down for
a series of negotiations with the Foods management group to resolve the
issue prior to the auction such that both buyers were comfortable with the
resolution. Both buyers were fully informed as to the circumstances and
were given a copy of the document that's been filed with Your Honor. The
Debtor wishes to avoid making the information contained in the documents
public for the reason that it contains sensitive information concerning
these employees' particular compensation and believes that it is proper for
the Court to consider under 107(b), these items to be filed under seal, and
we would ask that the Court do so and approve the motion approving the
transactions and the arrangement that is reflected in the agreement that
was negotiated between the Debtor and the Committees and the management
group."
The sale of the Pork Business to Smithfield closed on October 28,
2003.
3. DISPOSITION OF THE BEEF INTERESTS
On the Petition Date, Industries' ownership of the Beef Interests gave
it approximately 71.2% of the voting interests of National Beef. USPBCo.,
LLC ("USPBCo.") and U.S. Premium, Ltd. (together with USPBCo., the "USPB
Group"), a large producer-owned cattle marketing cooperative, owned the
remaining partnership interests and supply approximately 30% of National
Beef's cattle.
a) The Governance of National Beef
Founded in 1969, National Beef engages in meat packing and processing
and is the fourth largest beef packer in the United States. Operating from
five facilities, National Beef produces fresh, frozen, and case-ready
branded and nonbranded products for domestic consumption as well as foreign
consumption in 25 countries. It has two main slaughtering facilities and a
portion-control facility in Kansas, one case-ready facility in Pennsylvania
and a second case-ready facility in Georgia. National Beef estimates that
slightly more than 55% of its sales are to the retail sector and
approximately 30% of its sales are to the foodservice sector. National Beef
enjoys a customer base that includes such blue-chip retailers as Wal-Mart,
which has allowed National Beef to increase its sales of branded and other
value-added products.
National Beef has four wholly-owned subsidiaries and owns a
controlling interest in Kansas City Steak Company, L.L.C., a
portion-control company that provides steaks to premium steak houses in the
United States and directly to consumers via mail-order catalogs. In
addition, through a wholly-owned subsidiary, National Beef owns a 47.5%
interest in aLF Ventures, LLC, a joint venture with DMV International. aLF
Ventures holds the worldwide exclusive rights to market activated
lactoferrin, a natural product that has been recently granted "Generally
Recognized as Safe" status by the Food and Drug Administration for use in
protecting fresh beef from bacteria such as E. coli.
b) Marketing Process
The Debtors retained Goldsmith to, among other things, assist the
Debtors in marketing the Beef Interests. Goldsmith prepared and distributed
a Confidential Memorandum on National Beef (the "Beef Confidential
Memorandum") aimed at educating potential buyers on National Beef and
intended to establish valuation and interest in order to pursue potential
transactions involving National Beef.
The Beef Confidential Memorandum was prepared from information
provided to Goldsmith by Industries and National Beef. Prior to its
distribution, Goldsmith and Industries provided the Beef Confidential
Memorandum to management of National Beef and to the USPB Group and
received comments on the Beef Confidential Memorandum, which were
incorporated into the Beef Confidential Memorandum. In addition, the list
of companies that were approached by Goldsmith was reviewed with
Industries, National Beef management and the USPB Group.
c) Sale of the Beef Interests
On June 12, 2003, Foods, Industries and NBPCo. entered into an Asset
Purchase and Sale Agreement with the USPB Group and U.S. Premium Products,
LLC (the "Beef Purchase Agreement") pursuant to which Foods and Industries
agreed to sell the Beef Interests in accordance with section 363 of the
Bankruptcy Code. The sale of the Beef Interests will be consummated through
the sale of: (i) Industries' limited partnership interest in National Beef
and (ii) Industries' and Foods' equity interests in NBPCo.
The Beef Purchase Agreement provides for a $232,000,000 purchase price
for the Beef Interests. The USPB Group has deposited an aggregate of
$10,000,000 in an escrow account (the "Deposit Escrow Account") for the
benefit of Industries and Foods. The net proceeds of the sale will be
distributed pursuant to the Final DIP Order.
On June 13, 2003, the Bankruptcy Court issued an order: (i)
authorizing the sale of the Beef Interests (subject to higher and better
offers); (ii) approving auction and bid procedures; and (iii) approving a
$7,000,000 break-up fee (the "Beef Break-Up Fee") to be paid by Industries
and Foods to the USPB Group in the event that the Beef Purchase Agreement
is terminated as a result of Industries' and Foods' acceptance of a
competing bid.
The court-approved procedures for the submission and consideration of
competing offers for the Beef Interests required, among other things, that:
o Any person submitting a competing offer demonstrate evidence of
committed financing or otherwise demonstrate its ability to
consummate the proposed transaction in a time period acceptable
to Industries and Foods;
o Any competing offer be in writing, contain substantially similar
terms and conditions as the Beef Purchase Agreement and
identify: (i) the bidder, (ii) the consideration, (iii)
financial information with respect to the bidder and its ability
to consummate the transaction and (iv) all terms and conditions
of the competing offer;
o Any competing offer include information and representations
regarding compliance with the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended;
o To be a "higher or better offer," any competing offer must be at
least $239,500,000 (which represents the USPB Group's offer,
plus the Break-Up Fee, plus $500,000) and must not (i) require
financing, (ii) be subject to terms, conditions or restrictions
unacceptable to Industries or Foods, or (iii) require any
break-up fee, termination fee, or any similar buyer protections;
o Any competing offer include an earnest money deposit which
equals or exceeds the USPB Group's deposit; and
o Any competing offer be submitted by 5:00 p.m. Central Time on
July 7, 2003 (the "Beef Competing, Bid Deadline").
An auction was scheduled for July 9, 2003 to address any competing
bids submitted prior to the Beef Competing Bid Deadline. No competing bids
were received by the Beef Competing Bid Deadline so the auction was not
held.
The Sale Hearing was conducted on July 15, 2003 and the Debtors sought
the Bankruptcy Court's approval of the Beef Purchase Agreement and the
transactions contemplated thereby. The Bankruptcy Court entered its final
order authorizing the sale of the Beef Interests, free and clear of liens,
claims and encumbrances, on July 22, 2003. The sale of the Beef Interests
pursuant to the Beef Purchase Agreement closed on August 6, 2003.
Industries' ownership interest in Farmland National Beef aLF, LLC was not
sold as part of the Beef Interest.
4. OTHER BUSINESS OPERATIONS
Industries is currently winding up its international grain business.
As a part of this process, Industries has sold its export elevator located
in Argentina, sold substantially all of its inventories related to its
international grain business and has settled litigation in Brazil related
to misappropriated soybeans. Industries continues to collect certain
long-term receivables, governmental receivables and trade receivables from
troubled accounts related to the business. The Debtors anticipate that
Industries will receive in excess of $10 million from the windup of
Industries' international grain business.
The Debtors have discontinued operations at their fertilizer plant
located in Lawrence, Kansas (the "Lawrence Fertilizer Plant"), which is
primarily comprised of several parcels of real estate (the "Lawrence Real
Estate"), the Lawrence Plant Components and the Lawrence Spare Parts. See
Section III.G.1.cc, Major Plant Components and Spare Parts located in
Lawrence, Kansas. Although the Debtors remain open to any offers to
purchase the Lawrence Fertilizer Plant in its entirety, the Debtors have
determined that a sale of both the Lawrence Plant Components (either in its
entirety or as separate components) and the Lawrence Spare Parts currently
constitute the best method for maximizing the value of the Lawrence
Fertilizer Plant for their creditors. To this end, the Debtors conducted an
auction of the Lawrence Spare Parts on October 24 - 25, 2003. In addition,
although the Debtors have not entered into any definitive agreements for
the sale of any of the Lawrence Plant Components to date, the Debtors
continue to market the Lawrence Plant Components to interested parties. The
Debtors anticipate that any sale of the Lawrence Plant Components may not
be completed for over twelve months due to the time necessary to dismantle
and remove such items. The Debtors are currently meeting (and will continue
to meet) any environmental obligations related to the Lawrence Fertilizer
Plant.
H. CASE ADMINISTRATION
1. CLAIMS INFORMATION AND ESTIMATES
The Debtors filed their Schedules in July 2002 and filed amended
Schedules in October 2002. Thereafter, by its Order Establishing Bar Date
for Filing Proofs of Claim and Interest and Approving Form of Notice dated
October 24, 2002, the Bankruptcy Court established January 10, 2003, as the
final date for filing proofs of claim against the Debtors. The Debtors have
not completed their analysis of all Claims asserted against the Debtors.
2. CLAIMS AGENT
By order of the Bankruptcy Court, dated June 5, 2002, Bankruptcy
Management Corporation ("BMC") was appointed the official claims agent of
the clerk of the Bankruptcy Court and assumed responsibility to: (a)
provide notice to the Debtors' creditors of the Bankruptcy Code section 341
meeting; (b) provide form proofs of claim and notices related thereto to
creditors; and (c) docket and maintain proofs of claim filed in the Chapter
11 Cases.
3. BALLOTING AGENT
By order of the Bankruptcy Court, dated June 5, 2002, BMC was employed
to assist the Debtors with the balloting process in connection with the
Plan.
4. CLAIMS TRANSFER PROCEDURES
On December 20, 2002, the Bankruptcy Court entered its Interim Order
Pursuant to Sections 362 and 105(a) of the Bankruptcy Code Establishing
Notification Procedures Regarding (A) Applicability of the Automatic Stay
Enjoining Certain Transfers of Claims and (B) Approval Procedures for
Trading in Claims Against Farmland Industries, Inc., Et Al., establishing,
on an interim basis, certain procedures that must be satisfied before the
sale or other transfer of claims against the Debtors would be deemed
effective. On February 11, 2003, the Bankruptcy Court entered its Final
Order Pursuant to Sections 362 and 105(a) of the Bankruptcy Code
Establishing Notification Procedures Regarding (A) Applicablity of the
Automatic Stay Enjoining Certain Transfers of Claims and (B) Approval
Procedures for Trading in Claims Against Farmland Industries, Inc., Et Al.,
establishing, on a final basis, certain procedures that must be satisfied
before the sale or other transfer of claims against the Debtors would be
deemed effective.
I. SIGNIFICANT BUSINESS AND LEGAL MATTERS
1. PROCEDURES FOR WORKERS' COMPENSATION CLAIMS
On June 5, 2002, the Bankruptcy Court entered its Order Authorizing
Payment of Prepetition Wages, Salaries, Reimbursable Employee Expenses and
Medical and Other Employee Benefits, granting the Debtors, among other
things, the authority to settle and pay worker's compensation claims under
the Debtors' workers' compensation program in the ordinary course of
business.
On February 19, 2003, the Bankruptcy Court entered its Order Granting
Debtors' Motion for Omnibus Authority to Effectuate Settlements with
Workers' Compensation Claimants and Establishing Procedures for Resolution
of Contested Workers' Compensation Claims, establishing procedures for
workers' compensation claims that the Debtors are unable to settle in the
ordinary course of their business. Under these procedures, the Bankruptcy
Court will approve immediately upon submission (without the necessity of
filing a motion, providing notice or holding a hearing) any stipulation for
relief from stay filed by the Debtors and workers' compensation claimants
for final settlement workers' compensation claims against the Debtors that
are subject to administrative court approval. Prior to the submission of
such stipulations to the Bankruptcy Court, the Debtors must circulate the
stipulations to certain designated representatives of the Bankruptcy
Committees and the Lenders.
2. PROCEDURES FOR MECHANICS' LIEN CLAIMS
On October 17, 2002, the Debtors filed a motion for an order
authorizing procedures for determining the extend, validity and priority of
mechanics' and/or artisans' liens (the "Mechanics' Lien Procedures"). The
Mechanics' Lien Procedures proposed a schedule and process for filing and
prosecuting adversary proceedings in the Bankruptcy Court to resolve more
than 100 mechanics' and artisans' liens affecting property of the Debtors
situated in five states. On November 8, 2002, the Bankruptcy Court entered
its memorandum opinion and order, granting the Mechanics' Lien Procedures,
with certain modifications as set forth therein. Accordingly, adversary
proceedings are now pending in the Bankruptcy Court to resolve the extent,
validity and priority of each of these mechanics' and/or artisans' liens.
3. PROPOSED TERMINATION OF CERTAIN EMPLOYEE BENEFITS
The Debtors currently provide benefits to former or retired employees
under a group term life insurance policy with Minnesota Life Insurance
Company (the "Group Policy") at an annual cost of approximately $756,000.
Having determined, in the reasonable exercise of their business judgment,
that the termination of benefits to former or retired employees under the
Group Policy was in the best economic interest of the Debtors' estates and
creditors, the Debtors filed a motion seeking authority to terminate
certain life insurance benefits to former or retired employees under the
Group Policy. Pursuant to negotiations with the carrier for the Group
Policy, the affected former or retired employees could elect to continue
their individual life insurance policies in force and effect at their own
cost if they choose to do so following termination of their benefits under
the Group Policy. On May 28, 2003, the Bankruptcy Court entered an order
denying this motion without prejudice to a later refiling of the motion in
compliance with section 1114 of the Bankruptcy Code.
The Debtors currently provide several benefits programs for certain
current and former executive employees and members of the board of
directors of Industries. Having determined, in a reasonable exercise of
their business judgment, that termination of these benefits programs are in
the best interest of the Debtors' estates and creditors, the Debtors filed
a motion seeking authority to terminate these benefits programs and to
reject certain executory employment agreements. On May 28, 2003, the
Bankruptcy Court entered an order granting, in part, and denying, in part,
this motion.
For further discussion regarding retiree benefits, see Section IV.F,
Pension Benefits and Retiree Benefits.
4. PROPOSED SETTLEMENT WITH U.S. EPA
The U.S. Environmental Protection Agency (the "EPA" has asserted that
Industries is liable for response costs incurred and to be incurred by the
United States in the course of responding to releases and threats of
releases of hazardous substances into the environment for the following
sites: (i) 57th and North Broadway Site, Wichita, Kansas; (ii) Hastings
Area-Wide Groundwater Site - Operable Unit 19, Hastings, Nebraska; (iii)
FAR-MAR-CO subsite of the Hastings Groundwater Site; (iv) Obee Road Site,
Hutchison, Kansas; (v) Container Recycling, Inc. Site in Kansas City,
Kansas; and (vi) Taracorp Site, Granite City, Illinois (collectively, the
"Liquidated Sites"). The EPA has also asserted that Industries is liable
for penalties for violations of certain environmental statutes,
specifically, that Industries is liable for civil penalties for three
violations of Section 311 of the Clean Water Act (CWA) for oil spills which
occurred (i) into the Verdigris River on November 19,1998; (ii) near Rock,
Kansas on January 4, 2002; (iii) in Osage County near Bartlesville,
Oklahoma on July 23, 2001. Further, the EPA contended that Industries is
liable for civil penalties for violations of the "mobile source"
requirements of Sections 211 (h) and (k) of the Clean Air Act (CAA) at the
Coffeyville refinery in Coffeyville, Kansas (collectively, the "Liquidated
Civil Penalties").
Industries and the EPA have proposed to compromise and settle the
Liquidated Sites and the Liquidated Civil Penalties (the "EPA Settlement")
as follows:
o With respect to the EPA's claim for penalties based on the
Debtors' alleged violations of Section 311 of the CWA, 33 U.S.C.
ss. 1321, by spills of oil into (i) the Verdigris River on
November 19, 1998; (ii) near Rock, Kansas on January 4, 2002;
(iii) in Osage County near Bartlesville, Oklahoma on July
23,2001: the EPA shall have an Allowed General Unsecured Claim
against Industries of $1,575,000, as authorized by Section
311(b)(7)(A) of the CWA, 33 U.S.C. ss. 1321(b)(7)(A) .
o With respect to the EPA's claim for penalties based on the
Debtors' alleged violation of Sections 211(h) and (k) of the
Clean Air Act (CAA), 42 U.S.C. ss. 7545(h) and (k), at
Industries' refinery in Coffeyville, Kansas: the EPA shall have
an Allowed General Unsecured Claim against Industries of
$17,000, as authorized by Sections 211 and 205 of the CAA, 42
U.S.C. ss.ss. 7545 and 7524.
o With respect to the 57th and North Broadway Site, Wichita,
Kansas: the EPA shall have an Allowed General Unsecured Claim
against Industries of $250,000.
o With respect to the Hastings Area-Wide Groundwater Site -
Operable Unit 19, Hastings, Nebraska: the EPA shall have an
Allowed General Unsecured Claim against Industries of $333,340.
o With respect to the FAR-MAR-CO subsite of the Hastings Area-Wide
Groundwater Site, Hastings, Nebraska: the EPA shall have an
Allowed General Unsecured Claim against Industries of $10,000.
o With respect to the Obee Road Site, Hutchison, Kansas: the EPA
shall have an Allowed General Unsecured Claim against Industries
of $65,598.60 in settlement of past costs but excluding
settlement of claims for future costs.
o With respect to the Container Recycling, Inc., Site, Kansas
City, Kansas: the EPA shall have an Allowed General Unsecured
Claim against Industries of $351,360.
o With respect to the Taracorp Site, Granite City, Illinois: the
EPA shall have an Allowed General Unsecured Claim against
Industries of $91,584.
In exchange for resolution of the Liquidated Sites and
Liquidated Civil Penalties pursuant to the EPA Settlement, EPA
provides a covenant not to sue and contribution protection as to
the Debtors with regard to the claims addressed, and agrees not
to object to provisions of the Plan that are consistent with the
EPA Settlement. To the extent that a provision of the Plan is
not addressed by the EPA Settlement, the Debtors and the EPA
reserve all rights with regard to the Plan. The EPA Settlement
also creates a structure for analysis and payment of future EPA
response cost claims as allowed unsecured claims under the Plan.
The Debtors' entry into the EPA Settlement was approved by the
Bankruptcy Court on April 17, 2003. Notice of the EPA Settlement
appeared in the federal register on April 17, 2003. 68 Fed. Reg.
19006 (April 17, 2003). After the public comment period on the
EPA Settlement ended, the EPA filed a joint motion for final
approval of the EPA Settlement on June 12, 2003, which motion
was granted by the Bankruptcy Court by order dated July 22,
2003.
5. PENDING ENVIRONMENTAL CLAIMS
Claims totaling in excess of $100 million that relate to environmental
matters based on Industries' alleged pre-petition conduct have been filed
against Industries. The largest of these claims is a natural resource
damage ("NRD") claim filed by the Missouri Department of Natural Resources
("MDNR"). The remaining claims are primarily private party claims for
contribution related to past and future cleanup costs resulting from
alleged pre-petition releases of hazardous substances by Industries. Many
of these private party claims overlap with each other and with government
claims and some are barred by the contribution protection obtained in the
EPA Settlement discussed above. The Debtors believe that, with regard to
the majority of these claims (including the NRD claim), they have defenses,
under applicable bankruptcy and/or environmental law, to either the claim
or the amount of the claim. The validity and amount of these claims will be
resolved through the claims objection process.
To the extent that the Liquidating Trust and/or Reorganized Industries
own properties (such as the refinery located in Coffeyville, Kansas) that
are the subject of these claims or other applicable environmental
regulatory requirements after the Effective Date, such entities may have
ongoing obligations to address certain environmental issues in their
capacity as the owner of such properties. Section 5.1 (d) of the Plan
provides that, on the Effective Date, certain identified properties owned
by the Debtors on the Effective Date will be transferred to separate
trusts, which trusts will funded with sufficient capitalization for the
maintenance, remediation and/or disposition of such properties. See Section
IV.E.1, Continued Existing of the Debtors; Vesting of Assets.
Industries is subject to certain orders (including, but not limited
to, those order listed on Abbendix E attached hereto) to investigate and/or
cleanup environmental contamination at certain non-Debtor owned properties.
While Industries has been performing its obligations under these orders
during the Chapter 11 Case, because all of the properties involve
pre-petition conduct at non-Debtor owned properties, Industries believes
that these orders are not ongoing obligations of Reorganized Industries,
but should be permanently resolved as allowed unsecured claims as part of
the Plan and Confirmation. Industries will seek, in consultation with the
Bankruptcy Committees, such permanent resolutions through Confirmation and
the claims objection process, as appropriate.
6. ADJUDICATION REGARDING SUBORDINATED CERTIFICATES
On December 24, 2002, Industries filed a Complaint for Declaratory
judgment (the "Declaratory Judgment Complaint"), seeking declaratory relief
to determine the relative priority between and among the Subordinated
Certificates. In the Declaratory Judgment Complaint, Industries alleged
that the documents evidencing and otherwise related to the Subordinated
Certificates demonstrated the parties' intent for each issue of
Subordinated Certificates to share equal priority with each other issue of
Subordinated Certificates. On February 18, 2003, Wells Fargo Bank
Minnesota, National Association, in its capacity as successor trustee for
the Subordinated Certificates filed its answer to the Declaratory Judgment
Complaint, admitting each of the material allegations contained in the
Complaint and stated further that it did not oppose the declaratory relief
sought by Industries in the Declaratory Judgment Complaint. On March 24,
2003, the Bankruptcy Court entered its Declaratory judgment, ordering that,
between and among themselves, each issue of Subordinated Certificates
shared equal priority.
7. INSURANCE PROCEEDS FOR ALBERT LEA PLANT
On July 8, 2001, a fire occurred at the Albert Lea, Minnesota meat
processing facility (the "Albert Lea Plant"), which fire severely damaged
and/or destroyed buildings, equipment and inventory located at the Albert
Lea Plant. On January 14, 2002, the Albert Lea City Council adopted a
resolution approving and authorizing an Order for Removal requiring the
demolition of the entire building and facilities at the Albert Lea Plant
and brought an action for such demolition. On March 3, 2003, Freebourn
County District Court entered judgment for the demolition and removal of
the entire building and facilities at the Albert Lea Plant.
The fire loss at the Albert Lea Plant was insured under a $500 million
blanket policy covering this facility and other property of Debtors. This
policy provides for replacement coverage, or in the alternative, coverage
on an actual cash value basis. The Debtors submitted the Insurance Claim to
the insurers based upon the total loss sustained at the Albert Lea Plant.
Following its submission, the Debtors and the insurers engaged in
settlement discussions. As a result of those discussions, the Debtors and
the insurers have agreed to settle all claims between the insurers and the
Debtors arising from the fire at the Albert Lea Plant for the sum of $60
million, a portion of which has been previously paid by the insurers. The
parties have scheduled a November 4, 2003 hearing to approve the
settlement.
8. PENDING LITIGATION AND AUTOMATIC STAY
The nature of the Debtors' businesses is such that they are routinely
involved in litigation. As a result of the Chapter 11 Case, pursuant to
section 362 of the Bankruptcy Code, all litigation pending against the
Debtors has been stayed, except in instances where the Bankruptcy Court has
granted a party relief from the stay. Litigation matters involving the
Debtors include those disclosed in the Schedules and those discussed
herein.
a) Pending Proceedings Involving the National Labor
Relations Board ("NLRB")
The NLRB filed a proof of claim against Industries (the "NLRB Claim")
in the amount of $11,697,395.28, for which $651,000.00 is designated as an
Other Priority Claim against Industries pursuant to sections 507(a)(3) and
(a)(4) of the Bankruptcy Code, and for which $11,046,395.28 is designated
as a general unsecured claim against Industries. The NLRB bases its Claim
on ten charges currently pending before the NLRB, which charges relate to
allegations and administrative findings that Industries violated the
National Labor Relations Act. The NLRB contends that its Claim represents
the amounts that would result from the NLRB's successful prosecution of its
charges that constitute the NLRB Claim. The Debtors have filed an objection
to the NLRB Claim, which objection is currently pending before the
Bankruptcy Court. The NLRB also asserts that the Bankruptcy Court lacks
jurisdiction to estimate the NLRB Claim under section 502(c) of the
Bankruptcy Code.
b) Pending Adversary Proceedings
A number of adversary proceedings have been commenced in the
Bankruptcy Court during the Chapter 11 Case. Copies of all pleadings filed
in these adversary proceedings can be accessed via the Bankruptcy Court's
case management / electronic case filing system:
ecfmowb.uscourts.gov.
c) Known Claims Against Third Parties
The Debtors currently hold certain claims or rights of action against
a number of parties and continue to review claims against certain parties
that may ripen into litigation. Neither the listing nor the failure to list
any party herein shall prejudice the Debtors' rights to pursue any claims,
rights of action or proceedings that have arisen or may arise in the future
in the ordinary course of the Debtors' businesses. Known claims or rights
or action against third parties include, without limitation, the following:
(1) The Debtors have asserted claims against
Ultimate Thermal, Inc. in connection with the fire at the Albert
Lea Plant. The Debtors may also assert claims against Veit &
Company in connection with the demolition of the Albert Lea
Plant.
(2) The Debtors are investigating potential claims
against Agriliance LLC, Cenex Harvest States Cooperatives, Land
O'Lakes, Inc. and related entities in connection with the
formation of Agriliance LLC and the conduct of its business.
(3) The Debtors have asserted claims against
Reliance Insurance Company in connection with property losses the
Debtors sustained for risks insured by Reliance Insurance
Company.
(4) The Debtors are participants in an opt-out group
of companies that are pursuing price-fixing claims against
several manufacturers of linerboard, including Stone Container
Corporation, Jefferson Smurfit Corporation, SmurfitStone
Container Corp., International Paper Company, Georgia-Pacific
Corporation, Temple-Inland, Inc., Gaylord Container Corporation,
Tenneco, Inc., Tenneco Packaging, Inc., Union Camp Corporation,
Packing Corporation of American and Weyerhaeuser Paper Company.
(5) The Debtors have filed a complaint with the
Kansas Corporation Commission against Mid-America Pipeline
Company, The Williams Companies and others regarding violations
of the regulations governing utilities and common carriers.
(6) The Debtors have potential claims against WB
Swine/Pork Technology for amounts owing under a hog purchase
contract.
(7) The Debtors have a claim for repayment of
promissory notes issued by Platz Enterprises and Jeff Platz and
guaranteed by William Platz.
(8) The Debtors have a claim against Lincoln
National Life Insurance Company from its administration of the SF
Services 401 (k) plan.
(9) The Debtors have asserted claims against certain
securities agents to whom the Debtors have made loans.
(10) The Debtors have asserted claims against Black
& Veatch Pritchard in connection with the construction of the
Coffeyville, KS gasification complex.
(11) The Debtors are pursuing collection of monies
from Cook Composite for services provided by Transportation.
(12) The Debtors continue to pursue numerous
collection matters in the ordinary course.
IV. SUMMARY OF THE PLAN
A. INTRODUCTION
Set forth in this Article is a description of the basic terms of the
Plan. This description is not intended, nor should it be relied upon, to
substitute for a careful review of the actual terms of the Plan, a complete
copy of which is annexed hereto as Appendix A.
B. CLASSIFICATION OF CLAIMS AND INTERESTS
Section 1122 of the Bankruptcy Code provides that, except for certain
claims classified for administrative convenience, a plan may place a claim
of a creditor or an interest of an equity holder in a particular class only
if such claim or interest is substantially similar to the other claims or
interests of such class.
The Bankruptcy Code also requires that a plan provide 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 its claim or interest. The Debtors believe that the Plan
complies with this standard. The Plan divides Claims against and Interests
in the Debtors into the following Classes:
Class 1 consists of all Other Priority Claims.
Class 2 consists of all Secured Lender Claims.
Class 3 consists of all Other Secured Claims.
Class 4 consists of all Demand Certificates Claims.
Class 5 consists of all Subordinated Certificates Claims.
Class 6 consists of all Convenience Claims against Industries.
Class 7 consists of all General Unsecured Claims against Industries.
Class 8 consists of all Industries Preferred Shares.
Class 9 consists of all Industries Common Shares.
Class 10 consists of all General Unsecured Claims against Foods.
Class 11 consists of all Old Securities of Foods.
Class 12 consists of all General Unsecured Claims against
Transportation.
Class 13 consists of all Old Securities of Transportation.
Class 14 consists of all General Unsecured Claims against SFA.
Class 15 consists of all Old Securities of SFA..
Class 16 consists of all General Unsecured Claims against Pipeline.
Class 17 consists of all Old Securities of Pipeline.
Class 18 consists of all Intercompany Claims.
Class 19 consists of all Subordinated Claims.
For a description of the treatment of the Claims and Interests and a
summary of distributions under the Plan, see Section IV.C, Treatment of
Claims and Interests and Summary of Distributions under the Plan.
A Claim or Interest is placed in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class. A
Claim or Interest may be and is classified in other Classes to the extent
that any portion of the Claim or Interest falls within the description of
such other Classes. A Claim or Interest is also placed in a particular
Class for the purpose of receiving distributions pursuant to the Plan only
to the extent that such Claim or Interest is an Allowed Claim or Allowed
Interest in that Class and such Claim or Interest has not been paid,
released, or otherwise settled prior to the Effective Date.
Although the PBGC previously filed the PBGC Claims against certain of
the Debtors, all of the PBGC Claims will be resolved by the assumption of
the liabilities associated with such Claims in connection with the sale of
the Pork Business. No distributions will be made to the PBGC under the
Plan.
The Plan, though proposed jointly, constitutes separate plans proposed
by each Debtor. Therefore, the classifications set forth below shall be
deemed to apply separately (as appropriate) with respect to each such plan.
Accordingly, each Debtor reserves the right to request confirmation of its
separate plan in the event that such separate confirmation is necessary and
appropriate for such Debtor and its creditors. In addition, each Debtor
reserves the right to declare an Effective Date for its separate plan in
the event that this action is necessary and appropriate for such Debtor and
its creditors. There may exist circumstances in which one or more, but less
than all, of the Debtors would declare an Effective Date for such Debtors'
separate plans at the same time. As an example, a delay in the sale of the
Coffeyville Assets could delay Industries from declaring an Effective Date
for its separate plan and, as a result, could delay distributions to
creditors of Industries by as much as several months. In the event that one
or more, but less than all, of the Debtors wish to exercise their right to
declare an Effective Date, such Debtors will consult with the Bankruptcy
Committees and then present the proposed action to the Bankruptcy Court.
C. TREATMENT OF CLAIMS AND INTERESTS AND SUMMARY OF DISTRIBUTIONS
UNDER THE PLAN
The following table sets forth a brief summary of the classification
and treatment of Claims and Interests and the estimated distributions to
the holders of Allowed Claims and Allowed Interests under the Plan. The
information set forth in the tables is for convenience of reference only.
Each holder of a Claim or Interest should refer to Article III of the Plan,
Section IV.B, Classification of Claims and Interests, and the liquidation
analysis annexed as Appendix D hereto for a full understanding of the
classification and treatment of Claims and Interests provided under the
Plan. The estimates set forth in the table constitute the Debtors'
estimates of the likely distributions from the Debtors' orderly liquidating
of their Estates and may differ from actual distributions by reason of,
among other things, variations in the amounts of Allowed Claims and the
existence and resolution of Disputed Claims. The Debtors reserve their
rights to update or modify the estimated distributions set forth in the
table. Unless otherwise noted, these estimates are as of October 24, 2003.
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CLASS TYPE OF CLAIM OR TREATMENT
INTEREST
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- ADMINISTRATIVE CLAIMS Except as otherwise provided for herein, and
subject to the requirements of Sections
11.1-11.3 of the Plan, on, or as soon
Estimated Allowed as reasonably practicable after, the latest of
Claims: $204.1 (i) the Initial istribution Date, (ii) the date
million such Administrative Claim becomes an Allowed
Administrative Claim, or (iii) the date such
Estimated Percentage Administrative Claim becomes payable
Recovery: 100% pursuant to any agreement between a Debtor
(with the consent of the Bankruptcy
Committees) or the Liquidating Trustee, as
the case may be, and the holder of such
Administrative Claim, each holder of an
Allowed Administrative Claim shall receive
in full and complete satisfaction of such
Allowed Administrative Claim (x) Cash equal
to the unpaid portion of such Allowed
Administrative Claim or (y) such other
treatment as to which a Debtor (with the
consent of the Bankruptcy Committees) or the
Liquidating Trustee, as the case may be, and
such holder shall have agreed upon in
writing; provided, however, that Allowed
Administrative Claims with respect to
liabilities incurred by a Debtor in the
ordinary course of business during the
Chapter 11 Case and all liabilities and
obligations of the Debtors under the KERIT
Plan shall be paid in the ordinary course of
business in accordance with the terms and
conditions of any agreements relating
thereto. Notwithstanding the foregoing, (i)
the Bondholder Transaction Fee shall be
payable only from distributions otherwise
payable to holders of Allowed Class 5 Claims
and shall be paid prior to the payment of
any distributions to holders of Allowed
Class 5 Claims, and (ii) the Creditor
Transaction Fee shall be payable only from
distributions otherwise payable to holders
of Allowed Class 7 Claims and shall be paid
prior to the payment of any distributions to
holders of Allowed Class 7 Claims.
The Allowed Administrative Claims are
currently comprised of the following: (i)
$96.5 million in post-petition intercompany
obligations; (ii) $13.5 million in
post-petition trade payables; (iii) $5.0 in
Professional Fee Claims; (iii) $23.7 million
in outstanding checks; (iv) $14.5 million in
employee obligations; and (v) $50.9 million
in other current liabilities constituting
Administrative Claims.
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- PRIORITY TAX CLAIMS Except as otherwise provided for herein, on,
or as soon as reasonably practicable after,
Estimated Allowed the latest of (i) the Initial Distribution
Claims: $9.8 million Date, (ii) the date such Priority Tax Claim
becomes an Allowed Priority Tax Claim, or
Estimated Percentage (iii) the date such Priority Tax Claim
becomes payable pursuant to any agreement
between a Debtor with the consent of the
Recovery: 100% Bankruptcy Committees) or the Liquidating
Trustee, as the case may be, and the holder
of such Priority Tax Claim, each holder of
an Allowed Priority Tax Claim shall receive
in full and complete satisfaction of such
Allowed Priority Tax Claim (x) Cash equal to
the unpaid portion of such Allowed Priority
Tax Claim or (y) such other treatment as to
which a Debtor (with the consent of the
Bankruptcy Committees) or the Liquidating
Trustee, as the case may be, and such holder
shall have agreed upon in writing.
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- DIP LOAN CLAIMS If then outstanding on the Effective Date,
the DIP Loan Claims shall be paid in full on
Estimated Allowed the Effective Date according to the terms of
Claims: $10.5 million the DIP Credit Agreement. Notwithstanding
anything in the Plan to the contrary, the
Estimated Percentage DIP Loan Claims shall have the superpriority
Recovery 100% status set forth in the orders authorizing
and evidencing the DIP Loan Claims.
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1 OTHER PRIORITY CLAIMS On, or as soon as reasonably practicable
after, the latest of (i) the Initial
Estimated Allowed Distribution Date, (ii) the date such Claim
Claims: $0.1 million becomes an Allowed Class 1 Claim, or (iii)
the date such Class 1 Claim becomes payable
Estimated Percentage pursuant to any agreement between a Debtor
Recovery: 100% (with the consent of the Bankruptcy
Committees) or the Liquidating Trustee, as
the case may be, and the holder of such
Class 1 Claim, each holder of an Allowed
Class 1 Claim shall receive, in full and
complete satisfaction of such Allowed Class
1 Claim (x) Cash equal to the unpaid portion
of such Allowed Class 1 Claim or (y) such
other treatment as to which a Debtor (with
the consent of the Bankruptcy Committees) or
the Liquidating Trustee, as the case may be,
and such holder shall have agreed upon in
writing. The legal, equitable and
contractual rights of the holders of Allowed
Class 1 Claims are Unimpaired by the Plan.
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2 SECURED LENDER CLAIMS On the Effective Date, the Allowed Secured
Lender Claims, if any, shall be satisfied
Estimated Allowed and paid in full in the amount of said
Claims: $0.0 million Claims then outstanding. Net cash proceeds
from Section 363 asset sales prior to the
Estimated Percentage Confirmation Date shall be remitted for
Recovery: 100% application against the Secured Lender
Claims. The Secured Lender Claims, if any,
outstanding on the Effective Date shall be
paid in full in Cash from net cash proceeds
from Section 363 asset sales that occur
after the Confirmation Date and prior to the
Effective Date. Nothing in the Plan shall
alter or affect any intermediate payments
made by the Debtors to the Secured Lenders
prior to the Effective Date. Class 2 is
Unimpaired by the Plan.
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3 OTHER SECURED CLAIMS Subject to the provisions of Section 3.1(d)
of the Plan, on or as soon as reasonably
Estimated Allowed practicable after the Effective Date, each
Claims: $19.0 million holder of an Allowed Class 3 Claim shall
receive one of the following distributions:
Estimated Percentage (a) payment of such holder's Allowed Other
Recovery: 100% Secured Claim in full in Cash; (b) the sale
or disposition proceeds of the Collateral
securing such Allowed Other Secured Claim to
the extent of the value of the Debtors'
interest in such Collateral; (c) the
surrender of the Collateral securing such
Allowed Other Secured Claim to the holder of
such Allowed Other Secured Claim; (d) the
Reinstatement of such Allowed Other Secured
Claim; or (e) such other distribution or
treatment as may be ordered by the
Bankruptcy Court or as shall be necessary to
satisfy the requirements of the Bankruptcy
Code. The manner and treatment of each
Allowed Other Secured Claim shall be
determined by the Liquidating Trustee in his
sole and absolute discretion. Nothing in
this Section 3.4 or elsewhere in the Plan
shall preclude the Liquidating Trustee from
challenging the validity of any alleged Lien
on any asset of a Debtor or the value of
such Collateral. The legal, equitable and
contractual rights of the holders of Allowed
Class 3 Claims are Unimpaired by the Plan.
The Allowed Other Secured Claims are
currently comprised of the following: (i)
$15.9 million for certain of the Industrial
Revenue Bonds; (ii) $2.5 million in secured
tax claims; and (iii) $.6 million in other
miscellaneous secured claims.
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4 DEMAND CERTIFICATES As of the Effective Date, all notes,
CLAIMS instruments and other documents evidencing
the Demand Certificates shall be deemed
Estimated Allowed canceled without further act or action under
Claims: $20.0 million any applicable agreement, law, regulation,
order or rule, and the Demand Certificates
Estimated Percentage evidenced thereby shall be extinguished.
Recovery: 100% Subject to the provisions of Article VII of
the Plan and the Liquidating Trust
Agreement, until all Allowed Class 4 Claims
have been paid in full (including payment of
interest through the Effective Date at the
rate provided in the Demand Certificates)
less any amounts payable to the Indenture
Trustee for the Demand Certificates pursuant
to Section 3.1(d) of the Plan, each holder
of an Allowed Class 4 Claim shall receive,
in full and complete satisfaction of such
Allowed Class 4 Claim, (i) its Pro Rata
share of the Industries Distribution Pool
plus (ii) its Pro Rata Share of the funds
otherwise payable to holders of Allowed
Class 5 Claims pursuant to clause (i) of the
second sentence of Section 3.6 of the Plan
less (iii) its Pro Rata share of an amounts
payable to the Indenture Trustees for the
Demand Certificates pursuant to Section
3.1(d) of the Plan. Class 4 is Impaired by
the Plan.
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5 SUBORDINATED As of the Effective Date, all notes,
CERTIFICATES CLAIMS instruments and other documents evidencing
the Subordinated Certificates shall be
Estimated Allowed deemed canceled without further act or
Claims: $557.3 action under any applicable agreement, law,
million regulation, order or rule, and the
Subordinated Certificates evidenced thereby
Estimated Percentage shall be extinguished. Subject to the
Recovery: 60% -82% provisions of Article VII of the Plan
and the Liquidating Trust Agreement, each
holder of an Allowed Class 5 Claim shall
receive, in full satisfaction, settlement,
release and discharge of and in exchange for
such Allowed Class 5 Claim, (i) its Pro Rata
share of the Industries Distribution Pool
less (ii) its Pro Rata share of those funds
required to be paid to holders of Allowed
Class 4 Claims in accordance with clause
(ii) of the second sentence of Section 3.5
of the Plan lus (iii) after all Allowed
Class 4 Claims have been paid in full, its
Pro Rata share of the funds otherwise
payable to holders of Allowed Class 4 Claims
pursuant to clause (i) of the second
sentence of Section 3.5 of the Plan less
(iv) its Pro Rata share of the Bondholder
Transaction Fee less (v) its Pro Rata share
any amounts payable to the Indenture
Trustees for the Subordinated Certificates
pursuant to Section 3.1(d) of the Plan.
According to the Bondholders' Committee, the
Bondholder Transaction Fee will be
approximately $1.112 million to $1.725
million based on currently estimated
recoveries, but greater recoveries would
result in an increased amount. Class 5 is
Impaired by the Plan.
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6 CONVENIENCE CLAIMS Subject to the provisions of Article VII of the
AGAINST INDUSTRIES Plan and the Liquidating Trust Agreement, each
holder of an Allowed Class 6 Claim shall receive,
Estimated Allowed in full and complete satisfaction of such
Claim $2.0 million Allowed Class 6 Claim, Cash equal to the
amount of such Allowed Claim. Class 6 is
Estimated Percentage Unimpaired by the Plan.
Recovery: 100%
- -------------------------------------------------------------------------------
7 GENERAL UNSECURED Subject to the provisions of Article VII of
CLAIMS AGAINST the Plan and the Liquidating Trust
INDUSTRIES Agreement, each holder of an Allowed Class 7
Claim shall receive, in full and complete
Estimated Allowed satisfaction of such Allowed Class 7 Claim,
Claims: $274.6 its Pro Rata share of the Industries
million-$499.1 million Distribution Pool less the Creditor
Transaction Fee. According to the Creditors'
Committee, the Creditor Transaction Fee will
be approximately $1.087 million to $3
million. Class 7 is Impaired by the Plan.
- -------------------------------------------------------------------------------
8 INDUSTRIES PREFERRED The Industries Preferred Shares shall be
SHARES Reinstated on the Effective Date.
Notwithstanding such Reinstatement and in
Estimated Allowed accordcordance with applicable law, no
Interests: $100 distribution shall be made on account of the
million Industries Preferred Shares until all
Administrative Claims against Industries,
Estimated Percentage all Priority Tax Claims against Industries,
Recovery: 0% all Class 1 Claims against Industries, all
Class 3 Claims against Industries, all Class
4 Claims, all Class 5 Claims, all Class 6
Claims, all Class 7 Claims and all Class 18
Claims against Industries have been (i)
Allowed and paid in full (including, with
respect to Classes 5 and 7, payment of
interest at the Plan Rate) or, with respect
to Class 3 Claims, Allowed and treated in
accordance with Section 3.4 of the Plan,
(ii) disallowed or (iii) withdrawn, and all
Intercompany Advances payable by Industries
have been repaid. Class 8 is Unimpaired by
the Plan.
- -------------------------------------------------------------------------------
9 INDUSTRIES COMMON On the Effective Date (or such later date(s)
SHARES as may be determined by Reorganized
Industries with the consent of the
Estimated Allowed Liquidating Trustee), (i) that amount of
Interests: $596.7 Industries Common Shares whose cancellation,
in the Debtors' reasonable judgment, can be
Estimated Percentage offset in full against appropriate losses
Recovery: 0% and net operating losses shall be deemed
canceled on a Pro Rata basis without further
act or action under any applicable
agreement, law, regulation, order or rule,
and the Industries Common Shares evidenced
thereby shall be extinguished, and (ii) any
remaining Industries Common Shares shall be
deemed Reinstated. Notwithstanding such
Reinstatement and in accordance with
applicable law, no distribution shall be
made (or dividend paid) on account of any
remaining Industries Common Shares until all
Administrative Claims against Industries,
all Priority Tax Claims against Industries,
all Class 1 Claims against Industries, all
Class 3 Claims against Industries, all Class
4 Claims, all Class 5 Claims, all Class 6
Claims, all Class 7 Claims, all Interests in
Class 8 and all Class 18 Claims against
Industries have been (i) Allowed and paid in
full (including, with respect to Classes 5
and 7, payment of interest at the Plan
Rate), or, with respect to Class 3 Claims,
Allowed and treated in accordance with
Section 3.4 of the Plan, (ii) disallowed or
(iii) withdrawn, and all Intercompany
Advances payable by Industries have been
repaid. In accordance with and as provided
by the Plan, any remaining Industries Common
Shares shall be deemed to continue in effect
and shall not be deemed canceled or
extinguished under any other law or
regulation. Class 9 is Impaired by the Plan.
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10 GENERAL UNSECURED Subject to the provisions of Article VII of
CLAIMS AGAINST FOODS the Plan and the Liquidating Trust
Agreement, each holder of an Allowed Class
Estimated Allowed 10 Claim shall receive, in full and complete
Claims: $33.0 million satisfaction of such Allowed Class 10 Claim,
Cash equal to the amount of its Allowed
Estimated Percentage Class 10 Claim plus interest at the Plan
Recovery: 100% Rate from the Petition Date through the
Effective Date. Class 10 is Impaired by the
Plan; provided, however, that holders of
Allowed Class 10 Claims that arise from the
rejection of an executory contract or
unexpired leases shall receive interest at
the Plan Rate only from the date of such
rejection through the Effective Date.
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11 OLD SECURITIES OF As of the Effective Date, the stock
FOODS certificates and other instruments
evidencing the Old Securities of Foods shall
be deemed canceled without further act or
action under any applicable agreement, law,
regulation, order or rule and the Old
Securities of Foods evidenced thereby shall
be extinguished. The holders of Allowed
Class 11 Interests that constitute Minority
Foods Shares shall receive their Pro Rata
share of the Class 11 Distribution Pool.
Class 11 is Impaired by the Plan.
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12 GENERAL UNSECURED Subject to the provisions of Article VII of the
CLAIMS AGAINST Plan and the Liquidating Trust Agreement,
TRANSPORTATION each holder of an Allowed Class 12 Claim shall
receive, in full and complete satisfaction of
Estimated Allowed such Allowed Class 12 Claim, Cash equal to the
Claims: $3.2 million amount of its Allowed Class 12 Claim. Class 12
is Impaired by the Plan.
Estimated Percentage
Recovery: 100%
- -------------------------------------------------------------------------------
13 OLD SECURITIES OF As of the Effective Date, the stock certificates
TRANSPORTATION and other instruments evidencing the Old
Securities of Transportation shall be deemed
canceled without further act or action under
Estimated Percentage any applicable agreement, law, regulation, order
Recovery: 0% or rule, and The Old Securities of
Transportation evidenced thereby shall be
extinguished. Any Cash remaining in the
Estate of Transportation after all
Administrative Claims against
Transportation, all Priority Tax Claims
against Transportation, all Class 1 Claims
against Transportation, all Class 3 Claims
against Transportation, all Class 12 Claims
and all Class 18 Claims against
Transportation have been (i) Allowed and
paid (including, with respect to Class 12,
payment of interest at the Plan Rate) or,
with respect to Class 3 Claims, Allowed and
treated in accordance with Section 3.4 of
the Plan, (ii) disallowed or (iii)
withdrawn, and all Intercompany Advances
payable by Transportation have been repaid,
shall vest in the Liquidating Trust. Class
13 is Impaired by the Plan.
- --------------------------------------------------------------------------------
14 GENERAL UNSECURED Subject to the provisions of Article VII of
CLAIMS AGAINST SFA the Plan and the Liquidating Trust
Agreement, each holder of an Allowed Class
Estimated Allowed 14 Claim shall receive, in full and complete
Claims: $2.2 million satisfaction of such Allowed Class 14 Claim,
Cash equal to the amount of its Allowed
Estimated Percentage Class 14 Claim. Class 14 is Impaired by the
Recovery: 100% Plan.
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15 OLD SECURITIES OF SFA As of the Effective Date, the stock certificates
and other instruments evidencing the Old
Estimated Percentage Securities of SFA shall be deemed canceled
Recovery: 0% without further act or action under any
applicable agreement, law, regulation, order
or rule, and the Old Securities of SFA
evidenced thereby shall be extinguished. Any
Cash remaining in the Estate of SFA after
all Administrative Claims against SFA, all
Priority Tax Claims against SFA, all Class 1
Claims against SFA, all Class 3 Claims
against SFA, all Class 14 Claims and all
Class 18 Claims against SFA have been (i)
Allowed and paid (including, with respect to
Class 14, payment of interest at the Plan
Rate) or, with respect to Class 3 Claims,
Allowed and treated in accordance with
Section 3.4 of the Plan, (ii) disallowed or
(iii) withdrawn, and all Intercompany
Advances payable by SFA have been repaid,
shall vest in the Liquidating Trust. Class
15 is Impaired by the Plan.
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16 GENERAL UNSECURED Subject to the provisions of Article VII of
CLAIMS AGAINST the Plan and the Liquidating Trust
PIPELINE Agreement, each holder of an Allowed Class
16 Claim shall receive, in full and complete
Estimated Allowed satisfaction of such Allowed Class 16 Claim,
Claims: $1.0 million Cash equal to the amount of its Allowed
Class 16 Claim. Class 16 is Impaired by the
Estimated Percentage Plan.
Recovery: 100%
- --------------------------------------------------------------------------------
17 OLD SECURITIES OF As of the Effective Date, the stock
PIPELINE certificates and other instruments
evidencing the Old Securities of Pipeline
Estimated Percentage shall be deemed canceled without further act
Recovery: 0% or action under any applicable agreement,
law, regulation, order or rule, and the Old
Securities of Pipeline evidenced thereby
shall be extinguished. An Cash remaining in
the Estate of Pipeline after all
Administrative Claims against Pipeline, all
Priority Tax Claims against Pipeline, all
Class 1 Claims against Pipeline, all Class 3
Claims against Pipeline, all Class 16 Claims
and all Class 18 Claims against Pipeline
have been (i) Allowed and paid (including,
with respect to Class 16, payment of
interest at the Plan Rate) or, with respect
to Class 3 Claims, Allowed and treated in
accordance with Section 3.4 of the Plan,
(ii) disallowed or (iii) withdrawn, and all
Intercompany Advances payable by Pipeline
have been repaid, shall vest in the
Liquidating Trust. Class 17 is Impaired by
the Plan.
- -------------------------------------------------------------------------------
18 INTERCOMPANY CLAIMS On or as soon as reasonably practicable
after the Effective Date, each holder of an
Estimated Allowed Allowed Class 18 Claim shall receive, in
Claims: $198.0 million full and complete satisfaction of such
Allowed Class 18 Claim, (x) Cash equal to
Estimated Percentage the unpaid portion of such Allowed Class 18
Recovery: 100% Claim or (y) such other treatment as to
which the Debtors or the Liquidating
Trustee, as the case may be, and such holder
shall have agreed upon in writing. Class 18
is Impaired by the Plan.
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19 SUBORDINATED CLAIMS In accordance with section 510(b) and (c) of the
Bankruptcy Code, no distribution shall be
Estimated Allowed made on account of the Subordinated Claims
Claims: $0.0 million until all Administrative Claims against
Industries, all Priority Tax Claims against
Estimated Percentage Industries, all Class 1 Claims against
Recovery: 0% Industries, all Class 3 Claims against
Industries, all Class 4 Claims, all Class 5
Claims, all Class 6 Claims, all Class 7
Claims, all Interests in Class 8 and all
Class 18 Claims against Industries have been
(i) Allowed and paid in full (including,
with respect to Classes 5 and 7, payment of
interest at the Plan Rate) or, with respect
to Class 3 Claims, Allowed and treated in
accordance with Section 3.4 of the Plan,
(ii) disallowed or (iii) withdrawn, and all
Intercompany Advances payable by Industries
have been repaid. Class 19 is Impaired by
the Plan.
- -------------------------------------------------------------------------------
D. PROVISIONS GOVERNING DISTRIBUTIONS
1. DISTRIBUTIONS
Subject to Bankruptcy Rule 9010, all distributions under the Plan
shall be made by the Liquidating Trustee pursuant to the terms and
conditions contained in the Plan and the Liquidating Trust Agreement;
provided, however, that no distribution shall be made on behalf of any
Claim which may be subject to disallowance under section 502(d) of the
Bankruptcy Code. At the close of business on the Effective Date, the Claims
and Interest register shall be closed, and there shall be no further
changes in the record holders of any Claims or Interests. The Liquidating
Trustee shall have no obligation to recognize any transfer of any Claims or
Interest occurring after the Effective Date. The Liquidating Trustee shall
instead be entitled to recognize and deal for all purposes under the Plan
(except as to voting to accept or reject the Plan pursuant to Article 4 of
the Plan) with only those record holders stated on the Claims register as
of the close of business on the Effective Date.
2. INTEREST ON CLAIMS
Unless otherwise specifically provided for in the Plan or the
Confirmation Order, or required by applicable law, including section
1129(a) of the Bankruptcy Code, post-petition interest shall not accrue or
be paid on Claims, and no holder of a Claim shall be entitled to interest
accruing on or after the Petition Date on any Claim; provided, however,
that any interest determined to be payable in respect of any Claim shall be
calculated at the Plan Rate. This provision shall not apply to Allowed
Secured Lender Claims and DIP Loan Claims.
3. MEANS OF CASH PAYMENT
Any payment to be made by the Liquidating Trustee pursuant to the Plan
will be in U.S. dollars and may be made, at the sole discretion of the
Liquidating Trustee, by draft, check, electronic funds transfer, or as
otherwise required or provided in any relevant agreement or applicable law.
4. DISTRIBUTIONS ON THE INITIAL DISTRIBUTION DATE
As soon as is practicable after the Effective Date, subject to the
reservation of adequate funds in the Liquidating Trust Administrative
Reserve, each Disputed Claims Reserve and any other reserves established
under the Plan or the Liquidating Trust Agreement as and when appropriate,
the Liquidating Trustee shall deliver proceeds of Collateral and/or
Available Cash to holders of Claims entitled to distributions under the
Plan that were Allowed as of the Effective Date. All payments shall be made
in accordance with the priorities established by the Plan and in accordance
with the terms and conditions of the Plan and the Confirmation Order.
5. DISTRIBUTIONS ON A SUBSEQUENT DISTRIBUTION DATE
Unless otherwise provided in the Plan, to the extent that proceeds of
Collateral and/or Available Cash or other reasonably distributable assets
are available subsequent to the Initial Distribution Date, the Liquidating
Trustee shall, on a Subsequent Distribution Date, which date shall be
whenever the aggregate amount distributable to holders of Allowed Claims
equals or exceeds $1,000,000 (but in no event shall such date be less than
three months, or more than one year, after the next previous distribution
date), distribute such proceeds of Collateral and/or Available Cash or
other reasonably distributable assets to the holders of Claims entitled to
distributions under the Plan that were Allowed as of the Effective Date or
subsequently have become Allowed Claims on or before the Subsequent
Distribution Date in amounts necessary to cause such holders to have
received aggregate distributions of Cash in respect of such Allowed Claims
on the Initial Distribution Date if (a) such proceeds of Collateral and/or
Available Cash had been available for distribution on the Initial
Distribution Date, (b) such Allowed Claims had been Allowed on the Initial
Distribution Date in the amounts in which they are Allowed on the
Subsequent Distribution Date, and (c) Claims or portions thereof that have
become disallowed subsequent to the Initial Distribution Date and on or
before the Subsequent Distribution Date had been disallowed on the Initial
Distribution Date; provided, however, that the Liquidating Trustee shall
not be required to make any distribution on a Subsequent Distribution Date
on account of an Allowed Claim or Interest in an amount less than $100;
provided further, however, that in no event shall the foregoing impair the
right of the Liquidating Trustee to use funds in any Disputed Claims
Reserve to satisfy the costs of administering the Plan and the Liquidating
Trustee. All payments shall be made in accordance with the priorities
established by the Plan and in accordance with the terms and conditions of
the Plan and the Confirmation Order.
6. DISTRIBUTIONS ON THE FINAL DISTRIBUTION DATE
Unless otherwise provided in the Plan, to the extent that proceeds of
Collateral and/or Available Cash or other reasonably distributable assets
are available subsequent to the Initial Distribution Date, any Subsequent
Distribution Date and after the liquidation of any and all assets of the
Debtors and after all Disputed Claim and Disputed Interests of
Beneficiaries have become (in whole or in part) Allowed Claims or Allowed
Interests or have been disallowed by Final Order, the Liquidating Trustee
shall establish the Final Distribution Date upon which the Liquidating
Trustee shall distribute such proceeds of Collateral and/or Available Cash
or other assets to the holders of Claims entitled to distributions under
the Plan that were Allowed as of the Effective Date or subsequently have
become Allowed Claims on or before the Final Distribution Date in amounts
necessary to cause such holders to have received aggregate distributions of
Cash in respect of such Allowed Claims on the Initial Distribution Date if
(a) such proceeds of Collateral and/or Available Cash had been available
for distribution on the Initial Distribution Date, (b) such Allowed Claims
had been Allowed on the Initial Distribution Date in the amounts in which
they are Allowed on the Final Distribution Date, and (c) Claims or portions
thereof that have become disallowed subsequent to the Initial Distribution
Date and on or before the Final Distribution Date had been disallowed on
the Initial Distribution Date, taking into account all previous
distributions; provided, however, that in no event shall the foregoing
impair the right of the Liquidating Trustee to use funds in any Disputed
Claims Reserve to satisfy the costs of administering the Plan and the
Liquidating Trust. Within 20 Business Days prior to making the final
distribution, the Liquidating Trustee shall notify the Post-Confirmation
Committee that the Liquidating Trustee deems all assets to be liquidated
and all Claims and Interest of Beneficiaries to be resolved and that the
Liquidating Trustee intends to establish the Final Distribution Date.
7. DELIVERY OF DISTRIBUTIONS; UNDELIVERABLE DISTRIBUTIONS
Distributions to holders of Allowed Claims and Allowed Interests shall
be made by the Liquidating Trustee (a) at the addresses set forth on the
proofs of Claim or Interest filed by such holders (or at the last known
addresses of such holders if no proof of Claim or Interest is filed or if
the Debtors have been notified of a change of address), (b) at the
addresses set forth in any written notices of address changes delivered to
the Liquidating Trustee after the date of any related proof of Claim or
Interest, (c) at the addresses reflected in the Schedules if no proof of
Claim or Interest has been filed and the Liquidating Trustee has not
received a written notice of a change of address, or (d) at the addresses
contained in the official records of the Debtors or the applicable
Indenture Trustee for the Industrial Revenue Bonds, or (e) at the addresses
set forth in a properly completed letter of transmittal accompanying
securities properly remitted to the Debtors. If any holder's distribution
is returned as undeliverable, no further distributions to such holder shall
be made unless and until the Liquidating Trustee is notified, in accordance
with the Liquidating Trust Agreement, of such holder's then current
address. Claims or Interests held by holders whose distributions are
returned as undeliverable and who fail to notify the Liquidating Trustee of
their respective correct addresses within one year after such distributions
are returned to the Liquidating Trustee as undeliverable shall be expunged,
after which date all unclaimed property (including, without limitation, all
unclaimed property held in the Class 11 Distribution Pool) shall (i) revert
to the Liquidating Trust free of any restrictions thereon and the Claims or
Interests of any holder or successor to such holder with respect to such
property shall be discharged and forever barred, notwithstanding any
federal or state escheat laws to the contrary, or (ii) if the Liquidating
Trust has been terminated, be delivered to the clerk of the Bankruptcy
Court. All undeliverable distributions that revert to the Liquidating Trust
shall be used to satisfy the costs of administering the Plan and the
Liquidating Trust and/or distributed to other holders of Allowed Claims or
Allowed Interests of the same Class on the Final Distribution Date. Nothing
contained in the Plan shall require the Liquidating Trustee to attempt to
locate any holder of an Allowed Claim or Allowed Interest.
8. TENDER OF SECURITIES AND INSTRUMENTS; REINSTATEMENT OF PREFERRED
SHARES; CANCELLATION OF TRUST INDENTURES
Except as otherwise required by the Liquidating Trustee, as a
condition precedent to receiving any distribution pursuant to the Plan on
account of an Allowed Claim or Allowed Interest, each holder of Industrial
Revenue Bonds not Reinstated on the Effective Date, Demand Certificates,
Subordinated Certificates or Old Securities of Foods shall tender the
applicable instruments, securities or other documentation evidencing such
Claim or Interest to the Liquidating Trustee in accordance with written
instructions to be provided to such holders by the Liquidating Trustee as
promptly as practicable following the Effective Date. All tendered
instruments and documentation relating to Industrial Revenue Bonds, Demand
Certificates and Subordinated Certificates shall be marked as cancelled.
All tendered securities and documentation relating to Old Securities of
Foods shall be held by the Liquidating Trustee.
The Industries Preferred Shares are comprised of two million shares of
8% Series A Cumulative Redeemable Preferred Shares with an aggregate
liquidation preference of $100.0 million. The Industries Preferred Shares
do not have any stated maturity, are not subject to any sinking fund or
mandatory redemption provisions and are not convertible into any other
security. Under the Plan, the Industries Preferred Shares shall be
Reinstated on the Effective Date. Notwithstanding such Reinstatement and in
accordance with applicable law, no distribution shall be made on account of
the Industries Preferred Shares until all Administrative Claims against
Industries, all Priority Tax Claims against Industries, all Class 1 Claims
against Industries, all Class 3 Claims against Industries, all Class 4
Claims, all Class 5 Claims, all Class 6 Claims, all Class 7 Claims and all
Class 18 Claims against Industries have been (i) Allowed and paid in full
(including, with respect to Classes 5 and 7, payment of interest at the
Plan Rate) or, with respect to Class 3 Claims, Allowed and treated in
accordance with Section 3.4 of the Plan, (ii) disallowed or (iii)
withdrawn, and all Intercompany Advances payable by Industries have been
repaid. Because the Debtors do not anticipate that any distribution will be
payable on account of Industries Preferred Shares, the holders of
Industries Preferred Shares are not required to tender the Industries
Preferred Shares to the Liquidating Trustee.
In addition to any requirements under the applicable certificate or
articles of incorporation or by-laws of the applicable Debtor, any holder
of Industrial Revenue Bonds not Reinstated on the Effective Date, Demand
Certificates, Subordinated Certificates or Old Securities of Foods that has
been lost, stolen, mutilated or destroyed shall, in lieu of tendering such
instrument, security or documentation, deliver to the Liquidating Trustee
(i) evidence satisfactory to the Liquidating Trustee or the applicable
Indenture Trustee for the Industrial Revenue Bonds of the loss, theft,
mutilation or destruction; and (ii) such indemnity or security as may be
required by the Liquidating Trustee to hold the Liquidating Trustee and the
Liquidating Trust harmless from any damages, liabilities or costs incurred
in treating such individual as a holder of Industrial Revenue Bonds, Demand
Certificates, Subordinated Certificates or Old Securities of Foods that has
been lost, stolen, mutilated or destroyed. Upon compliance with this
Section 7.8(b) by a holder of a Claim or Interest evidenced by Industrial
Revenue Bonds, Demand Certificates, Subordinated Certificates or Old
Securities of Foods, such holder shall, for all purposes under the Plan, be
deemed to have tendered its Industrial Revenue Bonds, Demand Certificates,
Subordinated Certificates or Old Securities of Foods.
Except as otherwise required by the Liquidating Trustee, any holder of
Industrial Revenue Bonds not Reinstated on the Effective Date, Demand
Certificates, Subordinated Certificates or Old Securities of Foods that
fails to tender or is deemed to have failed to tender the applicable
instruments, securities and documentation required to be tendered hereunder
within one year after the Effective Date shall have its Claim or Interest
discharged and shall be forever barred from asserting such Claim or
Interest against the Liquidating Trust or its property and any distribution
to have been made on account of such Claim or Interest shall be treated as
an undeliverable distribution in accordance with Section 7.7 of the Plan.
The notice of the Confirmation Order shall contain a description of
the requirements contained in Section 7.8 of the Plan.
On the Effective Date, each Trust Indenture for Industrial Revenue
Bonds not Reinstated on the Effective Date shall be deemed cancelled as
permitted by section 1123(a)(5)(F) of the Bankruptcy Code.
9. WITHHOLDING AND REPORTING REQUIREMENTS
In connection with the Plan and all distributions hereunder, the
Liquidating Trustee shall, to the extent applicable, comply with all tax
withholding and reporting requirements imposed by any federal, state,
provincial, local, or foreign taxing authority, and all distributions
hereunder shall be subject to any such withholding and reporting
requirements. The Liquidating Trustee shall be authorized to take any and
all actions that may be necessary or appropriate to comply with such
withholding and reporting requirements.
10. SETOFFS
The Liquidating Trustee may, but shall not be required to, set off
against any Allowed Claim, and the payments or other distributions to be
made pursuant to the Plan in respect of such Allowed Claim, claims, right
and causes of action of any nature whatsoever that the Liquidating Trustee
may have against the holder of such Allowed Claim; provided, however, that
neither the failure to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Liquidating Trustee of any such claim
that the Liquidating Trustee may have against such holder, including,
without limitation, any Litigation Claims. Nothing contained herein is
intended or shall be construed to limit or otherwise affect any claims,
defenses or rights of any Entity to setoff or recoupment. The Debtors, the
Liquidating Trustee and Reorganized Industries expressly reserve all such
claims, defenses and rights with respect to setoff and recoupment.
11. NO RECOURSE
Notwithstanding that the Allowed amount of any particular Claim may be
reconsidered under the applicable provisions of the Bankruptcy Code and
Bankruptcy Rules or Allowed in an amount for which there is insufficient
Cash in the relevant account to provide a recovery equal to that received
by other holders of Allowed Claims in the relevant Class, no such holder
shall have recourse to the Estates, the Bankruptcy Committees, the
Liquidating Trust, the Liquidating Trustee, the Post-Confirmation
Committee, Reorganized Industries or any of their respective professionals,
or their successors or assigns, or the holder of any other Claim, or any of
their respective property. Nothing in the Plan, however, shall modify any
right of a holder of a Claim under section 5020(j) of the Bankruptcy Code.
12. TRANSACTIONS ON BUSINESS DAYS
If the Effective Date or any other date on which a transaction may
occur under the Plan shall occur on a day that is not a Business Day, the
transactions contemplated by the Plan to occur on such day shall instead
occur on the next succeeding Business Day and shall be deemed to have been
completed as of the required date.
13. NO DISTRIBUTIONS IN EXCESS OF ALLOWED AMOUNTS OF CLAIM
Notwithstanding anything to the contrary herein, no holder of an
Allowed Claim shall receive in respect of such Claim any distribution in
excess of the Allowed amount of such Claim Plus interest at the Plan Rate
from the Petition Date through the Effective Date plus Tax Distributions.
14. INTERCOMPANY ADVANCES; INTERCOMPANY CLAIMS
In the event that the Liquidating Trustee determines that there does
not exist sufficient Cash in the Estate of any Debtor (a "Benefited
Debtor") to make payments to all holders of Allowed Administrative Claims,
Allowed Priority Tax Claims and Allowed Class 1 Claims asserted against
such Benefited Debtor (or to deposit sufficient funds in Disputed Claims
Reserves for all Disputed Administrative Claims, Disputed Priority Tax
Claims and Disputed Class 1 Claims asserted against such Benefited Debtor),
then the Liquidating Trustee shall utilize Cash in the one or more of the
other Estates to make such payments or deposit such funds on behalf of the
Estate of such Benefited Debtor (such payments and deposits, the
"Intercompany Advances") and the Estate(s) of such Debtor(s) shall
thereupon have a direct right of reimbursement from the Estate of such
Benefited Debtor to the extent of the Intercompany Advances extended to
such Benefited Debtor (a "Reimbursement Right"). Except as otherwise
provided herein, the Liquidating Trustee shall ensure that all Intercompany
Advances are repaid prior to making any distributions to holders of Allowed
General Unsecured Claims asserted against such Benefited Debtor.
The Debtors currently believe that the Estate of each Debtor contains
sufficient assets to make payments to all holders of Allowed Administrative
Claim, Allowed Priority Tax Claims, Allowed Class 1 Claims asserted against
such Debtor. Because it is probable that all of the Debtors' assets will
not have be liquidated to Cash as of the Effective Date, the Debtors
propose to utilize Intercompany Advances (if at all) to permit the Debtors
to make prompt payments to the holders of these Allowed Claims.
On or as soon as reasonably practicable after the Effective Date, each
holder of an Allowed Intercompany Claim shall receive, in full and complete
satisfaction of such Intercompany 18 Claim, (x) Cash equal to the unpaid
portion of such Allowed Intercompany Claim or (y) such other treatment as
to which the Debtors or the Liquidating Trustee, as the case may be, and
such holder shall have agreed upon in writing. The sole Intercompany Claim
is $198.0 million pre-petition obligation that Foods owes to Industries.
E. IMPLEMENTATION OF THE PLAN
1. CONTINUED EXISTENCE OF THE DEBTORS; VESTING OF ASSETS
On the Effective Date, all right, title and interest in all of the
Debtors' property and assets (excluding the Industries Retained Assets, the
Transferred Assets and the Coffeyville Assets), including without
limitation, all rights and causes of action, whether arising by contract,
under the Bankruptcy Code (including, without limitation pursuant to
Section 1123(b)(3)(B) of the Bankruptcy Code), under the Plan or under
other applicable law, including, without limitation, all rights the Debtors
have under the Plan, shall vest in the Liquidating Trust. The Industries
Retained Assets are comprised primarily of ownership interests that the
Debtors hold in certain non-Debtor entities, which ownership interests the
Debtors believe, after careful analysis, can be more effectively maintained
and disposed of by Reorganized Industries, rather than the Liquidating
Trust. The Debtors expect the costs associated with maintaining the
Industries Retained Assets to be minimal.
On the Effective Date, Foods shall be merged into Industries, after
which Industries shall continue to exist as Reorganized Industries.
Reorganized Industries shall be governed and managed under and in
accordance with the Plan, the Management Agreement and its amended
certificate of incorporation and bylaws; provided, however, that all
provisions contained in such documents related to the SF Phosphates,
Limited Company will not be effective if the SF Phosphates Interest has
been disposed of prior to the Effective Date. Reorganized Industries shall
be authorized to effectuate the Plan and the transactions contemplated by
the Plan and to take any proceedings or actions provided for or
contemplated by the Plan (in each case in a manner consistent with the Plan
and the Liquidating Trust Agreement), including, without limitation, such
proceedings or actions related to the Industries Retained Assets, the
Transferred Assets and the Coffeyville Assets as may be necessary and
appropriate, all without further action by the stockholders of Reorganized
Industries, and with like effect as if such actions had been taken by
unanimous action of the stockholders of Reorganized Industries. All
recoveries received by Reorganized Industries on account of the Industries
Retained Assets, the Transferred Assets or any other assets of the Debtors
shall be remitted to the Liquidating Trust and held by the Liquidating
Trustee on account of the Estate to which such recoveries are allocable.
Forms of the Management Agreement and the amended certificate of
incorporation and bylaws of Reorganized Industries shall be filed with the
Bankruptcy Court at least five Business Days prior to commencement of the
Confirmation Hearing. The identities of the officers and directors of
Reorganized Industries shall be disclosed to the Bankruptcy Court no later
than five Business Days prior to the commencement of the Confirmation
Hearing, together with any additional information required under Section
1129(a)(5) of the Bankruptcy Code. The Bankruptcy Committees and any
creditor or party in interest may object to the identities of the proposed
officers and directors of Reorganized Industries (and the proposed
compensation to be provided to such persons) no later than one Business Day
prior to the commencement of the Confirmation Hearing. Notwithstanding any
other provision hereof, Cash or Cash equivalents in an amount disclosed to
the Bankruptcy Court at least five Business Days prior to the commencement
of the Confirmation Hearing shall remain as assets of Reorganized
Industries to fund all operations of Reorganized Industries other than
those operations, if any, related to the Industries Retained Assets and/or
services to be provided to the Liquidating Trust (which shall be funded, if
at all, under the Management Agreement).
In the event that the Debtors own the Coffeyville Assets on the
Effective Date, on the Effective Date, (i) all of the Debtors' right, title
and interest in the Coffeyville Assets shall be transferred to a Delaware
limited liability company (the "Coffeyyille LLC") to be established and
wholly owned by the Liquidating Trust, and (ii) the executory contracts and
unexpired leases listed on Plan Exhibit E shall be assumed and assigned to
the Coffeyville LLC; provided, however, that the Liquidating Trust shall
have the option (at its sole discretion in accordance with the liquidating
Trust Agreement) to transfer any of the Coffeyville Assets to the
Liquidating Trust. The Coffeyville LLC shall be funded with that amount of
capital determined by the Bankruptcy Court at the Confirmation Hearing to
constitute sufficient capitalization for the continued maintenance of the
Coffeyville LLC and any necessary remediation or other regulatory
compliance related to the Coffeyville Assets. Forms of the certificate of
organization and operation agreement for the Coffeyville LLC shall be filed
with the Bankruptcy Court at least five Business Days prior to the
commencement of the Confirmation Hearing.
On the Effective Date, (i) all of the Debtors' right, title and
interest in each Transferred Asset owned by the Debtors on the Effective
Date shall be transferred to a trust (each such trust, a "Transferred Asset
Trust"), and (ii) the liquidating Trust shall fund each Transferred Asset
Trust with that amount of capital set forth on Plan Exhibit D or such other
amount as determined by the Bankruptcy Court at the Confirmation Hearing
(or at such other time prior to the Effective Date), which amount shall
constitute sufficient capitalization for the maintenance, remediation (or
other regulatory compliance) and/or disposition of each such Transferred
Asset. Forms of the trust documents and related documents for each
Transferred Asset Trust shall be filed with the Bankruptcy Court no later
than five Business Days prior to the commencement of the Confirmation
Hearing.
On the Effective Date, SFA, Transportation and Pipeline shall be
deemed dissolved for all purposes without the necessity for any other or
further actions to be taken by or on behalf of the Debtors or payments to
be made in connection therewith; provided, however, that the Debtors shall
file with the appropriate public office certificates of dissolution.
From and after the Effective Date, the Debtors shall not be required
to file any document, or take any other action, to withdraw their business
operation from any state in which the Debtors were previously conducting
their business operation.
2. FUNDING FOR THE PLAN
The Plan shall be funded in accordance with the provisions of the Plan
from (a) Available Cash on the Effective Date and (b) Cash available after
the Effective Date from, among other things, the liquidation of the
Debtors' remaining assets, the prosecution and enforcement of Litigation
Claims, and any release of funds from the Disputed Claims Reserve after the
Effective Date. All Available Cash realized from the liquidation of the
Debtors' remaining assets that is not Collateral for the Secured Lender
Claims or DIP Loan Claims, the prosecution and enforcement of Litigation
Claims, and the release of funds from the Disputed Claims Reserve (to the
extent not otherwise payable to the Pre-Petition Lenders or the DIP
Lenders) shall be allocated to the appropriate Estate(s) and shall be
maintained by the Liquidating Trustee for distribution to the holders of
Allowed Claims as provided in the Plan and the Liquidating Trust Agreement.
3. ACCOUNTS
The Debtors (subject to approval of the Bankruptcy Committees, which
approval shall not be unreasonably withheld) and, from and after the
Effective Date, the Liquidating Trustee may establish or maintain one or
more interest-bearing accounts as they determine may be necessary or
appropriate to effectuate the provisions of the Plan consistent with
section 345 of the Bankruptcy Code and any orders of the Bankruptcy Court.
4. LIQUIDATING TRUST; LIQUIDATING TRUSTEE
Prior to the Effective Date, the Debtors shall establish the
Liquidating Trust in accordance with Sections 5.1(c) herein and subject to
the terms of the Liquidating Trust Agreement and the Plan. The Bankruptcy
Committees shall establish the Post-Confirmation Committee and appoint the
Committee Members in accordance with the Liquidating Trust Agreement and
the Plan. By Confirmation of the Plan, the Bankruptcy Court specifically
approves and designates the Liquidating Trust and the Liquidating Trustee
as a representative of each Estate and finds that the Liquidating Trust and
the Liquidating Trustee are acting on behalf of and for the benefit of the
Beneficiaries in accordance with the distribution scheme set forth in the
Plan. The establishment of the Liquidating Trust shall not give a holder of
a Claim against any Debtor or any Estate any rights as against any other
Debtor or any other Estate, except as provided for in Section 7.11 of the
Plan. The Liquidating Trust is an intended third-party beneficiary of the
Plan to the fullest extent allowable under the laws of the State of
Delaware, the laws of the United States or any other applicable law. The
identity of the Liquidating Trustee shall be disclosed to the Bankruptcy
Court at least five Business Days prior to the commencement of the
Confirmation Hearing. The Bankruptcy Committees and any creditor or party
in interest may object to the identity of the proposed Liquidating Trustee
(and the proposed compensation to be provided to such person) no later than
one Business Day prior to the commencement of the Confirmation Hearing.
The Liquidating Trust and the Liquidating Trustee, as the
representative of each Estate, except as otherwise limited in the
Liquidating Trust Agreement, Plan or the Confirmation Order, shall be
vested with all property, rights, interests, and powers of the Debtors.
Subject to the provisions of the Liquidating Trust Agreement, the
Liquidating Trustee's rights and authority include, without limitation, all
of the following:
(a) control, management and disposal of all Liquidating
Trust Assets for the benefit of the holders of Allowed Claims and
Allowed Class 11 Interests who may receive distributions under
the Plan;
(b) prosecution of Litigation Claims on behalf of the
Debtors and/or the Estates and/or the Liquidating Trust,
including preference, fraudulent conveyance, avoidance and other
actions whether against insiders or any other third parties;
(c) filing of objections to Claims or actions to
subordinate Claims or recharacterize debt as equity and the
filing and pursuit of any other pleading, motion, stipulation
or other item in connection with any matter arising under, in
or in connection with the Chapter 11 Case;
(d) filing of tax returns;
(e) transfer (subject to Bankruptcy Court approval) of
right, title and interest in and to any Liquidating Trust Assets;
and
(f) undertake any other action in the best interests of
the Trust and/or its beneficiaries and not inconsistent with the
provisions of the Liquidating Trust Agreement, the Plan, and the
Confirmation Order.
The funding of the Liquidating Trust pursuant to Section 5.1(c)
hereof shall be treated for all purposes of the Tax Code as a deemed
transfer to the Beneficiaries, followed by a deemed transfer by the
Beneficiaries to the Liquidating Trust. The Beneficiaries shall be treated
as the grantors and deemed owners of the Liquidating Trust. The valuation
of the property and assets transferred to the Liquidating Trust shall be
consistent and shall be used for all federal income tax purposes.
Neither the Liquidating Trust nor the Liquidating Trustee shall have
any successor or transferee liability for liabilities of the Debtors or
shall be deemed a joint employer, co-employer or successor employer with
the Debtors and shall have no obligation to pay wages, severance pay, WARN
Act claims, benefits (including, without limitation, benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985) or any other
payment to employees of the Debtors, except to the extent that such
payments are payable in respect of Allowed Claims against the Debtors.
From and after the Effective Date, the Liquidating Trust shall be
subject to all terms and conditions contained in the Liquidating Trust
Agreement and the Plan.
5. POST-CONFIRMATION COMMITTEE
On the Effective Date, there shall be constituted the Post-Confirmation
Committee consisting of Committee Members, the number and method for
selection of which shall be agreed to by the Bankruptcy Committees and
disclosed to the Bankruptcy Court at least ten Business Days prior to the
commencement of the Confirmation Hearing or as otherwise ordered by the
Bankruptcy Court. The identities of the Committee Members shall be
disclosed to the Bankruptcy Court on the Confirmation Date. In the event
that (a) no one is willing to serve on the Post-Confirmation Committee or
(b) there shall have been fewer than one-half of the original number of
Committee Members serving for a period of 30 consecutive days, then the
Liquidating Trustee may, during such vacancy, ignore any reference in the
Plan, the Liquidating Trust Agreement, or the Confirmation Order to a
Post-Confirmation Committee, and all references to the Post-Confirmation
Committee's ongoing duties and rights in the Plan, the Liquidating Trust
Agreement, and the Confirmation Order shall be null and void during such
time period.
The Post-Confirmation Committee shall have the rights and
responsibilities set forth in the Plan and the Liquidating Trust Agreement.
The Committee Members shall be entitled to reimbursement of their
reasonable expenses. The Committee Members shall receive such compensation
as shall be disclosed to the Bankruptcy Court, upon consent of the Debtors
and the Bankruptcy Committees, not less than five Business Days prior to
the commencement of the Confirmation Hearing.
Neither the Post-Confirmation Committee nor any of the Committee
Members shall be liable for the acts or omissions of any other member of
the Post-Confirmation Committee, nor shall any Committee Member be liable
for any act or omission taken in its capacity as a Committee Member, other
than acts or omissions resulting from such Committee Member's willful
misconduct or gross negligence.
The Post-Confirmation Committee shall adopt by-laws which shall
provide for the governance of the Post-Confirmation Committee, except as
may be otherwise set forth in the Liquidating Trust Agreement.
A Committee Member shall recuse himself or herself from any decisions
or deliberations regarding actions taken or proposed to be taken by the
Liquidating Trustee or the Estates with respect to the Claims, Interests,
or rights of such Committee Member, the entity appointing such Committee
Member, or any affiliate of the foregoing.
6. EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS
Prior to the Effective Date, the chief executive officer, chief
financial officer, or any other appropriate officer of Industries or any
other applicable Debtor, as the case may be, shall be authorized to
execute, deliver, file, or record such contracts, instruments, releases,
indentures, and other agreements or documents, and take such actions as may
be necessary or appropriate to effectuate and further evidence the terms
and conditions of the Plan. The secretary or assistant secretary of
Industries or any other applicable Debtor, as the case may be, shall be
authorized to certify or attest to any of the foregoing actions.
7. EXEMPTION FROM CERTAIN TRANSFER TAXES
Pursuant to section 1146(c) of the Bankruptcy Code, any transfers in
the United States from a Debtor to the Liquidating Trust or any other
Entity pursuant to the Plan shall not be subject to any document recording
tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax,
stamp act, real estate transfer tax, mortgage recording tax or other
similar tax or governmental assessment, and the Confirmation Order shall
direct the appropriate state or local governmental officials or agents to
forego the collection of any such tax or governmental assessment and to
accept for filing and recordation any of the foregoing instruments or other
documents without the payment of any such tax or governmental assessment.
8. RELEASES AND RELATED MATTERS
a) Releases by Debtors
As of the Effective Date, for good and valuable consideration, the
adequacy of which is hereby confirmed, the Debtors and the Liquidating
Trustee, on behalf of the Liquidating Trust, will be deemed to forever
release, waive and discharge all claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action and liabilities
whatsoever in connection with or related to the Debtors, the Liquidating
Trust, the Liquidating Trustee, the Non-Debtor Subsidiaries, the Chapter 11
Case or the Plan (other than the rights of the Debtor, the Liquidating
Trust or the Liquidating Trustee to enforce the Plan and the contracts,
instruments, releases, indentures, and other agreements or documents
delivered thereunder) whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen,
then existing or thereafter arising, in law, equity or otherwise that are
based in whole or part on any act, omission, transaction, event or other
occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors, the Liquidating Trust, the Liquidating Trustee,
the Non-Debtor Subsidiaries, the Chapter 11 Case or the Plan, and that may
be asserted by or on behalf of the Debtors or their Estates or the
Liquidating Trust against the Lenders, the agents under the Pre-Petition
Credit Agreement, the financial institutions party to the DIP Credit
Agreement, the agents under the DIP Credit Agreement, and their respective
agents and professionals.
The Debtors are not aware of any viable or valuable claims that are
being released under these provisions, but the Debtors have not conducted
an exhaustive investigation of this issue.
b) Injunction Related to Releases
The Confirmation Order will enjoin the prosecution, whether directly,
derivatively or otherwise, of any claim, obligation, suit, judgment,
damage, demand, debt, right, cause of action, liability or interest
released by operation of Section 5.8 of the Plan or exculpated by operation
of Section 11.9 of the Plan.
9. CLOSING OF THE CHAPTER 11 CASE
When substantially all remaining assets of the Debtors, Reorganized
Industries or the Liquidating Trust (except the Transferred Assets), as the
case may be, have been liquidated and converted into Cash (other than those
assets abandoned by Debtors or the Liquidating Trust, as the case may be),
and such Cash has been distributed in accordance with the Plan, the
Liquidating Trustee shall seek authority from the Bankruptcy Court to close
the Chapter 11 Case in accordance with the Bankruptcy Code and the
Bankruptcy Rules.
10. RIGHTS OF ACTION
On and after the Effective Date, except as provided in Section 11.9 of
the Plan, the Liquidating Trustee, on behalf of and as a court-appointed
representative of each Debtor and for the benefit of each Estate (as vested
in the Liquidating Trust pursuant to the Plan), will, pursuant to section
1123(b)(3)(B) of the Bankruptcy Code, retain and become the holder of, and
have the exclusive right to enforce any and all present or future
Litigation Claims and any and all rights of any and all of the Debtors that
arose before or after the Commencement Date, including, but not limited to,
rights, claims, causes of action, avoiding powers, suits and proceedings
arising under Chapter 5 of the Bankruptcy Code, including, without
limitation, any and all potential rights, claims and causes of action
related to payments made by the Debtors prior to the Petition Date and
disclosed in the Schedules. The Liquidating Trustee may pursue, abandon,
settle or release any or all such Litigation Claims and rights of action
pursuant to the terms of the Plan and the Liquidating Trust Agreement, as
it deems appropriate, without the need to obtain approval or any other or
further relief from the Bankruptcy Court.
On and after the Effective Date, all Entities are permanently enjoined
from commencing or continuing in any manner any action or proceeding
(whether directly, indirectly, derivatively or otherwise) on account of or
respecting any Claim, Litigation Claim, debt, right or cause of action of
the Debtors for which the Liquidating Trustee retains sole and exclusive
authority to pursue in accordance with Section 5.10(a) of the Plan.
The allowance of any Claim prior to the Effective Date shall not
constitute a waiver of any Litigation Claim against the holder of such
Claim.
The Litigation Claims include potential avoidance or other bankruptcy
causes of actions, including potential rights, claims and causes of action
related to payments made by the Debtors prior to the Petition Date and
disclosed in the Schedules. Copies of the Schedules can be accessed via the
Bankruptcy Court's case management / electronic case filing system:
ecfmowb.uscourts.gov. The Litigation Claims also include
non-bankruptcy claims, rights of action, suits or proceedings that arise in
the ordinary course of the Debtors' businesses. The Debtors currently hold
certain claims or rights of action against a number of parties and continue
to review claims against certain parties that may ripen into litigation.
Neither the listing nor the failure to list any party herein should
prejudice the Debtors' rights to pursue any claims, rights of action or
proceedings that have arisen or may arise in the future in the ordinary
course of the Debtors' businesses. In addition, the Bankruptcy Committees
are investigating possible pre-petition claims and rights of action. In the
event that this investigation has not been completed by the Effective Date,
the Liquidating Trustee may continue this investigation or initiate such
other investigations as the liquidating Trustee deems proper.
F. PENSION BENEFITS AND RETIREE BENEFITS
The Debtors sponsor the Farmland Pension Plan, which is a qualified
ERISA plan that includes approximately 18,000 participants, including both
active employees and retirees. The PBGC filed the PBGC Claims against each
of the Debtors in the amount of $141.7 million and asserted the joint and
several liability of each Debtor for such Claims. In connection with its
purchase of the Pork Business, Smithfield has agreed to assume sponsorship
and associated liabilities of the Farmland Pension Plan, including the
funding of accrued benefits under the Farmland Pension Plan. The Debtors
believe that Smithfield's assumption of the Farmland Pension Plan resolves
the PBGC Claims.
On September 23, 2003, the Bankruptcy Court appointed a committee of
retired employees (the "Retiree Committee") to serve as the "authorized
representative" of those person receiving "retiree benefits" (as that term
is defined in section 1114 of the Bankruptcy Code) from the Debtors. The
Retiree Committee is vested with the duties accorded an "authorized
representative" under section 1114(e), (f), (g), (h), and (k) of the
Bankruptcy Code. Section 1114 of the Bankruptcy Code outlines certain
procedures for modification or termination of "retiree benefits." Any
"retiree benefits" (as that term is defined in section 1114 of the
Bankruptcy Code) of the Debtors not terminated during the Chapter 11 Case
shall continue after the Effective Date to the extent required by section
1129(a)(13) of the Bankruptcy Code, without prejudice to the Debtor's right
under applicable non-bankruptcy law to modify, amend or terminate such
benefits. To the extent that any "retiree benefits" continue after the
Effective Date, the Liquidating Trustee and/or Reorganized Industries
expressly reserve the right to terminate such benefits in accordance with
applicable nonbankruptcy law. For a further discussion of certain "retiree
benefit" programs administered by the Debtors, see Section III.I.3,
Proposed Termination Of Certain Employee Benefits.
G. ESTABLISHMENT OF CLASS 11 DISTRIBUTION POOL; MINORITY FOODS SHARES;
ESTABLISHMENT OF INDUSTRIES DISTRIBUTION POOL
As of the Effective Date, the stock certificates and other instruments
evidencing the Old Securities of Foods (including the Minority Foods
Shares) shall be deemed canceled without further act or action under any
applicable agreement, law, regulation, order or rule and the Old Securities
of Foods evidenced thereby shall be extinguished. The holders of Allowed
Class 11 Interests that constitute Minority Foods Shares shall receive
their Pro Rata share of the Class 11 Distribution Pool. On or prior to the
Effective Date, and subject to approval of the Bankruptcy Court, the
Debtors, in consultation with the Bankruptcy Committees, shall determine
the amount of Cash to be reserved by the Liquidating Trustee in a separate
account (the "Class 11 Distribution Pool") for distribution to holders of
Allowed Class 11 Interests that constitute Minority Foods Shares in
accordance with the Plan and the Liquidating Trust Agreement, which amount
shall represent the Available Cash estimated to be available for
distribution to Allowed Class 11 Interests constituting Minority Foods
Shares as of the Effective Date after all Administrative Claims against
Foods, all Priority Tax Claims against Foods, all Class 1 Claims against
Foods, all Class 3 Claims against Foods, all Class 10 Claims and all Class
18 Claims against Foods have been (i) Allowed and paid in full (including,
with respect to Class 10, payment of interest at the Plan Rate) or, with
respect to Class 3 Claims, Allowed and treated in accordance with Section
3.4 of the Plan, (ii) disallowed or (iii) withdrawn, and all Intercompany
Advances payable by Foods have been repaid; provided, however, that the
Liquidating Trustee reserves the right to reduce the Class 11 Distribution
Pool in the event that the amount reserved in the Class 11 Distribution
Pool is determined to be in excess of the amount actually available for
distribution to Allowed Class 11 Interests constituting Minority Foods
Shares.
The Minority Foods Shares, which represent approximately 3% of the
outstanding common shares of Foods, represent the common shares of Foods
that were not tendered to Industries in 1991. The Plan provides for the
cancellation of all Old Securities of Foods (including the Minority Foods
Shares) on the Effective Date. Therefore, in order to ensure that the
holders of the Minority Foods Shares will receive any distributions
directly attributable to their ownership interest in Foods, the Plan
proposes to fund a reserve (i.e., the Class 11 Distribution Pool) with that
amount of Cash estimated to be available for distribution to holders of the
Minority Foods Shares after payment in full of all Allowed Claims against
Foods having priority over the Old Securities of Foods.
The Industries Distribution Pool will be comprised of all Available
Cash in the Estate of Industries after all Administrative Claims against
Industries, all Priority Tax Claims against Industries, all Class 1 Claims
against Industries, all Class 2 Claims, all Class 3 Claims against
Industries, all Class 6 Claims and all Intercompany Advances payable by
Industries have been (i) Allowed and paid or, with respect to Class 3
Claims, Allowed and treated in accordance with Section 3.4 of the Plan,
(ii) disallowed or (iii) withdrawn. The Liquidating Trustee may deposit the
Available Cash comprising the Industries Distribution Pool in one or more
accounts, as permitted under the Plan and the Liquidating Trust Agreement.
The documents evidencing or otherwise related to the Demand Certificates
and the Subordinated Certificates clearly identify them as debt securities,
not equity securities. The Debtors believe that, although the Demand
Certificates Claims and the Subordinated Certificates Claims constitute
Claims that are pari passu with the General Unsecured Claims of Industries,
as between the Subordinated Certificates Claims and the Demand Certificates
Claims, the Subordinated Certificates Claims are contractually subordinate
to the Demand Certificate Claims. As a result, the Plan provides that each
holder of Allowed Class 4 Claims will receive (i) its Pro Rata share of the
Industries Distribution Pool (after payment in full of the fees and
expenses of the Indenture Trustee for the Demand Certificates) plus (ii) the
funds otherwise payable to holders of Allowed Class 5 Claims in an amount
equal to the amount necessary to pay its Allowed Class 4 Claim in full,
including payment of interest at the rate provided in the Demand
Certificates through the Effective Date. Holders of Allowed Claims in
Classes 4, 5 and 7 will receive distributions from the Industries
Distribution Pool in accordance with the provisions of the Plan and the
Liquidating Trust Agreement.
H. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
1. REJECTED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Except as otherwise provided in Section 6.3 of the Plan, on the
Effective Date, all executory contracts and unexpired leases that exist
between a Debtor and any Entity (including, without limitation, the Trust
Indentures) shall be deemed rejected as of the Confirmation Date, except
for any executory contract or unexpired lease (a) which has been assumed or
rejected pursuant to an order of the Bankruptcy Court entered prior to the
Confirmation Date or pursuant to the Confirmation Order, or (b) as to which
a motion for approval of the assumption of such executory contract or
unexpired lease has been filed and served prior to the Confirmation Date
(except to the extent that any such motion is ultimately denied or
withdrawn). Entry of the Confirmation Order shall constitute the approval,
pursuant to section 365(a) of the Bankruptcy Code, of the rejection of the
executory contracts and unexpired leases pursuant to the Plan.
2. REJECTION DAMAGES BAR DATE
If the rejection of an executory contract or unexpired lease during
the Chapter 11 Case (including any rejection of an executory contract or
unexpired lease pursuant to Section 6.1 of the Plan) results in a Claim,
then such Claim shall be forever barred and shall not be enforceable
against any Debtor, the Liquidating Trust, the Liquidating Trustee or the
properties of any of them unless a proof of Claim is filed with the clerk
of the Bankruptcy Court and served upon counsel to the Debtors, and counsel
to the Bankruptcy Committees, (i) if such rejection is effective on or
prior to the Confirmation Date, within 30 days after the Confirmation Date,
(ii) if such rejection is effective after the Confirmation Date, within 30
days after service of notice of such rejection, or (iii) if such rejection
is pursuant to Section 6.1 of the Plan, within 30 days after the Effective
Date.
3. ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
On the Effective Date, Reorganized Industries shall be deemed to have
assumed or assumed and assigned, as the case may be, each executory
contract and unexpired lease listed on Plan Exhibit B, provided, however,
that the Debtors reserve their right, at any time prior to the Confirmation
Date, to amend Plan Exhibit B to delete an unexpired lease or executory
contract therefrom or add any unexpired lease or executory contract thereto
and to provide notice of any such deletion or addition to all affected
parties. The Confirmation Order shall constitute an order of the Bankruptcy
Court under section 365 of the Bankruptcy Code approving the contract and
lease assumptions or assumptions and assignments, as the case may be,
described above, as of the Effective Date.
In the event that Industries owns the Coffeyville Assets on the
Effective Date, on the Effective Date Reorganized Industries shall be
deemed to have assumed and assigned to the Coffeyville LLC each executory
contract and unexpired lease listed on Plan Exhibit E, provided, however,
that the Debtors reserve their right, at any time prior to the Effective
Date, to amend Plan Exhibit E to delete an unexpired lease or executory
contract therefrom or add any unexpired lease or executory contract thereto
and to provide notice of any such deletion or addition to all affected
parties. The Confirmation Order shall constitute an order of the Bankruptcy
Court under section 365 of the Bankruptcy Code approving the conditional
assumptions and assignments of the executory contracts and unexpired leases
listed on Plan Exhibit E, as of the Effective Date.
4. PAYMENTS RELATED TO ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Any monetary amounts by which each executory contract and unexpired
lease to be assumed pursuant to the Plan is in default are indicated on
Plan Exhibit B and Plan Exhibit E and shall be satisfied, under section
365(b)(1) of the Bankruptcy Code, at the option of the Debtor party to the
contract or lease or the assignee of such Debtor party assuming such
contract or lease, by Cure. If there is a dispute regarding (a) the nature
or amount of any Cure, (b) the ability of Reorganized Industries or any
assignee to provide "adequate assurance of future performance" (within the
meaning of section 365 of the Bankruptcy Code) under the contract or lease
to be assumed, or (c) any other matter pertaining to assumption or
assignment (each, a "Cure Dispute") that cannot be resolved consensually
among the parties, Reorganized Industries (with the consent of the
Liquidating Trustee) shall have the right to reject the contract or lease
for a period of five Business Days after entry of a Final Order
adjudicating a Cure Dispute in a manner that is not acceptable to
Reorganized Industries (with the consent of the Liquidating Trustee).
I. DISPUTED, CONTINGENT AND UNLIQUIDATED CLAIMS
1. PROSECUTION OF OBJECTIONS TO CLAIMS
a) Objections to Claims
All objections to Claims (other than Professional Fee Claims) and
Interests must be filed and served on the holders of such Claims and
Interests by the Objection Deadline.
b) Authority to Prosecute Objections
From and after the Effective Date, the Liquidating Trustee shall have
the exclusive right to make and file and continue prosecution of objections
to the allowance, classification and/or amount of any Claim or Interest
with the Bankruptcy Court, and shall serve such objections upon holders of
each of the Claims and Interests to which objections are made by the
Objection Deadline. Subject to the terms of the Liquidating Trust
Agreement, the Liquidating Trustee is authorized and empowered, but not
required, to resolve consensually any disputes regarding the allowance,
classification and/or amount of any Claim or Interest. All objections by
the Liquidating Trustee shall be litigated to a Final Order except to the
extent the Liquidating Trustee, in his discretion, elects to withdraw any
such objection, or compromise, settle or otherwise resolve any such
objection, in which event the Liquidating Trustee may settle, compromise or
otherwise resolve any Disputed Claim or Interest without approval of the
Bankruptcy Court. Subject to the terms of the Liquidating Trust Agreement,
the Liquidating Trustee and the Post-Confirmation Committee shall establish
appropriate protocol for the prosecution, settlement, compromise,
withdrawal or litigation to judgment of all objections to Claims and
Interests.
2. TREATMENT OF DISPUTED CLAIMS; DISPUTED CLAIMS RESERVES
Subject to the provisions of Section 7.1 of the Plan and
notwithstanding any other provisions of the Plan or the Liquidating Trust
Agreement to the contrary, no payments or distributions will be made on
account of a Disputed Claim or Disputed Interest, or, if less than the
entire Claim or Interest is a Disputed Claim or Disputed Interest, the
portion of a Claim or Interest that is Disputed, until such Claim or
Interest becomes an Allowed Claim or Allowed Interest. On the Effective
Date or as soon as practicable thereafter, the Liquidating Trustee shall
reserve Cash in one or more Disputed Claims Reserves in an amount equal to
the Face Amount of: (i) Disputed Administrative Claims asserted against
each Debtor; (ii) Disputed Priority Tax Claims asserted against each
Debtor; and (iii) Disputed Claims in Classes 1, 2, 3, 4, 5, 6, 7, 10, 12,
14, 16 and 18; provided, however, that the Liquidating Trustee shall have
the right to file a motion with the Bankruptcy Court to estimate, reduce or
modify the amount to be reserved with respect to any such Disputed Claims.
Each Disputed Claims Reserve shall be established and maintained in
accordance with the provisions of the Plan and the Liquidating Trust
Agreement.
3. ESTIMATION
The Liquidating Trustee may, at any time, request that the Bankruptcy
Court estimate any contingent or unliquidated Claim pursuant to section
502(c) of the Bankruptcy Code regardless of whether the Debtors or the
Liquidating Trustee, as the case may be, have previously objected to such
Claim, and the Bankruptcy Court shall retain jurisdiction to estimate any
contingent or unliquidated Claim at any time, including during litigation
concerning any objection to such Claim. In the event that the Bankruptcy
Court so estimates any contingent or unliquidated Claim, that estimated
amount shall constitute either the Allowed amount of such Claim or a
maximum limitation on such Claim, as determined by the Bankruptcy Court. If
the estimated amount constitutes a maximum limitation on such Claim, the
Liquidating Trustee may elect to pursue any supplemental proceedings to
object to any ultimate payment of such Claim. All of the aforementioned
Claims objection, estimation and resolution procedures are cumulative and
not necessarily exclusive of one another. Claims may be estimated and
thereafter resolved by any permitted mechanisms.
J. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN
1. CONDITIONS TO EFFECTIVE DATE
The following are conditions precedent to the occurrence of the
Effective Date, each of which must be satisfied or waived in accordance
with this Section:
a) The Confirmation Order shall have been entered and
become a Final Order in form and substance reasonably
satisfactory to the Debtors and the Bankruptcy Committees and
shall provide that the Debtors and the Liquidating Trustee are
authorized and directed to take all actions necessary or
appropriate to enter into, implement and consummate the
contracts, instruments, releases, leases, indentures and other
agreements or documents created in connection with the Plan.
b) All Plan Exhibits shall be in form and substance
reasonably acceptable to the Debtors and the Bankruptcy
Committees and shall have been executed and delivered.
c) All actions, documents and agreements necessary to
implement the Plan shall have been effected or executed or are
ready to be executed.
d) The Debtors shall have paid the then outstanding
balances of the Secured Lender Claims and the DIP Loan Claims in
full.
e) The closing of the sales of the Pork Business and the
SF Phosphate Interest shall have occurred.
f) The closing of the sale of the Coffeyville Assets shall
have occurred.
g) The Insurance Claim shall have been settled and paid in
full.
h) The Debtors shall have determined, in consultation with
the Bankruptcy Committees, that the occurrence of the Effective
Date is in the best interest of creditors and parties in
interest.
The Debtors anticipate that the Effective Date will occur within
thirty days after Confirmation.
2. WAIVER OF CONDITIONS
The requirement that the Confirmation Order must be a Final Order may
be waived by the Debtors, with the consent of the Bankruptcy Committees,
which consent shall not be unreasonably withheld. The requirement that the
closing of the sale of the Coffeyville Assets shall have occurred may be
waived by the Debtors, with the consent of the Bankruptcy Committees, which
consent shall not be unreasonably withheld, if the closing of the sale of
the Coffeyville Assets shall not have occurred by the closing date
established in connection with a Bankruptcy Court-approved sale of the
Coffeyville Assets.
3. NOTICE OF EFFECTIVE DATE
The Liquidating Trustee shall file and serve an appropriate notice of
the Effective Date within seven Business Days of the Effective Date.
K. PAYMENT OF CERTAIN FEES AND EXPENSES
1. PROFESSIONAL FEE CLAIMS
All final requests for compensation or reimbursement for Professionals
pursuant to sections 327, 328, 330, 331, 503(b) or 1103 of the Bankruptcy
Code for services rendered prior to the Effective Date and Substantial
Contribution Claims under section 503(b)(4) of the Bankruptcy Code must be
filed with the Bankruptcy Court and served on the Liquidating Trustee and
its counsel no later than 45 days after the Effective Date, unless
otherwise ordered by the Bankruptcy Court. Objections to applications of
such Professionals or other Entities for compensation or reimbursement of
expenses must be filed and served on the Liquidating Trustee and its
counsel and the requesting Professional or other Entity no later than 30
days (or such longer period as may be allowed by order of the Bankruptcy
Court) after the date on which the applicable application for compensation
or reimbursement was served.
2. ADMINISTRATIVE CLAIMS
Other than as set forth in Section 11.1 of the Plan and except with
respect to payments payable in connection with the KERIT Plan, all requests
for payment of an Administrative Claim incurred prior to the Effective Date
must be filed with the Bankruptcy Court and served on counsel for the
Liquidating Trust and, if prior to the Effective Date, counsel for the
Debtors and each Bankruptcy Committee no later than 30 days after the
Effective Date. In the event that the Debtors or the Liquidating Trustee,
as the case may be, object to an Administrative Claim, the Bankruptcy Court
shall determine the Allowed amount of such Administrative Claim.
3. FEES AND EXPENSES OF THE INDENTURE TRUSTEES
Without further order of the Bankruptcy Court, the Indenture Trustees
shall be entitled to payment out of distributions otherwise payable to the
holders of the Demand Certificates, the Subordinated Certificates or the
Industrial Revenue Bonds (as applicable) of all properly documented unpaid
fees and expenses for services rendered under the Trust Indentures and the
IRB Indentures, including compensation, disbursements and expenses of
agents and legal counsel to the Indenture Trustees in connection with the
performance of their duties under the Trust Indentures and the IRB
Indentures. Upon payment in full of such fees and expenses, any liens of
the Indenture Trustees on current distributions to holders of Demand
Certificates, Subordinated Certificates and Industries Revenue Bonds shall
be released and extinguished.
4. STATUTORY FEES
All fees payable pursuant to section 1930 of Title 28 of the United
States Code, as determined by the Bankruptcy Court at the Confirmation
shall be paid on or before the Effective Date.
L. MODIFICATIONS OF THE PLAN; SEVERABILITY OF PLAN PROVISIONS
The Debtors reserve the right (with the consent of the Bankruptcy
Committees in the case of material modifications or amendments), and in
accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or
modify the Plan and the Liquidating Trust Agreement at any time prior to
the entry of the Confirmation Order. After the entry of the Confirmation
Order, the Debtors (subject to consent of the Bankruptcy Committees and the
administrative agent under the Pre-Petition Credit Agreement, which consent
shall not be unreasonably withheld) may amend or modify the Plan and the
Liquidating Trust Agreement, in accordance with Section 1127 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. A holder of an Allowed Claim or Allowed
Interest that is deemed to have accepted the Plan shall be deemed to have
accepted the Plan as modified if the proposed modification does not
materially and adversely change the treatment of the Claim or Interest of
such holder. In addition, the Plan shall be deemed automatically amended
and modified to the extent determined necessary by the Bankruptcy Court to
comply with the DIP Credit Agreement.
In the event that any Impaired Class shall not accept the Plan, at the
written election of the Debtors (with the consent of the Bankruptcy
Committees, which consent shall not be unreasonably withheld) filed with
the Bankruptcy Court with respect to any one or more of said nonaccepting
Classes and any Classes junior to such nonaccepting Classes, the Plan shall
be modified and amended automatically and without further notice to provide
such treatment, as determined necessary by the Bankruptcy Court, sufficient
to assure that the Plan does not discriminate unfairly, and is fair and
equitable, with respect to the Classes rejecting the Plan, and, in
particular, the treatment necessary to meet the requirements of Sections
1129(a) and (b) of the Bankruptcy Code with respect to (i) the rejecting
Classes and (ii) any other Classes adversely affected by such
modifications. In particular, the treatment of any nonaccepting Classes or
adversely affected Classes shall be modified and amended from that set
forth in Article III, even if less favorable, to the minimum treatment
necessary to meet the requirements of sections 1129(a) and (b) of the
Bankruptcy Code.
If, prior to Confirmation, any term or provision of the Plan is held
by the Bankruptcy Court to be invalid, void or unenforceable, the
Bankruptcy Court, at the request of any Debtor, 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 shall remain in full
force and effect and shall 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.
M. 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.
N. REVOCATION, WITHDRAWAL, OR NON-CONSUMMATION
The Debtors reserve the right to revoke or withdraw the Plan at any
time prior to the Effective Date and to file subsequent plans of
reorganization; provided, however, that any revocation or withdrawal of the
Plan after the Confirmation Date shall be with the consent of the
Bankruptcy Committees and the administrative agent under the Pre-Petition
Credit Agreement, which consent shall not be unreasonably withheld. If the
Debtors revoke or withdraw the Plan, or if Confirmation or consummation
does not occur, then (a) the Plan shall be null and void in all respects,
(b) any settlement or compromise embodied in the Plan (including the fixing
or limiting to an amount certain any Claim or Class of Claims), assumption
or rejection of executory contracts or leases effected by the Plan, and any
document or agreement executed pursuant to the Plan shall be deemed null
and void, and (c) nothing contained in the Plan, and no acts taken in
preparation for consummation of the Plan, shall (x) constitute or be deemed
to constitute a waiver or release of any Claims by or against, or any
Interests in, any Debtor or any other Entity, (y) prejudice in any manner
the rights of any Debtor or any Entity in any further proceedings involving
a Debtor, or (z) constitute an admission of any sort by any Debtor or any
other Entity.
O. DISSOLUTION OF THE BANKRUPTCY COMMITTEES
On the Effective Date, the Bankruptcy Committees will dissolve and
their respective members (only in their capacity as members of the
Bankruptcy Committees) will be released and discharged from all further
authority, duties, responsibilities and obligations arising from or related
to the Chapter 11 Case. The members of the Bankruptcy Committees and the
Professionals retained by the Bankruptcy Committees will not be entitled to
compensation or reimbursement of expenses for any services rendered to the
Bankruptcy Committees after the Effective Date.
P. TERMS OF INJUNCTIONS OR STAYS
Unless expressly modified or lifted by the Bankruptcy Court, all
injunctions or stays provided for in the Chapter 11 Case, including in the
Confirmation Order, under sections 105 or 362 of the Bankruptcy Code or
otherwise, and extant on the Confirmation Date (excluding any injunctions
or stays contained in the Plan or the Confirmation Order), shall remain in
full force and effect until the Final Distribution Date.
V. CONFIRMATION OF THE PLAN
A. INTRODUCTION
The Bankruptcy Code requires a bankruptcy court to determine whether a
plan complies with the technical requirements of Chapter 11 of the
Bankruptcy Code before such plan can be confirmed. It requires further that
a debtor's disclosure statement concerning such plan is adequate and
includes information concerning all payments made or promised by the debtor
in connection with the plan.
If the Plan is confirmed, the Debtors expect the Effective Date to
occur as promptly as practicable after the Confirmation Date.
To confirm the Plan, the Bankruptcy Court must find that the
requirements of the Bankruptcy Code have been met. Thus, even if the
requisite vote is achieved for each Voting Class, the Bankruptcy Court must
make independent findings respecting the Plan's conformity with the
requirements of the Bankruptcy Code before it may confirm the Plan. Some of
these statutory requirements are discussed below.
B. VOTING
Pursuant to the Bankruptcy Code, only holders of Allowed Claims or
Allowed Interests that are Impaired under the terms and provisions of the
Plan and that receive distributions thereunder are entitled to vote for
acceptance or rejection of the Plan. A holder of a Claim or Interest whose
legal, equitable, or contractual rights are altered, modified or changed by
the proposed treatment under the Plan or whose treatment under the Plan is
not provided for in section 1124 of the Bankruptcy Code is considered
Impaired. Pursuant to section 1126(f) of the Bankruptcy Code, holders of
Claims and Interests that are Unimpaired are conclusively presumed to have
accepted the Plan and are not entitled to vote.
Votes on the Plan will be counted only in respect of Allowed Claims
and Allowed Interests that (i) belong to a Voting Class or (ii) are
otherwise permitted by the Bankruptcy Court to vote.
C. ACCEPTANCE
The Bankruptcy Code defines acceptance of a plan by an Impaired class
of claims as acceptance by holders of at least two-thirds in dollar amount,
and more than one-half in number, of claims of that class that actually
vote. Acceptance of a plan need only be solicited from holders of claims
whose claims are Impaired and not deemed to have rejected the Plan. Except
in the context of a "cram down" pursuant to section 1129(b) of the
Bankruptcy Code, as a condition to confirmation of a plan the Bankruptcy
Code requires that, with certain exceptions, each class of Impaired claims
accepts the plan.
In the event the requisite vote is not obtained, the Debtors have the
right, assuming that at least one Class of Impaired Claims has accepted the
Plan, to request confirmation of the Plan pursuant to section 1129(b) of
the Bankruptcy Code. Section 1129(b) permits confirmation of a plan
notwithstanding rejection by one or more classes of impaired claims or
impaired interests if the bankruptcy court finds that the plan does not
discriminate unfairly and is "fair and equitable" with respect to the
rejecting class or classes. This procedure is commonly referred to in
bankruptcy parlance as "cram down." For a more detailed description of the
requirements for acceptance of a plan and of the criteria for confirmation
of a plan notwithstanding rejection by certain Impaired classes, see
Section V.D.4, Cram Down. The Plan is predicated on all Voting Classes
voting to accept the Plan; however, if any Voting Classes vote to reject
the Plan, the Debtors may request a "cram down" of such Classes at the
Confirmation Hearing. In any event, the Debtors will seek a "cram down" of
the Plan on Classes deemed to reject the Plan by virtue of receiving no
distributions thereunder.
D. CONFIRMATION OF THE PLAN
At the Confirmation Hearing, the Bankruptcy Court will determine
whether the requirements of section 1129(a) of the Bankruptcy Code have
been satisfied with respect to the Plan. Section 1129(a) of the Bankruptcy
Code requires that, among other things, for a plan to be confirmed:
o The plan satisfies the applicable provisions of the Bankruptcy
Code.
o The proponent of the plan has complied with the applicable
provisions of the Bankruptcy Code.
o The plan has been proposed in good faith and not by any means
forbidden by law.
o Any payment made or promised by the proponent under the plan for
services or for costs and expenses in, or in connection with,
the Chapter 11 case, or in connection with the plan and incident
to the case, has been disclosed to the Bankruptcy Court, and any
such payment made before the confirmation of the plan is
reasonable, or if such payment is to be fixed after confirmation
of the plan, such payment is subject to the approval of the
Bankruptcy Court as reasonable.
o The proponent has disclosed the identity and affiliations of
any individual proposed to serve, after confirmation of the
plan, as a director, officer or trustee of the debtor, an
affiliate of the debtor participating in the plan with the
debtor, or a successor to the debtor under the plan. The
appointment to, or continuance in, such office of such
individual must be consistent with the interests of creditors
and equity security holders and with public policy and the
proponent must have disclosed the identity of any insider that
the reorganized debtors will employ or retain, and the nature
of any compensation for such insider.
o With respect to each class of impaired claims or interests,
either each holder of a claim or interest of such class has
accepted the plan, or will receive or retain under the plan on
account of such claim or interest, property of a value, as of
the effective date of the plan, that is not less than the amount
that such holder would receive or retain if the debtor were
liquidated on such date under Chapter 7 of the Bankruptcy Code.
o Each class of claims or interests has either accepted the plan
or is not impaired under the plan.
o Except to the extent that the holder of a particular claim has
agreed to a different treatment of such claim, the plan provides
that allowed administrative expenses and priority claims (other
than tax claims) will be paid in full on the effective date and
that priority tax claims will receive on account of such claims
deferred cash payments, over a period not exceeding six years
after the date of assessment of such claim, of a value, as of
the effective date, equal to the allowed amount of such claim.
o If a class of claims is impaired, at least one impaired class of
claims has accepted the plan, determined without including any
acceptance of the plan by any insider holding a claim in such
class.
o Confirmation of the plan is not likely to be followed by the
liquidation, or the need for further financial reorganization,
of the debtor or any successor to the debtor under the plan,
unless such liquidation or reorganization is proposed in the
plan.
Subject to receiving the requisite votes in accordance with section
1129(a)(8) of the Bankruptcy Code and the "cram down" of Impaired Classes
not receiving any distribution under the Plan, the Debtors believe that (i)
the Plan satisfies all of the statutory requirements of Chapter 11 of the
Bankruptcy Code, (ii) the Debtors have complied or will have complied with
all of the requirements of Chapter 11, and (iii) the Plan has been proposed
in good faith.
Set forth below is a more detailed summary of the relevant statutory
confirmation requirements.
1. BEST INTERESTS OF HOLDERS OF CLAIMS AND INTERESTS
The "best interests" test requires that a bankruptcy court find either
that all members of each Impaired class have accepted the plan or that each
holder of an allowed claim or interest of each Impaired class of claims or
interests will receive or retain under the plan on account of such claim or
interest property of a value, as of the effective date of the plan, that is
not less than the amount that such holder would so receive or retain if the
debtor were liquidated under Chapter 7 of the Bankruptcy Code on such date.
Annexed as Appendix D hereto is a liquidation analysis which demonstrates
that the Plan satisfies the "best interests" test.
The Debtors believe that, under the Plan, holders of Impaired Claims
and Impaired Interests against the Debtors will receive property with a
value equal to or in excess of the value such holders would receive in the
event each of the Debtors was liquidated under Chapter 7 of the Bankruptcy
Code.
To estimate the likely return to holders of Claims and Interests in
the event of Chapter 7 liquidations of the Debtors, the Debtors have
estimated the amount of liquidation proceeds with respect to each Debtor
that would be available for distribution and the allocation of such
proceeds among the Classes of Claims and Interests of each Debtor based
upon their relative priority. As further described below, to estimate the
liquidation proceeds, the Debtors assumed that the assets of each of the
Debtors were sold in a straight liquidation. Liquidation proceeds available
for distribution to holders of Claims and Interests of each Debtor would
consist of the net proceeds from the disposition of such Debtor's assets,
augmented by other cash held by such Debtor.
The relative priority in the distribution of liquidation proceeds with
respect to any Claim or Interest depends upon (i) its status as secured,
priority unsecured, non-priority unsecured or equity, and (ii) its relative
subordination.
In general, the liquidation proceeds for each Debtor would be
allocated in the following priority: (i) first, to the Claims of secured
creditors of each Debtor to the extent of the value of their collateral;
(ii) second, to the costs, fees and expenses of the liquidation, as well as
other administrative expenses of each Debtors' Chapter 7 case, including
certain tax liabilities; (iii) third, to the unpaid Administrative Claims
of each Debtor's Chapter 11 case; (iv) fourth, to Priority Tax Claims and
other Claims entitled to priority in payment under the Bankruptcy Code; (v)
fifth, to the General Unsecured Claims of each Debtor (subject to any
relative subordination of Claims); and (vi) sixth, to equity holders of
each Debtor. Each Debtor's liquidation costs in Chapter 7 would include the
compensation of a bankruptcy trustee, as well as compensation of counsel
and of other professionals retained by such trustee, asset disposition
expenses, applicable taxes, litigation costs, claims arising from the
operation of the Debtor during the pendency of the Chapter 7 case and all
unpaid Administrative Claims incurred by the Debtor during the Chapter 11
case that are Allowed Claims in the Chapter 7 case. The liquidation itself
may trigger certain Claims entitled to priority in payment under the
Bankruptcy Code, such as Claims for severance pay to certain employees.
As set forth below, the Debtors' have estimated the range of gross
liquidation proceeds for each of the Debtors. Based upon the priorities
outlined above, the Debtors believe that net proceeds, if any, available
for distribution to Impaired Claims in a Chapter 7 liquidation would be
significantly less than the estimated distributions to Impaired Claims
under the Plan.
This Chapter 7 liquidation analysis is intended solely for the purpose
of discussing the effects of hypothetical Chapter 7 liquidations of the
Debtors. This Chapter 7 liquidation analysis is based upon numerous
estimates and assumptions that, although developed and considered
reasonable by the Debtors' management and its financial advisors, are
inherently subject to significant economic and competitive uncertainties
and contingencies beyond the control of the Debtors. This liquidation
analysis is also based upon assumptions with regard to liquidation
decisions that are subject to change. Accordingly, there can be no
assurance that the values reflected in the liquidation analysis would be
realized if the Debtors were, in fact, to undergo such liquidations.
a) Significant Uncertainties
In addition to the General Assumptions and the Specific Assumptions
that are set forth below, there are significant areas of uncertainty that
exist with respect to this liquidation analysis.
The liquidation analysis assumes that the liquidation of the Debtors'
estates would commence on December 31, 2003 and would be substantially
complete within a six-month period. The wind-down costs during this
six-month liquidation period have been estimated by the Debtors'
management, and any deviation from this time frame could have a material
impact on the winddown costs, Administrative Claims, proceeds from asset
sales and the ultimate recovery to the holders of Claims and Interests.
If the implementation of the liquidation were delayed, there is a
possibility that the Debtors would sustain significant operating losses
during the delay period, thus adversely impacting the net liquidation
proceeds available to each Debtor's estate.
In any liquidation there is a general risk of unanticipated events,
which could have a significant impact on the projected cash receipts and
disbursements. These events include changes in the general economic
condition, changes in the market value of the respective Debtors' assets
and problems with current and former employees.
In addition to the Specific Assumptions described below, the following
General Assumptions were used in formulating the liquidation analysis.
b) General Assumptions
A. Operations During Liquidation Process and Wind-Down Expense - With
the exception of SFA, which has already substantially wound down
operations, all Debtor entities will maintain operations during the
liquidation process to the extent possible. It is assumed that all
operations will be break-even on a cash flow basis. As such, the
incremental wind-down expense will consist primarily of stay
bonuses and other incentives intended to encourage maximization of
liquidation proceeds.
B. Estimation of Outstanding Claims - Given the accelerated
liquidation conditions of a Chapter 7 proceeding, the Debtors have
assumed there will be significant additional contract rejection
claims. As such, the estimate of total claims for the purposes of
this analysis is based on the upper end of the range as
contemplated under the Plan. The significant variation in estimated
claims for Class 7 is based in large part on upper end and lower
end of the range of rejection claims the Debtors estimate may be
asserted against Industries.
C. Intercompany Balances - The Debtors have numerous and significant
intercompany balances amongst each other. Pursuant to section 553
of the Bankruptcy Code, the Debtor has offset all post-petition and
pre-petition intercompany balances such that a single line-item
remains as either an Administrative Claim in the case of
post-petition balances or a General Unsecured Claim in the case of
pre-petition balances.
D. Treatment of DIP Loan Claims and Secured Lender Claims - For the
purposes of this liquidation analysis, any outstanding DIP Loan
Claims and Secured Lender Claims are satisfied as of the Effective
Date.
E. Nature and Timing of the Liquidation Process - Under section 704 of
the Bankruptcy Code, a Chapter 7 trustee must, among other things,
collect and convert the property of a debtor's estate to cash and
close the estate as expeditiously as is compatible with the best
interest of the parties in interest. Solely for purposes of
preparing this liquidation analysis, it is assumed that the Chapter
11 case of each Debtor would be converted to a Chapter 7
liquidation on December 31, 2003. It is assumed that the Debtors'
assets will be sold during the following six-month period.
Management believes that it is unlikely that the actual sale period
would be shorter than those assumed, and there can be no assurance
that the actual sale period would not be longer than assumed. It is
likely that if the sale period was longer, net sale proceeds would
be diminished.
F. Estimated Liquidation Proceeds - All assets are assumed to be sold
in a straight liquidation to the highest bidder. Estimates of the
potential proceeds from the disposition of assets were provided by
either the Debtors or the financial advisors directly involved in
the asset sales efforts to date. The following list identifies
factors considered by the Debtors and its various financial
advisors in estimating the proceeds that might be received from the
liquidation sales.
o Indications of interest from potential third-party acquirers
o The historical cost of the assets
o Asset location and local market demand
o Previously issued third-party appraisals
o Recently transacted sales of similar assets
o Management's experience and expertise in asset resale values
o Analysis of liabilities and obligations relating to particular
assets
o Current industry trends
o "Distress sale value", which differs from the price at which
assets would be sold to a willing buyer by a willing seller,
assuming that neither is under any compulsion to buy or sell,
and assuming both are informed of the relevant facts
G. Additional Liabilities and Reserves - The Debtors believe that in
addition to the expenses that would be incurred by the Debtors in
the Chapter 11 Case, there would be certain actual and contingent
liabilities and expenses for which provision would be required in
Chapter 7 liquidations before distributions could be made to
creditors, including: (i) certain liabilities that are not
dischargeable pursuant to the Bankruptcy Code; (ii) Administrative
Claims, including damages from rejected post-petition contracts,
the fees of a Chapter 7 trustee and of counsel and other
professionals (including financial advisors and accountants),
retention bonuses paid to employees to effectuate the wind-down
process and other liabilities (including retirement, vacation pay
and other employee-related administrative costs and liabilities)
that would be funded from continuing operations if the Debtors were
reorganized as a going-concern; and (iii) certain other
administrative costs. Management believes that there is significant
uncertainty as to the reliability of the Debtors' estimates of the
amounts related to the foregoing that have been assumed in the
liquidation analysis.
H. Distributions: Absolute Priority - Under a Chapter 7 liquidation,
all secured claims are required to be satisfied from the proceeds
of the collateral securing such claims before any such proceeds
could be distributed to any other creditors. The following analysis
assumed the application of the rule of absolute priority of
distributions with respect to the remaining proceeds. Under the
rule of absolute priority, no junior creditor receives any
distribution until all senior creditors are paid in full. To the
extent that proceeds remain after satisfaction of all secured
claims, the proceeds would first be distributed to the holders of
Administrative Claims, then to Claims entitled to priority in
payment under the Bankruptcy Code, then to General Unsecured Claims
and finally (if at all) to equity holders of the Debtors. Based
upon the liquidation assumptions of the Debtors' management, the
proceeds generated from Chapter 7 liquidations of the Debtors'
assets would result in a substantial diminution in the recovery
percentage to holders of General Unsecured Claims.
I. Conclusion - The Debtors believe that the holders of Claims and
Interests will not receive recoveries under the Plan less than that
realized in Chapter 7 liquidation.
The following Specific Assumptions (as well as those set forth in the
footnotes to the table below) were used in formulating the liquidation
analysis.
c) Specific Assumptions
A. Gross Liquidation Proceeds for Industries - The gross liquidation
proceeds for Industries include Industries' existing cash balances,
proceeds from liquidation of retained working capital, intercompany
assets, estimated proceeds from the sale of SF Phosphate Interests,
and excess distributions from the liquidation of the Debtor
Subsidiaries (which primarily includes excess proceeds from the
sale of the Pork Business), and the straight liquidation sale of
Industries' remaining assets. The Debtors have ascribed a "low"
value and a "high" value for these gross liquidation proceeds as
follows (in $millions):
Low Value High Value
--------- ----------
Cash and cash equivalent $ 297.8 $ 297.8
Accounts receivable 19.7 26.2
Inventory 61.1 61.1
Debtor subsidiary intercompany assets 182.3 182.3
Other Industries assets 45.0 59.1
SF Phosphates sale 64.5 64.5
Excess distributions from Debtor 233.6 234.5
subsidiaries
Environmental/Tax/Other Reserves (163.1) (114.2)
--------- ----------
Gross liquidation proceeds $ 740.9 $ 811.3
========= ==========
B. Gross Liquidation Proceeds for Foods - The gross liquidation
proceeds for Foods include assumed gross proceeds from the sale of
Foods as a going concern as contemplated in the Pork Purchase
Agreement signed with Smithfield and intercompany balances due
Foods from Industries. The Debtors have ascribed a "low" value and
a "high" value for these gross liquidation proceeds as follows (in
$millions):
Low Value High Value
--------- ----------
Cash and cash equivalent $ - $ -
Accounts receivable - -
Inventory - -
Fixed assets 376.6 377.1
Debtor subsidiary intercompany assets 85.2 85.2
Other Foods assets - -
--------- ----------
Gross liquidation proceeds $ 461.8 $ 462.3
========= ==========
C. Gross Liquidation Proceeds for Transportation - The gross
liquidation proceeds for Transportation include assumed gross
proceeds from the liquidation of Transportation's working capital
and from intercompany balances due primarily from Industries. The
Debtors have ascribed a "low" value and a "high" value for these
gross liquidation proceeds as follows (in $millions):
Low Value High Value
--------- ----------
Cash and cash equivalent $ - $ -
Accounts receivable 0.2 0.4
Debtor subsidiary intercompany assets 8.8 8.8
Other Transportation assets - -
--------- ----------
Gross liquidation proceeds $ 9.0 $ 9.2
========= ==========
D. Gross Liquidation Proceeds for SEA - The gross liquidation
proceeds for SFA include assumed gross proceeds from the straight
liquidation and/or sale of SFA's working capital and fixed assets
and from intercompany balances due from Industries. The Debtors
have ascribed a "low" value and a "high" value for these gross
liquidation proceeds as follows (in $millions):
Low Value High Value
--------- ----------
Cash and cash equivalent $ 0.2 $ 0.2
Accounts receivable - 0.0
Fixed assets - 0.0
Debtor subsidiary intercompany assets 10.9 10.9
Other SFA assets - -
--------- ---------
Gross liquidation proceeds $ 11.1 $ 11.2
========= =========
E. Gross Liquidation Proceeds for Pipeline - The gross liquidation
proceeds for Pipeline include assumed gross proceeds from
intercompany balances due from Industries. The Debtors have
ascribed a "low" value and a "high" value for these gross
liquidation proceeds as follows (in $millions):
Low Value High Value
--------- ----------
Cash and cash equivalent $ - $ -
Accounts receivable - -
Fixed assets - -
Debtor subsidiary intercompany assets 7.1 7.1
Other SFA assets - -
--------- ---------
Gross liquidation proceeds $ 7.1 $ 7.1
========= =========
2. FINANCIAL FEASIBILITY
Section 1129(a)(11) of the Bankruptcy Code requires the Confirmation
not be likely to be followed by the liquidation, or the need for further
financial reorganization, of the Debtors or any successor to the Debtors
(unless such liquidation or reorganization is proposed in the Plan). The
Plan is a liquidating plan of reorganization. Thus, the Plan satisfies
section 1129(a)(11) of the Bankruptcy Code.
3. ACCEPTANCE BY IMPAIRED CLASSES
A class is impaired under a plan unless, with respect to each claim or
interest of such class, the plan (i) leaves unaltered the legal, equitable
and contractual rights to which the claim or interest entitles the holder
of such claim or interest; or (ii) notwithstanding a demand for accelerated
payment (a) cures any default and reinstates the maturity of the
obligation; (b) compensates the holder of such claim for damages incurred
on account of reasonable reliance on contractual provisions; and (c) does
not otherwise alter legal, equitable or contractual rights. A class that is
not impaired under a plan of reorganization is deemed to have accepted the
plan and, therefore, solicitation of acceptances with respect to such class
is not required.
With respect to the Plan, Classes 1, 2, 3, 6 and 8 are Unimpaired by
the Plan and the Claim and Interest holders in such Classes deemed by law
to have accepted the Plan. Classes 13, 15, 17 and 18 are conclusively
presumed to accept the Plan because the Claim and Interest holders in such
Classes are the proponents of the Plan. The holders of Claims in the Voting
Classes are Impaired and entitled to vote on the Plan.
4. CRAM DOWN
THE DEBTORS RESERVE THE RIGHT TO CRAM DOWN THE PLAN ON NONACCEPTING
CLASSES OF CLAIMS AND INTERESTS.
The Bankruptcy Code contains provisions for confirmation of a plan
even if the plan is not accepted by all impaired classes, as long as at
least one impaired class of claims has accepted the Plan. The "cram down"
provisions of the Bankruptcy Code are set forth in section 1129(b) of the
Bankruptcy Code. Under the "cram down" provisions, upon the request of a
plan proponent a bankruptcy court will confirm a plan despite the lack of
acceptance by an impaired class or classes if the bankruptcy court finds
that (i) the plan does not discriminate unfairly with respect to each
nonaccepting impaired class, (ii) the plan is fair and equitable with
respect to each non-accepting impaired class, and (iii) at least one
impaired class has accepted the plan. These standards ensure that holders
of junior interests, such as common stockholders, cannot retain any
interest in the debtor under a plan that has been rejected by a senior
class of impaired claims or interests unless such impaired claims or
interests are paid in full.
As used by the Bankruptcy Code, the phrases "discriminate unfairly" and
"fair and equitable" have narrow and specific meanings unique to bankruptcy
law. A plan does not discriminate unfairly if claims or interests in
different classes but with similar priorities and characteristics receive
or retain property of similar value under a plan.
The Bankruptcy Code sets forth different standards for establishing that
a plan is "fair and equitable" with respect to a non-accepting class,
depending on whether the class is comprised of secured or unsecured claims
or interests. In general, section 1129(b) of the Bankruptcy Code permits
confirmation notwithstanding non-acceptance by an impaired class if that
class and all junior classes are treated in accordance with the "absolute
priority" rule, which requires that the dissenting class be paid in full
before a junior class may receive anything under the plan. In addition,
case law surrounding section 1129(b) requires that no class senior to a
non-accepting Impaired class receives more than payment in full on its
claims.
With respect to a Voting Class that does not accept the Plan, the
Debtors must demonstrate to the Bankruptcy Court that either (i) each
holder of an unsecured Claim in the non-accepting Voting Class receives or
retains under such Plan property of a value equal to the allowed amount of
its Claim, or (ii) the holders of Claims or holders of Interests that are
junior to the Claims in such non-accepting Voting Class will not receive or
retain any property under the Plan. Additionally, the Debtors must
demonstrate that the holders of Claims that are senior to the Claims of the
nonaccepting Voting Class receive no more than payment in full on their
Claims under the Plan.
If all the applicable requirements for confirmation of the Plan are
met as set forth in sections 1129(a)(1) through (13) of the Bankruptcy
Code, except that one or more of the Voting Classes have failed to accept
the Plan pursuant to section 1129(a)(8) of the Bankruptcy Code, the Debtors
reserve the right to request that the Bankruptcy Court confirm the Plan in
accordance with section 1129(b) of the Bankruptcy Code. The Debtors believe
that the Plan satisfies the "cram down" requirements of the Bankruptcy
Code. The Debtors may seek confirmation of the Plan over the objection of
non-accepting Voting Classes, as well as over the objection of individual
holders of Claims who are members of an accepting Voting Class. In
addition, the Debtors intend to seek "cram down" of the Plan on the Classes
deemed to reject the Plan pursuant to section 1126(g) of the Bankruptcy
Code by virtue of receiving no distributions thereunder. Nevertheless,
there can be no assurance that the Bankruptcy Court will determine that the
Plan meets the requirements of section 1129(b) of the Bankruptcy Code.
5. CLASSIFICATION OF CLAIMS AND INTERESTS
The Debtors believe that the Plan meets the classification
requirements of the Bankruptcy Code which require that a plan place each
claim or interest into a class with other claims or interests which are
"substantially similar."
E. EFFECT OF CONFIRMATION OF THE PLAN
1. NO DISCHARGE
The Confirmation Order shall not discharge any Debtor from any debt or
liability that arose before Confirmation, as provided in section 1141(d)
(3)(A) of the Bankruptcy Code.
2. RELEASE OF ASSETS
Until the Effective Date, the Bankruptcy Court shall retain
jurisdiction over the Debtors, their assets and properties. Thereafter,
jurisdiction of the Bankruptcy Court shall be limited to the subject
matters set forth in Article X of the Plan, and Liquidating Trustee shall
perform its duties and obligations pursuant to the Liquidating Trust
Agreement and the Plan.
3. EXCULPATION AND LIMITATION OF LIABILITY
Subject to limitations required by applicable ethical rules and
standards of conduct, and except as limited in Section 11.9(b) of the Plan,
none of the Debtors, the Liquidating Trust, the Liquidating Trustee, the
Bankruptcy Committees, the Indenture Trustees, the Lenders, the financial
institutions party to the DIP Credit Agreement, nor any of their respective
present or former members, officers, directors, employees, advisors, or
attorneys shall have or incur any liability to any holder of a Claim or an
Interest, or any other party in interest, or any of their respective
agents, employees, representatives, financial advisors, attorneys, or
affiliates, or any of their successors or assigns, for any act or omission
from and after the Petition Date in connection with, relating to, or
arising out of, the Chapter 11 Case, the commencement of the Chapter 11
Case, the administration of the Chapter 11 Case, the pursuit of and the
approval of the sales of the Debtors' assets (and the related asset
purchase agreement), the formulation, negotiation or implementation of the
Plan, the solicitation of acceptances of the Plan, the pursuit of
confirmation of the Plan, the confirmation of the Plan, the consummation of
the Plan, or the administration of the Plan or the property to be
distributed under the Plan, except for their gross negligence or willful
misconduct; provided, however, any present or former officer or director of
any Debtors shall be liable to any holder of a Claim or Interest, or any
other party in interest, or any of their successor or assigns, for: (i) any
breach of such person's duty of loyalty to the Debtors, (ii) any act or
omission not in subjective good faith or which involves intentional
misconduct or a knowing violation of law, and (iii) any transaction for
which such person derived an improper benefit, and in all respects such
persons shall be entitled to reasonably rely upon the advice of the
Debtors' counsel (including in-house counsel) with respect to their duties
and responsibilities under the Plan. In addition, the Indenture Trustees
under the Demand Certificates and the Subordinated Certificates shall not
have or incur any liability to any holder (registered or unregistered) of
any Demand Certificate or Subordinated Certificate or any claim based on
any Demand Certificate or Subordinated Certificate as a result of any
inaccuracy or mistake in the books and records of Industries (in their
capacities as paying agents and registrars under the Trust Indentures for
the Demand Certificates and the Subordinated Certificates).
The exculpatory provisions contained in Section 11.9(a) of the Plan
(i) shall not limit the claims and rights, if any, of the United States,
and (ii) shall apply to any person or entity who was not the beneficiary of
a post-petition indemnification obligation of the Debtors only to the
extent provided in Section 11.9(c) of the Plan.
Any claims that would otherwise be subject to the exculpatory
provisions contained in Section 11.9(a) of the Plan but for the provisions
of Section 11.9(b)(ii) of the Plan may only be asserted in the Bankruptcy
Court and only if filed on or before ninety days after the Effective Date.
In the event that any such claims are not filed timely in the Bankruptcy
Court, the exemption contained in Section 11.9(b)(ii) of the Plan shall be
terminated with respect to such claims, and such claims shall be deemed
subject to the exculpatory provisions contained in Section 11.9(a) of the
Plan.
Any non-exculpated claims against the parties set forth in Section
11.9(a) of the Plan arising from or related to the matters set forth in
Section 11.9(a) of the Plan may only be asserted and filed in the
Bankruptcy Court.
The Bankruptcy Court shall retain exclusive jurisdiction to determine
all matters arising from or related to claims against the parties set forth
in Section 11.9(a) of the Plan arising from or related to the matters set
forth in Section 11.9(a) of the Plan.
The Debtors are not aware of any claims, meritorious or otherwise,
that are being exculpated under the Plan.
4. BINDING EFFECT
Except as otherwise provided in section 1141(d)(3) of the Bankruptcy
Code, on and after the Confirmation Date, the provisions of the Plan shall
be binding upon and inure to the benefit of the Debtors, all present and
former holders of Claims against and Interests in the Debtors, their
respective successors and assigns, including, but not limited to, the
Liquidating Trust, the Liquidating Trustee and all other
parties-in-interest in this Chapter 11 Case.
F. RETENTION OF JURISDICTION
Under sections 105(a) and 1142 of the Bankruptcy Code, and
notwithstanding entry of the Confirmation Order and occurrence of the
Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction
over all matters arising out of, and related to, the Chapter 11 Case and
the Plan to the fullest extent permitted by law, including, among other
things, those matters enumerated in Article X of the Plan.
VI. CERTAIN FACTORS TO BE CONSIDERED
HOLDERS OF CLAIMS AGAINST OR INTERESTS IN THE DEBTORS SHOULD READ AND
CONSIDER CAREFULLY THE FACTORS SET FORTH BELOW, AS WELL AS THE OTHER
INFORMATION SET FORTH IN THIS DISCLOSURE STATEMENT (AND THE DOCUMENTS
DELIVERED TOGETHER HEREWITH AND/OR INCORPORATED BY REFERENCE), PRIOR TO
VOTING TO ACCEPT OR TO REJECT THE PLAN. THESE RISK FACTORS SHOULD NOT,
HOWEVER, BE REGARDED AS CONSTITUTING THE ONLY RISKS INVOLVED IN CONNECTION
WITH THE PLAN AND ITS IMPLEMENTATION.
A. RISK THAT DISTRIBUTIONS MAY BE LESS THAN ESTIMATED BY DEBTORS
The distributions and recoveries set forth in this Disclosure
Statement are based on the Debtors' estimate of Allowed Claims as of
October 24, 2003 and include the Debtors' best current estimate of Allowed
Claims for damages under rejected contracts and leases that had not been
formally asserted against the Debtors as of October 24, 2003. The Debtors
project that the Claims asserted against them will be resolved in and
reduced to an amount that approximates their estimates and may seek an
order or orders from the Bankruptcy Court estimating the maximum dollar
amount of Allowed Claims and Disputed Claims or otherwise determining and
fixing the amount of the Disputed Claims Reserve. This estimate will be
used to calculate and fix distributions to holders of Allowed Claims and
the amount of the Disputed Claims Reserve. Such a procedure may also be
utilized, in the sole discretion of the Debtors, for Administrative Claims,
Other Priority Claims, Priority Tax Claims and/or other Claims. There can
be no assurance, however, that such estimates will prove accurate. The
Debtors do not believe that these risks pose a bar to confirmation of the
Plan.
In addition, there exists the potential that holders of certain Claims
(including, without limitation, Claims related to environmental matters)
that the Debtors contend constitute General Unsecured Claims will assert
that such Claims constitute Administrative Claims. To the extent that any
of such Claims are ultimately adjudicated to be Allowed Administrative
Claims, the distributions could significantly and materially differ from
the actual distributions made under the Plan. If and to the extent the
Debtors have underestimated the amount of any Allowed Claims or any
Disputed Claims Reserves for Administrative Claims, Other Priority Claims
or Priority Tax Claims, the Debtors could be required to redirect Available
Cash to such Disputed Claims Reserves, resulting in a potential dilution of
Available Cash. Therefore, the distributions discussed herein could
significantly and materially differ from the actual distributions made
under the Plan. Distributions will also be affected by the following: (i)
the amount of Available Cash the Debtors are able to realize from the
pursuit of Litigation Claims; (ii) the amount of Allowed Claims for
rejected contracts and leases that have not yet been formally asserted
against the Debtors; (iii) the amount of Allowed Administrative Claim that
have not yet been asserted against the Debtors; (iv) the amount of Allowed
Priority Tax Claims may be greater than estimated by the Debtors; and (v)
the costs of continuing to administer the Chapter 11 Cases and wind down
the Debtors' businesses.
The Debtors reserve the right to object to the amount or
classification of any Claim. Thus, the estimates set forth in this
Disclosure Statement cannot be relied upon by any holder of a Claim whose
Claim is subject to a successful objection. Any such holder may not receive
the estimated distributions set forth herein.
B. RISK OF NON-CONFIRMATION OF THE PLAN
If the Plan is not confirmed and consummated, there can be no
assurance that the Chapter 11 Case will continue rather than be converted
to a liquidation under Chapter 7 of the Bankruptcy Code or that an
alternative plan would be on terms as favorable to the holders of Allowed
Claims and Allowed Interests as the terms of the Plan.
C. NON-CONSENSUAL CONFIRMATION OF THE PLAN
Pursuant to the "cram down" provisions of section 1129(b) of the
Bankruptcy Code, the Bankruptcy Court can confirm the Plan without the
acceptances of all Impaired Classes, so long as at least one Impaired Class
of Claims has accepted the Plan. For a description of the "cram down"
provisions of the Bankruptcy Code, see Section V.D.4, Cram Down.
D. CONDITIONS PRECEDENT TO THE OCCURRENCE OF THE EFFECTIVE DATE
Article IX of the Plan sets forth the conditions precedent to the
occurrence of the Effective Date, including the closing of the sales of the
Coffeyville Assets, the SF Phosphates Interest and the Pork Business. There
can be no assurance that these conditions will be satisfied.
E. LIQUIDATION OF THE DEBTORS' ASSETS
Except to the extent that the Debtors' assets have already been
liquidated to Cash, the Liquidating Trustee's ability to make the
distributions described in the Plan depends on the liquidation of the
Debtors' assets. Although the Liquidating Trustee will endeavor to
liquidate these assets as expeditiously as possible and in such a manner as
to maximize the Cash realized from such liquidation, the Debtors cannot
warrant either the timing or the amount of distributions under the Plan.
F. LITIGATION RISKS
The Debtors have not completed their analysis of possible claims that
may ultimately be pursued by the Liquidating Trustee, including but not
limited to preference, fraudulent conveyance and other avoidance actions,
lender liability claims, fraud claims and breach of fiduciary duty claims.
The Liquidating Trustee will pursue all or certain of these or other claims
in accordance with the provisions of the Plan and the Confirmation Order.
The costs of pursuing such litigation will be paid out of Cash available to
the Estate and there can be no assurances that the Liquidating Trustee will
prevail in such litigation. In addition, objections to certain Claims may
require separate litigation. Accordingly, although recoveries on causes of
action may enhance distributions, the distributions currently projected by
the Debtors may be reduced by the costs of such litigation.
G. ALTERNATIVES TO THE PLAN
After careful review of the estimated recoveries in a Chapter 7
liquidation scenario, the Debtors have concluded that the recovery to
holders of Claims and Interest will be maximized by the Plan. According to
the liquidation analysis prepared by the Debtors with the assistance of its
financial advisors, distributions to holders of Claims and Interests will
occur much sooner and have greater value to holders of Claims under the
Plan than under any other alternative. Should the Plan not be confirmed, it
is likely that the distributions to holders of Claims and Interests would
be delayed and would be materially reduced by the additional fees and other
costs associated with a Chapter 7 liquidation. Accordingly, the Debtors
believe that the Plan offers the best prospect of recovery for the holders
of Claims and Interests against the Debtors and recommend that you vote to
accept the Plan.
VII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States federal income tax
consequences of the Plan to the Debtors and to the holders of the Demand
Certificates Claims, Subordinated Certificates Claims, General Unsecured
Claims against Industries, Industries Common Shares, Old Securities of
Foods, Old Securities of Transportation, Old Securities of SFA, Old
Securities of Pipeline, Intercompany Claims, and Subordinated Claims. This
summary is based on the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations thereunder, and administrative and judicial
interpretations and practice, all as in effect on the date hereof and all
of which are subject to change, with possible retroactive effect. This
description is for informational purposes only, and due to the lack of
definitive judicial or administrative authority and interpretation in a
number of areas, substantial uncertainty may exist with respect to some of
the tax consequences described below. No opinion of counsel has been
obtained, and except with respect to the ability to use Member NOLs
(defined below) to offset tax benefit income generated from the
cancellation of Industries Common Shares that constitute Industries Member
Equity (defined below) and whether income is generated with respect to any
outstanding patronage equity in Industries absent formal cancellation,
Debtors have not obtained and do not intend to seek a ruling from the
Internal Revenue Service (the "Service") as to any of such tax
consequences. There can be no assurance that the Service will not challenge
one or more of the tax consequences of the Plan described below.
The following discussion is limited to holders of Demand Certificates
Claims, Subordinated Certificates Claims, General Unsecured Claims against
Industries, Industries Common Shares, Old Securities of Foods, Old
Securities of Transportation, Old Securities of SFA, Old Securities of
Pipeline, Intercompany Claims, and Subordinated Claims that hold their
Claims or Interests as capital assets or whose Claims or Interests
otherwise arose in the ordinary course of business, and does not address
all matters that may be relevant to particular classes of holders that are
subject to special rules under the Code, including, without limitation,
financial institutions, securities dealers, broker-dealers, tax-exempt
entities, insurance companies, foreign persons, or holders that hold their
Securities as part of a "straddle" or a "conversion transaction" (as
defined in the Code). Consequently, such holders may be subject to special
rules not discussed below. In addition, estate and gift tax issues are not
addressed herein.
THIS DISCUSSION DOES NOT ADDRESS ANY TAX LAWS OTHER THAN UNITED STATES
FEDERAL INCOME TAX LAWS. THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
OF THE PLAN ARE COMPLEX. ALL HOLDERS OF CLAIMS AND INTERESTS SHOULD CONSULT
WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF
THE PLAN, INCLUDING THE APPLICABILITY AND EFFECT OF ANY FEDERAL ESTATE,
STATE, LOCAL, OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE TAX
LAWS.
A. CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE DEBTORS
1. TRANSFER OF ASSETS TO THE LIQUIDATING TRUST
On the Effective Date, Debtors will transfer all right, title and
interest in all of the Debtors' property and assets (excluding the
Industries Retained Assets, the Transferred Assets and the Coffeyville
Assets), including without limitation, all rights and causes of action,
whether arising by contract, under the Bankruptcy Code, under the Plan or
under other applicable law, including, without limitation, all rights the
Debtors have under the Plan (together with the net proceeds of the
Industries Retained Assets and the Coffeyville Assets, the "Remaining
Assets") to the Liquidating Trust on behalf of holders of Allowed Claims and
Interests to the extent they are Beneficiaries. The Debtors thereafter will
not have any beneficial interest, contingent or otherwise, in the
Liquidating Trust. See "Tax Treatment of the Liquidating Trust and
Ownership of Beneficial Inteivsts in the Liquidating Trust" below. Such
transfers will constitute a taxable disposition of the Remaining Assets,
resulting in the recognition of gain or loss by the Debtors equal to the
difference between the sum of the fair market value of the assets at the
time of such transfers and the amount of any liabilities assumed by the
Liquidating Trust and the Debtors' adjusted tax basis in such assets.
The Debtors believe they will recognize a net gain for tax purposes as
a result of the transfer to the Liquidating Trust and the already completed
and further anticipated asset sales, including the sales of the Pork
Business and the SF Phosphates Interests. However, a significant portion,
if not all, of such gain should be offset for United States federal income
tax purposes by available net operating losses and Debtors do not believe
they will incur a material net tax liability with respect to the transfer
and other asset sales. Any gain realized on the disposition of the
Industries Retained Assets may result in a material tax liability with
respect to the disposition.
2. MERGER OF FOODS INTO INDUSTRIES
Under the Plan, Foods will be merged into Industries with Industries
surviving. If, as the Debtors expect, the merger of Foods into Industries
complies with the provisions of Section 368(a)(1)(A) of the Code, the
merger contemplated by the Plan will qualify as an "A reorganization" for
United States federal income tax purposes, in which case Industries will
not recognize either gain or loss for United States federal income tax
purposes upon the merger.
3. CANCELLATION OF INDUSTRIES COMMON SHARES
a) Tax Benefit Income
Under the Plan, a portion of the Industries Common Shares will be
cancelled and, to the extent such Industries Common Shares constitute
Industries Member Equity (defined below), offset against appropriate losses
and available Member NOLs and Non Member NOLs (defined below). Any
remaining Industries Common Shares will be reinstated on the Effective Date
and shall not be cancelled or extinguished. Such Industries Common Shares
however are expected to be worthless on the Effective Date.
Cancellation of Industries Common Shares that constitute patronage
dividends issued to members, associate members and patrons of Industries in
the form of member common stock, associate member common stock or capital
credits (the "Industries Member Equity") may result in income to Industries
under the tax benefit rule. It is the position of the Service that
cooperatives recognize tax benefit income upon the cancellation or
redemption of patronage equity at a discount because (i) at the time the
patronage equity was issued the cooperative claimed a deduction for United
States federal income tax purposes and the patrons receiving the patronage
equity reported a like amount of income; and (ii) upon the cancellation or
redemption of the patronage equity, the cooperative is relieved of its
obligation to redeem the patronage equity in the future at its stated
value. Under the Service's approach, the amount of tax benefit income which
would be realized by Industries upon cancellation of Industries Common
Shares that constitute Industries Member Equity is equal to the difference
between the face amount of Industries Common Shares that constitute
Industries Member Equity outstanding and the sum of any cash and the fair
market value of any other property received in exchange for the Industries
Common Shares that constitute Industries Member Equity.
Contrary to the Service's position, the Eleventh Circuit Court of
Appeals has held that no tax benefit income is realized when patronage
equity is cancelled or otherwise redeemed for less than its face value.
Under the view of the Eleventh Circuit, when a cooperative pays a patronage
dividend through the issuance of a qualified written notice based on
consent, the dividend is deemed for tax purposes to have been paid in cash,
with the patron then using the cash to acquire the qualified written
notice. Gold Kist, Inc. v. Comm'r, 110 F.3d 769 (11th Cir. 1997).
The Service disagrees with the decision in Gold Kist and has stated
that it fully intends to litigate any taxpayer claim that tax benefit
income is not recognized based on the decision in Gold Kist. To the extent
that tax benefit income may be realized with respect to the portion of the
Industries Common Shares that constitute Industries Member Equity that are
cancelled pursuant to the Plan, Debtors believe that there will be
sufficient losses and NOLs (defined below) to offset this tax benefit
income. See, "Cancellation of Industries Common Shares Net Operating
Losses," below.
Based on current projections it is estimated that approximately
$45,000,000 Industries Common Shares that constitute Industries Member
Equity will not be cancelled. These outstanding Industries Common Shares
are believed to be worthless as it is unlikely that there will be any
remaining proceeds from the liquidation after Creditors' Claims are paid.
Industries believes that it will not recognize tax benefit income merely as
a result of the Industries Common Shares that constitute Industries Member
Equity becoming worthless. Industries has requested a private letter ruling
from the Service to the affect that income is not generated with respect to
any outstanding patronage equity in Industries absent formal cancellation.
If the Service does not grant such a ruling and treats the patronage equity
as cancelled and not otherwise excluded from taxation, Industries will be
subject to tax on the amount of outstanding patronage equity unless
Industries were to successfully contest the issue in court.
b) Net Operating Losses
As a cooperative, Industries' net operating losses ("NOLs") are
classified as either NOLs resulting from activities with patrons ("Member
NOLs") or NOLs resulting from activities with non patrons ("NonMember
NOLs"). Member NOLs may only be used to offset member sourced income,
whereas NonMember NOLs may be used to offset both member sourced income and
nonmember sourced income. The Service has granted Industries' private
letter ruling request providing that Industries will be able to utilize
current patronage sourced losses and available Member NOLs by canceling an
equal amount of the Industries Common Shares that constitute Industries
Member Equity. Industries will cancel Industries Common Shares that
constitute Industries Member Equity only to the extent it has available
losses, NonMember NOLs and Member NOLs. All remaining Industries Common
Shares that constitute Industries Member Equity will remain outstanding
under the Plan.
Industries has approximately $481,000,000 of Industries Common Shares
that constitute Industries Member Equity outstanding. Based on current
projections, following the transfer of the Remaining Assets to the
Liquidating Trust and consummation of the proposed asset sales, Industries
believes it will have losses, NonMember NOLS and Member NOLs of
approximately $436,000,000 available to offset any tax benefit income
resulting from cancellation of Industries Common Shares that constitute
Industries Member Equity. Therefore, it is anticipated that Industries will
cancel approximately $436,000,000 of the Industries Member Equity and leave
approximately $45,000,000 Industries Common Shares that constitute
Industries Member Equity outstanding.
Thus, after the offset against tax benefit income and gains from asset
sales, Industries expects to have no NOLs remaining prior to any
cancellation of indebtedness attribute reduction. See, "Cancellation of
Indebtedness and Reduction of Tax Attributes," below.
In the event Industries cancels an amount of Industries Common Shares
that constitute Industries Member Equity that exceeds its available losses
and NOLs, or Industries Common Shares that constitute Industries Member
Equity that remain outstanding are deemed to generate tax benefit income by
virtue of being worthless, the Debtors will be subject to tax on the amount
of tax benefit income that is not offset by the available losses and NOLs,
unless the Debtors prevail on a Gold Kist or similar type argument wherein
tax benefit income is not recognized.
4. CANCELLATION OF INDEBTEDNESS AND REDUCTION OF TAX ATTRIBUTES
In connection with the Plan, the amount of Industries' aggregate
outstanding indebtedness will be substantially reduced. A taxpayer
generally realizes cancellation of debt ("COD") income for United States
federal income tax purposes equal to the amount of any indebtedness that is
discharged or canceled during the taxable year. Whether a debt is
considered discharged is dependent upon the substance of the transaction.
Generally a debt is considered discharged at the point when it becomes
clear that the debt will never have to be paid. In the case of an exchange,
such as that contemplated by the Plan, where outstanding indebtedness is
exchanged for other property (such as Cash and the Remaining Assets), the
amount of such COD income is, in general, equal to the excess of the
adjusted issue price (including accrued but unpaid interest) of the
indebtedness over the fair market value of the other property issued
therefor. However, Section 108(a) of the Code provides that if the
discharge is granted by a court in a Chapter 11 proceeding or is pursuant
to a plan approved by such court, such income is excluded from the
taxpayer's taxable income. Consequently, any COD income attributable to the
Plan will be excluded from Debtors' taxable income and Debtors' will not
incur any tax liability with respect to such COD income.
However, Section 108(b) of the Code provides, in general, that certain
tax attributes of a debtor, including any NOLs and certain tax credits,
must be reduced by the amount of the debtor's COD income that is excluded
under Section 108(a) of the Code. To the extent that the amount excluded
exceeds these tax attributes, the debtor's tax basis in its property is
reduced by the amount of such excluded COD income, except that such
reduction is limited to the excess of the aggregate tax basis of the
property held by the debtor over the aggregate liabilities of the debtor
immediately after the transaction. Recent Treasury Regulations provide that
in a consolidated group situation, NOLs are reduced on a consolidated
basis. In addition, the Treasury Regulations clarify that all of the
consolidated attributes of the group may be available for reduction when
the debt of a member of the group is discharged, based upon the member's
relationship in the group, and provides a methodology for reducing such
attributes.
As a result of the Plan, and assuming the aggregate issue price for
each of the debt instruments issued in the Plan is equal to its aggregate
principal amount, Industries estimates that the attribute reduction
required under Section 108(b) will completely eliminate the NOLs of
Industries and its subsidiaries as of the end of the taxable year in which
the Plan is confirmed. However, because the attribute reduction occurs
after the determination of the Debtors' normal tax liability for a taxable
year, such attribute reduction is not expected to impact Debtors' use of
NOLs to offset tax benefit income or gain with respect to asset sales.
5. ALTERNATIVE MINIMUM TAX
In general, an "alternative minimum tax" ("AMT") is imposed on a
corporation's "alternative minimum taxable income" at a rate of 20% to the
extent such tax exceeds the corporation's regular United States federal
income tax. In computing taxable income for AMT purposes, certain tax
deductions and other beneficial allowances are modified or eliminated. In
particular, even though a corporation might be able to offset all of its
taxable income for regular United States federal income tax purposes by
available NOLs, only 90% of a corporation's taxable income for AMT purposes
may be offset by available NOLs (as recomputed for AMT purposes), resulting
in an effective AMT rate of 2%.
Any AMT that a corporation pays generally will be allowed as a
nonrefundable credit against its regular United States federal income tax
liability in future taxable years when the corporation is no longer subject
to the AMT. Debtors believe that they may be subject to an AMT liability as
a result of their use of NOLs to offset tax benefit income or gain on asset
sales.
B. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF CLAIMS
AND INTERESTS
The United States federal income tax consequences of the Plan to
holders of Claims and Interests and the character, amount and timing of
income, gain or loss recognized as a consequence of the Plan and the
distributions provided for or by the Plan will depend upon, among other
things, (i) the manner in which a holder acquired a Claim or Interest; (ii)
the length of time a Claim or Interest has been held; (iii) whether the
Claim or Interest was acquired at a discount; (iv) whether the holder has
taken a bad debt deduction in the current or prior years; (v) whether the
holder has previously included accrued but unpaid interest with respect to
a Claim or Interest; (vi) the method of tax accounting of the holder; (vii)
whether a Claim or Interest is an installment obligation for United States
federal income tax purposes; (viii) whether the holder's present Claim or
Interest constitutes a security for United States federal income tax
purposes; and (ix) the type of consideration received or deemed received by
the holder in exchange for its Claim or Interest. Therefore, holders of
Claims and Interests should consult their tax advisors for information that
may be relevant to their particular situations and circumstances and the
particular tax consequences to such holders as a result thereof.
1. HOLDERS OF ALLOWED CLAIMS AND INTERESTS RECEIVING CONSIDERATION
a) Unimpaired Claims and Interests
Under the Plan, Allowed Claims and Interests in Class 1 (Other
Priority Claims), Class 2 (Secured Lender Claims), Class 3 (Other Secured
Claims), Class 6 (Convenience Claims against Industries) and Class 8
(Industries Preferred Shares) (collectively, the "Unimpaired Claims") are
Unimpaired by the Plan. The satisfaction of the Unimpaired Claims will have
the same United States federal income tax consequences to the holders that
it would have had if the Plan were not confirmed. To the extent that the
fair market value of the Remaining Assets on the Effective Date equals or
exceeds the amount of such Claims on the Effective Date, such Claims shall
be deemed satisfied for tax purposes on the Effective Date when the
Remaining Assets are transferred to the Liquidating Trust.
b) Priority Impaired Claims
Under the Plan, holders of Claims in Class 10 (General Unsecured
Claims against Foods), Class 12 (General Unsecured Claims against
Transportation), Class 14 (General Unsecured Claims against SFA), Class 16
(General Unsecured Claims against Pipeline) and Class 18 (Intercompany
Claims) (collectively, the "Priority Impaired Claims") will be fully
satisfied provided that the fair market value of the Remaining Assets on
the Effective Date equals or exceeds the amount of the Unimpaired Claims
and Priority Impaired Claims on the Effective Date. The satisfaction of the
Priority Impaired Claims will have the same United States federal income
tax consequences to the holders that it would have had if the Plan were not
confirmed.
c) Impaired Claims
Under the Plan, holders of claims in Class 4 (Demand Certificates
Claims), Class 5 (Subordinated Certificates Claims), and Class 7 (General
Unsecured Claims against Industries) will receive, as consideration in
satisfaction of their Allowed Claim, a pro rata share of the Industries
Distribution Pool. Holders of Demand Certificates Claims, Subordinated
Certificates Claims, and General Unsecured Claims against Industries will
recognize ordinary interest income to the extent that any portion of such
consideration is allocable to accrued but untaxed interest. See
"Distributions in Discharge of Accrued Interest," below. The following
discussion addresses only that portion of the consideration received by a
such holders which is not allocable to accrued but untaxed interest.
Holders of Demand Certificates Claims, Subordinated Certificates Claims,
and General Unsecured Claims against Industries will be deemed to have
received a share of the Remaining Assets transferred to the Liquidating
Trust in exchange for their Claims to the extent the fair market value of
such assets on the Effective Date exceeds the aggregate amount of
Administrative Claims against Industries, Priority Tax Claims against
Industries, Unimpaired Claims and Priority Impaired Claims. Such transfer
will constitute a taxable transaction and such holders will recognize gain
or loss in an amount equal to the difference between (i) the "amount
realized" by the holder in respect of its Allowed Claim (other than any
claim for accrued but unpaid interest) and (ii) the holder's adjusted tax
basis in its Allowed Claim (other than any claim for accrued but unpaid
interest).
To the extent the proceeds of the Industries Retained Assets are
subsequently transferred to the Liquidating Trust, such transfer will
increase the amount of gain previously recognized or reduce the amount of
loss previously recognized by holders of Demand Certificates Claims,
Subordinated Certificates Claims and General Unsecured Claims against
Industries to the extent such proceeds are allocable to such holders. Such
transfer to the Beneficiaries will constitute a taxable transaction to the
Beneficiaries. Beneficiaries will determine the gain or loss on the
transfer by comparing the value of the Liquidating Trust interest received
in the exchange to the tax basis, if any, in their claims. As a result of
such treatment, such holders of Allowed Claims will have to take into
account the fair market value of their pro rata share, if any, of the
Remaining Assets transferred on their behalf to the Liquidating Trust in
determining the amount of gain or loss realized and required to be
recognized upon consummation of the Plan on the Effective Date. In
addition, since such a Beneficiary's share of the assets held in the
Liquidating Trust may change depending upon the resolution of Disputed
Claims and the Industries Retained Assets, the holder may be prevented from
recognizing any loss in connection with consummation of the Plan until the
time that all such issues with respect to the Disputed Claims and the
Industries Retained Assets have been resolved. The Liquidating Trustee will
provide the holders of Allowed Claims with valuations of the Remaining
Assets on behalf of and for the benefit of such holders and such valuations
should be used consistently by the Liquidating Trust and such holders for
all United States federal income tax purposes.
Where gain or loss is recognized by a holder of Subordinated
Certificates Claims or General Unsecured Claims against Industries, the
character of such gain or loss as long-term or short-term capital gain or
loss, or as ordinary income or loss will be determined by a number of
factors, including the tax status of the holder, whether the obligation
from which the Claim arose constitutes a capital asset in the hands of the
holder and how long it has been held, and whether and to what extent the
holder has previously claimed a bad debt deduction. A holder which
purchased its Claim from a prior holder at a market discount may be subject
to the market discount rules of the Code which could characterize a portion
of the gain recognized as ordinary income. In addition, Section 582(c) of
the Code provides that the sale or exchange of a bond, debenture, note or
certificate or other evidence of indebtedness by certain financial
institutions shall be considered the sale or exchange of a non-capital
asset. Accordingly, any gain or loss recognized by such financial
institutions as a result of the implementation of the Plan will be ordinary
gain or loss, regardless of the nature of their Claims.
The transfer of the Remaining Assets to the Liquidating Trust by the
Debtors as well as any subsequent transfers to the Liquidating Trust should
be treated for tax purposes as a deemed transfer to the holders of Allowed
Claims, to the extent they are Beneficiaries, followed by a deemed transfer
by the Beneficiaries to the Liquidating Trust. See "Tax Treatment of the
Liquidating Trust," below.
2. HOLDERS OF INDUSTRIES COMMON SHARES
Under the Plan, a portion of the Industries Common Shares will be
cancelled. The United States federal income tax consequences to the holders
of claims in Class 9 (Industries Common Shares) will depend on whether or
not the Industries Common Shares are Industries Member Equity in the hands
of the holder.
a) Industries Common Shares That Do Not Constitute
Industries Member Equity
If a holder of Industries Common Shares that are not Industries Member
Equity receives no consideration in exchange for its Industries Common
Shares, and such Industries Common Shares are cancelled, such holder will
generally recognize a loss equal to the holder's tax basis in its
Industries Common Shares. Any such loss will generally be a capital loss
and will be a long-term capital loss if the Industries Common Shares were
held for more than one year.
b) Industries Common Shares That Constitute Industries
Member Equity
If a holder of Industries Common Shares that represent Industries
Member Equity receives no consideration in exchange for its Industries
Common Shares that represent Industries Member Equity and such Industries
Common Shares that represent Industries Member Equity are cancelled, such
holder will generally recognize a loss equal to the holder's tax basis in
its Industries Common Shares that represent Industries Member Equity. Two
Revenue Rulings issued by the Service in 1970 provide that an association's
members and patrons will be allowed an ordinary loss deduction as a result
of the cancellation. Although the Service suspended these two Revenue
Rulings in 1987, Debtors' believe that it is still the position of the
Service that such loss is considered an ordinary loss. If the loss is not
treated as an ordinary loss as described above, the loss will be classified
as a capital loss.
3. HOLDERS OF OLD SECURITIES OF FOODS
Under the Plan, the Old Securities of Foods will be deemed cancelled
as of the Effective Date and holders of Old Securities of Foods that
constitute Minority Foods Shares will receive a pro rata share of the Class
11 Distribution Pool. Such holders of Old Securities of Foods will
recognize taxable loss (or gain) to the extent that the fair market value
of their share of the Class 11 Distribution Pool is less (or greater) than
the holder's tax basis in their Old Securities of Foods. The gain or loss
should be a capital gain or loss provided the shareholder held the Old
Securities of Foods as a capital asset within the meaning of Code Section
1221. If, however, a holder claimed a loss for tax purposes in a prior
period on the ground that the Old Securities of Foods had become worthless,
the holder would be required to recognize income equal to the fair market
value of their share of the Class 11 Distribution Pool.
4. HOLDERS OF OLD SECURITIES OF TRANSPORTATION, SFA AND PIPELINE
Under the Plan all Class 13 Interests (Old Securities of
Transportation), Class 15 Interests (Old Securities of SFA), and Class 17
Interests (Old Securities of Pipeline) will be deemed cancelled as of the
Effective Date and any cash remaining in the Estates of Transportation, SFA
and Pipeline after the payment of Claims against each Estate as set forth
in the Plan (the "Old Securities Cash") shall be transferred to the
Liquidating Trust for the benefits of the creditors of Industries. The
holders of the Old Securities of Transportation, SFA and Pipeline will
generally recognize a taxable loss (or gain) to the extent the Old
Securities Cash is less (or greater) than the holder's tax basis in its
respective Old Securities of Transportation, Old Securities of SFA, or Old
Securities of Pipeline. Any such loss (or gain) will generally be a capital
loss (or gain) and will be a long-term capital loss (or gain) if the Old
Securities of Transportation, Old Securities of SFA, or Old Securities of
Pipeline were held for more than one year.
5. HOLDERS OF SUBORDINATED CLAIMS
Under the Plan, claims in Class 19 (Subordinated Claims) will not
receive or retain any property until all Administrative Claims against
Industries, all Priority Tax Claims against Industries, all Class 1 Claims
against Industries, all Class 3 Claims against Industries, all Class 4
Claims, all Class 5 Claims, all Class 6 Claims, all Class 7 Claims, all
Interests in Class 8 and all Class 18 Claims against Industries have been
(i) Allowed and paid in full (including, with respect to Classes 5 and 7,
payment of interest at the Plan Rate), (ii) disallowed or (iii) withdrawn,
and all Intercompany Advances payable by Industries have been repaid.
In general, loss will be recognized by a holder of a Subordinated
Claim in an amount equal to the holder's adjusted tax basis in its
Subordinated Claim (other than any claim for accrued but unpaid interest).
See "Distributions in Discharge ofAccrued Interest," below.
Where loss is recognized by a holder of a Subordinated Claim, the
character of such loss as long-term or short-term capital loss, or as
ordinary loss will be determined by a number of factors, including the tax
status of the holder, whether the obligation from which the Claim arose
constitutes a capital asset in the hands of the holder and how long it has
been held, and whether and to what extent the holder has previously claimed
a bad debt deduction. A holder which purchased its Claim from a prior
holder at a market discount may be subject to the market discount rules of
the Code which could characterize a portion of the gain recognized as
ordinary income. In addition, Section 582(c) of the Code provides that the
sale or exchange of a bond, debenture, note or certificate or other
evidence of indebtedness by certain financial institutions shall be
considered the sale or exchange of a non-capital asset. Accordingly, any
gain or loss recognized by such financial institutions as a result of the
implementation of the Plan will be ordinary gain or loss, regardless of the
nature of their Claims.
6. DISTRIBUTIONS IN DISCHARGE OF ACCRUED INTEREST
To the extent the amount received by a holder is received in discharge
of interest accrued on its Claim during its holding period, such amount
will be taxable to the holder as interest income (if, under the holder's
applicable accounting method, such interest was not previously included in
the holder's gross income). Conversely, a holder will recognize a
deductible loss (or, possibly, a writeoff against a reserve for bad debts)
to the extent any accrued interest claimed was previously included in its
gross income and is not paid in full.
Pursuant to the Plan, any distributions received by a holder in
respect of an Allowed Claim shall be allocated first to the principal
portion of the Claim to the extent thereof and thereafter to any Claim
representing accrued interest through the Effective Date. There is no
assurance, however, that such allocation will be respected for United
States federal income tax purposes. Accordingly, all holders are advised to
consult their own tax advisors to determine the amount of consideration
received under the Plan that may be allocable to accrued interest.
7. INFORMATION REPORTING AND BACKUP WITHHOLDING
Certain payments, including the payments of Claims pursuant to the
Plan, are generally subject to information reporting by the Debtors to the
Service. Moreover, such reportable payments are subject to backup
withholding under certain circumstances. Under the Code's backup
withholding rules, a holder of a Claim may be subject to backup withholding
with respect to distributions or payments made pursuant to the Plan, unless
the holder: (i) comes within certain exempt categories (which generally
include corporations) and, when required, demonstrates this fact or (ii)
provides a correct taxpayer identification number and certifies under
penalty of perjury that the taxpayer identification number is correct and
that the taxpayer is not subject to backup withholding because of a failure
to report all dividend and interest income.
C. TAX TREATMENT OF THE LIQUIDATING TRUST
1. CLASSIFICATION OF THE LIQUIDATING TRUST AND OWNERSHIP OF BENEFICIAL
INTERESTS IN LIQUIDATING TRUST
Pursuant to the Plan, the Debtors will transfer the Remaining Assets
to the Liquidating Trust and the Liquidating Trust will become obligated to
make distributions in accordance with the Plan. The Liquidating Trust is
intended to qualify as a liquidating trust for United States federal income
tax purposes. In general, a liquidating trust is not a separate taxable
entity but rather is treated for United States federal income tax purposes
as a "grantor" trust (i.e., a pass-through entity). The Service, in Revenue
Procedure 94-45, set forth the general criteria for obtaining a Service
ruling as to the grantor trust status of a liquidating trust under a
Chapter 11 plan. Although no such ruling will be requested, the Liquidating
Trust has been structured with the intention of complying with such general
criteria. Pursuant to the Plan, and in conformity with Revenue Procedure
94-45, all parties (including the Debtors, the Liquidating Trustee and the
Beneficiaries) are required to treat, for United States federal income tax
purposes, the Liquidating Trust as a grantor trust of which the
Beneficiaries are the owners and grantors, and the following discussion
assumes that the liquidating Trust will be respected as a liquidating
trust. However, no ruling has been requested from the Service concerning
the tax status of the Liquidating Trust as a grantor trust. Accordingly,
there can be no assurance that the Service would not take a contrary
position. If the Service were to challenge successfully such
classification, the United States federal income tax consequences to the
Liquidating Trust and the Beneficiaries could vary from those discussed
herein (including the potential for an entity level tax).
2. TAX REPORTING
For all United States federal income tax purposes, all parties
(including the Debtors, the Liquidating Trustee and holders of beneficial
interests in the Liquidating Trust) shall treat the transfer of the
Remaining Assets to the Liquidating Trust, in accordance with the terms of
the Plan, as a transfer of the Remaining Assets directly to the
Beneficiaries, followed by the transfer of the Remaining Assets by such
holders to the Liquidating Trust. Consistent therewith, all parties shall
treat the Liquidating Trust as a grantor trust of which such holders are
the owners and grantors. Thus, such holders (and any subsequent holders of
interests in the Liquidating Trust) shall be treated as the direct owners
of an undivided beneficial interest in the assets and liabilities of the
Liquidating Trust for all United States federal income tax purposes. The
Liquidating Trustee will determine the fair market value of the Remaining
Assets and all parties, including the Beneficiaries, must consistently use
such valuation for all United States federal income tax purposes.
Each of the Beneficiaries will be required to report on its United
States federal income tax return(s) the holder's allocable share of any
income, gain, loss, deduction or credit recognized or incurred by the
Liquidating Trust. The character of items of income, deduction and credit
to any holder and the ability of such holder to benefit from any deduction
or losses may depend on the particular situation of the holder.
The United States federal income tax reporting obligation of the
Beneficiaries is not dependent upon the Liquidating Trust distributing cash
or other proceeds. Therefore, Beneficiaries may receive net taxable income
or gain in a taxable year regardless of the fact that the Liquidating Trust
has not made, or will not make, any concurrent or subsequent distributions
to the holder. If a holder does not receive distributions commensurate with
the net taxable income or gain allocated to it in respect of any beneficial
interests it holds in the Liquidating Trust, the holder may be entitled to
a subsequent loss or deduction. In general, a distribution of cash by the
Liquidating Trust to the Beneficiaries will not be subject to tax since
such Beneficiaries are already regarded for United States federal income
tax purposes as owning the underlying assets.
The Liquidating Trustee will file with the Service returns for the
Liquidating Trust as a grantor trust pursuant to Treasury Regulations
Section 1.671-4(a). The Liquidating Trustee will also send to each holder
of a beneficial interest in the Liquidating Trust a separate statement
setting forth the holder's share of items of income, gain, loss, deduction
or credit and will instruct the holder to report such items on its United
States federal income tax return.
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE
COMPLEX. THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF UNITED
STATES FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER
IN LIGHT OF SUCH HOLDER'S PARTICULAR CIRCUMSTANCES AND INCOME TAX
SITUATION. ALL HOLDERS OF CLAIMS AND INTERESTS SHOULD CONSULT WITH THEIR
TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING THE APPLICABILITY AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE TAX
LAWS.
[Remainder of Page Blank]
VIII. CONCLUSION
The Debtors urge holders of Claims and Interests in the Voting Classes
to vote to accept the Plan and to evidence such acceptance by returning
their completed and signed Ballots so they will be received by the
Balloting Agent not later than the Balloting Deadline.
Dated: October 31, 2003
FARMLAND INDUSTRIES, INC.
FARMLAND FOODS, INC.
SFA, INC.
FARMLAND TRANSPORTATION, INC.
FARMLAND PIPE LINE COMPANY
By: /s/ Robert B. Terry
-------------------------------
Name: Robert B. Terry
Title: Authorized Signatory
Laurence M. Frazen, Esq.
Cynthia Dillard Parres, Esq.
Robert M. Thompson, Esq.
BRYAN CAVE LLP
1200 Main Street, Suite 3500
Kansas City, Missouri 64105
Gregory D. Willard, Esq.
David M. Unseth, Esq.
Cullen K. Kuhn, Esq.
BRYAN CAVE LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Attorneys for the Debtors and Debtors-in-Possession
APPENDIX A
Second Amended Joint Plan of Reorganization, as Modified
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF MISSOURI
In re: ) In Proceedings under Chapter 11
)
FARMLAND INDUSTRIES, INC., ) Case No. 02-50557
FARMLAND FOODS, INC., ) Case No. 02-50561
SFA, INC., ) Case No. 02-50562
FARMLAND TRANSPORTATION, INC., ) Case No. 02-50564
FARMLAND PIPE LINE COMPANY, ) Case No. 02-50565
)
Debtors. ) Joint Administration
DEBTORS' SECOND AMENDED JOINT PLAN OF REORGANIZATION,
AS MODIFIED
--------------------------------------------------------
Gregory D. Willard, Esq. Laurence M. Frazen, Esq.
David M. Unseth, Esq. Cynthia Dillard Parres, Esq.
Cullen K. Kuhn, Esq. Robert M. Thompson, Esq.
BRYAN CAVE LLP BRYAN CAVE LLP
211 North Broadway, Suite 3600 1200 Main Street, Suite 3500
St. Louis, Missouri 63102-2750 Kansas City, Missouri 64105
Attorneys for Debtors and Debtors-in-Possession
Dated: October 31, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND
GOVERNING LAW......................................................1
1 1 "Administrative Claim".............................................1
1.2 "Allowed" .........................................................1
1.3 "Allowed Class ... Claim"..........................................2
1.4 "Allowed Class ... Interest".......................................2
1.5 "Allowed Interest".................................................2
1.6 "Available Cash"...................................................2
1.7 "Ballot"...........................................................2
1.8 "Bankruptcy Code"..................................................2
1.9 "Bankruptcy Committees"............................................2
1.10 "Bankruptcy Court".................................................2
1.11 "Bankruptcy Rules".................................................2
1.12 "Bar Date(s).......................................................3
1.13 "Beneficiaries"....................................................3
1.14 "Benefited Debtors"................................................3
1.15 "Bondholder Transaction Fee".......................................3
1.16 "Bondholders' Committee"...........................................3
1.17 "Business Day".....................................................3
1.18 "Cash".............................................................3
1.19 "Chapter 11 Case"..................................................3
1.20 "Claim"............................................................3
1.21 "Class"............................................................3
1.22 "Class 11 Distribution Pool".......................................3
1.23 "Coffeyville Assets"...............................................3
1.24 "Collateral".......................................................3
1.25 "Committee Members"................................................3
1.26 "Confirmation".....................................................3
1.27 "Confirmation Date"................................................3
1.28 "Confirmation Hearing'.............................................3
1.29 "Confirmation Order"...............................................4
1.30 "Convenience Claim.................................................4
1.31 "Creditor".........................................................4
1.32 "Creditor Transaction Fee".........................................4
1.33 "Creditors' Committee" ............................................4
1.34 "Cure".............................................................4
1.35 "Debtor" ..........................................................4
1.36 "Debtors"..........................................................4
1.37 "Demand Certificates"..............................................4
1.38 "Demand Certificates Claim"........................................4
1.39 "DIP Credit Agreement".............................................4
1.40 "DIP Loan Claims"..................................................4
1.41 "Disclosure Statement".............................................4
1.42 "Disputed Claim"...................................................5
1.43 "Disputed Claim Amount"............................................5
1.44 "Disputed Claims Reserve"..........................................5
1.45 "Disputed Interest"................................................5
1.46 "Disputed Interest Amount".........................................5
1.47 "Distribution Record Date".........................................5
1.48 "Effective Date"...................................................5
1.49 "Entity"...........................................................6
1.50 "Ernst & Young"....................................................6
1.51 "Estate(s)"........................................................6
1.52 "Face Amount"......................................................6
1.53 "Final Distribution Date"..........................................6
1.54 "Final Order"......................................................6
1.55 "Foods"............................................................6
1.56 "General Unsecured Claim"..........................................6
1.57 "Houlihan Lokey"...................................................6
1.58 "Impaired".........................................................6
1.59 "Indenture Trustees"...............................................6
1.60 "Industrial Revenue Bonds".........................................6
1.61 "Industries".......................................................7
1.62 "Industries Common Shares".........................................7
1.63 "Industries Distribution Pool".....................................7
1.64 "Industries Preferred Shares"......................................7
1.65 "Industries Retained Assets".......................................7
1.66 "Initial Distribution Date"........................................7
1.67 "Insurance Claim"..................................................7
1.68 "Intercompany Advances"............................................7
1.69 "Intercompany Claim"...............................................7
1.70 "Interest".........................................................7
1.71 "IRB Indentures"...................................................7
1.72 "KERIT Plan".......................................................7
1.73 "Lender"...........................................................7
1.74 "Lien".............................................................8
1.75 "Liquidating Trust"................................................8
1.76 "Liquidating Trust Administrative Reserve".........................8
1.77 "Liquidating Trust Agreement"......................................8
1.78 "Liquidating Trust Assets".........................................8
1.79 "Liquidating Trustee"..............................................8
1.80 "Litigation Claims"................................................8
1.81 "Loan Documents"...................................................8
1.82 "Management Agreement".............................................8
1.83 "Minority Foods Shares"............................................8
1.84 "Non-Debtor Subsidiaries"..........................................8
1.85 "Objection Deadline"...............................................8
1.86 "Old Common Shares"................................................9
1.87 "Old Preferred Shares".............................................9
1.88 "Old Securities"...................................................9
1.89 "Old Stock Options"................................................9
1.90 "Old Warrants".....................................................9
1.91 "Other Priority Claim".............................................9
1.92 "Other Secured Claim" .............................................9
1.93 "PBGC".............................................................9
1.94 "PBGC Claims" .....................................................9
1.95 "Person" ..........................................................9
1.96 "Petition Date" ...................................................9
1.97 "Pipeline".........................................................9
1.98 "Plan".............................................................9
1.99 "Plan Exhibit"....................................................10
1.100 "Plan Rate" ......................................................10
1.101 "Pork Business"...................................................10
1.102 "Post-Confirmation Committee".....................................10
1.103 "Pre-Petition Credit Agreement"...................................10
1.104 "Priority Tax Claim" .............................................10
1.105 "Pro Rata" .......................................................10
1.106 "Professional"....................................................10
1.107 "Professional Fee Claim"..........................................10
1.108 "Register"........................................................10
1.109 "Reimbursement Right".............................................10
1.110 "Reinstated" or "Reinstatement"...................................10
1.111 "Reorganized Industries"..........................................11
1.112 "Schedules".......................................................11
1.113 "Secured Claim"...................................................11
1.114 "Secured Lender Claims"...........................................11
1.115 "SF Phosphates Interest"..........................................11
1.116 "SFA".............................................................11
1.117 "Subordinated Certificates".......................................11
1.118 "Subordinated Certificates Claim".................................12
1.119 "Subordinated Claims".............................................12
1.120 "Subsequent Distribution Date"....................................12
1.121 "Subsidiaries"....................................................12
1.122 "Subsidiary Debtors"..............................................12
1.123 "Subsidiary Interests"............................................12
1.124 "Substantial Contribution Claim"..................................12
1.125 "Tax Distribution"................................................12
1.126 "Transferred Assets"..............................................12
1.127 "Transportation"..................................................12
1.128 "Trust Indentures"................................................12
1.129 "Unimpaired"......................................................13
1.130 "Voting Record Date"..............................................13
ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS............................14
2.1 Class 1 (Other Priority Claims)...................................14
2.2 Class 2 (Secured Lender Claims)...................................14
2.3 Class 3 (Other Secured Claims)....................................14
2.4 Class 4 (Demand Certificates Claims)..............................15
2.5 Class 5 (Subordinated Certificates Claims)........................15
2.6 Class 6 (Convenience Claims against Industries)...................15
2.7 Class 7 (General Unsecured Claims against Industries).............15
2.8 Class 8 (Industries Preferred Shares).............................15
2.9 Class 9 (Industries Common Shares)................................15
2.10 Class 10 (General Unsecured Claims against Foods).................15
2.11 Class 11 (Old Securities of Foods)................................15
2.12 Class 12 (General Unsecured Claims against Transportation)........15
2.13 Class 13 (Old Securities of Transportation).......................15
2.14 Class 14 (General Unsecured Claims against SFA)...................15
2.15 Class 15 (Old Securities of SFA)..................................15
2.16 Class 16 (General Unsecured Claims against Pipeline)..............16
2.17 Class 17 (Old Securities of Pipeline).............................16
2.18 Class 18 (Intercompany Claims)....................................16
2.19 Class 19 (Subordinated Claims)....................................16
ARTICLE III TREATMENT OF CLAIMS AND INTERESTS................................16
3.1 Unclassified Claims...............................................16
3.2 Class 1 (Other Priority Claims)...................................17
3.3 Class 2 (Secured Lender Claims)...................................17
3.4 Class 3 (Other Secured Claims)....................................18
3.5 Class 4 (Demand Certificates Claims)..............................18
3.6 Class 5 (Subordinated Certificates Claims)........................18
3.7 Class 6 (Convenience Claims against Industries)...................19
3.8 Class 7 (General Unsecured Claims against Industries).............19
3.9 Class 8 (Industries Preferred Shares).............................19
3.10 Class 9 (Industries Common Shares)................................19
3.11 Class 10 (General Unsecured Claims against Foods).................20
3.12 Class 11 (Old Securities of Foods)................................20
3.13 Class 12 (General Unsecured Claims against Transportation)........20
3.14 Class 13 (Old Securities of Transportation).......................20
3.15 Class 14 (General Unsecured Claims against SFA)...................20
3.16 Class 15 (Old Securities of SFA)..................................21
3.17 Class 16 (General Unsecured Claims against Pipeline)..............21
3.18 Class 17 (Old Securities of Pipeline).............................21
3.19 Class 18 (Intercompany Claims)....................................21
3.20 Class 19 (Subordinated Claims)....................................21
3.21 Reservation Of Rights Regarding Claims............................22
ARTICLE IV ACCEPTANCE OR REJECTION OF THE PLAN..........................22
4.1 Impaired Classes Of Claims And interests Entitled To Vote.........22
4.2 Acceptance By An Impaired Class...................................22
4.3 Presumed Acceptances..............................................22
4.4 Summary of Classes Voting On The Plan.............................22
4.5 Confirmation Pursuant To Section 1129(b) Of The Bankruptcy Code...22
ARTICLE V MEANS FOR IMPLEMENTATION OF THE PLAN..........................23
5.1 Continued existence Of The Debtors; Vesting Of Assets.............23
5.2 Funding For The Plan..............................................24
5.3 Accounts..........................................................25
5.4 Liquidating Trust; Liquidating Trustee............................25
5.5 Post-Confirmation Committee.......................................26
5.6 Effectuating Documents; Further Transactions......................27
5.7 Exemption From Certain Transfer Taxes.............................27
5.8 Releases And Related Matters......................................27
5.9 Closing Of The Chapter 11 Case....................................28
5.10 Rights of Action..................................................28
5.11 Retiree Benefits..................................................29
5.12 Establishment of Class 11 Distribution Pool.......................29
ARTICLE VI TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES........29
6.1 Rejected Executory Contracts And Unexpired Leases.................29
6.2 Rejection Damagers Bar Date.......................................30
6.3 Assumed Executory Contracts And Unexpired Leases..................30
6.4 Payments Related To Assumed Executory Contracts And
Unexpired Leases..................................................30
ARTICLE VII PROVISIONS GOVERNING DISTRIBUTIONS..........................31
7.1 Distributions.....................................................31
7.2 Interest On Claims................................................31
7.3 Means Of Cash Payment.............................................31
7.4 Distributions on the Initial Distribution Date....................31
7.5 Distributions on a Subsequent Distribution Date...................32
7.6 Distributions on the Final Distribution Date......................32
7.7 Delivery Of Distributions; Undeliverable Distributions............33
7.8 Tender Of Securities And Instruments; Cancellation of Trust
Indentures........................................................33
7.9 Withholding And Reporting Requirements............................34
7.10 Setoffs...........................................................34
7.11 No Recourse.......................................................35
7.12 Transactions On Business Days.....................................35
7.13 No Distribution In Excess Of Allowed Amount Of Claim..............35
7.14 Intercompany Advances.............................................35
ARTICLE VIII PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND
UNLIQUIDATED CLAIMS AND DISTRIBUTIONS WITH RESPECT THERETO..............36
8.1 Prosecution Of Objections To Claims...............................36
8.2 Treatment Of Disputed Claims; Disputed Claims Reserves............36
8.3 Estimation........................................................36
ARTICLE IX CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION
OF THE PLAN.............................................................37
9.1 Conditions To Effective Date......................................37
9.2 Waiver Of Conditions..............................................38
9.3 Notice of Effective Date..........................................38
ARTICLE X RETENTION OF JURISDICTION.....................................38
ARTICLE XI MISCELLANEOUS PROVISIONS.....................................40
11.1 Deadline For Filing Professional Fee Claims; Objections To
Professional Fee Claims...........................................40
11.2 Deadline For Filing Administrative Claims; Objections To
Administrative Claims.............................................40
11.3 Payment Of Statutory Fees.........................................40
11.4 Modifications And Amendments......................................40
11.5 Severability Of Plan Provisions...................................41
11.6 Successors And Assigns............................................41
11.7 No Discharge......................................................41
11.8 Release Of Assets.................................................41
11.9 Exculpation And Limitation Of Liability...........................42
11.10 Binding Effect....................................................43
11.11 Revocation, Withdrawal, Or Non-Consummation.......................43
11.12 Plan Exhibits.....................................................43
11.13 Notices...........................................................43
11.14 Dissolution Of The Bankruptcy Committees..........................45
11.15 Term Of Injunction Or Stays.......................................45
11.16 Headings..........................................................45
INTRODUCTION
Farmland Industries, Inc., Farmland Foods, Inc., Farmland
Transportation, Inc., SFA, Inc. and Farmland Pipe Line Company
(collectively, the "Debtors") hereby propose the following second amended
joint plan of reorganization, as modified (as may be further amended or
modified, the "Plan") for the resolution of their outstanding creditor
Claims (as defined herein) and equity Interests (as defined herein).
Reference is made to the Disclosure Statement (as defined herein)
distributed contemporaneously herewith for a discussion of the Debtors'
history, businesses, properties, results of operations, risk factors, a
summary and analysis of the Plan, and certain related matters. The Debtors
are the proponents of the Plan within the meaning of section 1129 of the
Bankruptcy Code.
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 the Plan. Subject to certain restrictions and requirements set forth
in section 1127 of the Bankruptcy Code, Fed. R. Bankr. P. 3019 and Article
XI, including Section 11.4 of the Plan, the Debtors reserve the right to
alter, amend, modify, revoke or withdraw the Plan prior to its substantial
consummation.
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION,
COMPUTATION OF TIME AND GOVERNING LAW
A. SCOPE OF DEFINITIONS, RULES OF CONSTRUCTION
-------------------------------------------
For purposes of the Plan, except as expressly provided or unless the
context otherwise requires, all capitalized terms not otherwise defined
shall have the meanings ascribed to them in Article I of the Plan. Any term
used in the Plan that is not defined herein, but is defined in the
Bankruptcy Code or the Bankruptcy Rules, shall have the meaning ascribed to
that term in the Bankruptcy Code or the Bankruptcy Rules. Whenever the
context requires, such terms shall include the plural as well as the
singular number, the masculine gender shall include the feminine, and the
feminine gender shall include the masculine.
B. DEFINITIONS
-----------
1.1 "ADMINISTRATIVE CLAIM" means a Claim for payment of an
administrative expense of a kind specified in section 503(6) or 1114(e)(2)
of the Bankruptcy Code and entitled to priority pursuant to section
507(a)(1) of the Bankruptcy Code, including, but not limited to, (a) the
actual, necessary costs and expenses, incurred after the Petition Date, of
preserving the Estates and operating the businesses of the Debtors,
including wages, salaries, commissions, severance payments or other
compensation for services rendered after the commencement of the Chapter 11
Case, (b) Professional Fee Claims, (c) all fees and charges assessed
against the Estates under 28 U.S.C. 5 1930 and (d) all Allowed Claims that
are entitled to be treated as Administrative Claims pursuant to a Final
Order of the Bankruptcy Court under section 546(c)(2)(A) of the Bankruptcy
Code.
1.2 "ALLOWED" means, with regard to any Claim other than an
Administrative Claim, a Claim or any portion thereof (a) that has been
allowed by a Final Order, or (b) as to which, on or by the Effective Date,
(i) no proof of Claim has been filed with the Bankruptcy Court and (ii) the
liquidated and noncontingent amount of which is listed on the Schedules,
other than a Claim that is listed on the Schedules as zero, in an unknown
amount, or as disputed, or (c) for which a proof of Claim in a liquidated
amount has been timely filed with the Bankruptcy Court pursuant to the
Bankruptcy Code, any Final Order of the Bankruptcy Court or other
applicable bankruptcy law, and as to which either (i) no objection to its
allowance has been filed by the Objection Deadline or by such other
applicable period of limitation fixed by the Plan, the Bankruptcy Code or
by any order of the Bankruptcy Court or (ii) any and all objections to its
allowance have been settled or withdrawn or have been denied by a Final
Order, or (d) that is expressly allowed in a liquidated amount in the Plan.
With regard to an Administrative Claim, `Allowed" means an Administrative
Claim, or any portion thereof, (a) incurred or arising after the Petition
Date and prior to the Effective Date, (b) as to which a request for payment
has been timely filed with the Bankruptcy Court in a liquidated amount, and
as to which either (i) no objection to its allowance has been filed by the
Objection Deadline or by such other applicable period of limitation fixed
by the Plan, the Bankruptcy Code or by any order of the Bankruptcy Court or
(ii) any and all objections to its allowance have been settled or withdrawn
or have been denied by a Final Order.
1.3 "ALLOWED CLASS ... CLAIM" means an Allowed Claim in the particular
Class described.
1.4 "ALLOWED CLASS ... INTEREST" means an Allowed Interest in the
particular Class described.
1.5 "ALLOWED INTEREST" means an Interest that (a) is registered as of
the Distribution Record Date in a stock register maintained by or on behalf
of the Debtors and (b) is not a Disputed Interest.
1.6 "AVAILABLE CASH" means all Cash of each separate Estate (other
than the proceeds of Collateral securing any Allowed Secured Claim) from
and after the Effective Date that is not subject to any Reimbursement
Right, less the amount of Cash deposited or to be deposited, from time to
time, into (i) the Liquidating Trust Administrative Reserve, (ii) the
Disputed Claims Reserves, and (iii) any other reserves established under
the Plan or the Liquidating Trust Agreement, which Cash shall be maintained
separately with respect to each Estate.
1.7 "BALLOT" means each of the ballot forms distributed with the
Disclosure Statement to holders of Impaired Claims entitled to vote as
specified in Article IV of the Plan, in connection with the solicitation of
acceptances of the Plan. 1.8 "Bankruptcy Code" means the Bankruptcy Reform
Act of 1978, as codified in title 11 of the United States Code, 11 U.S.C.
55 101-1330, as now in effect or hereafter amended. 1.9 "Bankruptcy
Committees" means, collectively, the Bondholders' Committee and the
Creditors' Committee.
1.10 "BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Western District of Missouri or such other court as may have
jurisdiction over the Chapter 11 Case.
1.11 "BANKRUPTCY RULES" means, collectively, the Federal Rules of
Bankruptcy Procedure and the Official Bankruptcy Forms, as amended, the
Federal Rules of Civil Procedure, as amended, as applicable to the Chapter
11 Case or proceedings therein, and the Local Rules of the Bankruptcy
Court, as applicable to the Chapter 11 Case or proceedings therein, as the
case may be.
1.12 "BAR DATE(S)" means the date(s) designated by the Bankruptcy
Court as the last date(s) for filing proofs of Claim or Interest against
the Debtors.
1.13 "BENEFICIARIES" means the holders of Allowed Claims and Allowed
Class 11 Interests that are beneficiaries of the Liquidating Trust.
1.14 "BENEFITED DEBTORS" has the meaning set forth in Section 7.14 of
the Plan.
1.15 "BONDHOLDER TRANSACTION FEE" means the "completion fee" payable
to Ernst & Young pursuant to the agreement between the Bondholders'
Committee and Ernst &Young. 1.16 "Bondholders' Committee" means the
official committee of bondholders appointed pursuant to section 1102(a) of
the Bankruptcy Code in the Chapter 11 Case. 1.17 "Business Day" means any
day except for Saturday, Sunday or a "legal holiday" (as defined in Fed. R.
Bankr. P. 9006(a)). 1.18 "Cash" means legal tender of the United States or
equivalents thereof.
1.19 "CHAPTER 11 CASE" means the jointly administered Chapter 11 cases
of the Debtors.
1.20 "CLAIM" means a "claim" against the Debtors, or any of them,
whether or not asserted, as defined in section 101 of the Bankruptcy Code.
1.21 "CLASS" means a category of holders of Claims or Interests, as
described in Article II of the Plan.
1.22 "CLASS 11 DISTRIBUTION POOL" has the meaning set forth in Section
5.12 of the Plan.
1.23 "COFFEYVILLE ASSETS" means all of the assets associated with the
following, including, without limitation, the executory contracts and
unexpired leases listed on Plan Exhibit E: (i) a petroleum refinery owned
by Industries in Coffeyville, Kansas; (ii) a fertilizer production facility
owned by Industries in Coffeyville, Kansas; (iii) a petroleum refinery
owned by Industries in Phillipsburg, Kansas; and (iv) a petroleum pipeline
system related to Industries' refining operations.
1.24 "COLLATERAL" means any property or interest in the property of an
Estate subject to a Lien to secure the payment or performance of a Claim,
which Lien is not subject to avoidance under the Bankruptcy Code or
otherwise invalid under the Bankruptcy Code or applicable state law.
1.25 "COMMITTEE MEMBERS" has the meaning set forth in Section 5.5 of
the Plan.
1.26 "CONFIRMATION" means entry by the Bankruptcy Court of the
Confirmation Order.
1.27 "CONFIRMATION DATE" means the date of entry by the clerk of the
Bankruptcy Court of the Confirmation Order.
1.28 "CONFIRMATION HEARING" means the hearing to consider confirmation
of the Plan under section 1128 of the Bankruptcy Code.
1.29 "CONFIRMATION ORDER" means the order entered by the Bankruptcy
Court confirming the Plan.
1.30 "CONVENIENCE CLAIM" means any Claim that otherwise would be an
Allowed Class 7 Claim in an amount equal to or less than $1,000.
1.31 "CREDITOR" means any Entity who holds a Claim against any of the
Debtors.
1.32 "CREDITOR TRANSACTION FEE" means the "success fee" payable to
Houlihan Lokey pursuant to the agreement between the Creditors' Committee
and Houlihan Lokey.
1.33 "CREDITORS' COMMITTEE" means the official committee of unsecured
creditors appointed pursuant to section 1102(a) of the Bankruptcy Code in
the Chapter 11 Case.
1.34 "CURE" means the distribution of Cash, or such other property as
may be agreed upon by the parties or ordered by the Bankruptcy Court, with
respect to the assumption of an executory contract or unexpired lease,
pursuant to section 365(b) of the Bankruptcy Code, in an amount equal to
all unpaid monetary obligations, without interest, or such other amount as
may be agreed upon by the parties, under such executory contract or
unexpired lease, to the extent such obligations are enforceable under the
Bankruptcy Code and applicable nonbankruptcy law.
1.35 "DEBTOR" means any of the Debtors.
1.36 "DEBTORS" means Farmland Industries, Inc., Farmland Foods, Inc.,
Farmland Transportation, Inc., SFA Inc. and Farmland Pipe Line Company,
including in their capacity as debtors-in-possession pursuant to sections
1107 and 1108 of the Bankruptcy Code.
1.37 "DEMAND CERTIFICATES" means: (a) Demand Loan Certificates dated
November 20, 1981 with an original authorized principal amount of
$500,000,000.00; and (b) Demand Loan Certificates dated December 4, 1997
issuable in Series with an unlimited authorized aggregate principal amount.
1.38 "Demand Certificates Claim" means a Claim arising out of or related to
the Demand Certificates. 1.39 "DIP Credit Agreement" means the First
Amended and Restated Debtor-InPossession Credit Agreement and Adequate
Protection Stipulation dated as of June 5, 2002, together with any
amendments, by and among Industries and Foods, as borrowers, the financial
institutions party thereto, as lenders, and Deutsche Bank Trust Company
Americas, as administrative agent.
1.40 "DIP LOAN CLAIMS" means the Allowed Claims held by those certain
financial institutions participating under the DIP Credit Agreement, which
Claims constitute superpriority Administrative Claims senior to all other
Claims and are secured by Liens on substantially all of the assets of the
Debtors.
1.41 "DISCLOSURE STATEMENT" means the written disclosure statement
that relates to the Plan, as amended, supplemented, or modified from time
to time, and that is prepared and distributed in accordance with section
1125 of the Bankruptcy Code and Fed. R. Bankr. P. 3017.
1.42 "DISPUTED CLAIM" means, with respect to a Claim, such Claim or
any portion thereof that is not an Allowed Claim, and includes, without
limitation, Claims (other than Allowed Claims) that (a) have not been
listed on the Schedules or have been listed on the Schedules at zero, or as
contingent, unliquidated or disputed, or (b) are the subject to an
objection filed in the Bankruptcy Court and which objection has not been
withdrawn or overruled by a Final Order of the Bankruptcy Court.
1.43 "DISPUTED CLAIM AMOUNT" means (a) if a liquidated amount is set
forth in a timely filed proof of Claim relating to a Disputed Claim, (i)
the liquidated amount set forth in the proof of Claim relating to the
Disputed Claim; (ii) an amount agreed to by the Debtors or the Liquidating
Trustee, as the case may be, and the holder of such Disputed Claim; or
(iii) if a request for estimation is filed by the Debtors or the
Liquidating Trustee, as the case may be, the amount at which such Claim is
estimated by the Bankruptcy Court; (b) if no liquidated amount is set forth
in the proof of Claim relating to a Disputed Claim, (i) an amount agreed to
by the Debtors or the Liquidating Trustee, as the case may be, and the
holder of such Disputed Claim or (ii) the amount estimated by the
Bankruptcy Court with respect to such Disputed Claim; (c) if the Claim was
listed on the Schedules as unliquidated, contingent or disputed and no
proof of Claim was filed, or deemed to have been filed, by the applicable
Bar Date and the Claim has not been resolved by written agreement of the
parties or an order of the Bankruptcy Court, zero; or (d), with respect to
a Disputed Administrative Claim, the liquidated amount set forth in any
request for payment relating to the Disputed Administrative Claim.
1.44 "DISPUTED CLAIMS RESERVE" means, in the event there exists any
Disputed Claims on or after the Effective Date, Cash reserved by the
Liquidating Trustee in separate interest-bearing accounts for the
following: (i) Disputed Administrative Claims asserted against each Debtor;
(ii) Disputed Priority Tax Claims asserted against each Debtor; and (iii)
Disputed Claims in each Class for which distributions are contemplated by
the Plan; all in accordance with the provisions of the Plan and the
Liquidating Trust Agreement and to be maintained under the Plan and the
Liquidating Trust Agreement. 1.45 "Disputed Interest" means an Interest, or
any portion thereof, that is not an Allowed Interest and includes, without
limitation, Interests (other than Allowed Interests) that (a) are not
listed in the Schedules or are listed in the Schedules as contingent,
unliquidated or disputed, or (b) are the subject of an objection filed in
the Bankruptcy Court and which objection has not been withdrawn or
overruled by a Final Order of the Bankruptcy Court.
1.46 "DISPUTED INTEREST AMOUNT" means, with respect to a Disputed
Interest, the number of shares set forth in a timely filed proof of
Interest. 1.47 "Distribution Record Date" means the record date for
purposes of making distributions under the Plan on account of Allowed
Claims and Allowed Interests, which date shall be the Confirmation Date or
such other date designated in the Confirmation Order.
1.48 "EFFECTIVE DATE" means the Business Day on which all conditions
to the consummation of the Plan as set forth in Section 9.1 of the Plan
have been satisfied or waived as provided in Article IX of the Plan and is
the effective date of the Plan.
1.49 "ENTITY" has the meaning set forth in section 101 of the
Bankruptcy Code and also means, without limitation, a Person, joint
venture, trust, estate, unincorporated association or organization, limited
liability company, governmental entity or political subdivision, agency or
representative thereof, or any other entity. 1.50 "Ernst & Young" means
Ernst & Young Corporate Finance, in their capacity as Professionals for the
Bondholders' Committee.
1.51 "ESTATE(S)" means, individually, the estate of each Debtor in the
Chapter 11 Case, and, collectively, the estates of all Debtors in the
Chapter 11 Case, created pursuant to section 541 of the Bankruptcy Code.
1.52 "FACE AMOUNT" means (a) when used in reference to a Disputed
Claim, the Disputed Claim Amount, and (b) when used in reference to an
Allowed Claim, the Allowed amount of such Claim.
1.53 "FINAL DISTRIBUTION DATE" has the meaning set forth in Section
7.6 of the Plan.
1.54 "Final Order" means an order or judgment of the Bankruptcy Court,
or other court of competent jurisdiction, as entered on the docket in the
Chapter 11 Case, the operation or effect of which has not been stayed,
reversed, or amended and (unless the Debtors, in compliance with Section
9.2 of the Plan, or the Liquidating Trustee, in its sole discretion, shall
have waived the requirement therefor) as to which order or judgment (or any
revision, modification, or amendment thereof) the time to appeal or seek
review or rehearing has expired and as to which no appeal or petition for
review or rehearing was filed or, if filed, remains pending.
1.55 "FOODS" means Farmland Foods, Inc.
1.56 "GENERAL UNSECURED CLAIM" means a Claim against any of the
Debtors that is not an Administrative Claim, Priority Tax Claim, Other
Priority Claim, Secured Lender Claim, Other Secured Claim, Convenience
Claim, Intercompany Claim or Subordinated Claim, and does not include any
Reimbursement Right.
1.57 "HOULIHAN LOKEY" means Houlihan Lokey Howard and Zukin Financial
Advisors, Inc., in their capacity as Professionals for the Creditors'
Committee.
1.58 "IMPAIRED" means, when used with reference to a Claim or
Interest, a Claim or Interest that is "impaired" within the meaning of
section 1124 of the Bankruptcy Code.
1.59 "INDENTURE TRUSTEES" means each of the trustees under the Trust
Indentures and the IRB Indentures.
1.60 "INDUSTRIAL REVENUE BONDS" means: (a) Taxable Industrial Revenue
Bond, Series 1999 of Kansas City, Missouri dated August 1, 1999 in the
original principal amount of $40,000,000.00; (b) City of Galveston, Texas,
Special Contract Revenue Bonds, Series 1977, in the original principal
amount of $26,000,000; (c) City of Galveston, Texas, Special Contract
Refunding Revenue Bonds (Farmland Industries, Inc. Project), Series 1998,
in the original principal amount of $8,500,000; (d) City of Coffeyville,
Kansas, Taxable Industrial Revenue Bonds, Series A, 1997 (Farmland
Industries, Inc.) in the aggregate original principal amount of
$255,110,000; and (e) City of Coffeyville, Kansas Subordinated Taxable
Industrial Revenue Bonds, Series B, 1997 (Farmland Industries, Inc.) in the
aggregate original principal amount of $10,520,000.
1.61 "INDUSTRIES" means Farmland Industries, Inc.
1.62 "INDUSTRIES COMMON SHARES" means the Old Common Shares of
Industries (including, without limitation, common stock, associate member
common stock and capital credits of Industries), the Old Stock Options of
Industries and the Old Warrants.
1.63 "INDUSTRIES DISTRIBUTION POOL" means all Available Cash in the
Estate of Industries after all Administrative Claims against Industries,
all Priority Tax Claims against Industries, all Class 1 Claims against
Industries, all Class 3 Claims against Industries, all Class 6 Claims and
all Intercompany Advances payable by Industries have been (i) Allowed and
paid or, with respect to Class 3 Claims, Allowed and treated in accordance
with Section 3.4 of the Plan, (ii) Disputed and sufficient Cash reserved in
a Disputed Claims Reserve, (iii) disallowed or (iv) withdrawn.
1.64 "INDUSTRIES PREFERRED SHARES" means the Old Preferred Shares of
Industries.
1.65 "INDUSTRIES RETAINED ASSETS" means those assets of Industries
and/or Foods identified on Plan Exhibit C, which assets shall be retained
by and vested in Reorganized Industries on the Effective Date; provided,
however, that the Debtors reserve their right, at any time prior to the
Confirmation Date upon prior consent of the Bankruptcy Committees, to amend
Plan Exhibit C to delete any assets therefrom or add any assets thereto and
to provide notice of any such amendments to the Bankruptcy Court.
1.66 "INITIAL DISTRIBUTION DATE" has the meaning set forth in Section
7.5 of the Plan.
1.67 "Insurance Claim" means the insurance claim arising under a $500
million blanket insurance policy that relates to the damage and/or
destruction of buildings, equipment and inventory located at Foods' Albert
Lea, Minnesota meat processing facility.
1.68 "INTERCOMPANY ADVANCES" has the meaning set forth in Section 7.14
of the Plan.
1.69 "Intercompany Claim" means any Claim by a Debtor against another
Debtor that was incurred or arose prior to the Petition Date.
1.70 "INTEREST" means (a) the legal, equitable, contractual and other
rights of any Entity (including any 401 (k) plan or plan participant) with
respect to Old Securities of the Debtors, and (b) the legal, equitable,
contractual or other rights of any Entity to acquire or receive any of the
foregoing.
1.71 "IRB INDENTURES" means the trust indentures for each of the
Industrial Revenue Bonds.
1.72 "KERIT Plan" means the Key Employee Retention and Incentive
Target Plan approved by the Bankruptcy Court by order dated November 4,
2002.
1.73 "Lender" means a "Lender" as defined in the Pre-Petition Credit
Agreement.
1.74 "LIEN" means a charge against or interest in property to secure
payment of a debt or performance of an obligation.
1.75 "LIQUIDATING TRUST" means the trust created pursuant to Section
5.4 of the Plan and evidenced by the Liquidating Trust Agreement.
1.76 "LIQUIDATING TRUST ADMINISTRATIVE RESERVE" has the meaning set
forth in the Liquidating Trust Agreement.
1.77 "LIQUIDATING TRUST AGREEMENT" means the trust agreement
establishing the Liquidating Trust, substantially in the form attached
hereto as Plan Exhibit A, which shall be approved in the Confirmation Order
and entered into by the Debtors and the Liquidating Trustee on the
Effective Date pursuant to the terms of the Plan; provided, however, that
the Debtors reserve their right, at any time prior to the Confirmation Date
with the consent of the Bankruptcy Committees, to amend Plan Exhibit A and
to provide notice of any such amendments to the Bankruptcy Court. All of
the terms and conditions of the Liquidating Trust Agreement are
incorporated into the Plan and are subject to the terms and provisions of
the Plan.
1.78 "LIQUIDATING TRUST ASSETS" has the meaning set forth in the
Liquidating Trust Agreement.
1.79 "LIQUIDATING TRUSTEE" has the meaning set forth in the
Liquidating Trust Agreement.
1.80 "LITIGATION CLAIMS" means the claims, rights, causes of action,
defenses, counterclaims, suits or proceedings, whether in law or in equity,
whether known or unknown, that the Debtors, the Estates or the Bankruptcy
Committees may hold or assert against any non-Debtor Entity, including,
without limitation, all claims, rights of action, suits and proceedings
under Chapter 5 of the Bankruptcy Code; provided, however, that "Litigation
Claims" shall not include any Industries Retained Assets or Transferred
Assets.
1.81 "Loan Documents" means the "Loan Documents" as defined in the
Pre-Petition Credit Agreement.
1.82 "MANAGEMENT AGREEMENT" means the agreement, if any, entered into
by the Liquidating Trustee and Reorganized Industries on the Effective Date
pursuant to the terms of the Plan and the Liquidating Trust Agreement,
substantially in the form to be filed with the Bankruptcy Court prior to
the commencement of the Confirmation Hearing. All of the terms and
conditions of the Management Agreement are subject to the terms and
provisions of the Plan.
1.83 "MINORITY FOODS SHARES" means the Old Securities of Foods held by
an Entity other than Industries.
1.84 "NON-DEBTOR SUBSIDIARIES" means, collectively, the direct and
indirect subsidiaries of Industries which have not commenced Chapter 11
cases and thus are not Debtors.
1.85 "OBJECTION DEADLINE" means the last day for filing objections to
Disputed Claims (other than Disputed Professional Fee Claims) or Disputed
Interests, which day shall be 180 days after the Effective Date, unless
such date is extended by the Bankruptcy Court upon request by the
Liquidating Trustee.
1.86 "OLD COMMON SHARES" means the common shares of any of the Debtors
issued and outstanding as of the Petition Date, including, without
limitation, any patronage dividends issued to members, associate members
and/or patrons of any Debtor in the form of common stock, associate member
common stock or capital credits.
1.87 "OLD PREFERRED SHARES" means the preferred shares of any of the
Debtors issued and outstanding as of the Petition Date.
1.88 "OLD SECURITIES" means, collectively, the Old Common Shares, the
Old Preferred Shares, the Old Warrants and the Old Stock Options of any of
the Debtors.
1.89 "OLD STOCK OPTIONS" means the outstanding options to purchase Old
Common Shares or Old Preferred Shares of any of the Debtors issued and
outstanding as of the Petition Date.
1.90 "OLD WARRANTS" means the warrants issued to former patrons of SF
Services, Inc. in conjunction with the merger of Industries and SF
Services, Inc. that entitled the holder to convert such warrants to Old
Common Shares of Industries if certain product purchases were made by such
patron from Industries during the seven year period following such merger.
1.91 "OTHER PRIORITY CLAIM" means a Claim entitled to priority
pursuant to section 507(a) of the Bankruptcy Code other than a Priority Tax
Claim or an Administrative Claim.
1.92 "OTHER SECURED CLAIM" means a Secured Claim against any of the
Debtors, as the case may be, other than the Secured Lender Claims,
including, without limitation, (i) Secured Claims arising under or in
connection with any Industrial Revenue Bonds and that remain unpaid
obligations of the Debtors as of the Effective Date, and (ii) mechanics',
materialmans', artisans' and similar type liens that constitute Secured
Claims.
1.93 "PBGC" means Pension Benefit Guaranty Corporation.
1.94 "PBGC CLAIMS" means any and all Claims of the PBGC against the
Debtors arising from or related to pension plan termination, unfunded
benefit liability and/or unpaid premiums and any and all Claims of the PBGC
on behalf of any pension plans administered by the Debtors for due and
unpaid minimum funding contributions under Title IV of the Employee
Retirement Income Security Act of 1974, 29 U.S.C. ss.ss. 1301-1461.
1.95 "PERSON" means a "person" as defined in section 101 of the
Bankruptcy Code.
1.96 "Petition Date" means the date on which the Debtors filed their
petitions for relief commencing the Chapter 11 Case.
1.97 "PIPELINE" means Farmland Pipe Line Company.
1.98 "PLAN" means this Chapter 11 reorganization plan and all exhibits
and schedules attached hereto or referenced herein, as the same may be
amended, modified or supplemented from time to time.
1.99 "PLAN EXHIBIT" means any exhibit or schedule attached hereto.
1.100 "PLAN RATE" means the federal judgment rate established under 28
U.S.C. ss. 1961 as of the Petition Date.
1.101 "PORK BUSINESS" means the Debtors' pork processing operations,
including, without limitation, substantially all of the assets of Foods.
1.102 "POST-CONFIRMATION COMMITTEE" has the meaning set forth in
Section 5.5 of the Plan.
1.103 "PRE-PETITION CREDIT AGREEMENT" means the Credit Agreement,
dated as of February 7, 2002, by and among Industries and Foods, as
borrowers, the financial institutions party thereto, as lenders, CoBank ACB
and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., as co-syndication
agents, Harris Trust & Savings Bank and U.S. Bank National Association, as
co-documentation agents, and Deutsche Bank Trust Company Americas, as
administrative agent.
1.104 "PRIORITY TAX CLAIM" means a Claim that is entitled to priority
pursuant to section 507(a)(8) of the Bankruptcy Code.
1.105 "PRO RATA" means, at any time, the proportion that the Face
Amount of a Claim (or the number of shares representing an Interest) in a
particular Class bears to the aggregate Face Amount of all Claims
(including Disputed Claims) in such Class (or the aggregate number of
shares (including Disputed Interests) representing such Class of
Interests), unless the Plan provides otherwise; provided, however, that
with respect to the Industries Distribution Pool, "Pro Rata" means with
respect to a Claim in Class 4, Class 5 or Class 7, the proportion that the
Face Amount of a Claim in Class 4, Class 5 or Class 7 bears to the
aggregate Face Amount of all Claims (including Disputed Claims) in Classes
4, 5 and 7.
1.106 "PROFESSIONAL" means any professional employed in the Chapter 11
Case pursuant to sections 327 or 1103 of the Bankruptcy Code or otherwise
and any professionals seeking compensation or reimbursement of expenses in
connection with the Chapter 11 Case pursuant to section 503(b)(4) of the
Bankruptcy Code.
1.107 "PROFESSIONAL FEE CLAIM" means a Claim of a Professional for
compensation or reimbursement of costs and expenses relating to services
incurred after the Petition Date and prior to and including the Effective
Date.
1.108 "REGISTER" has the meaning set forth in the Liquidating Trust
Agreement.
1.109 "REIMBURSEMENT RIGHT" has the meaning set forth in Section 7.14
of the Plan.
1.110 "REINSTATED" OR "REINSTATEMENT" means (i) leaving unaltered the
legal, equitable, and contractual rights to which a Claim or Interest
entitles the holder of such Claim or Interest so as to leave such Claim or
Interest unimpaired in accordance with section 1124 of the Bankruptcy Code
or (ii) notwithstanding any contractual provision or applicable law that
entitles the holder of such Claim or Interest to demand or receive
accelerated payment of such Claim or Interest after the occurrence of a
default (a) curing any such default that occurred before or after the
Petition Date, other than a default of a kind specified in section
365(b)(2) of the Bankruptcy Code; (b) reinstating the maturity of such
Claim or Interest as such maturity existed before such default; (c)
compensating the holder of such Claim or Interest for any damages incurred
as a result of any reasonable reliance by such holder on such contractual
provision or such applicable law; and (d) not otherwise altering the legal,
equitable, or contractual rights to which such Claim or Interest entitles
the holder of such Claim or Interest; provided, however, that any
contractual right that does not pertain to the payment when due of
principal and interest on the obligation on which such Claim or Interest is
based, including, but not limited to, financial covenant ratios, negative
pledge covenants, covenants or restrictions on merger or consolidation, and
affirmative covenants regarding corporate existence prohibiting certain
transactions or actions contemplated by the Plan, or conditioning such
transactions or actions on certain factors, shall not be required to be
reinstated in order to accomplish Reinstatement.
1.111 "REORGANIZED INDUSTRIES" means Industries, as reorganized on and
after the Effective Date.
1.112 "SCHEDULES" means the schedules of assets and liabilities and
the statements of financial affairs, if any, filed in the Bankruptcy Court
by the Debtors as such schedules or statements may be amended or
supplemented from time to time in accordance with Fed. R. Bankr. P. 1009 or
orders of the Bankruptcy Court.
1.113 "SECURED CLAIM" means a Claim that is secured by a Lien on
property in which an Estate has 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 Estate's 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.
1.114 "SECURED LENDER CLAIMS" means the Claims of the Lenders arising
under or as a result of the Pre-Petition Credit Agreement and the Loan
Documents.
1.115 "SF PHOSPHATES INTEREST" means Industries' ownership interest in
SF Phosphates, Limited Company.
1.116 "SFA" means SFA, Inc.
1.117 "SUBORDINATED CERTIFICATES" means: (a) 5 Year Subordinated
Capital Investment Certificates issued under the Indenture dated November
8, 1984, as amended by Amendment No. 1 dated January 3, 1985, as further
amended by Amendment No. 2 dated December 3, 1991, with an original
authorized principal amount of $500,000,000.00; (b) 10 Year Subordinated
Capital Investment Certificates issued under the Indenture dated November
8, 1984, as amended by Amendment No. 1 dated January 3, 1985, as further
amended by Amendment No. 2 dated December 3, 1991, with an original
authorized principal amount of $500,000,000.00; (c) 20 Year Subordinated
Capital Investment Certificates issued under the Indenture dated November
8, 1984, as amended by Amendment No. 1 dated January 3, 1985, as further
amended by Amendment No. 2 dated December 3, 1991, with an original
authorized principal amount of $500,000,000.00; (d) 10 Year Subordinated
Monthly Income Capital Investment Certificates issued under the Indenture
dated November 8, 1984, as amended by Amendment No. 1 dated January 3,
1985, as further amended by Amendment No. 2 dated November 20, 1985, with
an original authorized principal amount of $500,000,000.00; (e) 10 Year
Subordinated Individual Retirement Account Certificates issued under the
Indenture dated November 8, 1984, as amended by Amendment No. 1 dated
January 3, 1985, as further amended by Amendment No. 2 dated November 20,
1985, with an original authorized principal amount of $500,000,000.00; (f)
5 Year Subordinated Monthly Income Capital Investment Certificates issued
under the Indenture dated November 11, 1985, with an original authorized
principal amount of $500,000,000.00; and (g) Series A through Series H
Subordinated Debenture Bonds issued under a Subordinated Indenture dated
December 4, 1997, with an unlimited authorized aggregate principal amount.
1.118 "SUBORDINATED CERTIFICATES CLAIM" means a Claim arising out of
or related to the Subordinated Certificates.
1.119 "SUBORDINATED CLAIMS" means any Claim arising from, related to
or on account of any Old Security of Industries that is subordinated
pursuant to sections 510(b) or (c) of the Bankruptcy Code, which shall
include any Claim arising from the rescission of a purchase or sale of any
Old Security of Industries, any Claim for damages arising from the purchase
or sale of an Old Security of Industries, any Claim for reimbursement,
contribution or indemnification on account of any such Claim, or any Claim
arising out of or related to the rejection of Old Warrants.
1.120 "SUBSEQUENT DISTRIBUTION DATE" has the meaning set forth in
Section 7.5 of the Plan.
1.121 "SUBSIDIARIES" mean, collectively, the Subsidiary Debtors and
the Non-Debtor Subsidiaries.
1.122 "SUBSIDIARY DEBTORS" means, collectively, Farmland Foods, Inc.,
Farmland Transportation, Inc., SFA, Inc. and Farmland Pipe Line Company.
1.123 "SUBSIDIARY INTERESTS" means, collectively, the issued and
outstanding shares of common stock of the Subsidiary Debtors directly or
indirectly owned by Industries, as of the Petition Date.
1.124 "SUBSTANTIAL CONTRIBUTION CLAIM" means a claim for compensation
or reimbursement of expenses incurred in making a substantial contribution
in the Chapter 11 Case pursuant to section 503(b)(3),(4), or (5) of the
Bankruptcy Code.
1.125 "TAX DISTRIBUTION" has the meaning set forth in Section 1.1 of
the Liquidating Trust Agreement.
1.126 "TRANSFERRED ASSETS" means those assets of the Debtors
identified on Plan Exhibit D, which assets shall be transferred as provided
in Section 5.1(d) of the Plan; provided, however, that the Debtors reserve
their right, at any time prior to the Effective Date, upon prior consent of
the Bankruptcy Committees, to amend Plan Exhibit D to delete any assets
therefrom, add any assets thereto or modify any other information contained
thereon and to provide notice of any such amendments to the Bankruptcy
Court.
1.127 "TRANSPORTATION" means Farmland Transportation, Inc.
1.128 "TRUST INDENTURES" means: (a) Indenture dated November 20, 1981,
as amended January 4, 1982, providing for the issuance of demand loan
certificates; (b) Indenture dated November 8, 1984, as amended by Amendment
No. 1 dated January 3, 1985, as further amended by Amendment No. 2 dated
December 3, 1991, providing for the issuance of 5 Year Subordinated Capital
Investment Certificates; (c) Indenture dated November 8, 1984, as amended
by Amendment No. 1 dated January 3, 1985, as further amended by Amendment
No. 2 dated December 3, 1991, providing for the issuance of 10 Year
Subordinated Capital Investment Certificates; (d) Indenture dated November
8, 1984, as amended by Amendment No. 1 dated January 3, 1985, as further
amended by Amendment No. 2 dated December 3, 1991, providing for the
issuance of 20 Year Subordinated Monthly Income Capital Investment
Certificates; (e) Indenture dated November 8, 1984, as amended by Amendment
No. 1 dated January 3, 1985, as further amended by Amendment No. 2 dated
November 20, 1985, providing for the issuance of 10 Year Subordinated
Monthly Income Capital Investment Certificates; (f) Indenture dated
November 8, 1984, as amended by Amendment No. 1 dated January 3, 1985, as
further amended by Amendment No. 2 dated November 20, 1985, providing for
the issuance of 10 Year Subordinated Individual Retirement Account
Certificates; (g) Indenture dated November 11, 1985, providing for the
issuance of 5 Year Subordinated Monthly Income Capital Investment
Certificates; (h) Indenture dated December 4, 1997, providing for the
issuance of unsubordinated debt securities, including demand loan
certificates; (i) Subordinated Indenture dated December 4, 1997, providing
for the issuance of subordinated debt securities in series; and (j) the
trust indentures for each issue of Industrial Revenue Bonds.
1.129 "UNIMPAIRED" means, when used with reference to a Claim or
Interest, a Claim or Interest that is not Impaired.
1.130 "VOTING RECORD DATE" means the voting record date for voting to
accept or reject the Plan, as determined by the Bankruptcy Court.
C. RULES OF INTERPRETATION
-----------------------
For purposes of the Plan (a) any reference in the Plan to a contract,
instrument, release, indenture, or other agreement or documents being in a
particular form or on particular terms and conditions means that such
document shall be substantially in such form or substantially on such terms
and conditions, (b) any reference in the Plan to an existing document or
exhibit filed or to be filed means such document or exhibit as it may have
been or may be amended, modified, or supplemented, (c) unless otherwise
specified, all references in the Plan to sections, articles, schedules, and
exhibits are references to sections, articles, schedules, and exhibits of
or to the Plan, (d) the words "herein", "hereof", "hereunder", "hereto" and
other words of similar import refer to the Plan in its entirety rather than
to a particular portion of the Plan, (e) captions and headings to articles
and sections are inserted for convenience of reference only and are not
intended to be a part of or to affect the interpretation of the Plan, and
(f) the rules of construction set forth in section 102 of the Bankruptcy
Code and in the Bankruptcy Rules shall apply.
D. COMPUTATION OF TIME
-------------------
In computing any period of time prescribed or allowed by the Plan, the
provisions of Fed. R. Bankr. P. 9006(a) shall apply.
E. GOVERNING LAW
-------------
Unless a rule of law or procedure is supplied by federal law
(including the Bankruptcy Code and Bankruptcy Rules), the laws of (i) the
State of Delaware shall govern the construction and implementation of the
Plan and any agreements, documents, and instruments executed in connection
with the Plan and (ii) the laws of the state of incorporation of each
Debtor shall govern corporate governance matters with respect to such
Debtor, in either case without giving effect to the principles of conflicts
of law thereof. Nothing contained in this Section I.E is intended to, or
shall, affect the substantive law otherwise applicable to the allowance or
disallowance of a Claim or Interest or the rights granted to the
Liquidating Trustee, including, without limitation, those rights granted
pursuant to Section 5.10 of the Plan.
ARTICLE II
CLASSIFICATION OF CLAIMS AND INTERESTS
In accordance with section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims, Priority Tax Claims and DIP Loan Claims have not
been classified, and the respective treatment of such unclassified claims
is set forth in Section 3.1 of the Plan.
A Claim or Interest is placed in a particular Class only to the extent
that the Claim or Interest falls within the description of that Class. A
Claim or Interest may be and is classified in other Classes to the extent
that any portion of the Claim or Interest falls within the description of
such other Classes. A Claim or Interest is also placed in a particular
Class for the purpose of receiving distributions pursuant to the Plan only
to the extent that such Claim or Interest is an Allowed Claim or Allowed
Interest in that Class and such Claim or Interest has not been paid,
released, or otherwise settled prior to the Effective Date.
Although the PBGC previously filed the PBGC Claims against certain of
the Debtors, all of the PBGC Claims will be resolved by the assumption of
the liabilities associated with such Claims in connection with the sale of
the Pork Business. No distributions will be made to the PBGC under the
Plan.
The Plan, though proposed jointly, constitutes separate plans proposed
by each Debtor. Therefore, the classifications set forth below shall be
deemed to apply separately (as appropriate) with respect to each such plan.
Accordingly, each Debtor reserves the right to request confirmation of its
separate plan in the event that such separate confirmation is necessary and
appropriate for such Debtors and its creditors.
2.1 CLASS 1 (OTHER PRIORITY CLAIMS)
Class 1 consists of all Other Priority Claims.
2.2 CLASS 2 (SECURED LENDER CLAIMS)
Class 2 consists of all Secured Lender Claims.
2.3 CLASS 3 (OTHER SECURED CLAIMS)
Class 3 consists of all Other Secured Claims.
2.4 CLASS 4 (DEMAND CERTIFICATES CLAIMS)
Class 4 consists of all Demand Certificates Claims.
2.5 CLASS 5 (SUBORDINATED CERTIFICATES CLAIMS)
Class 5 consists of all Subordinated Certificates Claims.
2.6 CLASS 6 (CONVENIENCE CLAIMS AGAINST INDUSTRIES)
Class 6 consists of all Convenience Claims against Industries.
2.7 CLASS 7 (GENERAL UNSECURED CLAIMS AGAINST INDUSTRIES)
Class 7 consists of all General Unsecured Claims against
Industries.
2.8 CLASS 8 (INDUSTRIES PREFERRED SHARES)
Class 8 consists of all Industries Preferred Shares.
2.9 CLASS 9 (INDUSTRIES COMMON SHARES)
Class 9 consists of all Industries Common Shares.
2.10 CLASS 10 (GENERAL UNSECURED CLAIMS AGAINST FOODS)
Class 10 consists of all General Unsecured Claims against Foods.
2.11 CLASS 11 (OLD SECURITIES OF FOODS)
Class 11 consists of all Old Securities of Foods.
2.12 CLASS 12 (GENERAL UNSECURED CLAIMS AGAINST TRANSPORTATION)
Class 12 consists of all General Unsecured Claims against
Transportation.
2.13 CLASS 13 (OLD SECURITIES OF TRANSPORTATION)
Class 13 consists of all Old Securities of Transportation.
2.14 CLASS 14 (GENERAL UNSECURED CLAIMS AGAINST SFA)
Class 14 consists of all General Unsecured Claims against SFA.
2.15 CLASS 15 (OLD SECURITIES OF SFA)
Class 15 consists of all Old Securities of SFA.
2.16 CLASS 16 (GENERAL UNSECURED CLAIMS AGAINST PIPELINE)
Class 16 consists of all General Unsecured Claims against
Pipeline.
2.17 CLASS 17 (OLD SECURITIES OF PIPELINE)
Class 17 consists of all Old Securities of Pipeline.
2.18 CLASS 18 (INTERCOMPANY CLAIMS)
Class 18 consists of all Intercompany Claims.
2.19 CLASS 19 (SUBORDINATED CLAIMS)
Class 19 consists of all Subordinated Claims.
ARTICLE III
TREATMENT OF CLAIMS AND INTERESTS
3.1 UNCLASSIFIED CLAIMS
(a) Administrative Claims
Except as otherwise provided for herein, and subject to the
requirements of Sections 11.1-11.3 of the Plan, on, or as soon as
reasonably practicable after, the latest of (i) the Initial Distribution
Date, (ii) the date such Administrative Claim becomes an Allowed
Administrative Claim, or (iii) the date such Administrative Claim becomes
payable pursuant to any agreement between a Debtor (with the consent of the
Bankruptcy Committees) or the Liquidating Trustee, as the case may be, and
the holder of such Administrative Claim, each holder of an Allowed
Administrative Claim shall receive in full and complete satisfaction of
such Allowed Administrative Claim (x) Cash equal to the unpaid portion of
such Allowed Administrative Claim or (y) such other treatment as to which a
Debtor (with the consent of the Bankruptcy Committees) or the Liquidating
Trustee, as the case may be, and such holder shall have agreed upon in
writing; provided, however, that Allowed Administrative Claims with respect
to liabilities incurred by a Debtor in the ordinary course of business
during the Chapter 11 Case and all liabilities and obligation of the
Debtors under the KERIT Plan shall be paid in the ordinary course of
business in accordance with the terms and conditions of any agreements
relating thereto. Notwithstanding the foregoing, (i) the Bondholder
Transaction Fee shall be payable only from distributions otherwise payable
to holders of Allowed Class 5 Claims and shall be paid prior to the payment
of any distributions to holders of Allowed Class 5 Claims, and (ii) the
Creditor Transaction Fee shall be payable only from distributions otherwise
payable to holders of Allowed Class 7 Claims and shall be paid prior to the
payment of any distributions to holders of Allowed Class 7 Claims.
(b) Priority Tax Claims
Except as otherwise provided for herein, on, or as soon as reasonably
practicable after, the latest of (i) the Initial Distribution Date, (ii)
the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, or
(iii) the date such Priority Tax Claim becomes payable pursuant to any
agreement between a Debtor (with the consent of the Bankruptcy Committees)
or the Liquidating Trustee, as the case may be, and the holder of such
Priority Tax Claim, each holder of an Allowed Priority Tax Claim shall
receive in full and complete satisfaction of such Allowed Priority Tax
Claim (x) Cash equal to the unpaid portion of such Allowed Priority Tax
Claim or (y) such other treatment as to which a Debtor (with the consent of
the Bankruptcy Committees) or the Liquidating Trustee, as the case may be,
and such holder shall have agreed upon in writing.
(c) DIP Loan Claims
If then outstanding on the Effective Date, the DIP Loan Claims shall
be paid in full on the Effective Date according to the terms of the DIP
Credit Agreement. Notwithstanding anything in the Plan to the contrary, the
DIP Loan Claims shall have the superpriority status set forth in the orders
authorizing and evidencing the DIP Loan Claims.
(d) Fees and Expenses of the Indenture Trustees
Without further order of the Bankruptcy Court, the Indenture Trustees
shall be entitled to payment out of distributions otherwise payable to the
holders of the Demand Certificates, the Subordinated Certificates or the
Industrial Revenue Bonds (as applicable) of all properly documented unpaid
fees and expenses for services rendered under the Trust Indentures and the
IRB Indentures, including compensation, disbursements and expenses of
agents and legal counsel to the Indenture Trustees in connection with the
performance of their duties under the Trust Indentures and the IRB
Indentures. Upon payment in full of such fees and expenses, any liens of
the Indenture Trustees on current distributions to holders of Demand
Certificates, Subordinated Certificates and Industries Revenue Bonds shall
be released and extinguished.
3.2 CLASS 1 (OTHER PRIORITY CLAIMS)
On, or as soon as reasonably practicable after, the latest of (i) the
Initial Distribution Date, (ii) the date such Claim becomes an Allowed
Class 1 Claim, or (iii) the date such Class 1 Claim becomes payable
pursuant to any agreement between a Debtor (with the consent of the
Bankruptcy Committees) or the liquidating Trustee, as the case may be, and
the holder of such Class 1 Claim, each holder of an Allowed Class 1 Claim
shall receive, in full and complete satisfaction of such Allowed Class 1
Claim (x) Cash equal to the unpaid portion of such Allowed Class 1 Claim or
(y) such other treatment as to which a Debtor (with the consent of the
Bankruptcy Committees) or the Liquidating Trustee, as the case may be, and
such holder shall have agreed upon in writing. The legal, equitable and
contractual rights of the holders of Allowed Class 1 Claims are Unimpaired
by the Plan.
3.3 CLASS 2 (SECURED LENDER CLAIMS)
On the Effective Date, the Allowed Secured Lender Claims, if any,
shall be satisfied and paid in full in the amount of said Claims then
outstanding. Net cash proceeds from Section 363 asset sales prior to the
Confirmation Date shall be remitted for application against the Secured
Lender Claims. The Secured Lender Claims, if any, outstanding on the
Effective Date shall be paid in full in Cash from net cash proceeds from
Section 363 asset sales that occur after the Confirmation Date and prior to
the Effective Date. Nothing in the Plan shall alter or affect any
intermediate payments made by the Debtors to the Secured Lenders prior to
the Effective Date. Class 2 is Unimpaired by the Plan.
3.4 CLASS 3 (OTHER SECURED CLAIMS)
Subject to the provisions of Section 3.1(d) of the Plan, on or as
soon as reasonably practicable after the Effective Date, each holder of an
Allowed Class 3 Claim shall receive one of the following distributions: (a)
payment of such holder's Allowed Other Secured Claim in full in Cash; (b)
the sale or disposition proceeds of the Collateral securing such Allowed
Other Secured Claim to the extent of the value of the Debtors' interest in
such Collateral; (c) the surrender of the Collateral securing such Allowed
Other Secured Claim to the holder of such Allowed Other Secured Claim; (d)
the Reinstatement of such Allowed Other Secured Claim; or (e) such other
distribution or treatment as may be ordered by the Bankruptcy Court or as
shall be necessary to satisfy the requirements of the Bankruptcy Code. The
manner and treatment of each Allowed Other Secured Claim shall be
determined by the Liquidating Trustee in his sole and absolute discretion.
Nothing in this Section 3.4 or elsewhere in the Plan shall preclude the
Liquidating Trustee from challenging the validity of any alleged Lien on
any asset of a Debtor or the value of such Collateral. The legal, equitable
and contractual rights of the holders of Allowed Class 3 Claims are
Unimpaired by the Plan.
3.5 CLASS 4 (DEMAND CERTIFICATES CLAIMS)
As of the Effective Date, all notes, instruments and other documents
evidencing the Demand Certificates shall be deemed canceled without further
act or action under any applicable agreement, law, regulation, order or
rule, and the Demand Certificates evidenced thereby shall be extinguished.
Subject to the provisions of Article VII of the Plan and the Liquidating
Trust Agreement, until all Allowed Class 4 Claims have been paid in full
(including payment of interest through the Effective Date at the rate
provided in the Demand Certificates) less any amounts payable to the
Indenture Trustee for the Demand Certificates pursuant to Section 3.1(d) of
the Plan, each holder of an Allowed Class 4 Claim shall receive, in full
and complete satisfaction of such Allowed Class 4 Claim, (i) its Pro Rata
share of the Industries Distribution Pool plus (ii) its Pro Rata Share of
the funds otherwise payable to holders of Allowed Class 5 Claims pursuant
to clause (i) of the second sentence of Section 3.6 of the Plan less (iii)
its Pro Rata share of any amounts payable to the Indenture Trustees for the
Demand Certificates pursuant to Section 3.1(d) of the Plan. Class 4 is
Impaired by the Plan.
3.6 CLASS 5 (SUBORDINATED CERTIFICATES CLAIMS)
As of the Effective Date, all notes, instruments and other documents
evidencing the Subordinated Certificates shall be deemed canceled without
further act or action under any applicable agreement, law, regulation,
order or rule, and the Subordinated Certificates evidenced thereby shall be
extinguished. Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 5 Claim shall
receive, in full satisfaction, settlement, release and discharge of and in
exchange for such Allowed Class 5 Claim, (i) its Pro Rata share of the
Industries Distribution Pool less (ii) its Pro Rata share of those funds
required to be paid to holders of Allowed Class 4 Claims in accordance with
clause (ii) of the second sentence of Section 3.5 of the Plan plus (iii)
after all Allowed Class 4 Claims have been paid in full, its Pro Rata share
of the funds otherwise payable to holders of Allowed Class 4 Claims
pursuant to clause (i) of the second sentence of Section 3.5 of the Plan
less (iv) its Pro Rata share of the Bondholder Transaction Fee less (v) its
Pro Rata share of any amounts payable to the Indenture Trustees for the
Subordinated Certificates pursuant to Section 3.1(d) of the Plan. Class 5
is Impaired by the Plan.
3.7 CLASS 6 (CONVENIENCE CLAIMS AGAINST INDUSTRIES)
Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 6 Claim shall
receive, in full and complete satisfaction of such Allowed Class 6 Claim,
Cash equal to the amount of such Allowed Claim. Class 6 is Unimpaired by
the Plan.
3.8 CLASS 7 (GENERAL UNSECURED CLAIMS AGAINST INDUSTRIES)
Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 7 Claim shall
receive, in full and complete satisfaction of such Allowed Class 7 Claim,
its Pro Rata share of the Industries Distribution Pool less the Creditor
Transaction Fee. Class 7 is Impaired by the Plan.
3.9 CLASS 8 (INDUSTRIES PREFERRED SHARES)
The Industries Preferred Shares shall be Reinstated on the Effective
Date. Notwithstanding such Reinstatement and in accordance with applicable
law, no distribution shall be made on account of the Industries Preferred
Shares until all Administrative Claims against Industries, all Priority Tax
Claims against Industries, all Class 1 Claims against Industries, all Class
3 Claims against Industries, all Class 4 Claims, all Class 5 Claims, all
Class 6 Claims, all Class 7 Claims and all Class 18 Claims against
Industries have been (i) Allowed and paid in full (including, with respect
to Classes 5 and 7, payment of interest at the Plan Rate) or, with respect
to Class 3 Claims, Allowed and treated in accordance with Section 3.4 of
the Plan, (ii) disallowed or (iii) withdrawn, and all Intercompany Advances
payable by Industries have been repaid. Class 8 is Unimpaired by the Plan.
3.10 CLASS 9 (INDUSTRIES COMMON SHARES)
On the Effective Date (or such later date(s) as may be determined by
Reorganized Industries with the consent of the Liquidating Trustee), (i)
that amount of Industries Common Shares whose cancellation, in the Debtors'
reasonable judgment, can be offset in full against appropriate losses and
net operating losses shall be deemed canceled on a Pro Rata basis without
further act or action under any applicable agreement, law, regulation,
order or rule, and the Industries Common Shares evidenced thereby shall be
extinguished, and (ii) any remaining Industries Common Shares shall be
deemed Reinstated. Notwithstanding such Reinstatement and in accordance
with applicable law, no distribution shall be made (or dividend paid) on
account of any remaining Industries Common Shares until all Administrative
Claims against Industries, all Priority Tax Claims against Industries, all
Class 1 Claims against Industries, all Class 3 Claims against Industries,
all Class 4 Claims, all Class 5 Claims, all Class 6 Claims, all Class 7
Claims, all Interests in Class 8 and all Class 18 Claims against Industries
have been (i) Allowed and paid in full (including, with respect to Classes
5 and 7, payment of interest at the Plan Rate), or, with respect to Class 3
Claims, Allowed and treated in accordance with Section 3.4 of the Plan,
(ii) disallowed or (iii) withdrawn, and all Intercompany Advances payable
by Industries have been repaid. In accordance with and as provided by the
Plan, any remaining Industries Common Shares shall be deemed to continue in
effect and shall not be deemed canceled or extinguished under any other law
or regulation. Class 9 is Impaired by the Plan.
3.11 CLASS 10 (GENERAL UNSECURED CLAIMS AGAINST FOODS)
Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 10 Claim shall
receive, in full and complete satisfaction of such Allowed Class 10 Claim,
Cash equal to the amount of its Allowed Class 10 Claim plus interest at the
Plan Rate from the Petition Date through the Effective Date. Class 10 is
Impaired by the Plan; provided, however, that holders of Allowed Class 10
Claims that arise from the rejection of an executory contract or unexpired
leases shall receive interest at the Plan Rate only from the date of such
rejection through the Effective Date.
3.12 CLASS 11 (OLD SECURITIES OF FOODS)
As of the Effective Date, the stock certificates and other instruments
evidencing the Old Securities of Foods shall be deemed canceled without
further act or action under any applicable agreement, law, regulation,
order or rule and the Old Securities of Foods evidenced thereby shall be
extinguished. The holders of Allowed Class 11 Interests that constitute
Minority Foods Shares shall receive their Pro Rata share of the Class 11
Distribution Pool. Class 11 is Impaired by the Plan.
3.13 CLASS 12 (GENERAL UNSECURED CLAIMS AGAINST TRANSPORTATION)
Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 12 Claim shall
receive, in full and complete satisfaction of such Allowed Class 12 Claim,
Cash equal to the amount of its Allowed Class 12 Claim. Class 12 is
Impaired by the Plan.
3.14 CLASS 13 (OLD SECURITIES OF TRANSPORTATION)
As of the Effective Date, the stock certificates and other instruments
evidencing the Old Securities of Transportation shall be deemed canceled
without further act or action under any applicable agreement, law,
regulation, order or rule, and the Old Securities of Transportation
evidenced thereby shall be extinguished. Any Cash remaining in the Estate
of Transportation after all Administrative Claims against Transportation,
all Priority Tax Claims against Transportation, all Class 1 Claims against
Transportation, all Class 3 Claims against Transportation, all Class 12
Claims and all Class 18 Claims against Transportation have been (i) Allowed
and paid (including, with respect to Class 12, payment of interest at the
Plan Rate) or, with respect to Class 3 Claims, Allowed and treated in
accordance with Section 3.4 of the Plan, (ii) disallowed or (iii)
withdrawn, and all Intercompany Advances payable by Transportation have
been repaid, shall vest in the Liquidating Trust. Class 13 is Impaired by
the Plan.
3.15 CLASS 14 (GENERAL UNSECURED CLAIMS AGAINST SFA)
Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 14 Claim shall
receive, in full and complete satisfaction of such Allowed Class 14 Claim,
Cash equal to the amount of its Allowed Class 14 Claim. Class 14 is
Impaired by the Plan.
3.16 CLASS 15 (OLD SECURITIES OF SFA)
As of the Effective Date, the stock certificates and other instruments
evidencing the Old Securities of SFA shall be deemed canceled without
further act or action under any applicable agreement, law, regulation,
order or rule, and the Old Securities of SFA evidenced thereby shall be
extinguished. Any Cash remaining in the Estate of SFA after all
Administrative Claims against SFA, all Priority Tax Claims against SFA, all
Class 1 Claims against SFA, all Class 3 Claims against SFA, all Class 14
Claims and all Class 18 Claims against SFA have been (i) Allowed and paid
(including, with respect to Class 14, payment of interest at the Plan Rate)
or, with respect to Class 3 Claims, Allowed and treated in accordance with
Section 3.4 of the Plan, (ii) disallowed or (iii) withdrawn, and all
Intercompany Advances payable by SFA have been repaid, shall vest in the
Liquidating Trust. Class 15 is Impaired by the Plan.
3.17 CLASS 16 (GENERAL UNSECURED CLAIMS AGAINST PIPELINE)
Subject to the provisions of Article VII of the Plan and the
Liquidating Trust Agreement, each holder of an Allowed Class 16 Claim shall
receive, in full and complete satisfaction of such Allowed Class 16 Claim,
Cash equal to the amount of its Allowed Class 16 Claim. Class 16 is
Impaired by the Plan.
3.18 CLASS 17 (OLD SECURITIES OF PIPELINE)
As of the Effective Date, the stock certificates and other instruments
evidencing the Old Securities of Pipeline shall be deemed canceled without
further act or action under any applicable agreement, law, regulation,
order or rule, and the Old Securities of Pipeline evidenced thereby shall
be extinguished. Any Cash remaining in the Estate of Pipeline after all
Administrative Claims against Pipeline, all Priority Tax Claims against
Pipeline, all Class 1 Claims against Pipeline, all Class 3 Claims against
Pipeline, all Class 16 Claims and all Class 18 Claims against Pipeline have
been (i) Allowed and paid (including, with respect to Class 16, payment of
interest at the Plan Rate) or, with respect to Class 3 Claims, Allowed and
treated in accordance with Section 3.4 of the Plan, (ii) disallowed or
(iii) withdrawn, and all Intercompany Advances payable by Pipeline have
been repaid, shall vest in the Liquidating Trust. Class 17 is Impaired by
the Plan.
3.19 CLASS 18 (INTERCOMPANY CLAIMS)
On or as soon as reasonably practicable after the Effective Date, each
holder of an Allowed Class 18 Claim shall receive, in full and complete
satisfaction of such Allowed Class 18 Claim, (x) Cash equal to the unpaid
portion of such Allowed Class 18 Claim or (y) such other treatment as to
which the Debtors or the Liquidating Trustee, as the case may be, and such
holder shall have agreed upon in writing. Class 18 is Impaired by the Plan.
3.20 CLASS 19 (SUBORDINATED CLAIMS)
In accordance with section 510(b) and (c) of the Bankruptcy Code, no
distribution shall be made on account of the Subordinated Claims until all
Administrative Claims against Industries, all Priority Tax Claims against
Industries, all Class 1 Claims against Industries, all Class 3 Claims
against Industries, all Class 4 Claims, all Class 5 Claims, all Class 6
Claims, all Class 7 Claims, all Interests in Class 8 and all Class 18
Claims against Industries have been (i) Allowed and paid in full
(including, with respect to Classes 5 and 7, payment of interest at the
Plan Rate) or, with respect to Class 3 Claims, Allowed and treated in
accordance with Section 3.4 of the Plan, (ii) disallowed or (iii)
withdrawn, and all Intercompany Advances payable by Industries have been
repaid. Class 19 is Impaired by the Plan.
3.21 RESERVATION OF RIGHTS REGARDING CLAIMS
Except as otherwise explicitly provided in the Plan, nothing shall
affect the Debtors' or the Liquidating Trustee's rights and defenses, both
legal and equitable, with respect to any Claims, including, but not limited
to, all rights with respect to legal and equitable defenses to alleged
rights of setoff or recoupment.
ARTICLE IV
ACCEPTANCE OR REJECTION OF THE PLAN
4.1 IMPAIRED CLASSES OF CLAIMS AND INTERESTS ENTITLED TO VOTE
Subject to Section 4.3 of the Plan, Claim and Interest holders in each
Impaired Class of Claims or Interests are entitled to vote as a class to
accept or reject the Plan.
4.2 ACCEPTANCE BY AN IMPAIRED CLASS
In accordance with section 1126(c) of the Bankruptcy Code and except
as provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of
Claims shall have accepted the Plan if the Plan is accepted by the holders
of at least two-thirds in dollar amount and more than one-half in number of
the Allowed Claims of such Class that have timely and properly voted to
accept or reject the Plan.
4.3 PRESUMED ACCEPTANCES
Classes 1, 2, 3, 6 and 8 are Unimpaired by the Plan. Under section
1126(f) of the Bankruptcy Code, such Claim and Interest holders are
conclusively presumed to accept the Plan, and the votes of such Claim and
Interest holders will not be solicited. Classes 13, 15, 17 and 18 are
conclusively presumed to accept the Plan because the Claim and Interest
holders in such Classes are the proponents of the Plan.
4.4 SUMMARY OF CLASSES VOTING ON THE PLAN
As a result of the provisions of Sections 4.1, 4.3 and 4.4 of the
Plan, the votes of holders of Claims in Classes 4, 5, 7, 9, 10, 11, 12, 14,
16 and 19 will be solicited with respect to the Plan.
4.5 CONFIRMATION PURSUANT TO SECTION 1129(B) OF THE BANKRUPTCY CODE
To the extent that any Impaired Class rejects the Plan or is deemed to
have rejected the Plan, the Debtors will request confirmation of the Plan,
as it may be modified from time to time, under section 1129(b) of the
Bankruptcy Code.
ARTICLE V
MEANS FOR IMPLEMENTATION OF THE PLAN
5.1 CONTINUED EXISTENCE OF THE DEBTORS; VESTING OF ASSETS
(a) On the Effective Date, all right, title and interest in all of the
Debtors' property and assets (excluding the Industries Retained Assets, the
Transferred Assets and the Coffeyville Assets), including without
limitation, all rights and causes of action, whether arising by contract,
under the Bankruptcy Code (including, without limitation pursuant to
Section 1123(b)(3)(B) of the Bankruptcy Code), under the Plan or under
other applicable law, including, without limitation, all rights the Debtors
have under the Plan, shall vest in the Liquidating Trust.
(b) On the Effective Date, Foods shall be merged into Industries,
after which Industries shall continue to exist as Reorganized Industries.
Reorganized Industries shall be governed and managed under and in
accordance with the Plan, the Management Agreement and its amended
certificate of incorporation and bylaws; provided, however, that all
provisions contained in such documents related to the SF Phosphates,
Limited Company will not be effective if the SF Phosphates Interest has
been disposed of prior to the Effective Date. Reorganized Industries shall
be authorized to effectuate the Plan and the transactions contemplated by
the Plan and to take any proceedings or actions provided for or
contemplated by the Plan (in each case in a manner consistent with the Plan
and the Liquidating Trust Agreement), including, without limitation, such
proceedings or actions related to the Industries Retained Assets, the
Transferred Assets and the Coffeyville Assets as may be necessary and
appropriate, all without further action by the stockholders of Reorganized
Industries, and with like effect as if such actions had been taken by
unanimous action of the stockholders of Reorganized Industries. All
recoveries received by Reorganized Industries on account of the Industries
Retained Assets, the Transferred Assets or any other assets of the Debtors
shall be remitted to the Liquidating Trust and held by the Liquidating
Trustee on account of the Estate to which such recoveries are allocable.
Forms of the Management Agreement and the amended certificate of
incorporation and bylaws of Reorganized Industries shall be filed with the
Bankruptcy Court at least five Business Days prior to commencement of the
Confirmation Hearing. The identities of the officers and directors of
Reorganized Industries shall be disclosed to the Bankruptcy Court no later
than five Business Days prior to the commencement of the Confirmation
Hearing, together with any additional information required under Section
1129(a)(5) of the Bankruptcy Code. The Bankruptcy Committees and any
creditor or party in interest may object to the identities of the proposed
officers and directors of Reorganized Industries (and the proposed
compensation to be provided to such persons) no later than one Business Day
prior to the commencement of the Confirmation Hearing. Notwithstanding any
other provision hereof, Cash or Cash equivalents in an amount disclosed to
the Bankruptcy Court at least five Business Days prior to the commencement
of the Confirmation Hearing shall remain as assets of Reorganized
Industries to fund all operations of Reorganized Industries other than
those operations, if any, related to the Industries Retained Assets and/or
services to be provided to the Liquidating Trust (which shall be funded, if
at all, under the Management Agreement).
(c) In the event that the Debtors own the Coffeyville Assets on the
Effective Date, on the Effective Date, (i) all of the Debtors' right, title
and interest in the Coffeyville Assets shall be transferred to a Delaware
limited liability company (the "Coffeyville LLC") to be established and
wholly owned by the Liquidating Trust, and (ii) the executory contracts and
unexpired leases listed on Plan Exhibit E shall be assumed and assigned to
the Coffeyville LLC; provided, however, that the Liquidating Trust shall
have the option (at its sole discretion in accordance with the Liquidating
Trust Agreement) to transfer any of the Coffeyville Assets to the
Liquidating Trust. The Coffeyville LLC shall be funded with that amount of
capital determined by the Bankruptcy Court at the Confirmation Hearing to
constitute sufficient capitalization for the continued maintenance of the
Coffeyville LLC and any necessary remediation or other regulatory
compliance related to the Coffeyville Assets. Forms of the certificate of
organization and operating agreement for the Coffeyville LLC shall be filed
with the Bankruptcy Court at least five Business Days prior to the
commencement of the Confirmation Hearing.
(d) On the Effective Date, (i) all of the Debtors' right, title and
interest in each Transferred Asset owned by the Debtors on the Effective
Date shall be transferred to a trust (each such trust, a "Transferred Asset
Trust"), and (ii) the Liquidating Trust shall fund each Transferred Asset
Trust with that amount of capital set forth on Plan Exhibit D or such other
amount as determined by the Bankruptcy Court at the Confirmation Hearing
(or at such other time prior to the Effective Date), which amount shall
constitute sufficient capitalization for the maintenance, remediation (or
other regulatory compliance) and/or disposition of each such Transferred
Asset. Forms of the trust documents and related documents for each
Transferred Asset Trust shall be filed with the Bankruptcy Court no later
than five Business Days prior to the commencement of the Confirmation
Hearing.
(e) On the Effective Date, SFA, Transportation and Pipeline shall be
deemed dissolved for all purposes without the necessity for any other or
further actions to be taken by or on behalf of the Debtors or payments to
be made in connection therewith; provided, however, that the Debtors shall
file with the appropriate public office certificates of dissolution.
(f) From and after the Effective Date, the Debtors shall not be
required to file any document, or take any other action, to withdraw their
business operation from any state in which the Debtors were previously
conducting their business operation.
5.2 FUNDING FOR THE PLAN
The Plan shall be funded in accordance with the provisions of the Plan
from (a) Available Cash on the Effective Date and (b) Cash available after
the Effective Date from, among other things, the liquidation of the
Debtors' remaining assets, the prosecution and enforcement of Litigation
Claims, and any release of funds from the Disputed Claims Reserve after the
Effective Date. All Available Cash realized from the liquidation of the
Debtors' remaining assets that is not Collateral for the Secured Lender
Claims or DIP Loan Claims, the prosecution and enforcement of Litigation
Claims, and the release of funds from the Disputed Claims Reserve (to the
extent not otherwise payable to the Pre-Petition Lenders or the DIP
Lenders) shall be allocated to the appropriate Estate(s) and shall be
maintained by the Liquidating Trustee for distribution to the holders of
Allowed Claims as provided in the Plan and the Liquidating Trust Agreement.
5.3 ACCOUNTS
The Debtors (subject to approval of the Bankruptcy Committees, which
approval shall not be unreasonably withheld) and, from and after the
Effective Date, the Liquidating Trustee may establish or maintain one or
more interest-bearing accounts as they determine may be necessary or
appropriate to effectuate the provisions of the Plan consistent with
section 345 of the Bankruptcy Code and any orders of the Bankruptcy Court.
5.4 LIQUIDATING TRUST; LIQUIDATING TRUSTEE
(a) Prior to the Effective Date, the Debtors shall establish the
Liquidating Trust in accordance with Sections 5.1(c) herein and subject to
the terms of the Liquidating Trust Agreement and the Plan. The Bankruptcy
Committees shall establish the Post-Confirmation Committee and appoint the
Committee Members in accordance with the Liquidating Trust Agreement and
the Plan. By Confirmation of the Plan, the Bankruptcy Court specifically
approves and designates the Liquidating Trust and the Liquidating Trustee
as a representative of each Estate and finds that the Liquidating Trust and
the Liquidating Trustee are acting on behalf of and for the benefit of the
Beneficiaries in accordance with the distribution scheme set forth in the
Plan. The establishment of the Liquidating Trust shall not give a holder of
a Claim against any Debtor or any Estate any rights as against any other
Debtor or any other Estate, except as provided for in Section 7.11 of the
Plan. The Liquidating Trust is an intended third-party beneficiary of the
Plan to the fullest extent allowable under the laws of the State of
Delaware, the laws of the United States or any other applicable law. The
identity of the Liquidating Trustee shall be disclosed to the Bankruptcy
Court at least five Business Days prior to the commencement of the
Confirmation Hearing. The Bankruptcy Committees and any creditor or party
in interest may object to the identity of the proposed Liquidating Trustee
(and the proposed compensation to be provided to such person) no later than
one Business Day prior to the commencement of the Confirmation Hearing.
(b) The Liquidating Trust and the Liquidating Trustee, as the
representative of each Estate, except as otherwise limited in the
Liquidating Trust Agreement, Plan or the Confirmation Order, shall be
vested with all property, rights, interests, and powers of the Debtors.
Subject to the provisions of the Liquidating Trust Agreement, the
Liquidating Trustee's rights and authority include, without limitation, all
of the following:
(i) control, management and disposal of all Liquidating Trust
Assets for the benefit of the holders of Allowed Claims and Allowed
Class 11 Interests who may receive distributions under the Plan;
(ii) prosecution of Litigation Claims on behalf of the Debtors
and/or the Estates and/or the Liquidating Trust, including preference,
fraudulent conveyance, avoidance and other actions whether against
insiders or any other third parties;
(iii) filing of objections to Claims or actions to subordinate
Claims or recharacterize debt as equity and the filing and pursuit of
any other pleading, motion, stipulation or other item in connection
with any matter arising under, in or in connection with the Chapter 11
Case;
(iv) filing of tax returns;
(v) transfer (subject to Bankruptcy Court approval) of right,
title and interest in and to any Liquidating Trust Assets; and
(vi) undertake any other action in the best interests of the
Trust and/or its beneficiaries and not inconsistent with the
provisions of the Liquidating Trust Agreement, the Plan, and the
Confirmation Order.
(c) The funding of the Liquidating Trust pursuant to Section 5.1(c)
hereof shall be treated for all purposes of the Tax Code as a deemed
transfer to the Beneficiaries, followed by a deemed transfer by the
Beneficiaries to the Liquidating Trust. The Beneficiaries shall be treated
as the grantors and deemed owners of the Liquidating Trust. The valuation
of the property and assets transferred to the Liquidating Trust shall be
consistent and shall be used for all federal income tax purposes.
(d) Neither the Liquidating Trust nor the Liquidating Trustee shall
have any successor or transferee liability for liabilities of the Debtors
or shall be deemed a joint employer, co-employer or successor employer with
the Debtors and shall have no obligation to pay wages, severance pay, WARN
Act claims, benefits (including, without limitation, benefits under the
Consolidated Omnibus Budget Reconciliation Act of 1985) or any other
payment to employees of the Debtors, except to the extent that such
payments are payable in respect of Allowed Claims against the Debtors.
(e) From and after the Effective Date, the Liquidating Trust shall be
subject to all terms and conditions contained in the Liquidating Trust
Agreement and the Plan.
5.5 POST-CONFIRMATION COMMITTEE
(a) On the Effective Date, there shall be constituted a committee (the
"Post-Confirmation Committee") consisting of members (the "Committee
Members"), the number and method for selection of which shall be agreed to
by the Bankruptcy Committees and disclosed to the Bankruptcy Court at least
ten Business Days prior to the commencement of the Confirmation Hearing or
as otherwise ordered by the Bankruptcy Court. The identities of the
Committee Members shall be disclosed to the Bankruptcy Court on the
Confirmation Date. In the event that (a) no one is willing to serve on the
Post-Confirmation Committee or (b) there shall have been fewer than
one-half of the original number of Committee Members serving for a period
of 30 consecutive days, then the Liquidating Trustee may, during such
vacancy, ignore any reference in the Plan, the Liquidating Trust Agreement,
or the Confirmation Order to a Post-Confirmation Committee, and all
references to the Post-Confirmation Committee's ongoing duties and rights
in the Plan, the Liquidating Trust Agreement, and the Confirmation Order
shall be null and void during such time period.
(b) The Post-Confirmation Committee shall have the rights and
responsibilities set forth in this Plan and the Liquidating Trust
Agreement. The Committee Members shall be entitled to reimbursement of
their reasonable expenses. The Committee Members shall receive such
compensation as shall be disclosed to the Bankruptcy Court, upon consent of
the Debtors and the Bankruptcy Committees, not less than five Business Days
prior to the commencement of the Confirmation Hearing.
(c) Neither the Post-Confirmation Committee nor any of the Committee
Members shall be liable for the acts or omissions of any other member of
the Post-Confirmation Committee, nor shall any Committee Member be liable
for any act or omission taken in its capacity as a Committee Member, other
than acts or omissions resulting from such Committee Member's willful
misconduct or gross negligence.
(d) The Post-Confirmation Committee shall adopt by-laws which shall
provide for the governance of the Post-Confirmation Committee, except as
may be otherwise set forth in the Liquidating Trust Agreement.
(e) A Committee Member shall recuse himself or herself from any
decisions or deliberations regarding actions taken or proposed to be taken
by the Liquidating Trustee or the Estates with respect to the Claims,
Interests, or rights of such Committee Member, the entity appointing such
Committee Member, or any affiliate of the foregoing.
5.6 EFFECTUATING DOCUMENTS; FURTHER TRANSACTIONS
Prior to the Effective Date, the chief executive officer, chief
financial officer, or any other appropriate officer of Industries or any
other applicable Debtor, as the case may be, shall be authorized to
execute, deliver, file, or record such contracts, instruments, releases,
indentures, and other agreements or documents, and take such actions as may
be necessary or appropriate to effectuate and further evidence the terms
and conditions of the Plan. The secretary or assistant secretary of
Industries or any other applicable Debtor, as the case may be, shall be
authorized to certify or attest to any of the foregoing actions.
5.7 EXEMPTION FROM CERTAIN TRANSFER TAXES
Pursuant to section 1146(c) of the Bankruptcy Code, any transfers in
the United States from a Debtor to the Liquidating Trust or any other
Entity pursuant to the Plan shall not be subject to any document recording
tax, stamp tax, conveyance fee, intangibles or similar tax, mortgage tax,
stamp act, real estate transfer tax, mortgage recording tax or other
similar tax or governmental assessment, and the Confirmation Order shall
direct the appropriate state or local governmental officials or agents to
forego the collection of any such tax or governmental assessment and to
accept for filing and recordation any of the foregoing instruments or other
documents without the payment of any such tax or governmental assessment.
5.8 RELEASES AND RELATED MATTERS
(a) Releases by Debtors
As of the Effective Date, for good and valuable consideration, the
adequacy of which is hereby confirmed, the Debtors and the Liquidating
Trustee, on behalf of the Liquidating Trust, will be deemed to forever
release, waive and discharge all claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action and liabilities
whatsoever in connection with or related to the Debtors, the Liquidating
Trust, the Liquidating Trustee, the Non-Debtor Subsidiaries, the Chapter 11
Case or the Plan (other than the rights of the Debtor, the Liquidating
Trust or the Liquidating Trustee to enforce the Plan and the contracts,
instruments, releases, indentures, and other agreements or documents
delivered thereunder) whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen,
then existing or thereafter arising, in law, equity or otherwise that are
based in whole or part on any act, omission, transaction, event or other
occurrence taking place on or prior to the Effective Date in any way
relating to the Debtors, the Liquidating Trust, the Liquidating Trustee,
the Non-Debtor Subsidiaries, the Chapter 11 Case or the Plan, and that may
be asserted by or on behalf of the Debtors or their Estates or the
Liquidating Trust against the Lenders, the agents under the Pre-Petition
Credit Agreement, the financial institutions party to the DIP Credit
Agreement, the agents under the DIP Credit Agreement, and their respective
agents and professionals.
(b) Injunction Related to Releases
The Confirmation Order will enjoin the prosecution, whether directly,
derivatively or otherwise, of any claim, obligation, suit, judgment,
damage, demand, debt, right, cause of action, liability or interest
released by operation of Section 5.8 of the Plan or exculpated by operation
of Section 11.9 of the Plan.
5.9 CLOSING OF THE CHAPTER 11 CASE
When substantially all remaining assets of the Debtors, Reorganized
Industries or the Liquidating Trust (except the Transferred Assets), as the
case may be, have been liquidated and converted into Cash (other than those
assets abandoned by Debtors or the Liquidating Trust, as the case may be),
and such Cash has been distributed in accordance with the Plan, the
Liquidating Trustee shall seek authority from the Bankruptcy Court to close
the Chapter 11 Case in accordance with the Bankruptcy Code and the
Bankruptcy Rules.
5.10 RIGHTS OF ACTION
(a) On and after the Effective Date, except as provided in Section
11.9 of the Plan, the Liquidating Trustee, on behalf of and as a
court-appointed representative of each Debtor and for the benefit of each
Estate (as vested in the Liquidating Trust pursuant to the Plan), will,
pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, retain and become
the holder of, and have the exclusive right to enforce any and all present
or future Litigation Claims and any and all rights of any and all of the
Debtors that arose before or after the Commencement Date, including, but
not limited to, rights, claims, causes of action, avoiding powers, suits
and proceedings arising under Chapter 5 of the Bankruptcy Code, including,
without limitation, any and all potential rights, claims and causes of
action related to payments made by the Debtors prior to the Petition Date
and disclosed in the Schedules. The Liquidating Trustee may pursue,
abandon, settle or release any or all such Litigation Claims and rights of
action pursuant to the terms of the Plan and the Liquidating Trust
Agreement, as it deems appropriate, without the need to obtain approval or
any other or further relief from the Bankruptcy Court.
(b) On and after the Effective Date, all Entities are permanently
enjoined from commencing or continuing in any manner any action or
proceeding (whether directly, indirectly, derivatively or otherwise) on
account of or respecting any Claim, Litigation Claim, debt, right or cause
of action of the Debtors for which the Liquidating Trustee retains sole and
exclusive authority to pursue in accordance with Section 5.10(a) of the
Plan.
(c) The allowance of any Claim prior to the Effective Date shall not
constitute a waiver of any Litigation Claim against the holder of such
Claim.
5.11 RETIREE BENEFITS
Any "retiree benefits" (as that term is defined in section 1114 of the
Bankruptcy Code) of the Debtors not terminated during the Chapter 11 Case
shall continue after the Effective Date to the extent required by section
1129(a)(13) of the Bankruptcy Code, without prejudice to the Debtor's right
under applicable non-bankruptcy law to modify, amend or terminate such
benefits. To the extent that any "retiree benefits" continue after the
Effective Date, the Liquidating Trustee and/or Reorganized Industries
expressly reserve the right to terminate such benefits in accordance with
applicable non-bankruptcy law.
5.12 ESTABLISHMENT OF CLASS 11 DISTRIBUTION POOL
On or prior to the Effective Date, and subject to approval of the
Bankruptcy Court, the Debtors, in consultation with the Bankruptcy
Committees, shall determine the amount of Cash to be reserved by the
Liquidating Trustee in a separate account (the "Class 11 Distribution
Pool") for distribution to holders of Allowed Class 11 Interests that
constitute Minority Foods Shares in accordance with the Plan and the
Liquidating Trust Agreement, which amount shall represent the Available
Cash estimated to be available for distribution to Allowed Class 11
Interests constituting Minority Foods Shares as of the Effective Date after
all Administrative Claims against Foods, all Priority Tax Claims against
Foods, all Class 1 Claims against Foods, all Class 3 Claims against Foods,
all Class 10 Claims and all Class 18 Claims against Foods have been (i)
Allowed and paid in full (including, with respect to Class 10, payment of
interest at the Plan Rate) or, with respect to Class 3 Claims, Allowed and
treated in accordance with Section 3.4 of the Plan, (ii) disallowed or
(iii) withdrawn, and all Intercompany Advances payable by Foods have been
repaid; provided, however, that the Liquidating Trustee reserves the right
to reduce the Class 11 Distribution Pool in the event that the amount
reserved in the Class 11 Distribution Pool is determined to be in excess of
the amount actually available for distribution to Allowed Class 11
Interests constituting Minority Foods Shares.
ARTICLE VI
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
6.1 REJECTED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Except as otherwise provided in Section 6.3 of the Plan, on the
Effective Date, all executory contracts and unexpired leases that exist
between a Debtor and any Entity (including, without limitation, the Trust
Indentures) shall be deemed rejected as of the Confirmation Date, except
for any executory contract or unexpired lease (a) which has been assumed or
rejected pursuant to an order of the Bankruptcy Court entered prior to the
Confirmation Date or pursuant to the Confirmation Order, or (b) as to which
a motion for approval of the assumption of such executory contract or
unexpired lease has been filed and served prior to the Confirmation Date
(except to the extent that any such motion is ultimately denied or
withdrawn). Entry of the Confirmation Order shall constitute the approval,
pursuant to section 365(a) of the Bankruptcy Code, of the rejection of the
executory contracts and unexpired leases pursuant to the Plan.
6.2 REJECTION DAMAGES BAR DATE
If the rejection of an executory contract or unexpired lease during
the Chapter 11 Case (including any rejection of an executory contract or
unexpired lease pursuant to Section 6.1 of the Plan) results in a Claim,
then such Claim shall be forever barred and shall not be enforceable
against any Debtor, the Liquidating Trust, the Liquidating Trustee or the
properties of any of them unless a proof of Claim is filed with the clerk
of the Bankruptcy Court and served upon counsel to the Debtors, and counsel
to the Bankruptcy Committees, (i) if such rejection is effective on or
prior to the Confirmation Date, within 30 days after the Confirmation Date,
(ii) if such rejection is effective after the Confirmation Date, within 30
days after service of notice of such rejection, or (iii) if such rejection
is pursuant to Section 6.1 of the Plan, within 30 days after the Effective
Date.
6.3 ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED LEASES
(a) On the Effective Date, Reorganized Industries shall be deemed to
have assumed or assumed and assigned, as the case may be, each executory
contract and unexpired lease listed on Plan Exhibit B, provided, however,
that the Debtors reserve their right, at any time prior to the Confirmation
Date, to amend Plan Exhibit B to delete an unexpired lease or executory
contract therefrom or add any unexpired lease or executory contract thereto
and to provide notice of any such deletion or addition to all affected
parties. The Confirmation Order shall constitute an order of the Bankruptcy
Court under section 365 of the Bankruptcy Code approving the contract and
lease assumptions or assumptions and assignments, as the case may be,
described above, as of the Effective Date.
(b) In the event that Industries owns the Coffeyville Assets on the
Effective Date, on the Effective Date Reorganized Industries shall be
deemed to have assumed and assigned to the Coffeyville LLC each executory
contract and unexpired lease listed on Plan Exhibit E, provided, however,
that the Debtors reserve their right, at any time prior to the Effective
Date, to amend Plan Exhibit E to delete an unexpired lease or executory
contract therefrom or add any unexpired lease or executory contract thereto
and to provide notice of any such deletion or addition to all affected
parties. The Confirmation Order shall constitute an order of the Bankruptcy
Court under section 365 of the Bankruptcy Code approving the conditional
assumptions and assignments of the executory contracts and unexpired leases
listed on Plan Exhibit E, as of the Effective Date.
6.4 PAYMENTS RELATED TO ASSUMED EXECUTORY CONTRACTS AND UNEXPIRED
LEASES
Any monetary amounts by which each executory contract and unexpired
lease to be assumed pursuant to the Plan is in default are indicated on
Plan Exhibit B and Plan Exhibit E and shall be satisfied, under section
365(b)(1) of the Bankruptcy Code, at the option of the Debtor party to the
contract or lease or the assignee of such Debtor party assuming such
contract or lease, by Cure. If there is a dispute regarding (a) the nature
or amount of any Cure, (b) the ability of Reorganized Industries or any
assignee to provide "adequate assurance of future performance" (within the
meaning of section 365 of the Bankruptcy Code) under the contract or lease
to be assumed, or (c) any other matter pertaining to assumption or
assignment (each, a "Cure Dispute") that cannot be resolved consensually
among the parties, Reorganized Industries (with the consent of the
Liquidating Trustee) shall have the right to reject the contract or lease
for a period of five Business Days after entry of a Final Order
adjudicating a Cure Dispute in a manner that is not acceptable to
Reorganized Industries (with the consent of the Liquidating Trustee).
ARTICLE VII
PROVISIONS GOVERNING DISTRIBUTIONS
7.1 DISTRIBUTIONS
Subject to Bankruptcy Rule 9010, all distributions under the Plan
shall be made by the Liquidating Trustee pursuant to the terms and
conditions contained in the Plan and the Liquidating Trust Agreement;
provided, however, that no distribution shall be made on behalf of any
Claim which may be subject to disallowance under section 502(d) of the
Bankruptcy Code. At the close of business on the Effective Date, the Claims
and Interest register shall be closed, and there shall be no further
changes in the record holders of any Claims or Interests. The Liquidating
Trustee shall have no obligation to recognize any transfer of any Claims or
Interest occurring after the Effective Date. The Liquidating Trustee shall
instead be entitled to recognize and deal for all purposes under the Plan
(except as to voting to accept or reject the Plan pursuant to Article 4 of
the Plan) with only those record holders stated on the Claims register as
of the close of business on the Effective Date.
7.2 INTEREST ON CLAIMS
Unless otherwise specifically provided for in the Plan or the
Confirmation Order, or required by applicable law, including section
1129(a) of the Bankruptcy Code, post-petition interest shall not accrue or
be paid on Claims, and no holder of a Claim shall be entitled to interest
accruing on or after the Petition Date on any Claim; provided, however,
that any interest determined to be payable in respect of any Claim shall be
calculated at the Plan Rate. This provision shall not apply to Allowed
Secured Lender Claims and DIP Loan Claims.
7.3 MEANS OF CASH PAYMENT
Any payment to be made by the Liquidating Trustee pursuant to the Plan
will be in U.S. dollars and may be made, at the sole discretion of the
Liquidating Trustee, by draft, check, electronic funds transfer, or as
otherwise required or provided in any relevant agreement or applicable law.
7.4 DISTRIBUTIONS ON THE INITIAL DISTRIBUTION DATE
As soon as is practicable after the Effective Date, subject to the
reservation of adequate funds in the Liquidating Trust Administrative
Reserve, each Disputed Claims Reserve and any other reserves established
under the Plan or the Liquidating Trust Agreement as and when appropriate,
the Liquidating Trustee shall deliver proceeds of Collateral and/or
Available Cash to holders of Claims entitled to distributions under the
Plan that were Allowed as of the Effective Date. All payments shall be made
in accordance with the priorities established by the Plan and in accordance
with the terms and conditions of the Plan and the Confirmation Order.
7.5 DISTRIBUTIONS ON A SUBSEQUENT DISTRIBUTION DATE
Unless otherwise provided in the Plan, to the extent that proceeds of
Collateral and/or Available Cash or other reasonably distributable assets
are available subsequent to the date of making the distributions required
by Section 7.4 of the Plan (the "Initial Distribution Date"), the
Liquidating Trustee shall, on a subsequent date (each, a "Subsequent
Distribution Date"), which date shall be whenever the aggregate amount
distributable to holders of Allowed Claims equals or exceeds $1,000,000
(but in no event shall such date be less than three months, or more than
one year, after the next previous distribution date), distribute such
proceeds of Collateral and/or Available Cash or other reasonably
distributable assets to the holders of Claims entitled to distributions
under the Plan that were Allowed as of the Effective Date or subsequently
have become Allowed Claims on or before the Subsequent Distribution Date in
amounts necessary to cause such holders to have received aggregate
distributions of Cash in respect of such Allowed Claims on the Initial
Distribution Date if (a) such proceeds of Collateral and/or Available Cash
had been available for distribution on the Initial Distribution Date, (b)
such Allowed Claims had been Allowed on the Initial Distribution Date in
the amounts in which they are Allowed on the Subsequent Distribution Date,
and (c) Claims or portions thereof that have become disallowed subsequent
to the Initial Distribution Date and on or before the Subsequent
Distribution Date had been disallowed on the Initial Distribution Date;
provided, however, that the Liquidating Trustee shall not be required to
make any distribution on a Subsequent Distribution Date on account of an
Allowed Claim or Interest in an amount less than $100; provided further,
however, that in no event shall the foregoing impair the right of the
Liquidating Trustee to use funds in any Disputed Claims Reserve to satisfy
the costs of administering the Plan and the Liquidating Trustee. All
payments shall be made in accordance with the priorities established by the
Plan and in accordance with the terms and conditions of the Plan and the
Confirmation Order.
7.6 DISTRIBUTIONS ON THE FINAL DISTRIBUTION DATE
Unless otherwise provided in the Plan, to the extent that proceeds of
Collateral and/or Available Cash or other reasonably distributable assets
are available subsequent to the Initial Distribution Date, any Subsequent
Distribution Date and after the liquidation of any and all assets of the
Debtors and after all Disputed Claim and Disputed Interests of
Beneficiaries have become (in whole or in part) Allowed Claims or Allowed
Interests or have been disallowed by Final Order, the Liquidating Trustee
shall establish a final distribution date (the "Final Distribution Date")
upon which the Liquidating Trustee shall distribute such proceeds of
Collateral and/or Available Cash or other assets to the holders of Claims
entitled to distributions under the Plan that were Allowed as of the
Effective Date or subsequently have become Allowed Claims on or before the
Final Distribution Date in amounts necessary to cause such holders to have
received aggregate distributions of Cash in respect of such Allowed Claims
on the Initial Distribution Date if (a) such proceeds of Collateral and/or
Available Cash had been available for distribution on the Initial
Distribution Date, (b) such Allowed Claims had been Allowed on the Initial
Distribution Date in the amounts in which they are Allowed on the Final
Distribution Date, and (c) Claims or portions thereof that have become
disallowed subsequent to the Initial Distribution Date and on or before the
Final Distribution Date had been disallowed on the Initial Distribution
Date, taking into account all previous distributions; provided, however,
that in no event shall the foregoing impair the right of the Liquidating
Trustee to use funds in any Disputed Claims Reserve to satisfy the costs of
administering the Plan and the Liquidating Trust. Within 20 Business Days
prior to making the final distribution, the Liquidating Trustee shall
notify the Post-Confirmation Committee that the Liquidating Trustee deems
all assets to be liquidated and all Claims and Interest of Beneficiaries to
be resolved and that the Liquidating Trustee intends to establish the Final
Distribution Date.
7.7 DELIVERY OF DISTRIBUTIONS; UNDELIVERABLE DISTRIBUTIONS
Distributions to holders of Allowed Claims and Allowed Interests shall
be made by the Liquidating Trustee (a) at the addresses set forth on the
proofs of Claim or Interest filed by such holders (or at the last known
addresses of such holders if no proof of Claim or Interest is filed or if
the Debtors have been notified of a change of address), (b) at the
addresses set forth in any written notices of address changes delivered to
the Liquidating Trustee after the date of any related proof of Claim or
Interest, (c) at the addresses reflected in the Schedules if no proof of
Claim or Interest has been filed and the Liquidating Trustee has not
received a written notice of a change of address, or (d) at the addresses
contained in the official records of the Debtors or the applicable
Indenture Trustee for the Industrial Revenue Bonds, or (e) at the addresses
set forth in a properly completed letter of transmittal accompanying
securities properly remitted to the Debtors. If any holder's distribution
is returned as undeliverable, no further distributions to such holder shall
be made unless and until the Liquidating Trustee is notified, in accordance
with the Liquidating Trust Agreement, of such holder's then current
address. Claims or Interests held by holders whose distributions are
returned as undeliverable and who fail to notify the Liquidating Trustee of
their respective correct addresses within one year after such distributions
are returned to the Liquidating Trustee as undeliverable shall be expunged,
after which date all unclaimed property (including, without limitation, all
unclaimed property held in the Class 11 Distribution Pool) shall (i) revert
to the Liquidating Trust free of any restrictions thereon and the Claims or
Interests of any holder or successor to such holder with respect to such
property shall be discharged and forever barred, notwithstanding any
federal or state escheat laws to the contrary, or (ii) if the Liquidating
Trust has been terminated, be delivered to the clerk of the Bankruptcy
Court. All undeliverable distributions that revert to the Liquidating Trust
shall be used to satisfy the costs of administering the Plan and the
Liquidating Trust and/or distributed to other holders of Allowed Claims or
Allowed Interests of the same Class on the Final Distribution Date. Nothing
contained in the Plan shall require the Liquidating Trustee to attempt to
locate any holder of an Allowed Claim or Allowed Interest.
7.8 TENDER OF SECURITIES AND INSTRUMENTS; CANCELLATION OF TRUST
INDENTURES
(a) Except as otherwise required by the Liquidating Trustee, as a
condition precedent to receiving any distribution pursuant to the Plan on
account of an Allowed Claim or Allowed Interest, each holder of Industrial
Revenue Bonds not Reinstated on the Effective Date, Demand Certificates,
Subordinated Certificates or Old Securities of Foods shall tender the
applicable instruments, securities or other documentation evidencing such
Claim or Interest to the Liquidating Trustee in accordance with written
instructions to be provided to such holders by the Liquidating Trustee as
promptly as practicable following the Effective Date. All tendered
instruments and documentation relating to Industrial Revenue Bonds, Demand
Certificates and Subordinated Certificates shall be marked as cancelled.
All tendered securities and documentation relating to Old Securities of
Foods shall be held by the Liquidating Trustee.
(b) In addition to any requirements under the applicable certificate
or articles of incorporation or by-laws of the applicable Debtor, any
holder of Industrial Revenue Bonds not Reinstated on the Effective Date,
Demand Certificates, Subordinated Certificates or Old Securities of Foods
that has been lost, stolen, mutilated or destroyed shall, in lieu of
tendering such instrument, security or documentation, deliver to the
Liquidating Trustee (i) evidence satisfactory to the Liquidating Trustee or
the applicable Indenture Trustee for the Industrial Revenue Bonds of the
loss, theft, mutilation or destruction; and (ii) such indemnity or security
as may be required by the Liquidating Trustee to hold the Liquidating
Trustee and the Liquidating Trust harmless from any damages, liabilities or
costs incurred in treating such individual as a holder of Industrial
Revenue Bonds, Demand Certificates, Subordinated Certificates or Old
Securities of Foods that has been lost, stolen, mutilated or destroyed.
Upon compliance with this Section 7.8(b) by a holder of a Claim or Interest
evidenced by Industrial Revenue Bonds, Demand Certificates, Subordinated
Certificates or Old Securities of Foods, such holder shall, for all
purposes under the Plan, be deemed to have tendered its Industrial Revenue
Bonds, Demand Certificates, Subordinated Certificates or Old Securities of
Foods.
(c) Except as otherwise required by the Liquidating Trustee, any
holder of Industrial Revenue Bonds not Reinstated on the Effective Date,
Demand Certificates, Subordinated Certificates or Old Securities of Foods
that fails to tender or is deemed to have failed to tender the applicable
instruments, securities and documentation required to be tendered hereunder
within one year after the Effective Date shall have its Claim or Interest
discharged and shall be forever barred from asserting such Claim or
Interest against the Liquidating Trust or its property and any distribution
to have been made on account of such Claim or Interest shall be treated as
an undeliverable distribution in accordance with Section 7.7 of the Plan.
(d) The notice of the Confirmation Order shall contain a description
of the requirements contained in this Section 7.8.
(e) On the Effective Date, each Trust Indenture for Industrial Revenue
Bonds not Reinstated on the Effective Date shall be deemed cancelled as
permitted by section 1123(a)(5)(F) of the Bankruptcy Code.
7.9 WITHHOLDING AND REPORTING REQUIREMENTS
In connection with the Plan and all distributions hereunder, the
Liquidating Trustee shall, to the extent applicable, comply with all tax
withholding and reporting requirements imposed by any federal, state,
provincial, local, or foreign taxing authority, and all distributions
hereunder shall be subject to any such withholding and reporting
requirements. The Liquidating Trustee shall be authorized to take any and
all actions that may be necessary or appropriate to comply with such
withholding and reporting requirements.
7.10 SETOFFS
The Liquidating Trustee may, but shall not be required to, set off
against any Allowed Claim, and the payments or other distributions to be
made pursuant to the Plan in respect of such Allowed Claim, claims, right
and causes of action of any nature whatsoever that the Liquidating Trustee
may have against the holder of such Allowed Claim; provided, however, that
neither the failure to do so nor the allowance of any Claim hereunder shall
constitute a waiver or release by the Liquidating Trustee of any such claim
that the Liquidating Trustee may have against such holder, including,
without limitation, any Litigation Claims. Nothing contained herein is
intended or shall be construed to limit or otherwise affect any claims,
defenses or rights of any Entity to setoff or recoupment. The Debtors, the
Liquidating Trustee and Reorganized Industries expressly reserve all such
claims, defenses and rights with respect to setoff and recoupment.
7.11 NO RECOURSE
Notwithstanding that the Allowed amount of any particular Claim may be
reconsidered under the applicable provisions of the Bankruptcy Code and
Bankruptcy Rules or Allowed in an amount for which there is insufficient
Cash in the relevant account to provide a recovery equal to that received
by other holders of Allowed Claims in the relevant Class, no such holder
shall have recourse to the Estates, the Bankruptcy Committees, the
Liquidating Trust, the Liquidating Trustee, the Post-Confirmation
Committee, Reorganized Industries or any of their respective professionals,
or their successors or assigns, or the holder of any other Claim, or any of
their respective property. Nothing in the Plan, however, shall modify any
right of a holder of a Claim under section 502(j) of the Bankruptcy Code.
7.12 TRANSACTIONS ON BUSINESS DAYS
If the Effective Date or any other date on which a transaction may
occur under the Plan shall occur on a day that is not a Business Day, the
transactions contemplated by the Plan to occur on such day shall instead
occur on the next succeeding Business Day and shall be deemed to have been
completed as of the required date.
7.13 NO DISTRIBUTION IN EXCESS OF ALLOWED AMOUNT OF CLAIM
Notwithstanding anything to the contrary herein, no holder of an
Allowed Claim shall receive in respect of such Claim any distribution in
excess of the Allowed amount of such Claim plus interest at the Plan Rate
from the Petition Date through the Effective Date plus Tax Distributions.
7.14 INTERCOMPANY ADVANCES
In the event that the Liquidating Trustee determines that there does
not exist sufficient Cash in the Estate of any Debtor (a "Benefited
Debtor") to make payments to all holders of Allowed Administrative Claims,
Allowed Priority Tax Claims and Allowed Class 1 Claims asserted against
such Benefited Debtor (or to deposit sufficient funds in Disputed Claims
Reserves for all Disputed Administrative Claims, Disputed Priority Tax
Claims and Disputed Class 1 Claims asserted against such Benefited Debtor),
then the Liquidating Trustee shall utilize Cash in the one or more of the
other Estates to make such payments or deposit such funds on behalf of the
Estate of such Benefited Debtor (such payments and deposits, the
"Intercompany Advances") and the Estate(s) of such Debtor(s) shall
thereupon have a direct right of reimbursement from the Estate of such
Benefited Debtor to the extent of the Intercompany Advances extended to
such Benefited Debtor (a "Reimbursement Right"). Except as otherwise
provided herein, the Liquidating Trustee shall ensure that all Intercompany
Advances are repaid prior to making any distributions to holders of Allowed
General Unsecured Claims asserted against such Benefited Debtor.
ARTICLE VIII
PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED CLAIMS AND
DISTRIBUTIONS WITH RESPECT THERETO
8.1 PROSECUTION OF OBJECTIONS TO CLAIMS
(a) Objections to Claims
All objections to Claims (other than Professional Fee Claims) and
Interests must be filed and served on the holders of such Claims and
Interests by the Objection Deadline.
(b) Authority to Prosecute Objections
From and after the Effective Date, the Liquidating Trustee shall have
the exclusive right to make and file and continue prosecution of objections
to the allowance, classification and/or amount of any Claim or Interest
with the Bankruptcy Court, and shall serve such objections upon holders of
each of the Claims and Interests to which objections are made by the
Objection Deadline. Subject to the terms of the Liquidating Trust
Agreement, the Liquidating Trustee is authorized and empowered, but not
required, to resolve consensually any disputes regarding the allowance,
classification and/or amount of any Claim or Interest. All objections by
the Liquidating Trustee shall be litigated to a Final Order except to the
extent the Liquidating Trustee, in his discretion, elects to withdraw any
such objection, or compromise, settle or otherwise resolve any such
objection, in which event the Liquidating Trustee may settle, compromise or
otherwise resolve any Disputed Claim or Interest without approval of the
Bankruptcy Court. Subject to the terms of the Liquidating Trust Agreement,
the Liquidating Trustee and the Post-Confirmation Committee shall establish
appropriate protocol for the prosecution, settlement, compromise,
withdrawal or litigation to judgment of all objections to Claims and
Interests.
8.2 TREATMENT OF DISPUTED CLAIMS; DISPUTED CLAIMS RESERVES
Subject to the provisions of Section 7.1 of the Plan and
notwithstanding any other provisions of the Plan or the Liquidating Trust
Agreement to the contrary, no payments or distributions will be made on
account of a Disputed Claim or Disputed Interest, or, if less than the
entire Claim or Interest is a Disputed Claim or Disputed Interest, the
portion of a Claim or Interest that is Disputed, until such Claim or
Interest becomes an Allowed Claim or Allowed Interest. On the Effective
Date or as soon as practicable thereafter, the Liquidating Trustee shall
reserve Cash in one or more Disputed Claims Reserves in an amount equal to
the Face Amount of: (i) Disputed Administrative Claims asserted against
each Debtor; (ii) Disputed Priority Tax Claims asserted against each
Debtor; and (iii) Disputed Claims in Classes 1, 2, 3, 4, 5, 6, 7, 10, 12,
14, 16 and 18; provided, however, that the Liquidating Trustee shall have
the right to file a motion with the Bankruptcy Court to estimate, reduce or
modify the amount to be reserved with respect to any such Disputed Claims.
Each Disputed Claims Reserve shall be established and maintained in
accordance with the provisions of the Plan and the Liquidating Trust
Agreement.
8.3 ESTIMATION
The Liquidating Trustee may, at any time, request that the Bankruptcy
Court estimate any contingent or unliquidated Claim pursuant to section
502(c) of the Bankruptcy Code regardless of whether the Debtors or the
Liquidating Trustee, as the case may be, have previously objected to such
Claim, and the Bankruptcy Court shall retain jurisdiction to estimate any
contingent or unliquidated Claim at any time, including during litigation
concerning any objection to such Claim. In the event that the Bankruptcy
Court so estimates any contingent or unliquidated Claim, that estimated
amount shall constitute either the Allowed amount of such Claim or a
maximum limitation on such Claim, as determined by the Bankruptcy Court. If
the estimated amount constitutes a maximum limitation on such Claim, the
Liquidating Trustee may elect to pursue any supplemental proceedings to
object to any ultimate payment of such Claim. All of the aforementioned
Claims objection, estimation and resolution procedures are cumulative and
not necessarily exclusive of one another. Claims may be estimated and
thereafter resolved by any permitted mechanisms.
ARTICLE IX
CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE PLAN
9.1 CONDITIONS TO EFFECTIVE DATE
The following are conditions precedent to the occurrence of the
Effective Date, each of which must be satisfied or waived in accordance
with this Section:
(a) The Confirmation Order shall have been entered and become a
Final Order in form and substance reasonably satisfactory to the
Debtors and the Bankruptcy Committees and shall provide that the
Debtors and the Liquidating Trustee are authorized and directed to
take all actions necessary or appropriate to enter into, implement and
consummate the contracts, instruments, releases, leases, indentures
and other agreements or documents created in connection with the Plan.
(b) All Plan Exhibits shall be in form and substance reasonably
acceptable to the Debtors and the Bankruptcy Committees and shall have
been executed and delivered.
(c) All actions, documents and agreements necessary to implement
the Plan shall have been effected or executed or are ready to be
executed.
(d) The Debtors shall have paid the then outstanding balances of
the Secured Lender Claims and the DIP Loan Claims in full.
(e) The closing of the sales of the Pork Business and the SF
Phosphate Interest shall have occurred.
(f) The closing of the sale of the Coffeyville Assets shall have
occurred.
(g) The Insurance Claim shall have been settled and paid in full.
(h) The Debtors shall have determined, in consultation with the
Bankruptcy Committees, that the occurrence of the Effective Date is in
the best interest of creditors and parties in interest.
9.2 WAIVER OF CONDITIONS
The requirement that the Confirmation Order must be a Final Order may
be waived by the Debtors, with the consent of the Bankruptcy Committees,
which consent shall not be unreasonably withheld. The requirement that the
closing of the sale of the Coffeyville Assets shall have occurred may be
waived by the Debtors, with the consent of the Bankruptcy Committees, which
consent shall not be unreasonably withheld, if the closing of the sale of
the Coffeyville Assets shall not have occurred by the closing date
established in connection with a Bankruptcy Court-approved sale of the
Coffeyville Assets.
9.3 NOTICE OF EFFECTIVE DATE
The Liquidating Trustee shall file and serve an appropriate notice of
the Effective Date within seven Business Days of the Effective Date.
ARTICLE X
RETENTION OF JURISDICTION
Under sections 105(a) and 1142 of the Bankruptcy Code, and
notwithstanding entry of the Confirmation Order and occurrence of the
Effective Date, the Bankruptcy Court shall retain exclusive jurisdiction
over all matters arising out of, and related to, the Chapter 11 Case and
the Plan to the fullest extent permitted by law, including, among other
things, jurisdiction to:
(a) Allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim or
Interest not otherwise allowed under the Plan, including the
resolution of any request for payment of any Administrative Claim and
the resolution of any objections to the allowance or priority of
Claims or Interests;
(b) Hear and determine all applications for compensation and
reimbursement of expenses of Professionals under the Plan or under
sections 330, 331, 503(b), 1103 and 1129(a)(4) of the Bankruptcy Code;
provided, however, that from and after the Effective Date, the payment
of the fees and expenses of the retained Professionals of the
Liquidating Trustee shall be made in the ordinary course of business
and shall not be subject to the approval of the Bankruptcy Court;
(c) Hear and determine all matters with respect to the assumption
or rejection of any executory contract or unexpired lease to which a
Debtor is a party or with respect to which a Debtor may be liable,
including, if necessary, the nature or amount of any required Cure or
the liquidation or allowance of any Claims arising therefrom;
(d) Effectuate performance of and payments under the provisions
of the Plan;
(e) Hear and determine any and all adversary proceedings,
motions, applications, and contested or litigated matters arising out
of, under, or related to, the Chapter 11 Case;
(f) Enter such orders as may be necessary or appropriate to
execute, implement, or consummate the provisions of the Plan and all
contracts, instruments, releases, and other agreements or documents
created in connection with the Plan, the Disclosure Statement or the
Confirmation Order;
(g) Hear and determine disputes arising in connection with the
interpretation, implementation, consummation, or enforcement of the
Plan, including disputes arising under agreements, documents or
instruments executed in connection with the Plan;
(h) Consider any modifications of the Plan, cure any defect or
omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including, without limitation, the Confirmation
Order;
(i) 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 implementation, consummation, or
enforcement of the Plan or the Confirmation Order;
(j) Enter and implement such orders as may be necessary or
appropriate if the Confirmation Order is for any reason reversed,
stayed, revoked, modified, or vacated;
(k) Hear and determine any matters arising in connection with or
relating 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, the Disclosure Statement
or the Confirmation Order;
(l) Enforce all orders, judgments, injunctions, releases,
exculpations, indemnifications and rulings entered in connection with
the Chapter 11 Case;
(m) Except as otherwise limited herein, recover all assets of the
Debtors and property of the Estates, wherever located;
(n) Hear and determine matters concerning state, local, and
federal taxes in accordance with sections 346, 505, and 1146 of the
Bankruptcy Code;
(o) Hear and determine such other matters as may be provided in
the Confirmation Order or as may be authorized under, or not
inconsistent with, provisions of the Bankruptcy Code; and
(p) Enter a final decree closing the Chapter 11 case.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 DEADLINE FOR FILING PROFESSIONAL FEE CLAIMS; OBJECTIONS TO
PROFESSIONAL FEE CLAIMS
All final requests for compensation or reimbursement for
Professionals pursuant to sections 327, 328, 330, 331, 503(b) or 1103
of the Bankruptcy Code for services rendered prior to the Effective
Date and Substantial Contribution Claims under section 503(b)(4) of
the Bankruptcy Code must be filed with the Bankruptcy Court and served
on the Liquidating Trustee and its counsel no later than 45 days after
the Effective Date, unless otherwise ordered by the Bankruptcy Court.
Objections to applications of such Professionals or other Entities for
compensation or reimbursement of expenses must be filed and served on
the Liquidating Trustee and its counsel and the requesting
Professional or other Entity no later than 30 days (or such longer
period as may be allowed by order of the Bankruptcy Court) after the
date on which the applicable application for compensation or
reimbursement was served.
11.2 DEADLINE FOR FILING ADMINISTRATIVE CLAIMS; OBJECTIONS TO
ADMINISTRATIVE CLAIMS
Other than as set forth in Section 11.1 of the Plan and except
with respect to payments payable in connection with the KERIT Plan,
all requests for payment of an Administrative Claim incurred prior to
the Effective Date must be filed with the Bankruptcy Court and served
on counsel for the Liquidating Trust and, if prior to the Effective
Date, counsel for the Debtors and each Bankruptcy Committee no later
than 30 days after the Effective Date. In the event that the Debtors
or the Liquidating Trustee, as the case may be, object to an
Administrative Claim, the Bankruptcy Court shall determine the Allowed
amount of such Administrative Claim.
11.3 PAYMENT OF STATUTORY FEES
All fees payable pursuant to section 1930 of Title 28 of the United
States Code, as determined by the Bankruptcy Court at the Confirmation
shall be paid on or before the Effective Date.
11.4 Modifications And Amendments
(a) The Debtors reserve the right (with the consent of the
Bankruptcy Committees in the case of material modifications or amendments),
and in accordance with the Bankruptcy Code and the Bankruptcy Rules, to
amend or modify the Plan and the Liquidating Trust Agreement at any time
prior to the entry of the Confirmation Order. After the entry of the
Confirmation Order, the Debtors (subject to consent of the Bankruptcy
Committees and the administrative agent under the Pre-Petition Credit
Agreement, which consent shall not be unreasonably withheld) may amend or
modify the Plan and the Liquidating Trust Agreement, in accordance with
Section 1127 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. A holder of an Allowed
Claim or Allowed Interest that is deemed to have accepted the Plan shall be
deemed to have accepted the Plan as modified if the proposed modification
does not materially and adversely change the treatment of the Claim or
Interest of such holder. In addition, the Plan shall be deemed
automatically amended and modified to the extent determined necessary by
the Bankruptcy Court to comply with the DIP Credit Agreement.
(b) In the event that any Impaired Class shall not accept the
Plan, at the written election of the Debtors (with the consent of the
Bankruptcy Committees, which consent shall not be unreasonably withheld)
filed with the Bankruptcy Court with respect to any one or more of said
nonaccepting Classes and any Classes junior to such nonaccepting Classes,
the Plan shall be modified and amended automatically and without further
notice to provide such treatment, as determined necessary by the Bankruptcy
Court, sufficient to assure that the Plan does not discriminate unfairly,
and is fair and equitable, with respect to the Classes rejecting the Plan,
and, in particular, the treatment necessary to meet the requirements of
Sections 1129(a) and (b) of the Bankruptcy Code with respect to (i) the
rejecting Classes and (ii) any other Classes adversely affected by such
modifications. In particular, the treatment of any nonaccepting Classes or
adversely affected Classes shall be modified and amended from that set
forth in Article III, even if less favorable, to the minimum treatment
necessary to meet the requirements of sections 1129(a) and (b) of the
Bankruptcy Code.
11.5 SEVERABILITY OF PLAN PROVISIONS
If, prior to Confirmation, any term or provision of the Plan is held
by the Bankruptcy Court to be invalid, void or unenforceable, the
Bankruptcy Court, at the request of any Debtor, 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 shall remain in full
force and effect and shall 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.
11.6 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.
11.7 NO DISCHARGE
The Confirmation Order shall not discharge any Debtor from any debt or
liability that arose before Confirmation, as provided in section 1141(d)(3)(A)
of the Bankruptcy Code.
11.8 RELEASE OF ASSETS
Until the Effective Date, the Bankruptcy Court shall retain
jurisdiction over the Debtors, their assets and properties. Thereafter,
jurisdiction of the Bankruptcy Court shall be limited to the subject
matters set forth in Article X of the Plan, and Liquidating Trustee shall
perform its duties and obligations pursuant to the Liquidating Trust
Agreement and the Plan.
11.9 EXCULPATION AND LIMITATION OF LIABILITY
(a) Subject to limitations required by applicable ethical rules
and standards of conduct, and except as limited in Section 11.9(b) below,
none of the Debtors, the Liquidating Trust, the Liquidating Trustee, the
Bankruptcy Committees, the Indenture Trustees, the Lenders, the financial
institutions party to the DIP Credit Agreement, nor any of their respective
present or former members, officers, directors, employees, advisors, or
attorneys shall have or incur any liability to any holder of a Claim or an
Interest, or any other party in interest, or any of their respective
agents, employees, representatives, financial advisors, attorneys, or
affiliates, or any of their successors or assigns, for any act or omission
from and after the Petition Date in connection with, relating to, or
arising out of, the Chapter 11 Case, the commencement of the Chapter 11
Case, the administration of the Chapter 11 Case, the pursuit of and the
approval of the sales of the Debtors' assets (and the related asset
purchase agreement), the formulation, negotiation or implementation of the
Plan, the solicitation of acceptances of the Plan, the pursuit of
confirmation of the Plan, the confirmation of the Plan, the consummation of
the Plan, or the administration of the Plan or the property to be
distributed under the Plan, except for their gross negligence or willful
misconduct; provided, however, any present or former officer or director of
any Debtors shall be liable to any holder of a Claim or Interest, or any
other party in interest, or any of their successor or assigns, for: (i) any
breach of such person's duty of loyalty to the Debtors, (ii) any act or
omission not in subjective good faith or which involves intentional
misconduct or a knowing violation of law, and (iii) any transaction for
which such person derived an improper benefit, and in all respects such
persons shall be entitled to reasonably rely upon the advice of the
Debtors' counsel (including in-house counsel) with respect to their duties
and responsibilities under the Plan. In addition, the Indenture Trustees
under the Demand Certificates and the Subordinated Certificates shall not
have or incur any liability to any holder (registered or unregistered) of
any Demand Certificate or Subordinated Certificate or any claim based on
any Demand Certificate or Subordinated Certificate as a result of any
inaccuracy or mistake in the books and records of Industries (in their
capacities as paying agents and registrars under the Trust Indentures for
the Demand Certificates and the Subordinated Certificates).
(b) The exculpatory provisions contained in Section 11.9(a) of
the Plan (i) shall not limit the claims and rights, if any, of the United
States, and (ii) shall apply to any person or entity who was not the
beneficiary of a post-petition indemnification obligation of the Debtors
only to the extent provided in Section 11.9(c).
(c) Any claims that would otherwise be subject to the exculpatory
provisions contained in Section 11.9(a) but for the provisions of Section
11.9(b)(ii) may only be asserted in the Bankruptcy Court and only if filed
on or before ninety days after the Effective Date. In the event that any
such claims are not filed timely in the Bankruptcy Court, the exemption
contained in Section 11.9(b)(ii) shall be terminated with respect to such
claims, and such claims shall be deemed subject to the exculpatory
provisions contained in Section 11.9(a).
(d) Any non-exculpated claims against the parties set forth in
Section 11.9(a) arising from or related to the matters set forth in Section
11.9(a) may only be asserted and filed in the Bankruptcy Court.
(e) The Bankruptcy Court shall retain exclusive jurisdiction to
determine all matters arising from or related to claims against the parties
set forth in Section 11.9(a) that arise from or relate to the matters set
forth in Section 11.9(a).
11.10 BINDING EFFECT
Except as otherwise provided in section 1141(d)(3) of the Bankruptcy
Code, on and after the Confirmation Date, the provisions of the Plan shall
be binding upon and inure to the benefit of the Debtors, all present and
former holders of Claims against and Interests in the Debtors, their
respective successors and assigns, including, but not limited to, the
Liquidating Trust, the Liquidating Trustee and all other
parties-in-interest in this Chapter 11 Case.
11.11 REVOCATION, WITHDRAWAL, OR NON-CONSUMMATION
The Debtors reserve the right to revoke or withdraw the Plan at any
time prior to the Effective Date and to file subsequent plans of
reorganization; provided, however, that any revocation or withdrawal of the
Plan after the Confirmation Date shall be with the consent of the
Bankruptcy Committees and the administrative agent under the Pre-Petition
Credit Agreement, which consent shall not be unreasonably withheld. If the
Debtors revoke or withdraw the Plan, or if Confirmation or consummation
does not occur, then (a) the Plan shall be null and void in all respects,
(b) any settlement or compromise embodied in the Plan (including the fixing
or limiting to an amount certain any Claim or Class of Claims), assumption
or rejection of executory contracts or leases effected by the Plan, and any
document or agreement executed pursuant to the Plan shall be deemed null
and void, and (c) nothing contained in the Plan, and no acts taken in
preparation for consummation of the Plan, shall (x) constitute or be deemed
to constitute a waiver or release of any Claims by or against, or any
Interests in, any Debtor or any other Entity, (y) prejudice in any manner
the rights of any Debtor or any Entity in any further proceedings involving
a Debtor, or (z) constitute an admission of any sort by any Debtor or any
other Entity.
11.12 PLAN EXHIBITS
Any and all Plan Exhibits, or other lists or schedules not filed with
the Plan, shall be filed with the Clerk of the Bankruptcy Court at least
five Business Days prior to the date of the commencement of the hearing on
the approval of the Disclosure Statement and shall be actually provided to
all parties identified in Section 11.13 at the addresses provided in such
Section at least five Business Days prior to the date of the commencement
of the hearing on the approval of the Disclosure Statement. Upon such
filing, such documents may be inspected in the office of the Clerk of the
Bankruptcy Court during normal court hours. Holders of Claims or Interests
may obtain a copy of any such document upon written request to the Debtors
in accordance with Section 11.13 of the Plan.
11.13 NOTICES
Any notice, request, or demand required or permitted to be made or
provided to or upon a Debtor or the Liquidating Trustee under the Plan
shall be (a) in writing, (b) served by (i) certified mail, return receipt
requested, (ii) hand delivery, (iii) overnight delivery service, (iv) first
class mail, or (v) facsimile transmission, and (b) deemed to have been duly
given or made when actually delivered or, in the case of notice by
facsimile transmission, when received and telephonically confirmed,
addressed as follows:
FARMLAND INDUSTRIES, INC., et al.
12200 North Ambassador Drive
Kansas City, Missouri 64163-1244
Attn: Chief Executive Officer
Telephone: (816) 713-7000
Facsimile: (816) 713-6397
with a copy to:
BRYAN CAVE LLP
1200 Main Street, Suite 3500
Kansas City, Missouri 64105
Attn: Laurence M. Frazen
Telephone: (816) 374-3200
Facsimile: (816) 374-3300
and
O'MELVENY & MYERS LLP
400 South Hope Street
Los Angeles, California 90071-2899
Attn: Evan M. Jones, Esq.
Telephone: (213) 430-6236
Facsimile: (213) 430-6407
and
AKIN GUMP STRAUSS HAUER & FELD LLP
1900 Pennzoil Place - South Tower
711 Louisiana
Houston, Texas 77002
Attn: S. Margie Venus, Esq.
Telephone: (713) 220-5800
Facsimile: (713) 236-0822
and
HUSCH & EPPENBERGER
1200 Main Street, Suite 1700
Kansas City, Missouri 64105
Attn: Christopher Redmond, Esq.
Telephone: (816) 421-4800
Facsimile: (816) 421-0596
and
FOLEY & LARDNER
321 North Clark Street
Suite 2800
Chicago, Illinois 60610-4764
Attn: Michael Small, Esq.
Telephone: (312) 832-4500
Facsimile: (312) 832-4700
and
POLSINELLI SHALTON & WELTE
700 W. 47th Street, Suite 1000
Kansas City, Missouri 64112-1808
Attn: Daniel J. Flanigan, Esq.
James E. Bird, Esq.
Telephone: (816) 753-1000
Facsimile: (816) 753-1536
11.14 DISSOLUTION OF THE BANKRUPTCY COMMITTEES
On the Effective Date, the Bankruptcy Committees will dissolve and
their respective members (only in their capacity as members of the
Bankruptcy Committees) will be released and discharged from all further
authority, duties, responsibilities and obligations arising from or related
to the Chapter 11 Case. The members of the Bankruptcy Committees and the
Professionals retained by the Bankruptcy Committees will not be entitled to
compensation or reimbursement of expenses for any services rendered to the
Bankruptcy Committees after the Effective Date.
11.15 TERM OF INJUNCTIONS OR STAYS
Unless expressly modified or lifted by the Bankruptcy Court, all
injunctions or stays provided for in the Chapter 11 Case, including in the
Confirmation Order, under sections 105 or 362 of the Bankruptcy Code or
otherwise, and extant on the Confirmation Date (excluding any injunctions
or stays contained in the Plan or the Confirmation Order), shall remain in
full force and effect until the Final Distribution Date.
11.16 HEADINGS
Headings are used in the Plan for convenience and reference only, and
shall not constitute a part of the Plan for any other purpose
[Remainder of Page Blank]
Dated: October 31, 2003
FARMLAND INDUSTRIES, INC.
FARMLAND FOODS, INC.
SFA, INC.
FARMLAND TRANSPORTATION, INC.
FARMLAND PIPE LINE COMPANY
By: /s/ Robert B. Terry
------------------------------
Name: Robert B. Terry
Title: Authorized Signatory
Laurence M. Frazen, Esq.
Cynthia Dillard Parres, Esq.
Robert M. Thompson, Esq.
BRYAN CAVE LLP
1200 Main Street, Suite 3500
Kansas City, Missouri 64105
Gregory D. Willard, Esq.
David M. Unseth, Esq.
Cullen K. Kuhn, Esq.
BRYAN CAVE LLP
211 North Broadway, Suite 3600
St. Louis, Missouri 63102-2750
Attorneys for the Debtors and Debtors-in-Possession
PLAN EXHIBIT A
--------------
Liquidating Trust Agreement(1)
- -------------------------
(1) The Debtors reserve their right, at any time prior to the Confirmation
Date, to amend Plan Exhibit A and to provide notice of any such
amendments to the Bankruptcy Court.
FI LIQUIDATING TRUST AGREEMENT
------------------------------
This FI Liquidating Trust Agreement (the "Agreement"), dated as of
___________ 2003 (the "Effective Date"), by and among Farmland Industries,
Inc., both in its own capacity and as successor in interest to Farmland
Foods, Inc., Farmland Transportation, Inc., SFA, Inc. and Farmland Pipe
Line Company (collectively, the "Debtors") and __________, as trust
administrator (together, with any successor appointed under the terms
hereof, the "Trustee"), provides for the establishment of a liquidating
trust evidenced hereby (the "FI Liquidating Trust") for the sole benefit of
the Beneficiaries (as defined below). This Agreement is being entered into
in connection with the Chapter 11 Debtors' First Amended Joint Plan of
Liquidation dated July 31, 2003 as may be subsequently amended (the
"Plan"), filed in the Debtors' cases under chapter 11 of title 11 of the
United States Code (the "Bankruptcy Code") pending in the United States
Bankruptcy Court for the Western District of Missouri (the "Bankruptcy
Court") and the order entered by the Bankruptcy Court confirming the Plan
(the "Confirmation Order").
RECITALS
--------
WHEREAS, the FI Liquidating Trust is established pursuant to section
5.4 of the Plan for the sole purpose of liquidating and distributing the
Trust Assets (as defined below) for the benefit of the Beneficiaries (as
defined below), as a liquidating trust in accordance with 26 C.F.R. ss.
301.7701-4(d) and Revenue Procedure 94-45, 1994-28 C.B. 124, with no
objective to continue or engage in the conduct of a trade or business
except to the extent reasonably necessary to, and consistent with, the
liquidating purpose of the FI Liquidating Trust; and
WHEREAS, the Confirmation Order having been entered on __________, 2003;
and
WHEREAS, the FI Liquidating Trust is intended to qualify as a "grantor
trust" for U.S. federal income tax purposes, pursuant to sections 671-677
of the Internal Revenue Code of 1986, as amended (the "Code"), with the
Beneficiaries (as defined below) treated as the grantors and owners of the
Trust Assets; and
WHEREAS, the Trustee has agreed to act as Trustee under this Agreement
and to manage the Trust as Trustee upon and subject to the terms and
conditions set forth herein, in the Plan, and in the Confirmation Order;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, the Debtors and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following initially capitalized terms shall have
the meanings ascribed to them below for all purposes under this Agreement.
All initially capitalized terms not otherwise defined in this Agreement
shall have the meanings given to them in the Plan. All initially
capitalized terms not otherwise defined in this Agreement or the Plan shall
have the meanings given them in the Bankruptcy Code.
"Avoidance Actions" means any avoidance actions under Chapter 5 of the
Bankruptcy Code or any applicable state law.
"Beneficiaries" means holders of Allowed Claims and Allowed Class 11
Interests.
"Business Day" means any day except for Saturday, Sunday or a "legal
holiday" (as defined in Fed. R. Bankr. P. 9006(a)).
"Cash" means legal tender of the United States or equivalents thereof.
"Claim" means a Claim (as such term is defined in the Plan) against
the Debtors, or any of them, whether or not asserted, as defined in section
101 of the Bankruptcy Code.
"Class 11 Interests" means those Interests of Farmland Foods
classified under the Plan as Class 11.
"Code" is defined in the third recital hereof.
"Deemed Tax Amount" means the amount, determined by the Trustee with
respect to each Beneficiary on a consistent basis, of the estimated federal
income tax obligation which such Beneficiary can be reasonably anticipated
to incur with respect to the net taxable income of the FI Liquation Trust,
taking into consideration all deductions, credit, or losses otherwise
allocable to such Beneficiary.
"Disputed Claim" means, with respect to a Claim, such Claim or any
portion thereof that is not an Allowed Claim, and includes, without
limitation, Claims (other than Allowed Claims) that (a) have not been
listed on the Schedules or have been listed on the Schedules at zero, or as
contingent, unliquidated or disputed, or (b) are subject to an objection
filed in the Bankruptcy Court and which objection has not been withdrawn or
overruled by a Final Order of the Bankruptcy Court.
"Disputed Claims Reserve" means, in the event there exists any
Disputed Claims on or after the Effective Date, Cash, reserved by the
Liquidating Trust in separate interest bearing accounts for the following:
(i) Disputed Administrative Claims asserted against each Debtor; (ii)
Disputed Priority Tax Claims asserted against each Debtor; and (iii)
Disputed Claims in each Class for which distributions are contemplated by
the Plan; all in accordance with the provisions of the Plan and this
Agreement and to be maintained under the Plan and this Agreement.
"Distribution" means any distribution made to holders of Allowed
Claims or Allowed Class 11 Interests under the Plan or this Agreement.
"IRS" means the United States Internal Revenue Service.
"Liquidating Trust Administrative Reserve" is defined in section
4.2(b).
"Objection Deadline" means the last day for filing Disputed Claims
(other than Disputed Professional Fee Claims) or Disputed Interests, which
day shall be 180 days after the Effective Date, unless such date is
extended by the Bankruptcy Court upon request by the Trustee.
"Permitted Investments" is defined in section 3.4(vi).
"Person" means a "person" as defined in section 101 of the Bankruptcy
Code.
"Post Confirmation Committee" means the committee appointed in
accordance with the Plan, which shall oversee the operation of the FI
Liquidating Trust and have the duties and responsibilities specified in the
Plan and in Section 2.4 of this Agreement.
"Priority Claim" means a Claim against the Debtors that is an
Administrative Claim, a Priority Tax Claim, a DIP Loan Claim or an Other
Priority Claim.
"Remaining Assets" means those Trust Assets remaining in or
transferable to the FI Liquidating Trust following the payment of all
Allowed Secured Claims and Allowed Priority Claims.
"Tax Distribution" means a Distribution to a Beneficiary made with
respect to any net taxable income of the Trust which is allocated to such
Beneficiary for United States federal income tax purposes.
"Termination Date" is defined in section 8.1.
"Treasury Regulation" means the United States Treasury regulations,
including any temporary regulations from time to time promulgated under the
Code.
"Trust Assets" means all property and assets of each Estate and
Reorganized Industries as and when required by the Plan to be transferred
to the FI Liquidating Trust
ARTICLE II
ESTABLISHMENT OF THE FI LIQUIDATING TRUST
2.1 Transfer of Assets to FI Liquidating Trust.
------------------------------------------
(a) The Debtors and the Trustee hereby establish the FI
Liquidating Trust on behalf, and for the sole and exclusive benefit,
of the Beneficiaries. On the date hereof, the Debtors shall deliver to
the FI Liquidating Trust the Trust Assets required to be transferred
to the FI Liquidating Trust on the Effective Date, for the benefit and
on behalf of the Beneficiaries, pursuant to sections 7.1 and 7.7 of
the Plan. The Debtors agree to make, and the Trustee agrees to accept,
additional transfers of the Trust Assets to the FI Liquidating Trust
consistent with the terms of the Plan. The Trustee hereby agrees to
accept and hold the Trust Assets in the FI Liquidating Trust for the
sole and exclusive benefit of the Beneficiaries, subject to the terms
of this Agreement and the Plan. Following the transfer of the Trust
Assets to the FI Liquidating Trust, the Debtors shall have no interest
in, or with respect to, the Trust Assets.
(b) The Trust Assets shall be valued consistently pursuant to
section 6.2 of this Agreement, and those valuations shall be used for
all U.S. federal income tax purposes.
(c) Reorganized Industries shall retain only such books and
records as are necessary to manage the Industries Retained Assets, the
Industries Transferred Assets, any Rejected Assets and its corporate
affairs. All other books and records of the Debtors shall be
transferred to the FI Liquidating Trust. The FI Liquidating Trust and
Reorganized Industries shall provide reasonable access to the books
and records in its possession to each other as may be necessary to
effectuate the Plan and the transactions contemplated by the Plan. Any
attorney-client privilege, work-product privilege or other privilege
or immunity attaching to any documents or communications (whether
written or oral) transferred to the FI Liquidating Trust shall vest
exclusively in the Trustee and his representatives, and the Trustee is
authorized to take all necessary actions to effectuate the transfer of
such privileges. After the Effective Date, no person other than the
Trustee may assert or waive any privilege of the Debtors or any Estate
or to make any admission or statement against interest respecting the
Debtors or any Estate.
(d) The FI Liquidating Trust is irrevocable.
2.2 Intention of Parties. All parties (x) intend to create a
liquidating trust in accordance with Treasury Regulation ss.
301.7701-4(d) and Revenue Procedure 94-45, 1994-28 C.B. 124, which
shall be treated as a grantor trust for United States federal income
tax purposes pursuant to sections 671-677 of the Code, and (y) agree
that the transfer of the Trust Assets by the Debtors to the FI
Liquidating Trust shall be treated for federal income tax purposes as
a taxable sale or exchange of the Trust Assets (other than Cash) by
the Debtors to the Beneficiaries and a transfer from the Beneficiaries
to the FI Liquidating Trust. The Beneficiaries shall be treated as the
grantors and owners of a grantor trust for U.S. federal income tax
purposes. More particularly, for U.S. federal income tax purposes:
(a) Each Beneficiary holding an Allowed Secured Claim or an
Allowed Priority Claim that is not fully paid on the Effective
Date shall be deemed to have received from the Debtors on the
Effective Date, and immediately contributed to the FI Liquidating
Trust, an amount of Cash equal to the amount of such
Beneficiary's Claim that was not actually paid on the Effective
Date.
(b) Each Beneficiary holding an Allowed Claim or Allowed
Class 11 Interest that is not an Allowed Secured Claim or an
Allowed Priority Claim shall be deemed (1) to have received from
the Debtors on the Effective Date, and immediately contributed to
the FI Liquidating Trust, an interest in Remaining Assets equal
to its pro rata interest in the Remaining Assets and (ii) to
receive from the Debtors on each subsequent date on which the
Debtor makes a transfer to the FI Liquidating Trust and to have
immediately contributed to the FI Liquidating Trust its pro rata
portion of the assets so transferred by the Debtors.
2.3 Purposes of the FI Liquidating Trust. Subject to section 8.1, the
FI Liquidating Trust shall continue in existence so long as necessary for
the purpose of liquidating the Trust Assets, in accordance with Treasury
Regulation ss. 301.7701-4(d), with no objective to continue or engage in
the conduct of a trade or business except to the extent reasonably
necessary to, and consistent with, the liquidating purpose of the FI
Liquidating Trust. Consistent with such objective, the Trustee, in an
orderly manner and subject to the provisions of the Plan and this
Agreement, shall:
(a) make all Distributions under the Plan and this Agreement;
(b) satisfy its obligations under the Plan and this
Agreement, including, but not limited to, those specifically set
forth in sections 5.4(a)(b) and 7.1 of the Plan;
(c) enforce and prosecute the Litigation Claims, and other
claims, interests, rights and privileges of the Debtors,
including, but not limited to, the prosecution of Avoidance
Actions;
(d) on a timely basis under the Plan, object to Claims and
Class 11 Interests asserted against the Debtors;
(e) litigate or resolve Disputed Claims and Disputed Class
11 Interests;
(f) administer the Plan; and
(g) file appropriate tax returns in accordance with section
6.2.
2.4 The Post Confirmation Committee.
-------------------------------
(a) The Post Confirmation Committee shall consist of four
members. Each Bankruptcy Committee shall appoint two persons to
serve on the Post Confirmation Committee. Decisions of the Post
Confirmation Committee shall require at least three votes in
favor of or against the matter proposed. The Trustee shall report
to and consult with, and as determined herein or as otherwise
requested by the Post Confirmation Committee, shall follow the
instructions of the Post Confirmation Committee with regard to
the implementation of the Plan. If three votes cannot be obtained
in favor of or against the Trustee's proposal, the Trustee may
seek the Court's approval of the proposal without further voting
by the Post Confirmation Committee. The Trustee shall render
monthly written reports to the Post Confirmation Committee.
(b) If a member of the Post Confirmation Committee sells,
transfers or assigns its Claim, such member shall be immediately
removed.
(c) If a member of the Post Confirmation Committee resigns
or is removed pursuant to Section 2.4(b) of this Agreement, the
remaining members of the Post Confirmation Committee shall elect
a replacement member who must be the holder of the same class of
claim as the resigning or removed member of the Post Confirmation
Committee.
(d) The Post Confirmation Committee may retain the services
of attorneys, accountants and other agents that, in the
discretion of the Post Confirmation Committee, are necessary to
assist the Post Confirmation Committee in the performance of its
duties. The reasonable fees and expenses of such professionals
shall be paid by the FI Liquidating Trust upon the monthly
submission of statements to the Trustee and the Post Confirmation
Committee. The payment of the reasonable fees and expenses of the
Post Confirmation Committee's retained professional shall be made
in the ordinary course of business from the FI Liquidating Trust
and shall not be subject to the approval of the Bankruptcy Court.
(e) The Post Confirmation Committee shall monitor the
performance by the Trustee of its obligations under the Plan and
this Agreement. The Post Confirmation Committee shall also review
and either approve or reject:
(i) budgets for the FI Liquidating Trust that the
Trustee may be required or requested to prepare and submit
to the Post Confirmation Committee;
(ii) proposals by the Trustee to modify the Plan;
(iii) proposals by the Trustee to set or postpone the
scheduled date of a Distribution to holders of Allowed
Claims or Allowed Class 11 Interests;
(iv) proposals by the Trustee to sell, abandon or
otherwise transfer non-cash Trust Assets;
(v) proposals by the Trustee to retain professionals,
employees or agents to assist in the administration of the
Fl Liquidating Trust;
(vi) proposals by the Trustee with respect to
initiation and prosecution of litigation, including but not
limited to, objections to Claims, Class 11 Interests and
Litigation Claims; and
(vii) proposals by the Trustee with respect to
disposition and settlement of any Claim, Class 11 Interest
or Litigation Claim, including any Avoidance Action,
provided, however, that the Post Confirmation Committee may
designate parameters within with the Trustee need not seek
approval for settlement of Claims, Class 11 Interests or
Litigation Claims;
(f) Except as otherwise specifically provided herein and in the
Plan, members of the Post Confirmation Committee shall not be held
personally liable for any claim asserted against the FI Liquidating
Trust, the Trustee, the Trustee's employees, the Post Confirmation
Committee's employees, any of the Trustee's professionals or
representatives or any of the Post Confirmation Committee's
professionals or representatives. Without limiting the generality of
the foregoing, the members of the Post Confirmation Committee shall
not be liable for any error of judgment with respect to their
oversight of the FI Liquidating Trust and/or the activities of the
Trustee made in good faith, or with respect to any action taken or
omitted to be taken in good faith, except for actions or omissions to
act that are due to gross negligence, willful misconduct or
intentional fraud.
(g) The members of the Post Confirmation Committee shall be and
hereby are exculpated by all Persons from any and all claims, causes
of action and other assertions of liability arising out of the
discharge of the powers and duties conferred upon the members of the
Post Confirmation Committee or any of the Post Confirmation Committee
members' professionals or representatives by this Agreement or
applicable law or otherwise, except for actions or omissions to act
that are due to gross negligence, willful misconduct or fraud after
the date hereof. The FI Liquidating Trust shall indemnify, defend and
hold harmless the members of the Post Confirmation Committee and their
professionals or representatives from and against any and all claims,
causes of action, liabilities, obligations, losses, damages or
reasonable expenses (including reasonable attorneys' fees and
expenses) (other than and only to the extent due to such Post
Confirmation Committee member's or such professionals' or
representatives' gross negligence, willful misconduct or intentional
fraud) to the fullest extent permitted by applicable law.
(h) The duties, responsibilities and powers of the members of the
Post Confirmation Committee to oversee the FI Liquidating Trust and/or
the activities of the Trustee shall terminate on the date the FI
Liquidating Trust is dissolved pursuant to Article VIII of this
Agreement and section 7.9 of the Plan, provided that paragraphs (d)
and (e) of this section 2.4 shall survive such termination,
dissolution and entry.
ARTICLE III
TRUSTEE
3.1 Appointment. The Debtors hereby designate _____________ to serve
as the initial Trustee, and ____________ hereby accepts such appointment
and agrees to serve in such capacity, effective as of the date hereof.
3.2 Generally. The Trustee's powers are exercisable solely in a
fiduciary capacity consistent with, and in furtherance of, the purposes of
the FI Liquidating Trust and not otherwise. The Trustee shall have the
authority to bind the FI Liquidating Trust, but shall for all purposes
hereunder be acting in the capacity as Trustee, and not individually. The
Trustee shall owe a fiduciary duty to the Beneficiaries.
3.3 Rights and Powers of the Trustee.
--------------------------------
(a) The Trustee shall have all the rights, powers and duties
necessary to carry out its responsibilities under the Plan and this
Agreement.
(b) In exercising its rights and powers and carrying out its
duties under the Plan and this Agreemert, upon the approval of the
Post Confirmation Committee, the Trustee shall have the authority to
retain such professionals (including, without limitation, disbursing
and transfer agents, legal counsel and/or other agents or advisors) on
the Trustee's own behalf and on behalf of the Trust, as the Trustee
deems appropriate and compensate such professionals from the Trust
Assets on customary terms reasonably acceptable to the Trustee and the
Post Confirmation Committee, without any requirement of approval by
the Bankruptcy Court, subject to the terms of section 3.8 of this
Agreement. Professionals so retained are not required to be
"disinterested persons" (as such term is defined in the Bankruptcy
Code) and may include, without limitation, counsel or financial
advisors to the Debtors, the Bankruptcy Committees, or any member of
the Bankruptcy Committees.
3.4 Scope of Trustee's Duties. The duties of the Trustee shall
include, but shall not be limited to:
(i) considering, pursuing and to the extent the Trustee deems
advisable, with the approval of the Post Confirmation Committee,
settling, abandoning, selling or assigning any of the Litigation
Claims, including, but not limited to, the Avoidance Actions.
(ii) preparing and submitting a proposed budget of expenses and,
to the extent feasible, anticipated recoveries of cash, for the nine
months following the Effective Date. The Trustee shall present such
additional budgets as are requested by the Post Confirmation
Committee, which shall be subject to the approval of the Post
Confirmation Committee.
(iii) preparing and submitting to the Post Confirmation Committee
such additional budgets as may be required by the Post Confirmation
Committee.
(iv) preparing and submitting to the Post Confirmation Committee
a monthly report of Cash held in the FI Liquidating Trust.
(v) operating within approved budgets as they may be modified
with the consent of the Post Confirmation Committee.
(vi) investing the Cash held in the Liquidating Trust in
accordance with the terms of Section 5.3 of the Plan (collectively,
the "Permitted Investments"); provided, however, that the scope of the
Permitted Investments shall be limited to include only those
investments that a liquidating trust, within the meaning of Treasury
Regulation ss. 301.7701-4(d), maybe permitted to invest in, pursuant
to the Treasury Regulations and Rev. Proc. 94-45, 1994-28 C.B. 124, or
any modification in IRS guidelines, whether set forth in IRS rulings,
other IRS pronouncements or otherwise.
(vii) calculating and paying all Distributions to be made under
the Plan and other orders of the Bankruptcy Court to holders of
Allowed Claims and Allowed Class 11 Interests.
(viii) to the extent the Trustee deems advisable, with the
approval of the Post Confirmation Committee, litigating and settling
(with the approval of the Post Confirmation Committee) all objections
to Claims and Class 11 Interests, except that the Trustee has the
authority to settle without first consulting the Post Confirmation
Committee (a) any Priority Claim if the allowed amount of such Claim
is less than $15,000.00 and (b) any unsecured Claim if the allowed
amount of such Claim is less than $250,000.00, unless otherwise
instructed by the Post Confirmation Committee after a minimum
three-fourths vote.
(ix) taking all other actions necessary or appropriate to
implement or consummate the Plan and/or this Agreement, including,
without limitation, all actions necessary to fulfill the Debtors'
obligations under the KERIT Plan.
(x) reviewing and objecting to Claims and Class 11 Interests as
appropriate, and resolving all Disputed Claims and Disputed Class 11
Interests.
(xi) filing any and all tax and information returns with respect
to the FI Liquidating Trust consistent with the treatment of the FI
Liquidating Trust as a grantor trust pursuant to Treasury Regulation
ss. 1.671-4(a) and paying taxes properly payable by the FI Liquidating
Trust, if any, and making Distributions, including Tax Distributions,
to Beneficiaries net of any such taxes.
(xii) complying with the provisions of the Plan.
(xiii) such other responsibilities as may be necessary and proper
to carry out the provisions of this Agreement.
3.5 Limitation of Trustee's Authority.
---------------------------------
(a) Except as otherwise provided in the Plan and the Confirmation
Order, the Trustee shall not and is not authorized to engage in any
trade or business with respect to the Trust Assets or any proceeds
therefrom or take any action, except to the extent reasonably
necessary to, and consistent with, the liquidating purpose of the FI
Liquidating Trust or as permitted under this Agreement, and shall take
such actions consistent with the orderly liquidation of the Trust
Assets as is required by applicable law and consistent with the
treatment of the FI Liquidating Trust as a liquidating trust under
Treasury Regulation ss.301.7701-4(d) and Revenue Procedure 94-45,
1994-28 C.B. 124, and such actions permitted herein.
(b) The Trustee shall take specific actions upon the receipt of
directions and instructions from the Post Confirmation Committee. The
Trustee may rely and act upon the directions and instructions of the
Post Confirmation Committee given in accordance with and pursuant to
this Agreement, and the Trustee shall not be liable for any action
taken or omitted to be taken by it in reliance upon such directions
and instructions.
3.6 Liability of Trustee.
--------------------
(a) Except as otherwise specifically provided herein, the
Trustee, the Trustee's employees and the Trustee's professionals or
representatives shall not be held personally liable for any claim
asserted against the FI Liquidating Trust, the Trustee, the Trustee's
employees, the Post Confirmation Committee's members, any of the
Trustee's professionals or representatives or any of the Post
Confirmation Committee's professionals or representatives. Without
limiting the generality of the foregoing, the Trustee, the Trustee's
employees and any of the Trustee's professionals or representatives
shall not be liable for any error of judgment made in good faith, or
with respect to any action taken or omitted to be taken in good faith,
except for actions or omissions to act that are due to gross
negligence, willful misconduct or intentional fraud.
(b) The Trustee shall not be liable for interest or obligated to
produce income on any moneys received by the FI Liquidating Trust
hereunder and held for Distribution or payment to the Beneficiaries,
except as such interest or other income shall actually be received by
the Trustee.
(c) Nothing in this Section 3.6 shall be deemed to protect the
Trustee from personal liability with respect to the assessment of
fines or penalties against the Trustee which may be assessed by any
government agency for failure to comply with applicable law.
3.7 Reliance by Trustee.
-------------------
(a) Except as otherwise provided in sections 2.4 and 3.6 hereof
(i) the Trustee may rely, and shall be protected in acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, or other paper or document believed
by it to be genuine and to have been signed or presented by the proper
party or parties; and (ii) the Trustee may consult with accounting
advisors and other professionals to be selected by it, and the Trustee
shall not be liable for any action taken or omitted to be taken by it
in accordance with the advice thereof
(b) If the Trustee is unsure of the application of any provision
of this Agreement or any other agreement relating to the transactions
contemplated hereby, the Trustee may consult with the Post
Confirmation Committee and request and rely upon the instructions of
the Post Confirmation Committee; provided, however, that if the
Trustee shall not have received instructions from the Post
Confirmation Committee within fifteen (15) days after the date of such
request, until instructed otherwise, the Trustee may, but shall be
under no duty to, take or refrain from taking such action as it shall
deem advisable in the best interests of the FI Liquidating Trust and
the Beneficiaries.
3.8 Compensation of the Trustee. Any commission or fees which may be
fixed by applicable law for trustees or fiduciaries are hereby waived by
the Trustee. The Trustee shall receive compensation as has been approved by
Bankruptcy Committees and disclosed to the Bankruptcy Court at the
Confirmation Hearing. Such compensation shall be paid from the Liquidating
Trust Administrative Reserve. In addition, the Trustee shall be entitled to
reimbursement from the Liquidating Trust Administrative Reserve of all
reasonable expenses and costs to administer the Liquidating Trust,
distribute to the Beneficiaries the Available Cash, litigate any Litigation
Claims or take other actions contemplated herein. The Trustee shall provide
to the Post Confirmation Committee a written report detailing all such
expenditures on such schedule and by such written documentation as the Post
Confirmation Committee may reasonably require.
3.9 Exculpation; Indemnification. The Trustee, the Trustee's employees
and the Trustee's professionals and representatives shall be and hereby are
exculpated by all Persons from any and all claims, causes of action and
other assertions of liability arising out of the discharge of the powers
and duties conferred upon such Trustee by this Agreement or applicable law
or otherwise, except for actions or omissions to act that are due to gross
negligence, willful misconduct, intentional fraud or violations of
applicable law of such persons after the date hereof. The FI Liquidating
Trust shall indemnify, defend and hold harmless the Trustee, the Trustee's
employees and the Trustee's professionals or representatives from and
against any and all claims, causes of action, liabilities, obligations,
losses, damages or reasonable expenses (including reasonable attorneys'
fees and expenses) (other than and only to the extent due to the Trustee's
gross negligence, willful misconduct, fraud or violation of applicable law)
to the fullest extent permitted by applicable law.
3.10 Termination. The duties, responsibilities and powers of the
Trustee shall terminate on the date the FI Liquidating Trust is dissolved
pursuant to Article IX of this Agreement, provided that sections 3.8 and
3.9 above shall survive such termination and dissolution.
ARTICLE IV
BOOKS, RECORDS AND DISTRIBUTIONS
4.1 Books and Records. The Trustee shall maintain books and records
relating to the assets and income of the FI Liquidating Trust and the
payment of expenses of, and liabilities of, the FI Liquidating Trust in
such detail and for such period of time as may be necessary to enable it to
make full and proper accounting in respect thereof in accordance with
Article VI hereof and to comply with applicable provisions of law. The Post
Confirmation Committee shall have the right to inspect the books and
records of the FI Liquidating Trust. Except as provided in section 6.1
hereof, nothing in this Agreement requires the Trustee to file any
accounting or seek approval of any court with respect to the administration
of the FI Liquidating Trust, or as a condition for making any payment or
Distribution out of the Trust Assets.
4.2 Distributions.
-------------
(a) General Operating Account; Other Accounts. The Trustee shall
maintain in a general operating account all Cash received from the
Debtors or obtained at any time in the future with respect to the FI
Liquidating Trust. The Trustee shall establish and maintain such other
accounts as he deems necessary and appropriate to carry forth the
terms of the Plan and the FI Liquidating Trust, including, without
limitation, the Liquidating Trust Administrative Reserve and the
Disputed Claims Reserves.
(b) Liquidating Trust Administrative Reserve. The Trustee shall
establish a separate interest-bearing account (the "Liquidating Trust
Administrative Reserve") and deposit funds into such reserve, in an
amount to be determined by the Trustee with the approval of the Post
Confirmation Committee, as reasonably sufficient to pay the costs,
fees, and expenses arising from the administration of the Plan and the
FI Liquidating Trust. Furthermore, to the extent the Trustee
determines that funding of the Liquidating Trust Administrative
Reserve is insufficient, additional funds from the Trust Assets,
including, but not limited to any Disputed Claims Reserve, to the
extent necessary for such purposes, may be allocated by the Trustee to
the Liquidating Trust Administrative Reserve, after notice and
approval by to the Post Confirmation Committee. After all costs and
expenses associated with the FI Liquidating Trust have been paid,
and/or upon the reasonable determination of the Trustee, in
consultation with the Post Confirmation Committee that the funds in
the Liquidating Trust Administrative Reserve exceed the amounts
necessary to pay the expenses for which such fund is established, the
remaining or excess funds, as applicable, in the Liquidating Trust
Administrative Reserve shall be distributed, net of any Tax
Distribution approved by the Trustee, Pro Rata to holders of Allowed
Claims in accordance with this Agreement, the Plan, and the
Confirmation Order.
(c) Distributions on Initial Distribution Date. As soon as is
practicable and prudent after the Effective Date, subject to the
reservation of adequate funds in the Liquidating Trust Administrative
Reserve and each Disputed Claims Reserve, the Trustee shall deliver
proceeds of Collateral and/or Available Cash to holders of Claims
entitled to Distributions under the Plan that were Allowed as of the
Effective Date. All payments shall be made in accordance with the
priorities established by the Plan and in accordance with the terms
and conditions of the Plan and the Confirmation Order.
(d) Distributions on a Subsequent Distribution Date. Unless
otherwise provided in the Plan, to the extent that proceeds of
Collateral and/or Available Cash or other reasonably distributable
assets are available subsequent to the Initial Distribution Date, the
Trustee shall, on a Subsequent Distribution Date, which date shall be
whenever the aggregate amount distributable to holders of Allowed
Claims equals or exceeds $1,000,000 (but in no event shall such date
be less than three months, or more than one year, after the next
previous distribution date), distribute such proceeds of Collateral
and/or Available Cash or other reasonably distributable assets to the
holders of Claims entitled to Distributions under the Plan that were
Allowed as of the Effective Date or subsequently have become Allowed
Claims on or before the Subsequent Distribution Date in amounts
necessary to cause such holders to have received aggregate
distributions of Cash in respect of such Allowed Claims on the Initial
Distribution Date if (a) such proceeds of Collateral and/or Available
Cash had been available for distribution on the Initial Distribution
Date, (b) such Allowed Claims had been Allowed on the Initial
Distribution Date in the amounts in which they are Allowed on the
Subsequent Distribution Date, and (c) Claims or portions thereof that
have become disallowed subsequent to the Initial Distribution Date and
on or before the Subsequent Distribution Date had been disallowed on
the Initial Distribution Date; provided, however, that the Liquidating
Trustee shall not be required to make any Distribution on a Subsequent
Distribution Date on account of an Allowed Claim in an amount less
than $100, except in the case of a Distribution on the Final
Distribution Date in accordance with Section 7.6 of the Plan; provided
further, however, that in no event shall the foregoing impair the
right of the Trustee to use funds in any Disputed Claims Reserve to
satisfy the costs of administering the Plan and the FI Liquidating
Trust. All payments shall be made in accordance with the priorities
established by the Plan and in accordance with the terms and
conditions of the Plan and the Confirmation Order. The foregoing
notwithstanding, at least annually, the Liquidating Trustee shall
distribute to the Beneficiaries an amount equal to (A-B), where A is
the sum of the net income from investments earned by the Liquidating
Trust and the net proceeds from the sale of assets and B is such
amount as the Liquidating Trustee deems reasonably necessary to
maintain the value of the Liquidating Trust Assets and to satisfy the
expenses and contingent liabilities of the Liquidating Trust
(including Disputed Claims). In addition to distributions with respect
to Allowed Claims, Beneficiaries shall be entitled to receive Tax
Distributions with respect to the net taxable income of the
Liquidating Trust allocated to them for federal income tax purposes in
such amount as the Liquidating Trustee, in his sole discretion, deems
reasonable and appropriate.
(e) Distributions on the Final Distribution Date. Unless
otherwise provided in the Plan, after the liquidation of any and all
Trust Assets to the fullest extent reasonably possible, the Trustee
shall establish the Final Distribution Date, upon which the Trustee
shall distribute such Cash or other assets remaining after
satisfaction of all expenses and other obligations of the FI
Liquidating Trust to the holders of Claims entitled to distributions
under the Plan that were Allowed as of the Effective Date or
subsequently have become Allowed Claims on or before the Final
Distribution Date in amounts necessary to cause such holders to have
received aggregate distributions of Cash in respect of such Allowed
Claims on the Initial Distribution Date if (a) such Cash or other
assets had been available for distribution on the Initial Distribution
Date, (b) such Allowed Claims had been Allowed on the Initial
Distribution Date in the amounts in which they are Allowed on the
Final Distribution Date, and (c) Claims or portions thereof that have
become disallowed subsequent to the Initial Distribution Date and on
or before the Final Distribution Date had been disallowed on the
Initial Distribution Date, taking into account all previous
distributions; provided, however, that in no event shall the foregoing
impair the right of the Plan Administrator to use funds in any
Disputed Claims Reserve to satisfy the costs of administering the Plan
and the FI Liquidating Trust or to make Tax Distributions which the
Trustee deems reasonable and appropriate. Within 20 Business Days
prior to making the final distribution, the Trustee shall notify the
Post Confirmation Committee that the Trustee deems all assets to be
liquidated and that the Trustee intends to establish the Final
Distribution Date.
(f) Setoffs. The Trustee may, but shall not be required to, set
off against any Allowed Claim, and the payments or other distributions
to be made pursuant to the Plan in respect of such Allowed Claim,
claims, right and causes of action of any nature whatsoever that the
Trustee, as successor to and assignee from the Allowed Debtors, may
have or have had against the holder of such Allowed Claim or any prior
holder of such Claim if the Allowed Claim has been transferred;
provided, however, that neither the failure to do so nor the allowance
of any Claim hereunder shall constitute a waiver or release current or
former by the Trustee of any such claim that the Debtors or the
Trustee may have against such current or former holder.
(g) Disputed Payment. If any dispute arises as to the identity of
a holder of an Allowed Claim or Allowed Class 11 Interest who is to
receive any Distribution, the Trustee may, in lieu of making such
Distribution to such person, make such Distribution into an escrow
account until the disposition thereof shall be determined by the
Bankruptcy Court or by written agreement among the interested parties
to such dispute or otherwise withhold payment until the Bankruptcy
Court has determined the identity of the holder upon request by the
Trustee.
(h) No Distribution in Excess of Allowed Amount of Claim.
Notwithstanding anything to the contrary herein, no holder of an
Allowed Claim shall receive in respect of such Claim any distribution
in excess of sum of the Allowed amount of such Claim and the Deemed
Tax Amount for all taxable periods, unless such holder is entitled to
interest at the Plan Rate pursuant to the Plan.
ARTICLE V
SUCCESSOR TRUSTEE
5.1 Resignation. The Trustee may resign by giving not less than sixty
(60) days prior written notice thereof to the Post Confirmation Committee.
5.2 Removal. The Trustee may be removed upon a minimum three-fourths
vote of the Post Confirmation Committee, with or without cause. If the
Trustee is removed for cause, the Post Confirmation Committee or successor
Trustee shall have the right to seek disgorgement from the Trustee of all
or a portion of the fee paid to such removed Trustee. In the event of the
removal of the Trustee without cause, the Trustee shall be entitled to
immediate payment of all compensation earned by the Trustee through and
including the date of such removal.
5.3 Acceptance of Appointment by Successor Trustee. Any successor
Trustee shall be appointed after a minimum three-fourths vote of the Post
Confirmation Committee, by an acknowledged written instrument delivered to
the successor Trustee. Any successor Trustee appointed hereunder shall
execute an instrument accepting such appointment hereunder and shall file
such acceptance with the FI Liquidating Trust records. Thereupon, such
successor Trustee shall, without any further act, become vested with all
the estates, properties, rights, powers, trusts and duties of its
predecessor in the FI Liquidating Trust with like effect as if originally
named herein; provided, however, that a removed or resigning Trustee shall,
nevertheless, when requested in writing by the successor Trustee, execute
and deliver an instrument or instruments conveying and transferring to such
successor Trustee under the FI Liquidating Trust all the estates,
properties, rights, powers and trusts of such predecessor Trustee.
ARTICLE VI
REPORTING
6.1 Reports
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(a) In addition to the reporting otherwise required by this
Agreement, as soon as practicable upon termination of the FI
Liquidating Trust, the Trustee shall submit to the Post Confirmation
Committee a written report, including: (i) audited financial
statements of the FI Liquidating Trust for the period commencing on
the date hereof and ending on the Termination Date and the receipts
and disbursements of the Trustee for such period; and (ii) a
description of any action taken by the Trustee in the performance of
its duties which materially affects the FI Liquidating Trust and of
which notice has not previously been given to the Post Confirmation
Committee. All such reports shall be in form and substance reasonably
acceptable to the Post Confirmation Committee.
(b) Upon the occurrence of any change, circumstance or effect
that could reasonably be determined to be materially adverse to the FI
Liquidating Trust, the Trustee shall promptly notify the Post
Confirmation Committee in writing of such occurrence. The Trustee may,
but shall not be required to, consult with, and rely upon the advice
of, the Post Confirmation Committee in making a determination that
such a change, circumstance or effect has occurred, and the Trustee
shall not be liable for any determination made by it in reliance upon
the advice thereof.
6.2 United States Federal Income Tax
--------------------------------
(a) Grantor Trust Status. Subject to definitive guidance from the
IRS or a court of competent jurisdiction to the contrary (including
the issuance of applicable Treasury Regulations, the receipt by the
Trustee of a private letter ruling if the Trustee so requests one, or
the receipt of an adverse determination by the IRS upon audit if not
contested by the Trustee), the Trustee shall make timely filings of
annual federal income tax returns attached to Form 1041 reflecting the
items of income, gain or loss, deductions or credits of the FI
Liquidating Trust as a grantor trust pursuant to Treasury Regulation
ss. 1.671-4(a). The Trustee shall value the Trust Assets on a
consistent basis and such valuations shall be used for all federal
income tax purposes by the Trustee and the Beneficiaries. Consistent
with its status as a grantor trust, the FI Liquidating Trust shall not
be, and the Beneficiaries shall be, responsible for the payment of
their allocable portion of any federal income tax liability related to
the operation of the Liquidating Trust.
(b) Attributions of FI Liquidating Trust Taxable Income. Subject
to the provisions of section 6.2(a) hereof, attribution of taxable
income or credits of the FI Liquidating Trust shall be determined by
reference to the manner in which an amount of Cash equal to such
taxable income would be distributed (without regard to any restriction
on distributions described herein) if, immediately prior to such
deemed distribution, the FI Liquidating Trust had distributed all of
its other assets (valued for this purpose at their "tax book value")
to the Beneficiaries, taking into account all prior and concurrent
Distributions from the FI Liquidating Trust. Similarly, taxable losses
or deductions of the FI Liquidating Trust shall be attributed by
reference to the manner in which an economic loss would be borne
immediately after a liquidating Distribution of the remaining Trust
Assets. The tax book value of the Trust Assets for this purpose shall
equal their fair market value on the date hereof or, if later, the
date such assets were acquired by the Fl Liquidating Trust, adjusted
in either case in accordance with tax accounting principles prescribed
by the IRS, the Treasury Regulations and other applicable
administrative and judicial authorities and pronouncements.
(c) Compliance. The FI Liquidating Trust shall comply with all
withholding and reporting requirements imposed by any federal, state,
local or foreign taxing authority with respect to Distributions.
6.3 Other. The Trustee shall also file (or cause to be filed) any
other statements, returns or disclosures relating to the FI Liquidating
Trust that, upon the advice of counsel, are identified to the Trustee as
required by any governmental authority.
ARTICLE VII
BENEFICIARIES' INTERESTS
7.1 Beneficial Interests. The interests of the Beneficiaries in the FI
Liquidating Trust shall be uncertificated and shall be reflected only on
the records of the FI Liquidating Trust maintained by the Trustee. The
proportionate interest of each Beneficiary in the FI Liquidating Trust
shall be in the priority and amount of each Beneficiary's Allowed Claim or
Allowed Class 11 Interest, and the Trustee shall be fully protected and
incur no liability to any Beneficiary or any other Person in making any
Distribution in accordance with such proportionate interests.
7.2 Transfer. The interests of the Beneficiaries in the FI Liquidating
Trust are not negotiable and shall be transferable after written notice to
the Trustee only: (a) pursuant to applicable laws of descent and
distribution (in the case of a deceased individual Beneficiary), or (b) by
operation of law. The Trustee shall not be required to record any transfer
in favor of any transferee who, in the sole discretion of the Trustee, is
or might be construed to be ambiguous, or create uncertainty as to the
holder of the interest in the FI Liquidating Trust, and in so doing the
Trustee shall be fully protected and incur no liability to any Person
pursuant to section 3.6 hereof. Until a transfer is in fact recorded on the
books and records maintained by the Trustee for the purpose of identifying
the Beneficiaries, the Trustee, whether or not in receipt of documents of
transfer or other documents relating to the transfer, may nevertheless make
Distributions and send communications to the Beneficiaries, as though it
has no notice of any such transfer, and in so doing the Trustee shall be
fully protected and incur no liability to any purported transferee or any
other Person pursuant to section 3.6 hereof.
ARTICLE VIII
TERMINATION OF FI LIQUIDATING TRUST
8.1 Termination of FI Liquidating Trust. The Trustee shall seek
authority from the Bankruptcy Court to dissolve the FI Liquidating Trust as
part of the process of closing the Bankruptcy Case, consistent with section
5.9 of the Plan, when each of the following conditions are satisfied (such
date being referred to herein as the "Termination Date"):
(a) all Disputed Claims and Disputed Class 11 Interests have
become Allowed Claims and Allowed Class 11 Interests or have been
disallowed by Final Order,
(b) all Litigation Claims, including any Avoidance Actions, have
been resolved;
(c) all other Trust Assets have been liquidated;
(d) all Cash from the liquidation of the Trust Assets has been
distributed in accordance with the Plan and this Agreement; and
(e) if any Cash remains after the payment in full (including
post-petition interest at the Plan Rate) of the Allowed Claims of all
Beneficiaries and any other distributions in accordance with the Plan
and this Agreement, such remaining Cash has been transferred to
Reorganized Industries.
Notwithstanding the foregoing, the FI Liquidating Trust shall not
remain in being for more than four (4) years, unless such term is extended
pursuant to section 8.2 of this Agreement.
8.2 Extension of Term of FI Liquidating Trust. Any extension of the
term of the FI Liquidating Trust set forth in section 8.1 hereof must be
(i) for a finite period of time, (ii) preceded by the Trustee's receipt of
a favorable ruling from the IRS that the FI Liquidating Trust's continued
existence beyond such period would not adversely affect the status of the
FI Liquidating Trust as a liquidating trust within the meaning of ss.
301.7701-4(d) of the Treasury Regulations for U.S. federal income tax
purposes, and (iii) approved by the Bankruptcy Court within six (6) months
of the beginning of the extended term
ARTICLE IX
AMENDMENT AND WAIVER
Subject to approval of the Bankruptcy Court, any provision of this
Agreement may be amended or waived with the approval of the Trustee and a
three-fourths vote of the Post Confirmation Committee; provided further
that no change shall be made to this Agreement that would (1) adversely
affect the Distributions otherwise required to be made to any Beneficiary,
(ii) adversely affect the U.S. federal income tax status of the FI
Liquidating Trust as a "grantor trust" (in accordance with section 6.2
hereof), if applicable, or (iii) unless agreed to in writing by the
affected Trustee, adversely affect the rights of the Trustee. Technical
amendments to this Agreement may be made as necessary to cure any
ambiguity, defect or inconsistency in this Agreement or enable the FI
Liquidating Trust to effectuate the terms of this Agreement, with the
consent of the Trustee and a three-fourths vote of the Post Confirmation
Committee, provided that such amendment does not adversely affect the
rights of the Beneficiaries.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Cooperation. Simultaneously with or immediately prior to the
effectiveness of this Agreement, the Debtors shall provide the Trustee with
copies of such of its books and records and such further information as the
Bankruptcy Committees have requested for the purpose of performing its
duties and exercising its powers hereunder.
10.2 Laws as to Construction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
giving effect to rules governing the conflict of law which would require
the application of the law of another jurisdiction.
10.3 Actions Taken on Other Than Business Day. If any payment or act
is required to be made or performed on a date that is not a Business Day,
then the making of such payment or the performance of such act may be
completed on the next succeeding Business Day, but shall be deemed to have
been completed as of the required date.
10.4 Severability. If any provision of this Agreement or application
thereof to any person or circumstance shall be finally determined by a
court of competent jurisdiction to be invalid or unenforceable to any
extent, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and such
provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
10.5 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, certified or
registered first-class mail, next-day air courier or telecopier to the
following addresses:
If to the Trustee:
- -----------------
[INSERT TRUSTEE CONTACT INFO]
Attn:
--------------------------------
Direct:
Facsimile:
E-Mail:
If to the Post Confirmation Committee:
- -------------------------------------
[INSERT #1 CONTACT INFO]
Attention:
Direct:
Facsimile:
E-Mail:
[INSERT #2 CONTACT INFO]
Attention:
Direct:
Facsimile:
E-Mail:
[INSERT #3 CONTACT INFO]
Attention:
Direct:
Facsimile:
E-Mail:
[INSERT #4 CONTACT INFO]
Attention:
Direct:
Facsimile:
E-Mail:
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five (5) Business
Days after being deposited in the mail, postage prepaid, if mailed; one (1)
Business Day after being timely delivered to a next-day air courier; and
when receipt is acknowledged by the addressee, if telecopied.
10.6 Headings. The section headings contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or any term or provision hereof.
10.7 Conflict with Plan. In the event of a conflict between the terms
of this Agreement and the terms of the Plan, the terms of the Plan shall
control.
10.8 Retention of Jurisdiction. After the Effective Date and to the
fullest extent permitted by law, the Bankruptcy Court shall retain
exclusive jurisdiction over (i) the FI Liquidating Trust, including the
performance of the duties of the Trustee and the Post Confirmation
Committee in overseeing the FI Liquidating Trust and (ii) the
interpretation of this Agreement and all issues arising under or related to
this Agreement.
10.9 Third Party Beneficiaries. Except for the Beneficiaries, nothing
in this Agreement is intended to confer upon any Person that is not a party
hereto any rights or remedies hereunder.
10.10 Successors and Assigns. The terms of this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.
10.11 Counterparts. This Agreement may be signed by the parties hereto
in counterparts, which, when taken together, shall constitute one and the
same document.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have either executed and
acknowledged this Agreement, or caused it to be executed and acknowledged
on their behalf by their duly authorized officers all as the date of the
first above written.
FARMLAND INDUSTRIES, INC.
FARMLAND FOODS, INC.
SFA, INC.
FARMLAND TRANSPORTATION, INC.
FARMLAND PIPE LINE COMPANY
By:
-------------------------------------
Name: Robert B. Terry, Authorized Signatory
By:
-------------------------------------
, as Trustee
PLAN EXHIBIT B
--------------
Assumed Executory Contracts and Unexpired Leases (2)
Name Disposition Cure Amount
- ----------------------------------------------------------------------------------------------
Operating Agreement of Agrifarm Assumed by Reorganized Industries $0.00
Industries, LLC, dated as of
March 19, 1998
Agreement among Wilbur-Ellis Company, Assumed by Reorganized Industries $0.00
Farmland Industries, Inc., Wilfarm,
L.L.C., Cenex Harvest States
Cooperatives and United Country
Brands LLC, dated March 2000
Operating Agreement of Agriliance LLC, Assumed by Reorganized Industries $0.00
dated as of January 4, 2000
Management Services Agreement with Assumed by Reorganized Industries $0.00
Agriliance LLC, dated as of
January 4, 2000
Put Option Agreements with Agriliance Assumed by Reorganized Industries $0.00
LLC, dated January 2000
Seed Agreement with Agriliance LLC, Assumed by Reorganized Industries $0.00
dated January 2000
Bylaws adopted by Alliance Farms Assumed by Reorganized Industries $0.00
Cooperative Association, dated
May 3, 1994
Operating Agreement of Dakota Energy Assumed by Reorganized Industries $0.00
Retail Ventures, L.L.C., dated as
of May 2, 1997
Limited Liability Company Agreement of Assumed by Reorganized Industries $0.00
Farmland-Harvest States, LLC, dated as
of September 10, 1996
Limited Liability Company Agreement of Assumed by Reorganized Industries $0.00
Farmland National Beef aLF, LLC, dated
as of July 16, 2001
- ------------------------
<FN>
(2) The Debtors reserve their right to add any unexpired lease or
executory contract to, or delete any unexpired lease of executory
contract from, this Plan Exhibit in accordance with Section 6.3 of the
Plan.
</FN>
Operating Agreement of Husky Hogs, Assumed by Reorganized Industries $0.00
L.L.C., dated as of January 26, 1999
Limited Liability Company Agreement of Assumed by Reorganized Industries $0.00
Land O'Lakes Farmland Feed LLC, dated
as of September 1, 2000
Fourth Amendment Modifying Economic Assumed by Reorganized Industries $0.00
Interest of Land O'Lakes Farmland
Feed LLC, dated as of October 12, 2001
Third Amended and Restated Operating Assumed by Reorganized Industries $0.00
Agreement of Resource2l, LLC, dated
October 1, 1997
Bylaws of TruAI, Inc., dated as of Assumed by Reorganized Industries $0.00
March 8, 1995
Operating Agreement of United Bakeries Assumed by Reorganized Industries $0.00
International, Inc., dated as of
January 31, 2001
Joint Venture Agreement among Farmland Assumed by Reorganized Industries $0.00
Industries, Inc., Cenex Harvest States
Cooperatives, United Country Brands LLC
and Land O'Lakes, Inc., effective
January 1, 2000
Operating Agreement of United Country Assumed by Reorganized Industries $0.00
Brands LLC, effective January 4, 2000
Operating Agreement of United Assumed by Reorganized Industries $0.00
Processors, L.L.C.
Third Amended and Restated Operating Assumed by Reorganized Industries $0.00
Agreement of Westland Terminal, L.L.C.,
dated as of January 15, 1997
PLAN EXHIBIT C
--------------
Industries Retained Assets (3)
1. Interest in Agrifarm Industries, LLC
2. Interest in Agriliance LLC
3. Interest in Alliance Farms Cooperative Association
4. Interest in Dakota Energy Retail Ventures, L.L.C.
5. Interest in Farmland-Harvest States, LLC
6. Interest in Farmland National Beef aLF, LLC
7. Interest in Husky Hogs, L.L.C.
8. Interest in Land O'Lakes Farmland Feed LLC
9. Interest in Resource2l, LLC
10. Interest in TruAl, Inc.
11. Interest in United Bakeries International, Inc.
12. Interest in United Country Brands LLC
13. Interest in United Processors, L.L.C.
14. Interest in Westland Terminal, L.L.C.
15. Interest in Double Circle Farm Supply Company
16. Interest in Farmers Petroleum, Inc.
- ------------------------
(3) The Debtors reserve their right, at any time prior to the Confirmation
Date, upon prior consent of the Bankruptcy Committees, to amend Plan
Exhibit C to delete any assets therefrom or add any assets thereto and
to provide notice of any such amendments to the Bankruptcy Court.
PLAN EXHIBIT D
--------------
Transferred Assets(4)
PROPERTY OWNER OF REGULATORY PROPOSED FUNDING
DESCRIPTION PROPERTY AGENCIES FOR TRUST
INVOLVED
Joplin, MO Gypsum Farmland Missouri $5,292,119
Stack Property Industries, Inc. Department of
Natural Resources
South Hutchinson, Farmland Kansas Department $916,382
KS Grain Elevator Industries, Inc. of Health and
Environment
Fertilizer Farmland Oklahoma Department of $91,594
Storage Industries, Inc. Environmental Quality
Tank adjacent to
former Enid, OK
Feed Mill
facility
Lawrence, KS Farmland Kansas Department of $4,894,210
nitrogen plant Industries, Inc. Health and
Environment;
U.S. EPA
Scottsbluff, NE Farmland Nebraska Department of $185,855
former refinery Industries, Inc. Environmental Quality
site
Doniphan, NE UAN Farmland Nebraska Department of $536,305
Pit Release Industries, Inc. Environmental Quality
North Kansas Farmland Missouri $217,689
City, MO Industries, Inc. Department of
Manufacturing Natural Resources
Complex
Augusta, AK Farm SFA, Inc. Arkansas $37,171
Supply Operation Department of
Environmental
Quality
Topeka, KS Grain Farmland Kansas Department of $425,912
Elevator Industries, Inc. Health and Environment
Wichita, KS Grain Farmland Kansas Department of $358,644
Elevator Industries, Inc. Health and Environment
Wichita, KS North Farmland Kansas Department of $97,087
Industrial Industries, Inc. Health and Environment
Corridor
- ------------------------
(4) The Debtors reserve their right, at any time prior to the Effective
Date, upon prior consent of the Bankruptcy Committees, to amend Plan
Exhibit D to delete any assets therefrom, add any assets thereto or
modify any other information contained thereon and to provide notice
of any such amendments to the Bankruptcy Court.
PLAN EXHIBIT E
--------------
Executory Contracts and Unexpired Leases related to Coffeyville Assets (5)
- ------------------------
(5) The Debtors reserve their right, at any time prior to the Effective
Date, to amend Plan Exhibit E to delete an unexpired lease or
executory contract therefrom or add any unexpired lease or executory
contract thereto and to provide notice of any such deletion or
addition to all affected parties.
CONTRACT NO CONTRACT EXACT TITLE OF CONTRACT CURE AMOUNTS SITE
PARTY CONTRACT TYPE
MATLAB PLS
MATHWORKS TOOL BOX Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
SERVER
MICROSOFT CORP SOFTWARE Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
SERVER
MICROSOFT CORP CLIENT Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
MICROSOFT CORP MAIL SERVER Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
MICROSOFT CORP MAIL CLIENT Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ISA 2000 Software Coffeyville
MICROSOFT CORP SERVER
- --------------------------------------------------------------------------------------------------------------------------------
OFFICE PRO Software Coffeyville
MICROSOFT CORP 2000
- --------------------------------------------------------------------------------------------------------------------------------
DESKTOP OP. Software Coffeyville
MICROSOFT CORP SYSTEM
- --------------------------------------------------------------------------------------------------------------------------------
MICROSOFT CORP VISIO 5.0 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
MICROSOFT CORP VISIO 2000 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
WIN NT 4.0
MICROSOFT CORP SVR Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ADOBE ACROBAT 5.0 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ALLEN BRADLEY RSLOGIC 500 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ALLEN BRADLEY AI LADDER Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Aspen
Technology Inc ADVISOR 7.0 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ATR PRISM Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Autodesk AUTOCAD Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Autodesk AUTOCAD LT Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
BR&E Prosim\Tsweet Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
BST BAPPT Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
COMPUTER ARCSERVE Software Coffeyville
ASSOCIATES
- --------------------------------------------------------------------------------------------------------------------------------
COX BUSINESS COX Software Coffeyville
SERVICES
- --------------------------------------------------------------------------------------------------------------------------------
DTN CORP FARMDATA Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ENTEK ENLINE66 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
ENTEK ODYSSEY Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Epcon I:PROCESS Software Coffeyville
International
- --------------------------------------------------------------------------------------------------------------------------------
ETI FEMS Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Flir Systems Thermacam Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
GE CIMPLICITY Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Haverly GRTMPS Software Coffeyville
Systems Inc
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Template Software Coffeyville
Systems Inc
- --------------------------------------------------------------------------------------------------------------------------------
Haverly iCDM\Flash Software Coffeyville
Systems Inc
- --------------------------------------------------------------------------------------------------------------------------------
Haverly OMNI PC\ASM Software Coffeyville
Systems Inc
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems CAL-II Software Coffeyville
Inc
- --------------------------------------------------------------------------------------------------------------------------------
HONEYWELL INC LIMS Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
HONEYWELL INC SESP Software $8,534.72 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
HONEYWELL UNLIMITED Software Coffeyville
INC PARTS
- --------------------------------------------------------------------------------------------------------------------------------
HONEYWELL HI-SPEC Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
HONEYWELL SCAN 3000 Software Coffeyville
INC
- --------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL
AUTOMATION PEBUILD Software Coffeyville
TECHNOLOGY
- --------------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL
AUTOMATION DSMAP Software Coffeyville
TECHNOLOGY
- --------------------------------------------------------------------------------------------------------------------------------
ICARUS
CORPORATION QUESTIMATE Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
APOGEE
INFOGRAPHICS 8.11.866 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
INVENSYS WONDERWARE Software Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Ise Press CLIP SYMBOLS Software Coffeyvlle
- --------------------------------------------------------------------------------------------------------------------------------
KBC
(Profimatics, FCC-SIM Software Coffeyville
Inc)
- --------------------------------------------------------------------------------------------------------------------------------
KENONIC FLOWELL Software Coffeyville
CONTROLS
- --------------------------------------------------------------------------------------------------------------------------------
Kodak
Polychrome PICTURE EASY Software Coffeyville
Graphics LLC
- --------------------------------------------------------------------------------------------------------------------------------
KRAUTKRAMER ULTRAPIPE Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Kronos Inc KRONOS Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
MACROSOLVE, Software
INC
- --------------------------------------------------------------------------------------------------------------------------------
MACROSOLVE
INC RFBARCODE Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
MATHWORKS MATLAB Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
MICROSOFT NT4.0 Software Coffeyville
CORP CLIENTS
- --------------------------------------------------------------------------------------------------------------------------------
MICROSOFT NT 2000 Software Coffeyville
CORP WKST
- --------------------------------------------------------------------------------------------------------------------------------
Mro Software MAXIMO Software Coffeyville
(Formerly Psdi)
- --------------------------------------------------------------------------------------------------------------------------------
Oracle Corp ORACLE (Enterprise) Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Oracle Corp. ORACLE (Workgroup) Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Pdma Corp MCE MOTOR
TESTER Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Petrometrix PETRO Software Coffeyville
Inc
- --------------------------------------------------------------------------------------------------------------------------------
Primavera
Systems Inc PRIMAVERA-P3 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Primavera PRIMAVERA-P1.3 Software Coffeyville
Systems Inc
- --------------------------------------------------------------------------------------------------------------------------------
RICHARDSON
ENG RICHARDSON Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
SYMANTEC Norton Anti Virus Software Coffeyville
CORPORATION
- --------------------------------------------------------------------------------------------------------------------------------
SYMANTEC Norton Ghost Software Coffeyville
CORPORATION
- --------------------------------------------------------------------------------------------------------------------------------
SYMANTEC PROCOM + Software Coffeyville
CORPORATION
- --------------------------------------------------------------------------------------------------------------------------------
Toptech TMS5
Systems, Inc Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Toptech PHINDOWS Software Coffeyville
Systems,
Inc
- --------------------------------------------------------------------------------------------------------------------------------
Toptech
Systems, T-TALKW Software Coffeyville
Inc
- --------------------------------------------------------------------------------------------------------------------------------
Toptech
Systems, FAIRCOM Software Coffeyville
Inc
- --------------------------------------------------------------------------------------------------------------------------------
TREMETRICS OHM Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
TRINITY BREEZE HAZ Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
TRISYS TAPITT 2000 Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Uop WKCOMPLY Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Uop TRIOS Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
WINESTIMATOR INC WINEST PRO+ Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Zytax ZYTAX Software Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
HONEYWELL INC HONEYWELL Software
- --------------------------------------------------------------------------------------------------------------------------------
Bourque Data Systems RAILTRAC Software
Inc
- --------------------------------------------------------------------------------------------------------------------------------
Mid-America Building Janitorial Service Agreement $0.00 Coffeyville
Maintenance, Inc. Services
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
American Petroleum Petroleum and Coffeyville
Institute ("API") Allied Industry
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Ammonia Casale S.A. License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1022 ARCO Lease between ARCO (Lessor) & Non-Residential $0.00 Gathering
Farmland Industries, Inc. Real Property Lease System
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
1023 ARCO Lease between ARCO (Lessor) & Non-Residential $0.00 Gathering
Farmland Industries, Inc. Real Property Lease System
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
IIYS, Inc. (now Aspen Tech) IIYS Advisor License and Coffeyville
Maintenance Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Atchison Topeka and Contract for Industry Track Track $0.00 Coffeyville
Santa Fe Railroad Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Atchison Topeka and License for parking motor License for $0.00 Coffeyville
Santa Fe Railroad vehicles on right of way Parking Motor
Company Vehicles on Right
of Way
- --------------------------------------------------------------------------------------------------------------------------------
Atchison Topeka and Pipe Line License License $0.00 Coffeyville
Santa Fe Railroad Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Atchison, Topeka and Pipe Line License Lease $0.00 Gathering
Santa Fe Railway Agreement System
Company
- --------------------------------------------------------------------------------------------------------------------------------
Atchison, Topeka and Pipe Line License License $0.00 Coffeyville
Santa Fe Railway Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Atchison, Topeka and Pipe Line License License $0.00 Gathering
Santa Fe Railway Agreement System
Company
- --------------------------------------------------------------------------------------------------------------------------------
Atchison, Topeka and Power Line License License $0.00 Gathering
Santa Fe Railway Agreement System
Company
- --------------------------------------------------------------------------------------------------------------------------------
Atchison, Topeka and Pipe Line License License $0.00 Gathering
Santa Fe Railway Agreement System
Company (apparently
assigned to South Kansas
and Oklahoma Railroad.)
- --------------------------------------------------------------------------------------------------------------------------------
The Atchison Topeka and Agreement for Private or License $0.00 Coffeyville
Santa Fe Railroad Farm Agreement
Company Crossing
- --------------------------------------------------------------------------------------------------------------------------------
The Atchison Topeka and Shackle Rod Line License License $0.00 Coffeyville
Santa Fe Railroad Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Joint Tariff
Williams Pipe Line Company Joint Tariff Agreement Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
0810 Williams Pipe Line Company Petroleum Products Transport $0.00 Coffeyville
Transportation Agreement
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
AX&P, Inc. Crude Oil Purchase Agreement Agreement $0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Baker Tanks, Inc. Polymer Tank Rental Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
813 Banc One Lease Agreement for 98 UAN $0.00
tank cars.
- --------------------------------------------------------------------------------------------------------------------------------
0257 Banks Construction Company, Coke Handling Agreement 237,407.00
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Black Hills Energy Crude Oil Agreement Agreement $0.00 Gathering
Resources, Inc. System
- --------------------------------------------------------------------------------------------------------------------------------
BlackJack Oil Company Crude Oil Purchase Purchase $0.00 Gathering
Contract Contract System
- --------------------------------------------------------------------------------------------------------------------------------
BOC Gases Rental Agreement of Lease Agreement $1,300.00 Coffeyville
Nitrogen Tank
and Vaporizer at Alky
- --------------------------------------------------------------------------------------------------------------------------------
BOC Gases Rental Agreement of Lease Agreement $1,300.00 Coffeyville
Nitrogen Tank
and Vaporizer at Area 1
- --------------------------------------------------------------------------------------------------------------------------------
BOC Gases Rental Agreement of Lease Agreement $1,300.00 Coffeyville
Oxygen Tank
and Vaporizer at
Sulfur unit
- --------------------------------------------------------------------------------------------------------------------------------
BP America Production Crude Oil Agreement Agreement $0.00 Gathering
Co. System
- --------------------------------------------------------------------------------------------------------------------------------
1028 Brothers Dairy Surface Lease between Brothers Surface Lease $0.00 Gathering
Incorporated Dairy Incorporated (Lessor) & System
Farmland Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Bruker Analytical X-Ray Service Agreement Coffeyville
Systems, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Bryan Research and Software Licensing Agreement Coffeyville
Engineering, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
GE Capital Modular CEMS Trailer Lease #822356 Lease Agreement $634.00 Coffeyville
Space
- --------------------------------------------------------------------------------------------------------------------------------
0773 GE Capital Modular Lease of a 14x70 office Equipment Lease $1,130.00 Coffeyville
Space trailer
- --------------------------------------------------------------------------------------------------------------------------------
N31285 Carolyn Tolson [Lease Lease of Property located in Non-Residential $0.00 Gathering
assignment from Osage Real System
Robert & Harriet Labodie] County, OK Property Lease
- --------------------------------------------------------------------------------------------------------------------------------
0757 Cenex Harvest States Terminal Throughput Agreement Purchase Agreement $0.00 Phillipsburg
Cooperatives
- --------------------------------------------------------------------------------------------------------------------------------
0758 Cenex Harvest States Refinery Supply Agreement for Purchase Agreement $0.00 Coffeyville
Cooperatives purchase of refined energy
products manufactured at
Coffeyville refinery
- --------------------------------------------------------------------------------------------------------------------------------
Central and South West Payment Security Agreement
Services, Inc.
and the City of
Coffeyville, KS
- --------------------------------------------------------------------------------------------------------------------------------
Chicago, Burlington & Contract for Pipe Line Lease Agreement $0.00 Gathering
Quincy Railroad System
Company
- --------------------------------------------------------------------------------------------------------------------------------
0762 Citation Oil and Gas Crude Oil Purchase Agreement Purchase Agreement $0.00 Gathering
Corp. System
- --------------------------------------------------------------------------------------------------------------------------------
0761 Citation Oil and Gas Crude Oil Purchase Agreement Purchase Agreements $0.00 Gathering
Corp. System
- --------------------------------------------------------------------------------------------------------------------------------
1493 City of Coffeyville, Petroleum Coke Gasification $0.00
Kansas to Nitrogen Fertilizer
Electric Service Agreement
(requires modification)
- --------------------------------------------------------------------------------------------------------------------------------
The Coleman Company, Agreement Agreement $0.00 Coffeyville
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
N31393 Missouri-Kansas-Texas Pipe Line License Lease Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
N31265 Freedom Group Inc. Membership Agreement Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Sinclair Pipe Line Company Pipe Line License Lease Agreement $0.00 Gathering
(assigned from Missouri- System
Kansas-Texas Railroad Company)
- --------------------------------------------------------------------------------------------------------------------------------
0793 Sinclair Oil Asphalt Services Agreement Service Agreement $0.00 Phillipsburg
Corporation for the terminaling of Roll
Saturate and Roofing Flux
("Products")
- --------------------------------------------------------------------------------------------------------------------------------
0796 Terra Resources, Inc. Agreement for Preferential Purchase Agreement $0.00 Gathering
Right to System
Purchase Crude Oil
- --------------------------------------------------------------------------------------------------------------------------------
N31255 Mobil Oil Corporation Sludge Coking Process License License Agreement $42,590.77 Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31258 Exxon Research and Flexicracking Process License Agreement $26,996.00 Coffeyville
Engineering Company License and
Engineering Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31261 W.R. Grace & Co. -Conn. Desox Injection Equipment Equipment Lease $3,050.00 Coffeyville
Lease
- --------------------------------------------------------------------------------------------------------------------------------
Oxbow Carbon and Minerals Petroleum Coke Agreement $0.00
LLC
- --------------------------------------------------------------------------------------------------------------------------------
Black Hills Energy Crude Oil Agreement Agreement $0.00 Gathering
Resources, Inc. System
- --------------------------------------------------------------------------------------------------------------------------------
0789 ONEOK NGL Marketing, Agreement Lease Agreement $0.00 Coffeyville
L.P.
- --------------------------------------------------------------------------------------------------------------------------------
Corroon & Black Agreement Agreement $0.00 Coffeyville
Company of New
York
- --------------------------------------------------------------------------------------------------------------------------------
Project Software and Software License Coffeyville
Development, Agreement
Inc. (now MRO)
- --------------------------------------------------------------------------------------------------------------------------------
1081 Sun Pipe Line Company Lease between Sun Pipe Non-Residential $0.00 Gathering
Line Company (Lessor) & Real System
Farmland Industries, Inc. Property Lease
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31256 Union Carbide Total Isomerization License $0.00 Coffeyville
Corporation Process License Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Corroon & Black Agreement Agreement $0.00 Coffeyville
Company of New
York
- --------------------------------------------------------------------------------------------------------------------------------
0800 TexPar Energy, Inc. Purchase/Sale Agreement Purchase $0.00 Coffeyville
for CBO/Slurry Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1041 Estate Land Company Lease between Estate Non-Residential $0.00 Gathering
Land Company (Lessor) & Real System
Farmland Industries, Property Lease
Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
0808 Williams Pipe Line Crude Oil Pipeline Purchase $0.00 Coffeyville
Company Agreement (16" Agreement
Coffeyville line)
- --------------------------------------------------------------------------------------------------------------------------------
1072 Octagon Investment Lease between Octagon Non-Residential $0.00 Gathering
Company Investment Company (Lessor) Real System
(Originally with John & Farmland Industries, Inc. Property Lease
M. Kane Land (Lessee)
Trust)
- --------------------------------------------------------------------------------------------------------------------------------
1493 City of Coffeyville, Petroleum Coke $0.00
Kansas Gasification to
Nitrogen Fertilizer
Electric Service
Agreement (requires
modification)
- --------------------------------------------------------------------------------------------------------------------------------
Prime Energy Air Compressor Rental Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1038 Don W. Steeples and Lease between Don W. Non-Residential $0.00 Gathering
David J. Steeples and Real System
Steeples David J. Steeples Property Lease
(Lessor) &
Farmland Industries,
Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31280 Donald Adams,Jim Lease of Property Non-Residential $0.00 Gathering
Childress, Lonnie located in Creek Real System
Adams, Mary Cochran, County, OK Property Lease
Melvin Cochran [Original lease
was between
Samuel Dix and
Prairie Oil & Gas.]
- --------------------------------------------------------------------------------------------------------------------------------
Quest Resource Base Contract For Sale Natural Gas $0.00 Coffeyville
Corporation and Purchase
Purchase of Natural Agreement
Gas
- --------------------------------------------------------------------------------------------------------------------------------
1040 Elton Bowman and Una Mae Lease between Elton Surface Lease $0.00 Gathering
Bowman Bowman and System
Una Mae Bowman (Lessor)
&
Farmland Industries,
Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Energy Support Natural Gas Agency Coffeyville
Providers, LLC Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Engineered Recovery Service Agreement Coffeyville
Systems, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Entek IRD Corporation ESAFE Agreement Coffeyville
(Includes Enline
66 and Odyssey)
- --------------------------------------------------------------------------------------------------------------------------------
0768 EOTT Energy Operating Crude Oil Exchange Exchange $0.00 Gathering
Limited Party Contract Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
0769 EOTT Energy Operating Crude Oil Exchange Exchange $0.00 Gathering
Limited Party Contract Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
1041 Estate Land Company Lease between Estate Non-Residential $0.00 Gathering
Land Real System
Company (Lessor) & Property Lease
Farmland
Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31258 Exxon Research and Flexicracking Process License $26,996.00 Coffeyville
Engineering License and Agreement
Company Engineering Agreement
- --------------------------------------------------------------------------------------------------------------------------------
819 Farm Credit Lease Agreement for 100 $114,206.00
UAN tank cars.
- --------------------------------------------------------------------------------------------------------------------------------
N31248 Phillips Petroleum Metals Passivation License $0.00 Coffeyville
Company License Agreement
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31260 Phillips Petroleum Reforming Technology License $0.00 Coffeyville
Company License Agreement
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31265 Freedom Group Inc. Membership Agreement Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
GE Capital Modular CEMS Trailer Lease Lease Agreement $634.00 Coffeyville
Space #822356
- --------------------------------------------------------------------------------------------------------------------------------
0773 GE Capital Modular Lease of a 14x70 office Equipment Lease $1,130.00 Coffeyvile
Space trailer
- --------------------------------------------------------------------------------------------------------------------------------
0774 GE Capital Modular Lease for double wide Equipment Lease $2,046.00 Coffeyville
Space office
- --------------------------------------------------------------------------------------------------------------------------------
842 GE Capital Railcar Railcar lease Lease Agreement for $18,900.00
Services 18 tank cars
- --------------------------------------------------------------------------------------------------------------------------------
N31435 GATX Lease Agreement for 150 $428,794.00
Ammonia
tank cars
- --------------------------------------------------------------------------------------------------------------------------------
1044 Grabs Kemp Lease between Gratis Non-Residential $0.00 Gathering
Kemp Real System
(Lessor) & Farmland Property Lease
Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31273 Greeley Gas Company Sales and Transportation Service $154,490.00 Coffeyville
(now ATMOS) Service Agreement
(Original agreement was Agreement
in name of
United Cities Gas Co.
which sold to
Greeley and which then sold
to Atmos)
- --------------------------------------------------------------------------------------------------------------------------------
Harbison Walker Refractory Purchase Order $0.00
Refractives
- --------------------------------------------------------------------------------------------------------------------------------
Harry R. Defeer Corp. Petroleum Coke Purchase Order $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Harry R. Defeer Corp. Petroleum Coke Purchase Order $0.00
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. CAL II Use Rights License Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. GRTMPS Continuous Maintenance Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. ICDM Software Continuous Coffeyville
Maintenance Agreement Renewal
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. Template Continuous Coffeyville
Maintenance
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0776 Honeywell Hi-Spec Advanced Process Control Service $0.00 Coffeyville
Solutions Technical Agreement
Service Contract
- --------------------------------------------------------------------------------------------------------------------------------
Honeywell International Industrial Services $7,608.00
Inc. Agreement No.
14284
- --------------------------------------------------------------------------------------------------------------------------------
0777 Honeywell International Industrial Control Services Service $8,535.00 Coffeyville
Inc. Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1028 Brothers Dairy Surface Lease between Surface Lease $0.00 Gathering
Incorporated Brothers System
Dairy Incorporated (Lessor) &
Farmland Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
1046 James A. Wheeler and Leta Lease between James A. Non-Residential $0.00 Gathering
Beth Wheeler Real System
Wheeler and Leta Beth Wheeler Property Lease
(Lessor) &
Farmland Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
TPA, Inc. License Agreement - TPA Technology $0.00 Coffeyville
Technology (Oxygen Injection) License
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
TPA, Inc. License Agreement - TPA Technology $0.00 Coffeyville
Technology (Sulfur Recovery) License
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1047 James R. and Mary E. Lease between James R. and Non-Residential $0.00 Gathering
Conrad Mary E. Conrad Real System
(Lessor) & Farmland Property Lease
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
1048 Jayhawk Pipeline Lease between Jayhawk Non-Residential $0.00 Gathering
Corporation Pipeline Real System
Corporation (Lessor) & Property Lease
Farmland
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31388 ATSF & MKT Railroads Pipe Line License Lease Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Bryan Research and Software Licensing Agreement Coffeyville
Engineering, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
1050 Jody Morgan Lease between Jody Morgan Non-Residential $0.00 Gathering
(Lessor) & Farmland Real System
Industries, Inc. (Lessee) Property Lease
- --------------------------------------------------------------------------------------------------------------------------------
N31415 Union Pacific Railroad Pipe Line License License Agreement $0.00 Gathering
(Agmt originally System
w/Midland Valley Railroad
Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31419 Union Pacific Pipe Line License $0.00 Gathering
Railroad System
- --------------------------------------------------------------------------------------------------------------------------------
N31420 Union Pacific Railroad Pipe Line License $0.00 Coffeyville
(Agmt originally
w/Missouri Pacific RR
Co)
- --------------------------------------------------------------------------------------------------------------------------------
N31421 Union Pacific Railroad Pipe Line License $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31422 Union Pacific Pipe Line License $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
AX&P, Inc. Crude Oil Purchase Agreement Agreement $0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
N31262 Westar Energy (f/k/a Electric Service Agreement for Service $946,051.00 Coffeyville
Kansas Gas and Coffeyville Refinery Agreement
Electric Co.)
- --------------------------------------------------------------------------------------------------------------------------------
N31522 Kansas Water Office Water Purchase Contract $0.00
(Coffeyville)
- --------------------------------------------------------------------------------------------------------------------------------
1052 Kaw Pipe Line Company Sublease between Kaw Pipe Line Non-Residential $0.00 Gathering
Company (Lessor) & Farmland Real System
Industries, Inc. (Sublessee) Property
Sublease
- --------------------------------------------------------------------------------------------------------------------------------
1053 Kaw Pipe Line Company Sublease between Kew Pipe Line Non-Residential $0.00 Gathering
Company (Sublessor) & Farmland Real System
Industries, Inc. (Sublessee) Property
Sublease
- --------------------------------------------------------------------------------------------------------------------------------
Profimatics, Inc. (now FCC-SIMOPT Software Package Coffeyville
KBC) License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1054 Kenneth Bever Lease between Kenneth Bever Non-Residential $0.00 Gathering
(Orignally N. C. (Lessor) & Farmland Real System
Spurlock) Industries, Inc. Property Lease
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
0782 Koch Sulfur Products Purchase Contract for molten Purchase $3,346.60 Coffeyville
Company, LLC sulfur Agreement
- --------------------------------------------------------------------------------------------------------------------------------
L&G Petroleum Crude Oil Purchase Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Entek IRD Corporation ESAFE Agreement (Includes Coffeyville
Enline
66 and Odyssey)
- --------------------------------------------------------------------------------------------------------------------------------
N31262 Westar Energy (f/k/a Electric Service Agreement for Service $946,051.O0 Coffeyville
Kansas Gas and Coffeyville Refinery Agreement
Electric Co.)
- --------------------------------------------------------------------------------------------------------------------------------
1061 Laurence and Lorene Lease between Laurence and Non-Residential $0.00 Gathering
Diehl Lorene Real System
Diehl (Lessor) & Farmland Property Lease
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Chicago, Rock Island and Pipe Line License License $0.00 Gathering
Pacific Agreement System
Railroad Company (now
Kyle R.R.)
- --------------------------------------------------------------------------------------------------------------------------------
Chicago, Rock Island and Pipe Line License License $0.00 Gathering
Pacific Agreement System
Railroad Company (now
U.P.)
- --------------------------------------------------------------------------------------------------------------------------------
Chicago, Rock Island and Pipe Line License License $0.00 Gathering
Pacific Agreement System
Railroad Company (now
UP)
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Kansas Texas Pipe Line License License $0.00 Coffeyville
Railroad Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Kansas Texas Pipe Line License License $0.00 Gathering
Railroad Agreement System
Company
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Kansas Texas Pipeline Agreement - Crossing License $0.00 Coffeyville
Railroad Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Kansas Texas Power Line License License $0.00 Coffeyville
Railroad Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Kansas Texas Pipe Line License License $0.00 Coffeyville
Railway Agreement
Company
- --------------------------------------------------------------------------------------------------------------------------------
1062 Leland H. Schumacher Lease between Leland H. Non-Residential $0.00 Gathering
and Augusta Schumacher and Augusta Real System
Brungardt Brungardt (Lessor) & Farmland Property Lease
Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
1063 Madean Heyen and June Lease between Madean Heyen Non-Residential $0.00 Gathering
Heyen and Real System
June Heyen (Lessor) & Property Lease
Farmland
Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
1394 Marguerite Swain Lease between Marguerite Non-Residential $0.00 Gathering
Swain Real System
(Lessor) & Farmland Property Lease
Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31247 Petrolite Petreco Desalting Equipment Equipment Lease $0.00 Coffeyville
Corporation Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31259 Merichem Company Process License License $4,343.00 Coffeyville
Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
MFA Incorporated Prepay Ammonia Contract No.
400038381
- --------------------------------------------------------------------------------------------------------------------------------
MFA Incorporated Prepay Ammonia Contract No.
40038382
- --------------------------------------------------------------------------------------------------------------------------------
Mid-America Building Janitorial Services Service $0.00 Coffeyville
Maintenance, Agreement Agreement
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
1067 Mid-America Pipeline Pipeline Capacity Equipment Lease $0.00 Coffeyville
system (now Lease and
Williams Energy Operating Agreement
Services) between Mid-
America Pipeline system
(Lessor) &
Farmland Industries,
Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License $0.00 Coffeyville
Railroad Company Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License $0.00 Gathering
Railroad Company Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Supplemental Agreement & License $0.00 Gathering
Railroad Company Lease Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Wire Line License License $0.00 Gathering
Railroad Company Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License $0.00 Coffeyville
Railroad Company Agreement
(Agmt originally
w/Mo-Ks-Tx Railroad)
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License $0.00 Coffeyville
Railway Company Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31391 Missouri Pacific Agreement for Pipe Line Lease Agreement $0.00 Coffeyville
Railroad Crossing
- --------------------------------------------------------------------------------------------------------------------------------
N31392 Missouri Pacific Pipe Line License Lease Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
N31255 Mobil Oil Sludge Coking Process License License $42,590.77 Coffeyville
Corporation Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1043 Mrs. Faye Taylor and Lease between Floyd Allred, Non-Residential $0.00 Gathering
Mrs. Mabel E. Mrs. Faye Taylor and Mrs. Mabel Real System
Allred E. Allred (Lessor) Property Lease
& Farmland Industries, Inc.
(Lessee) Mrs. Mabel E. Allred
(Lessor) & Farmland
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
1396 Nancy and Parker Lease between Nancy and Non-Residential $0.00 Gathering
Badenhop Parker Real System
Badenhop (Lessor) & Property Lease
Farmland
Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
National Cooperative Employee Lease Agreement Gathering
Refinery Assoc. Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
National Cooperative Equipment Lease Agreement Equipment Lease $0.00 Gathering
Refinery System
Association
- --------------------------------------------------------------------------------------------------------------------------------
0783 National Cooperative Accounting Services Service $18,343.45 Coffeyville
Refinery Assoc Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0786 National Cooperative Crude Oil Purchase Purchase $1,486,521.00 Coffeyville
Refinery Assoc Agreement Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0785 National Cooperative Crude Oil Exchange Exchange $72,649.35 Gathering
Refinery Contract (#5993) Agreement System
Association
- --------------------------------------------------------------------------------------------------------------------------------
0769 EOTT Energy Operating Crude Oil Exchange Exchange $0.00 Gathering
Limited Party Contract Agreement System
- --------------------------------------------------------------------------------------------------------------------------------
1072 Octagon Investment Lease between Octagon Non-Residential Real $0.00 Gathering
Company (Originally with Investment Company (Lessor) Property Lease System
John M. Kane Land Trust) & Farmland Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
0789 ONEOK NGL Marketing, L.P. Agreement Lease Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Oxbow Carbon and Minerals LLC Petroleum Coke Agreement $0.00
- --------------------------------------------------------------------------------------------------------------------------------
N31283 Paulette A Briley and James Lease of Property located Non-Residential Real $300.00 Gathering
L. Briley in Chautauqua County, OK Property Lease System
(Contract is in name of
Bill Brown &
Betty Lowery).
- --------------------------------------------------------------------------------------------------------------------------------
Peter Berick Water Treatment Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31247 Petrolite Corporation Petreco Desalting Equipment Equipment Lease $0.00 Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31245 Petrolite Corporation, Ltd. License Agreement License Agreement for $8,898.00 Coffeyville
Vertical Desalter
- --------------------------------------------------------------------------------------------------------------------------------
N31246 Petrolite Corporation, Ltd. Electrical Purification Equipment Lease for $0.00 Coffeyville
Equipment Loan Agreement Spherical Desalter
- --------------------------------------------------------------------------------------------------------------------------------
N31260 Phillips Petroleum Company Reforming Technology License Agreement $0.00 Coffeyville
License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31248 Phillips Petroleum Company Metals Passivation License License Agreement $0.00 Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
852 Pitney Bowes Lease Agreement for 200 UAN $210,663.00
tank cars.
- --------------------------------------------------------------------------------------------------------------------------------
Imaginistics Fax machine rental contract Lease Agreement $75.00 Coffeyville
(f/k/a Pitney Bowes) #R370748
- --------------------------------------------------------------------------------------------------------------------------------
Imaginistics Fax machine rental contract Lease Agreement $75.00 Coffeyville
(f/k/a Pitney Bowes) #R412310 replaces #R310475
- --------------------------------------------------------------------------------------------------------------------------------
Imaginistics Fax machine rental contract Lease Agreement $86.00 Coffeyville
(f/k/a Pitney Bowes) #R8055994
- --------------------------------------------------------------------------------------------------------------------------------
Imaginistics Fax machine rental contract Lease Agreement $38.00 Coffeyville
(f/k/a Pitney Bowes) #R8962785
- --------------------------------------------------------------------------------------------------------------------------------
Prime Energy Air Compressor Coffeyville
Rental Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31266 Process Industry Practices Subscription and License License Agreement $0.00 Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Project Software and Software License Agreement Coffeyville
Development, Inc. (now MRO)
- --------------------------------------------------------------------------------------------------------------------------------
Quest Resource Corporation Base Contract For Sale and Natural Gas Purchase $0.00 Coffeyville
Purchase of Natural Gas Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1595 GE Capital (as assigned by Master Lease Agreement Equipment Lease $0.00 Coffeyville
Reliant Energy Solutions)
- --------------------------------------------------------------------------------------------------------------------------------
N31264 Rexel Nelson Agreement for Sale on Sale Agreement $0.00 Coffeyville
Consignment (electrical motors)
- --------------------------------------------------------------------------------------------------------------------------------
1077 Robert L. Campbell Lease between Robert L. Non-Residential Real $0.00 Coffeyville
Campbell (Lessor) & Farmland Property Lease
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc. Prepay Ammonia Contract No.
400038380
- --------------------------------------------------------------------------------------------------------------------------------
1020 Running "F", Inc. Lease between Running "F", Non-Residential Real $0.00 Gathering
Inc. (Lessor) & Farmland Property Lease System
Industries, Inc (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
N31284 Ruth Spurgeon (Assigned Lease of Property located Non-Residential Real $0.00 Gathering
from Edward & Norma Miller). in Nowata County, OK Property Lease System
- --------------------------------------------------------------------------------------------------------------------------------
Saint-Gobain Ceramics and Refractory Agreement $0.00
Plastics, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
0792 Seaway Crude Pipeline Company Division of Rates Agreement Service Agreement $196,236.72 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Seaway Crude Pipeline Division of Rates Agreement Service Agreement $196,236.72 Coffeyville
Company
- --------------------------------------------------------------------------------------------------------------------------------
Seminole Transportation and Lease Agreement Lease Agreement for Gathering
Gathering, Inc. Haviland Station System
- --------------------------------------------------------------------------------------------------------------------------------
Seminole Transportation and Lease Agreement Lease Agreement for Gathering
Gathering, Inc. Susank Station System
- --------------------------------------------------------------------------------------------------------------------------------
Shannahan Crane & Hoist, Inspection Agreement Coffeyville
Inc.
- --------------------------------------------------------------------------------------------------------------------------------
0793 Sinclair Oil Corporation Asphalt Services Agreement Service Agreement $0.00 Phillipsburg
for the
terminaling of Roll
Saturate and
Roofing Flux ("Products")
- --------------------------------------------------------------------------------------------------------------------------------
Sinclair Pipe Line Company Pipe Line License Lease Agreement $0.00 Gathering
(assigned from Missouri-Kansas-Texas System
Railroad Company)
- --------------------------------------------------------------------------------------------------------------------------------
South Kansas & Oklahoma Overhead Utility Bridge Agreement $0.00 Coffeyville
Railroad Agreement
- --------------------------------------------------------------------------------------------------------------------------------
South Kansas & Oklahoma Pipeline Agreement Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
South Kansas & Oklahoma Waterline Agreement Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
South Kansas and Oklahoma License Agreement for Wire, License Agreement $0.00 Coffeyville
Railroad Pipe
and Cable Transverse
Crossings and
Longitudinal Occupations
- --------------------------------------------------------------------------------------------------------------------------------
South Kansas and Oklahoma Pipeline Agreement-Crossing Lease Agreement $0.00 Gathering
Railroad System
- --------------------------------------------------------------------------------------------------------------------------------
Southeast Kansas Railroad Industry Track Agreement Track Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Southeast Kansas Railroad Industry Tract Agreement Railcar Storage $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
St. Louis-San Francisco Pipe Line Crossing Contract Lease Agreement $0.00 Gathering
Railway Company System
- --------------------------------------------------------------------------------------------------------------------------------
St. Louis-San Francisco Pipe Line Crossing Contract License Agreement $0.00 Gathering
Railway Company System
- --------------------------------------------------------------------------------------------------------------------------------
N31405 The Staubach Company (Agmt Pipe Line License License Agreement $0.00 Gathering
originally w/Atchison, System
Topeka and
Santa Fe Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31406 The Staubach Company (Agmt Pipe Line Crossing Contract Gathering
originally w/St. Louis San System
Francisco Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31408 The Staubach Company (Agmt Pipe Line License License Agreement $0.00 Coffeyville
Extension originally w/Atchison,
Rider Topeka and
Santa Fe Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31409 The Staubach Company (Agmt Pipe Line License $0.00 Coffeyville
originally w/Atchison,
Topeka and
Santa Fe Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31410 The Staubach Company (Agmt Pipe Line License $0.00 Gathering
originally w/Atchison, System
Topeka and
Santa Fe Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31411 The Staubach Company (Agmt Pipe Line License $0.00 Gathering
originally w/Atchison, System
Topeka and
Santa Fe Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31412 The Staubach Company (agmt Pipe Line License $0.00 Gathering
originally w/Atchison, System
Topeka and
Santa Fe Railway Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31413 The Staubach Company (Agmt Pipe Line Crossing $0.00 Gathering
originally w/St Louis-San Contract System
Francisco RR Co)
- --------------------------------------------------------------------------------------------------------------------------------
N31414 The Staubach Company (Agmt Pipe Line License $0.00 Gathering
originally w/St. System
Louis-San Frisco RR Co)
- --------------------------------------------------------------------------------------------------------------------------------
N31388 ATSF & MKT Railroads Pipe Line License Lease Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
0794 Sun Company, Inc. Crude Oil Bulk Purchase Purchase Agreement. $0.00 Gathering
Agreement Farmland sells to Sun System
- --------------------------------------------------------------------------------------------------------------------------------
0795 Sun Company, Inc. Sale Agreement for Sale Agreement- $0.00 Gathering
Light Cycle Oil Farmland sells to Sun System
- --------------------------------------------------------------------------------------------------------------------------------
1081 Sun Pipe Line Company Lease between Sun Pipe Line Non-Residential Real $0.00 Gathering
Company (Lessor) & Farmland Property Lease System
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
0796 Terra Resources, Inc. Agreement for Preferential Purchase Agreement $0.00 Gathering
Right to Purchase Crude Oil System
- --------------------------------------------------------------------------------------------------------------------------------
Tessenderlo Kerley, Inc. Ground Lease Lease Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
0797 Tessenderlo Kerley Inc. Sulfur Processing Agreement Service Agreement $796,446.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
1495 Tessenderlo Kerley, Inc. Phase II Sulfur Processing $331,349.00
Agreement (requires
modification)
- --------------------------------------------------------------------------------------------------------------------------------
Texaco Development THGP Technical Services
Corporation Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0290 Texaco Development License Agreement for Use of $1,316,244.20
Corporation the Texaco Gasification
Process, Texaco
Hydrogen Generation Process, and
Texaco Gasification Power Systems
(requires modification)
- --------------------------------------------------------------------------------------------------------------------------------
Texaco,lnc. License Agreement-Texaco License Agreement $62,500.00 Coffeyville
General Equipment and
Materials Specifications (GEMS)
- --------------------------------------------------------------------------------------------------------------------------------
0800 TexPar Energy, Inc. Purchase/Sale Agreement for Purchase Agreement $0.00 Coffeyville
CBO/Slurry
- --------------------------------------------------------------------------------------------------------------------------------
0259 The BOC Group, Inc. On-Site Product Supply Agreement $0.00
with the BOC Group, Inc. dated
12/3/97 (requires modifications)
- --------------------------------------------------------------------------------------------------------------------------------
1067 Mid-America Pipeline Pipeline Capacity Lease and Equipment Lease $0.00 Coffeyville
system (now Williams Operating Agreement between
Energy Services) Mid America Pipeline system
(Lessor) & Farmland
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
American Petroleum Petroleum and Allied Coffeyville
Institute ("API") Industry Agreement
- --------------------------------------------------------------------------------------------------------------------------------
BP America Production Co. Crude Oil Agreement Agreement $0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
The Coleman Company, Inc. Agreement Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Harbison Walker Refractives Refractory Purchase Order $0.00
- --------------------------------------------------------------------------------------------------------------------------------
L&G Petroleum Crude Oil Purchase Agreement
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
MFA Incorporated Prepay Ammonia Contract No.
400038381
- --------------------------------------------------------------------------------------------------------------------------------
MFA Incorporated Prepay Ammonia Contract No.
40038382
- --------------------------------------------------------------------------------------------------------------------------------
Seminole Transportation and Lease Agreement Lease Agreement for Gathering
Gathering, Inc. Haviland Station System
- --------------------------------------------------------------------------------------------------------------------------------
Seminole Transportation and Lease Agreement Lease Agreement for Gathering
Gathering, Inc. Susank Station System
- --------------------------------------------------------------------------------------------------------------------------------
United Suppliers, Inc. Prepay Ammonia Contract No.
400038378
- --------------------------------------------------------------------------------------------------------------------------------
United Suppliers, Inc. Prepay Ammonia Contract No.
400038379
- --------------------------------------------------------------------------------------------------------------------------------
United Suppliers, Inc. Prepay Ammonia Contract No.
400038386
- --------------------------------------------------------------------------------------------------------------------------------
0257 Banks Construction Coke Handling Agreement $237,407.00
Company, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
0259 The BOC Group, Inc. On-Site Product Supply $0.00
Agreement with the BOC
Group, Inc. dated
12/3/97 (requires
modifications)
- --------------------------------------------------------------------------------------------------------------------------------
0786 National Cooperative Crude Oil Purchase Purchase Agreement $1,486,521.00 Coffeyville
Refinery Assoc Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0805 Williams Midstream Natural Gas Product Storage Lease RGB Storage Lease $0.00 Coffeyville
Liquids, Inc for RGBs (Contract No.
2003-0001)- Conway Holding
- --------------------------------------------------------------------------------------------------------------------------------
N31273 Greeley Gas Company Sales and Transportation Service Agreement $154,490.00 Coffeyville
(now ATMOS) (Original Service Agreement
agreement was in name of
United Cities Gas Co. which
sold to Greeley and which
then sold to Atmos)
- --------------------------------------------------------------------------------------------------------------------------------
Baker Tanks, Inc. Polymer Tank Coffeyville
Rental Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License Agreement $0.00 Coffeyville
Railroad Company
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License Agreement $0.00 Gathering
Railroad Company System
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Supplemental Agreement License Agreement $0.00 Gathering
Railroad Company & Lease System
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Wire Line License License Agreement $0.00 Gathering
Railroad Company System
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License Agreement $0.00 Coffeyville
Railroad Company
(Agmt originally
w/Mo-Ks-Tx Railroad)
- --------------------------------------------------------------------------------------------------------------------------------
Missouri Pacific Pipe Line License License Agreement $0.00 Coffeyville
Railway Company
- --------------------------------------------------------------------------------------------------------------------------------
N31391 Missouri Pacific Railroad Agreement for Pipe Lease Agreement $0.00 Coffeyville
Line Crossing
- --------------------------------------------------------------------------------------------------------------------------------
N31392 Missouri Pacific Railroad Pipe Line License Lease Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Royster-Clark, Inc. Prepay Ammonia Contract No.
400038380
- --------------------------------------------------------------------------------------------------------------------------------
ZyTax, Inc. Software License Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
1048 Jayhawk Pipeline Corporation Lease between Jayhawk Non-Residential $0.00 Gathering
Pipeline Corporation Real System
(Lessor) & Farmland Property Lease
Industries, Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
0761 Citation Oil and Crude Oil Purchase Agreement Purchase $0.00 Gathering
Gas Corp. Agreements System
- --------------------------------------------------------------------------------------------------------------------------------
Honeywell International Inc. Industrial Services $7,608.00
Agreement No. 14284
- --------------------------------------------------------------------------------------------------------------------------------
0777 Honeywell International Inc. Industrial Control Service Agreement $8,535.00 Coffeyville
Services Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0782 Koch Sulfur Products Purchase Contract for Purchase Agreement $3,346.60 Coffeyville
Company, LLC molten sulfur
- --------------------------------------------------------------------------------------------------------------------------------
0795 Sun Company, Inc. Sale Agreement for Sale Agreement - $0.00 Gathering
Light Cycle Oil Farmland sells to Sun System
- --------------------------------------------------------------------------------------------------------------------------------
Tessenderlo Kerley, Inc. Ground Lease Lease Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
0797 Tessenderlo Kerley Inc. Sulfur Processing Agreement Service Agreement $796,446.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31250 Universal Oil UOP Platforming License Agreement $0.00 Coffeyville
Products Company Process License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Saint-Gobain Ceramics Refractory Agreement $0.00
and Plastics, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
The Prairie Oil & Gas Company Lease Lease Agreement $0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
The Prairie Oil & Gas Company Lease Lease Agreement $0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
N31264 Rexel Nelson Agreement for Sale on Sale Agreement $0.00 Coffeyville
Consignment (electrical motors)
- --------------------------------------------------------------------------------------------------------------------------------
Texaco, Inc. License Agreement - Texaco License Agreement $62,500.00 Coffeyville
General Equipment and
Materials Specifications (GEMS)
- --------------------------------------------------------------------------------------------------------------------------------
1053 Kaw Pipe Line Company Sublease between Kaw Pipe Line Non-Residential $0.00 Gathering
Company (Sublessor) & Farmland Real System
Industries, Inc. (Sublessee) Property Sublease
- --------------------------------------------------------------------------------------------------------------------------------
Texaco Development THGP Technical Services
Corporation Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0290 Texaco Development License Agreement for Use $1,316,244.20
Corporation of the Texaco Gasification
Process, Texaco Hydrogen
Generation Process, and
Texaco Gasification Power
Systems (requires
modification)
- --------------------------------------------------------------------------------------------------------------------------------
0805 Williams Midstream Natural Product Storage Lease RGB Storage Lease $0.00 Coffeyville
Gas Liquids, Inc for RGBs (Contract No.
2003-0001) - Conway
Holding
- --------------------------------------------------------------------------------------------------------------------------------
N31259 Merichem Company Process License Agreement License Agreement $4,343.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Toptech Systems, Inc. Software Support and Coffeyville
Maintenance Agreement
- --------------------------------------------------------------------------------------------------------------------------------
TPA, Inc. License Agreement - TPA Technology License $0.00 Coffeyville
Technology (Oxygen Injection) Agreement
- --------------------------------------------------------------------------------------------------------------------------------
TPA, Inc. License Agreement - TPA Technology License $0.00 Coffeyville
Technology (Sulfur Recovery) Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31256 Union Carbide Corporation Total Isomerization Process License Agreement $0.00 Coffeyville
License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31399 Union Pacific Railroad Track Lease Agreement- First Lease Agreement $0.00 Coffeyville
Amendment
- --------------------------------------------------------------------------------------------------------------------------------
N31400 Union Pacific Railroad Pipe Line License Lease Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31399 Union Pacific Railroad Track Lease Agreement - First Lease Agreement $0.00 Coffeyville
Amendment
- --------------------------------------------------------------------------------------------------------------------------------
N31400 Union Pacific Railroad Pipe Line License Lease Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31415 Union Pacific Railroad Pipe Line License License Agreement $0.00 Gathering
(Agmt originally System
w/Midland Valley
Railroad Company)
- --------------------------------------------------------------------------------------------------------------------------------
N31419 Union Pacific Railroad Pipe Line License $0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
N31420 Union Pacific Railroad Pipe Line License $0.00 Coffeyville
(Agmt originally
w/Missouri Pacific RR Co)
- --------------------------------------------------------------------------------------------------------------------------------
N31421 Union Pacific Railroad Pipe Line License $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31422 Union Pacific Railroad Pipe Line License $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31393 Missouri-Kansas-Texas Pipe Line License Lease Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
N31394 Missouri-Kansas-Texas Electric Power Transmission Lease Agreement $0.00 Coffeyville
Railroad Line Across or Along Railroad
Company Property
- --------------------------------------------------------------------------------------------------------------------------------
N31395 Missouri-Kansas-Texas Pipe Line License Lease Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
N31396 Missouri-Kansas-Texas Pipe Line License Lease Agreement $0.00 Coffeyville
Railroad
- --------------------------------------------------------------------------------------------------------------------------------
N30877 Union Pacific Railroad Power Line License License Agreement $0.00 Coffeyville
(Agmt originally
w/Mo-Ks-Tx Railroad)
- --------------------------------------------------------------------------------------------------------------------------------
United Suppliers, Inc. Prepay Ammonia Contract No.
400038378
- --------------------------------------------------------------------------------------------------------------------------------
United Suppliers, Inc. Prepay Ammonia Contract No.
400038379
- --------------------------------------------------------------------------------------------------------------------------------
United Suppliers, Inc. Prepay Ammonia Contract No.
400038386
- --------------------------------------------------------------------------------------------------------------------------------
N31249 Universal Oil Products UOP "HF" Alkylation Process License Agreement $6,153.00 Coffeyville
Company License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31250 Universal Oil Products UOP Platforming Process License Agreement $0.00 Coffeyville
Company License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Universal Oil Products LPG Merox Process License Agreement $0.00 Coffeyville
Company Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31251 Universal Oil Products UOP Merox Process License License Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31252 Universal Oil Products Unifying Process Agreement Service Agreement $0.00 Coffeyville
Company
- --------------------------------------------------------------------------------------------------------------------------------
UOP Precious Metals Lease $15,638.14 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31257 UOP Process Division Hydrobon Process License License Agreement $0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
N31253 UOP Process Division, Service Agreement Service Agreement $3,568.00 Coffeyville
a division of
- --------------------------------------------------------------------------------------------------------------------------------
N31254 UOP Process Division, UOP HC Platforming Process Service Agreement $0.00 Coffeyville
a division of Guarantee Agreement
- --------------------------------------------------------------------------------------------------------------------------------
UOP Selexol Process
License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Profirmatics, Inc. (now KBC) FCC-SIMOPT Software Package Coffeyville
License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
1085 Veva Conness Lease between Veva Conness Non-Residential Real $0.00 Gathering
(Lessor) & Farmland Industries, Property Lease System
Inc. (Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. CAL II Use Rights Coffeyville
License Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. GRTMPS Continuous Maintenance Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Haverly Systems, Inc. ICDM Software Continuous Coffeyville
Maintenance Agreement Renewal
- --------------------------------------------------------------------------------------------------------------------------------
Haverty Systems, Inc. Template Continuous Coffeyville
Maintenance Agreement
- --------------------------------------------------------------------------------------------------------------------------------
Vivian Mayer, Raymond Clark, Surface Lease Agreement $0.00 Gathering
Lyle Shawler, Faye Clark System
& Mary Shawler (Original
Lessor was W. M. & Maude Clark)
- --------------------------------------------------------------------------------------------------------------------------------
1086 Wade and Margarte Lease between Wade Margarte Non-Residential Real $12.50 Gathering
Waldschmidt Waldschmidt (Lessor) & APCO Property Lease System
Pipe Line (Lessee) assigned to
Farmland on 11/10/71.
- --------------------------------------------------------------------------------------------------------------------------------
1087 Wade S. Waldschmidt Lease between Wade Non-Residential Real $0.00 Gathering
Waldschmidt (Lessor) & Property Lease System
Farmland Industries, Inc.
(Lessee)
- --------------------------------------------------------------------------------------------------------------------------------
Shannahan Crane & Hoist, Inc. Inspection Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
0805 Williams Midstream Natural Product Storage Lease RGB Storage Lease $0.00 Coffeyville
Gas Liquids, Inc or RGBs (Contract No. 2003 -
0001) - Conway Holding
- --------------------------------------------------------------------------------------------------------------------------------
0806 Williams Midstream Natural Product Storage Lease Isobulane Storage $0.00 Coffeyville
Gas Liquids, Inc (Contract No. 2003-0016) - Lease
Conway Holding
- --------------------------------------------------------------------------------------------------------------------------------
Williams Midstream Natural Product Storage Lease RGB Storage Lease $0.00 Coffeyville
Gas Liquids, Inc. (contract No. 2003-0002)
- --------------------------------------------------------------------------------------------------------------------------------
0809 Williams Pipe Line Company Agreement of Capacity Lease Equipment Lease $38,750.00 Coffeyville
and Operating Agreement
(for portions of 8" and 10"
pipelines between Coffeyville
and Caney Junction,
Kansas, and Coffeyville and
Independence, Kansas)
- --------------------------------------------------------------------------------------------------------------------------------
Williams Pipe Line Company Joint Tariff Agreement Joint Tariff $0.00 Coffeyville
Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0810 Williams Pipe Line Company Petroleum Products Transport Agreement $0.00 Coffeyville
Transportation Agreement
- --------------------------------------------------------------------------------------------------------------------------------
0808 Williams Pipe Line Company Crude Oil Pipeline Agreement Purchase Agreement $0.00 Coffeyville
(16" Coffeyville line)
- --------------------------------------------------------------------------------------------------------------------------------
Wilson Supply, a unit Purchasing and Warehouse Service Agreement $151,145.77 Coffeyville
of Smith International, Inc. Services Agreement
- --------------------------------------------------------------------------------------------------------------------------------
N31261 W.R. Grace & Co. - Conn. Desox Injection Equipment Equipment Lease $3,050.00 Coffeyville
Lease
- --------------------------------------------------------------------------------------------------------------------------------
ZyTax, Inc. Software License Agreement Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Adobe Acrobat 5.0 Software 0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Autodesk Autocad Software 0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Autodesk Autocad LT Software 0.00 Coffeyville
- --------------------------------------------------------------------------------------------------------------------------------
Computer Associates AcrServe Software 393.00 Coffeyville
International
- --------------------------------------------------------------------------------------------------------------------------------
Mathsoft Engineering & Mathcad Software 0.00 Gathering
Education Inc. System
- --------------------------------------------------------------------------------------------------------------------------------
Palm Inc Palm Desktop Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Prolink Microsystems Inc Prolink Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Bachelor Controls (BCI) Automated loadout system Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Invensys Triconex Operating Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Invensys Triconex Recorder Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Honeywell Inc. Uniformance Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Microsoft Visio 2000 Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Microsoft Visual Basic Software 0.00 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
NUS York DTS Software Software 0 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
CSI CSI 8117 Pro-Align Software 0 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Modicon York DTS Software Software 0 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Williams Interactive Maintenance Software 0 Gathering
Training System
- --------------------------------------------------------------------------------------------------------------------------------
CSI CSI Model 2120-2 RBM Software 0 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
VSI Ecowatch VSI Software 0 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
GE GE Ditronics Software Software 0 Gathering
System
- --------------------------------------------------------------------------------------------------------------------------------
Honeywell Honeywell Software 40000 Gathering
System
APPENDIX B
Historical Statements
FARMLAND INDUSTRIES, INC.
(PRE-PETITION)
BALANCE SHEET
August 31 May 31
------------------------------------ -----------
1999 2000 2001 2002
---------- ----------- ------------- -----------
(Amounts in Thousands)
ASSETS
Current Assets:
Accounts
receivable - trade 261,271 139,781 123,862 78,385
Accounts receivable -
inter-company 55,107 45,667 45,429 25,227
Inventories 646,588 548,749 342,498 189,091
Deferred income taxes 48,817 44,794 62,358 57,806
Other current assets 111,545 154,830 76,426 50,676
Other current assets -
inter-company 101,493 117,194 165,581 92,941
--------- --------- --------- ---------
Total Current Assets 1,224,821 1,051,015 816,154 494,126
--------- --------- --------- ---------
Investments and
Long-Term Receivables:
Investments and LT
receivables - 3rd party 326,317 396,712 369,881 333,081
Investments and LT
receivables -
inter-company 291,128 308,025 248,343 227,813
--------- --------- --------- ---------
Total Investments and
Long-Term Receivables 617,445 704,737 618,224 560,894
--------- --------- --------- ---------
Property, Plant and Equipment:
Property, plant and
equipment, at cost 1,186,563 1,187,417 1,067,708 1,208,737
Less accumulated
depreciation and
amortization (680,857) (704,085) (660,244) (587,839)
--------- --------- --------- ---------
Net Property, Plant
and Equipment 505,706 483,332 407,464 620,898
--------- --------- --------- ---------
Other Assets 214,248 190,486 214,482 198,515
--------- --------- --------- ---------
Total Assets 2,562,220 2,429,570 2,056,324 1,874,433
========= ========= ========= =========
LIABILITIES AND EQUITIES
Current Liabilities:
Demand loan certificates 25,054 25,731 17,696 0
Short-term notes payable 416,477 430,839 238,125 12,035
Current maturities of
long-term debt 25,040 38,876 43,119 82,739
Accounts payable - trade 271,477 122,938 174,870 181,691
Other current liabilities -
3rd Party 195,785 347,845 197,554 157,505
Other current liabilities -
inter-company 1,690 11,902 (2,377) 19,093
--------- --------- --------- ---------
Total Current Liabilities 935,523 978,131 668,987 453,063
--------- --------- --------- ---------
Long-Term Liabilities:
L-T borrowings (excluding
current maturities) 712,160 583,993 529,636 798,837
Other long-term
liabilities 37,413 37,370 36,453 43,657
--------- --------- --------- ---------
Total Long-Term
Liabilities 749,573 621,363 566,089 842,494
--------- --------- --------- ---------
Deferred Income Taxes 57,075 48,514 70,909 74,364
--------- --------- --------- ---------
Minority Owners' Equity
in Subsidiaries (322) 0 0 0
--------- --------- --------- ---------
Loss to surplus (4,113) (32,321) (1,975) (269,367)
--------- --------- --------- ---------
Income to patrons (30,269) (8,002) 0 0
--------- --------- --------- ---------
Capital Shares and Equities:
Common shares 508,022 522,876 527,562 527,419
Earned surplus and
other equities 346,731 299,009 224,752 246,460
--------- --------- --------- ---------
Total Capital
Shares and Equities 854,753 821,885 752,314 773,879
--------- --------- --------- ---------
Total Liabilities and
Equities 2,562,220 2,429,570 2,056,324 1,874,433
========= ========= ========= =========
FARMLAND INDUSTRIES, INC.
(POST-PETITION)
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
May 31
----------
2003
----------
ASSETS
Current Assets:
Accounts receivable - trade 47,980
Accounts receivable - inter-company 31,876
Inventories 116,309
Other current assets 47,895
Other current assets - inter-company 112,519
---------
Total Current Assets 356,579
---------
Investments and Long-Term Receivables:
Investments and LT receivables - 3rd Party 213,028
Investments and LT receivables - inter-company 236,950
---------
Total Investments and Long-Term Receivables 449,978
---------
Property, Plant and Equipment:
Property, plant and equipment, at cost 524,580
Less accumulated depreciation and amortization (426,980)
---------
Net Property, Plant and Equipment 97,600
---------
Other Assets 84,124
---------
Total Assets 988,281
=========
LIABILITIES AND EQUITIES
Current Liabilities:
Current maturities of long-term debt 22,603
Accounts payable - trade 21,607
Other current liabilities - 3rd party 24,350
Other current liabilities - inter-company 133,170
---------
Total Current Liabilities 201,730
---------
Liabilities Subject to Compromise 810,464
---------
Long-Term Liabilities:
L-T borrowings(excluding current maturities) 15,200
Other long-term liabilities 39,015
---------
Total Long-Term Liabilities 54,215
---------
Deferred Income Taxes 9,998
---------
Net loss (472,718)
---------
Capital Shares and Equities:
Preferred shares 100,000
Common shares 526,075
Accumulated other comprehensive income 3
Earned surplus and other equities (241,486)
---------
Total Capital Shares and Equities 384,592
---------
Total Liabilities and Equities 988,281
=========
FARMLAND INDUSTRIES, INC.
(PRE-PETITION)
STATEMENT OF OPERATIONS
Nine Months
Year Ended August 31 Ended May 31
---------------------------------- ------------
1999 2000 2001 2002
---------- ----------- ----------- ------------
(Amount in Thousands)
Sales 7,152,018 7,541,956 5,795,724 2,957,617
Cost of sales 7,035,820 7,425,309 5,741,286 3,033,896
---------- ---------- ---------- ----------
Gross income 116,198 116,647 54,438 (76,279)
Selling, general and
administrative expense (230,048) (223,460) (130,585) (99,727)
Restructuring and other
charges 0 0 (42,478) (55,577)
Interest Expense (82,801) (101,582) (115,415) (62,612)
Interest Income 23,781 20,504 28,118 13,119
Other income (expense) 85,605 76,581 130,185 (15,974)
Equity in net income
of investees 65,495 56,904 27,460 23,291
Minority owners' interest
in net income of
subsidiaries (340) 504 0 0
Reorganization expense 0 0 0 (51,419)
---------- ---------- ---------- ----------
Loss from continuing
operations before
income tax benefit
and cumulative effect
of changes in accounting
principles (22,110) (53,902) (48,277) (325,178)
Income tax benefit 17,997 21,580 26,371 55,811
---------- ---------- ---------- ----------
Loss from continuing
operations before
cumulative effect of
changes in accounting
principles (4,113) (32,321) (21,906) (269,367)
Cumulative effect of
changes in accounting
for derivative financial
instruments and planned
major maintenance costs,
net of applicable income
tax expense 0 0 19,931 0
---------- ---------- ---------- ----------
Net loss (4,113) (32,321) (1,975) (269,367)
========== ========== ========== ==========
FARMLAND INDUSTRIES, INC.
(POST-PETITION)
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
Three Months Ended Three Months Ended
August 31 May 31
------------------- -------------------
2002 2003
------------------- -------------------
Sales 514,827 1,740,409
Cost of sales 528,123 1,711,752
---------- ----------
Gross income (13,296) 28,657
Selling, general and
administrative expense (18,008) (37,345)
Restructuring and other
(charges) credits (2,639) 2,311
Interest expense (13,021) (17,774)
Interest income (155) 4,124
Other income (expense) (63,773) 44,677
Equity in net income
of investees 11,776 18,388
Reorganization (expense) income (16,953) (515,756)
---------- ----------
Loss from continuing
operations before
income tax benefit (expense) (116,069) (472,718)
Income tax benefit (expense) (7,943) 0
---------- ----------
Net loss (124,012) (472,718)
========== ==========
FARMLAND FOODS, INC.
(PRE-PETITION)
BALANCE SHEET
August 31 May 31
---------------------------------- ------------
1999 2000 2001 2002
---------- ----------- ----------- ------------
(Amount in Thousands)
ASSETS
Current Assets:
Accounts receivable -
trade 72,510 71,134 72,922 73,625
Accounts receivable -
inter-company 7,388 618 1,719 2,901
Inventories 106,150 108,825 117,491 98,082
Other current assets 7,018 10,666 13,287 3,768
--------- --------- --------- ---------
Total Current Assets 193,066 191,243 205,419 178,376
--------- --------- --------- ---------
Investments and Long-Term
Receivables:
Investments and LT
receivables - 3rd Party 670 699 508 221
Investments and LT
receivables - inter-company 61 61 61 61
--------- --------- --------- ---------
Total Investments and
Long-Term Receivables 731 760 569 282
--------- --------- --------- ---------
Property, Plant and
Equipment:
Property, plant and
equipment, at cost 255,429 303,694 318,487 331,968
Less accumulated
depreciation and amortz. (126,589) (152,086) (164,895) (177,862)
--------- --------- --------- ---------
Net Property, Plant and
Equipment 128,840 151,608 153,592 154,106
--------- --------- --------- ---------
Other Assets 10,406 10,476 15,997 10,361
--------- --------- --------- ---------
Total Assets 333,043 354,087 375,577 343,125
========= ========= ========= =========
LIABILITIES AND EQUITIES
Current Liabilities:
Short-term notes payable -
inter-company 80,651 94,400 140,021 79,452
Current maturities of
long-term debt 287 156 294 96
Accounts payable - trade 28,556 33,308 39,387 44,431
Other current liabilities -
3rd party 24,606 15,938 30,678 43,262
Other current liabilities -
inter-company 18,816 17,907 20,355 20,562
--------- --------- --------- ---------
Total Current Liabilities 152,916 161,709 230,735 187,803
--------- --------- --------- ---------
Long-Term Liabilities:
L-T borrowings(excluding
current maturities) 6,064 5,994 5,802 5,530
L-T borrowings -
inter-company 56,800 56,800 56,800 56,800
--------- --------- --------- ---------
Total Long-Term
Liabilities 62,864 62,794 62,602 62,330
--------- --------- --------- ---------
Deferred Income Taxes 3,338 3,338 0 0
--------- --------- --------- ---------
Distribution of current
year income (loss)
Net income (loss) 27,453 12,703 (43,048) 10,758
(Income) loss allocated
to Farmland Industries,
Inc. (26,574) 0 39,515 0
--------- --------- --------- ---------
Net income (loss) to
surplus 879 12,703 (3,533) 10,758
--------- --------- --------- ---------
Capital Shares and Equities:
Common shares 20,865 20,484 20,480 17,153
Earned surplus and other
equities 92,181 93,059 65,293 65,081
--------- --------- --------- ---------
Total Capital Shares and
Equities 113,046 113,543 85,773 82,234
--------- --------- --------- ---------
Total Liabilities and
Equities 333,043 354,087 375,577 343,125
========= ========= ========= =========
FARMLAND FOODS, INC.
(POST-PETITION)
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
May 31
-----------
2003
-----------
ASSETS
Current Assets:
Accounts receivable - trade 70,971
Accounts receivable - inter-company 11,849
Inventories 87,177
Other current assets (1,003)
Other current assets - inter-company 98,568
-----------
Total Current Assets 267,562
-----------
Investments and Long-Term Receivables:
Investments and LT receivables - 3rd Party 207
Investments and LT receivables - inter-company 105
-----------
Total Investments and Long-Term Receivables 312
-----------
Property, Plant and Equipment:
Property, plant and equipment, at cost 346,050
Less accumulated depreciation and amortz. (199,993)
-----------
Net Property, Plant and Equipment 146,057
-----------
Other Assets (1,335)
-----------
Total Assets 412,596
===========
LIABILITIES AND EQUITIES
Current Liabilities:
Short-term notes payable - inter-company 89,970
Current maturities of long-term debt 94
Accounts payable - trade 13,419
Other current liabilities - 3rd party 43,526
Other current liabilities - inter-company 40,196
-----------
Total Current Liabilities 187,205
-----------
Liabilities Subject to Compromise 53,930
-----------
Long-Term Liabilities:
L-T borrowings(excluding current maturities) 3,939
L-T borrowings - inter-company 56,800
-----------
Total Long-Term Liabilities 60,739
-----------
Deferred Income Taxes (9,053)
-----------
Net income 21,906
-----------
Capital Shares and Equities:
Common shares 17,153
Earned surplus and other equities 80,716
-----------
Total Capital Shares and Equities 97,869
-----------
Total Liabilities and Equities 412,596
===========
FARMLAND FOODS, INC.
(PRE-PETITION)
STATEMENT OF OPERATIONS
Nine Months
Year Ended August 31 Ended May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amount in Thousands)
Sales 1,448,970 1,659,570 1,649,657 1,258,838
Cost of sales 1,247,332 1,472,172 1,499,086 1,118,899
----------- ----------- ----------- ------------
Gross income 201,638 187,398 150,571 139,939
Selling, general & administrative expense (157,419) (160,003) (159,293) (114,947)
Restructuring expense 0 0 (17,396) 0
Interest expense (18,249) (11,790) (14,784) (11,818)
Interest income 9 (0) 14 0
Other income (expense) 2,237 (2,889) (4,212) (2,416)
Equity in net income (loss) of investees 15 (13) (3) 0
----------- ----------- ----------- ------------
Income (loss) from continuing operations before
income tax benefit (expense) and cumulative
effect of changes in accounting principles 28,231 12,703 (45,103) 10,758
Income tax benefit (expense) (778) 0 2,210 0
----------- ----------- ----------- ------------
Income (loss) from continuing operations before
cumulative effect of changes in accounting principles 27,453 12,703 (42,893) 10,758
Cumulative effect of changes in accounting for
derivative financial instruments, net of applicable
income tax expense 0 0 (155) 0
----------- ----------- ----------- ------------
Net income (loss) 27,453 12,703 (43,048) 10,758
=========== =========== =========== ============
FARMLAND FOODS, INC.
(POST-PETITION)
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
Three Months Ended Nine Months Ended
August 31 May 31
------------------ -----------------
2002 2003
-----------------
Sales 386,672 1,230,322
Cost of Sales 325,787 1,080,951
------------------ -----------------
Gross income 60,885 149,371
Selling, general & administrative expense (42,876) (107,905)
Interest expense (827) (3,591)
Interest income 0 1
Other income (expense) (11,284) 2,038
Reorganization (expense) income 752 (18,008)
------------------ -----------------
Income (loss) from continuing operations
before income tax benefit (expense) 6,650 21,906
Income tax benefit (expense) (1,772) 0
------------------ -----------------
Net income 4,878 21,906
================== =================
FARMLAND PIPE LINE COMPANY
(PRE-PETITION)
BALANCE SHEET
August 31 May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amounts in Thousands)
ASSETS
Current Assets:
Accounts receivable - trade 179 139 262 146
Accounts receivable - inter-company 0 6,443 5,904 0
Other current assets - inter-company 0 0 1,276 7,494
----------- ----------- ----------- ------------
Total Current Assets 179 6,582 7,442 7,640
----------- ----------- ----------- ------------
Total Assets 179 6,582 7,442 7,640
=========== =========== =========== ============
LIABILITIES AND EQUITIES
Current Liabilities:
Accounts payable - trade (391) 0 0 81
Other current liabilities - 3rd party 750 799 1,626 928
Other current liabilities - inter-company (4,018) 1,463 0 0
----------- ----------- ----------- ------------
Total Current Liabilities (3,659) 2,262 1,626 1,009
----------- ----------- ----------- ------------
Income to surplus 884 482 1,495 815
----------- ----------- ----------- ------------
Capital Shares and Equities:
Common shares 0 0 0 0
Earned surplus and other equities 2,954 3,838 4,321 5,816
----------- ----------- ----------- ------------
Total Capital Shares and Equities 2,954 3,838 4,321 5,816
----------- ----------- ----------- ------------
Total Liabilities and Equities 179 6,582 7,442 7,640
=========== =========== =========== ============
FARMLAND PIPE LINE COMPANY
(POST-PETITION)
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
May 31
----------
2003
----------
ASSETS
Current Assets:
Accounts receivable - trade 300
Other current assets - inter-company 7,825
----------
Total Current Assets 8,125
----------
Total Assets 8,125
==========
LIABILITIES AND EQUITIES
Current Liabilities:
Accounts payable - trade 196
Other current liabilities - 3rd party 416
Other current liabilities - inter-company 523
----------
Total Current Liabilities 1,135
----------
Liabilities Subject to Compromise 120
----------
Net income 176
----------
Capital Shares and Equities:
Common shares 0
Earned surplus and other equities 6,694
----------
Total Capital Shares and Equities 6,694
----------
Total Liabilities and Equities 8,125
==========
FARMLAND PIPE LINE COMPANY
(PRE-PETITION)
STATEMENTS OF OPERATIONS
Nine Months
Year Ended August 31 Ended May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amounts in Thousands)
Sales 0 0 0 0
Cost of sales 1,612 (1,555) (1,883) (590)
----------- ----------- ----------- ------------
Gross income 1,612 1,555 1,883 590
Selling, general & administrative expense (3) (3) (3) (3)
Interest income 261 442 443 228
----------- ----------- ----------- ------------
Income from continuing operations before
income tax expense 1,870 1,994 2,323 815
Income tax expense (986) 1,512 (828) 0
----------- ----------- ----------- ------------
Net income 884 482 1,495 815
=========== =========== =========== ============
FARMLAND PIPE LINE COMPANY
(POST-PETITION)
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
Three Months Ended Nine Months Ended
August 31 May 31
------------------ -----------------
2002 2003
------------------ -----------------
Sales 0 0
Cost of sales (71) (190)
------------------ -----------------
Gross income 71 190
Selling, general and administrative expenses 0 (5)
Interest income 5 0
Reorganization (expense) income (1) (9)
------------------ -----------------
Income from continuing operations
before income tax benefit (expense) 75 176
Income tax benefit (expense) (11) 0
------------------ -----------------
Net income 64 176
================== =================
FARMLAND TRANSPORTATION, INC.
(PRE-PETITION)
BALANCE SHEET
August 31 May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amounts in Thousands)
ASSETS
Current Assets:
Accounts receivable-trade 3,765 3,879 6,958 6,894
Accounts receivable - inter-company 3,920 1,872 916 776
Other current assets - 3rd party 17 (4) (1) 27
Other current assets - inter-company 6,426 4,384 2,577 2,903
----------- ----------- ----------- ------------
Total Current Assets 14,128 10,131 10,450 10,600
----------- ----------- ----------- ------------
Property, Plant and Equipment:
Property, plant and equipment, at cost 166 143 143 143
Less accumulated depreciation and amortz. (148) (140) (143) (143)
----------- ----------- ----------- ------------
Net Property, Plant and Equipment 18 3 0 0
----------- ----------- ----------- ------------
Other Assets 106 89 25 188
----------- ----------- ----------- ------------
Total Assets 14,252 10,223 10,475 10,788
=========== =========== =========== ============
LIABILITIES AND EQUITIES
Current Liabilities:
Accounts payable - trade 3,205 925 557 1,042
Other current liabilities - 3rd party 3,549 1,514 1,471 1,127
Oher current liabilities - inter-company 419 7 443 202
----------- ----------- ----------- ------------
Total Current Liabilities 7,173 2,446 2,471 2,371
----------- ----------- ----------- ------------
Long-Term Liabilities
Long-term borrowings (excluding current maturities) 32 0 0 0
----------- ----------- ----------- ------------
Total Long-term Liabilities 32 0 0 0
----------- ----------- ----------- ------------
Deferred Income Taxes (63) (63) 0 0
----------- ----------- ----------- ------------
Income to surplus 749 730 164 413
----------- ----------- ----------- ------------
Capital Shares and Equities:
Common shares 0 0 0 0
Earned surplus and other equities 6,361 7,110 7,840 8,004
----------- ----------- ----------- ------------
Total Capital Shares and Equities 6,361 7,110 7,840 8,004
----------- ----------- ----------- ------------
Total Liabilities and Equities 14,252 10,223 10,475 10,788
=========== =========== =========== ============
FARMLAND TRANSPORTATION, INC.
(POST-PETITION)
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
May 31
------------
2003
------------
ASSETS
Current Assets:
Accounts receivable - trade 1,101
Accounts receivable - inter-company 642
Other current assets (11)
Other current assets - inter-company 8,561
------------
Total Current Assets 10,293
Property, Plant and Equipment:
Property, plant and equipment, at cost 143
Less accumulated depreciation and amortz. (143)
------------
Net Property, Plant and Equipment 0
------------
Other Assets 310
------------
Total Assets 10,603
============
LIABILITIES AND EQUITIES
Current Liabilities:
Accounts payable - trade 0
Other current liabilities - 3rd party 665
Other current liabilities - inter-company 500
------------
Total Current Liabilities 1,165
------------
Liabilities Subject to Compromise 3,383
------------
Net loss (1,155)
------------
Capital Shares and Equities:
Common shares 0
Earned surplus and other equities 7,210
------------
Total Capital Shares and Equities 7,210
------------
Total Liabilities and Equities 10,603
============
FARMLAND TRANSPORTATION, INC.
(PRE-PETITION)
STATEMENT OF OPERATIONS
Nine Months
Year Ended August 31 Ended May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amounts in Thousands)
Sales 86,131 52,483 42,602 39,938
Cost of sales 81,416 48,228 38,044 36,555
----------- ----------- ----------- ------------
Gross income 4,715 4,255 4,558 3,383
Selling, general and administrative expense (4,027) (3,760) (4,631) (3,092)
Interest expense 561 565 0 0
Interest income 0 0 336 121
Other income 0 13 10 1
----------- ----------- ----------- ------------
Income from continuing operations before
income tax expense 1,249 1,073 273 413
Income tax expense (500) (343) (109) 0
----------- ----------- ----------- ------------
Net income 749 730 164 413
=========== =========== =========== ============
FARMLAND TRANSPORTATION, INC.
(POST-PETITION)
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
Three Months Ended Nine Months Ended
August 31 May 31
------------------ -----------------
2002 2003
------------------ -----------------
Sales 10,721 17,304
Cost of sales 9,919 15,902
------------------ -----------------
Gross income 802 1,402
Selling, general & administrative expense (1,849) (2,187)
Other income (expense) 14 (195)
Reorganization expense 0 (175)
------------------ -----------------
Loss from continuing operations
before income tax benefit (expense) (1,033) (1,155)
Income tax benefit (expense) (173) 0
------------------ -----------------
Net loss (1,206) (1,155)
================== =================
SFA, INC.
(PRE-PETITION)
BALANCE SHEET
August 31 May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amounts in Thousands)
ASSETS
Current Assets:
Accounts receivable - trade 3,005 4,212 3,095 2,408
Accounts receivable - inter-company (154) 29 29 32
Inventories 4,058 3,161 3,436 2,588
Other current assets - 3rd party 328 277 756 180
Other current assets - inter-company 0 0 696 6,077
----------- ----------- ----------- ------------
Total Current Assets 7,237 7,679 8,012 11,285
----------- ----------- ----------- ------------
Investments and Long-Term Receivables 0 0 110 378
----------- ----------- ----------- ------------
Property, Plant and Equipment:
Property, plant and equipment, at cost 3,068 4,495 4,542 2,203
Less accumulated depreciation and amortz. (266) (1,705) (1,946) (1,324)
----------- ----------- ----------- ------------
Net Property, Plant and Equipment 2,802 2,790 2,596 879
----------- ----------- ----------- ------------
Other Assets 471 447 385 35
----------- ----------- ----------- ------------
Total Assets 10,510 10,916 11,103 12,577
=========== =========== =========== ============
LIABILITIES AND EQUITIES
Current Liabilities:
Accounts payable - trade 102 1,053 1,157 3,110
Other current liabilities - 3rd party 1,649 (29) 363 (77)
Other current liabilities - inter-company 40 296 0 0
----------- ----------- ----------- ------------
Total Current Liabilities 1,791 1,378 1,520 3,033
----------- ----------- ----------- ------------
Long-Term Liabilities
Long-term borrowings (excluding current maturities) (865) 0 0 0
----------- ----------- ----------- ------------
Total Long-Term Liabilities (865) 0 0 0
----------- ----------- ----------- ------------
Income (loss) to surplus 321 256 45 (40)
----------- ----------- ----------- ------------
Capital Shares and Equities:
Common shares 1 1 1 1
Earned surplus and other equities 9,262 9,281 9,537 9,583
----------- ----------- ----------- ------------
Total Capital Shares and Equities 9,263 9,282 9,538 9,584
----------- ----------- ----------- ------------
Total Liabilities and Equities 10,510 10,916 11,103 12,577
=========== =========== =========== ============
SFA, INC.
(POST-PETITION)
BALANCE SHEET
(AMOUNTS IN THOUSANDS)
May 31
-----------
2003
-----------
ASSETS
Current Assets:
Accounts receivable - trade 165
Other current assets 14
Other current assets - inter-company 11,229
-----------
Total Current Assets 11,408
-----------
Investments and Long-Term Receivables 437
-----------
Property, Plant and Equipment:
Property, plant and equipment, at cost 441
Less accumulated depreciation and amortization (351)
-----------
Net Property, Plant and Equipment 90
-----------
Other Assets 0
-----------
Total Assets 11,935
===========
LIABILITIES AND EQUITIES
Current Liabilities:
Accounts payable - trade (62)
Other current liabilities - 3rd party 23
Other current liabilities - inter-company 89
-----------
Total Current Liabilities 50
-----------
Liabilities Subject to Compromise 3,846
-----------
Net loss (688)
-----------
Capital Shares and Equities:
Common shares 1
Earned surplus and other equities 8,726
-----------
Total Capital Shares and Equities 8,727
-----------
Total Liabilities and Equities 11,935
===========
SFA, INC.
(PRE-PETITION)
STATEMENT OF OPERATIONS
Nine Months
Year Ended August 31 Ended May 31
------------------------------------------------- ------------
1999 2000 2001 2002
----------- ----------- ----------- ------------
(Amounts in Thousands)
Sales 34,332 35,389 34,599 16,944
Cost of sales 29,069 30,284 29,272 13,922
----------- ----------- ----------- ------------
Gross income 5,263 5,105 5,327 3,022
Selling, general & administrative expense (7,322) (6,945) (7,259) (5,120)
Interest expense 0 (33) (17) 62
Interest income 10 247 11 0
Other income 2,370 1,726 2,007 1,996
----------- ----------- ----------- ------------
Income (loss) from continuing operations before
income tax (expense) benefit 321 100 69 (40)
Income tax (expense) benefit 0 156 (24) 0
----------- ----------- ----------- ------------
Net income (loss) 321 256 45 (40)
=========== =========== =========== ============
SFA, INC.
(POST-PETITION)
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
Three Months Ended Nine Months Ended
August 31 May 31
------------------ -----------------
2002 2003
------------------ -----------------
Sales 3,450 1,313
Cost of sales 2,998 1,062
------------------ -----------------
Gross income 452 251
Selling, general & administrative expense (1,216) (1,125)
Other income (expense) 38 245
Reorganization (expense) income (337) (59)
------------------ -----------------
Loss from continuing operations
before income tax benefit (expense) (1,063) (688)
Income tax benefit (expense) 247 0
------------------ -----------------
Net loss (816) (688)
================== =================
APPENDIX C
----------
Organization Structure of the Debtors
[GRAPHIC OMITTED]
Farmland Industries, Inc. Organizational Chart
Farmland Foods, Inc. SFA, Inc. Farmland Transportation, Inc. Farmland Pipe Line Company
(Approximately 97.2% Owned) (100% Owned) (100% Owned) (100% Owned)
APPENDIX D
----------
Liquidation Analysis for the Debtors
The Debtors believe that the Plan meets the "best interests" test as set
forth in section 1129(a)(7) of the Bankruptcy Code. The Debtors believe
that, under the Plan, holders of Impaired Claims and Impaired Interests
against the Debtors will receive property with a value equal to or in
excess of the value such holders would receive in the event each of the
Debtors was liquidated under Chapter 7 of the Bankruptcy Code.
The Liquidation Analysis that supports these conclusions is detailed in
Section V.D. 1, Best Interest of Holders of Claims and Interest, and is
summarized on the attached chart. Underlying the Liquidation Analysis are a
number of estimates and assumptions that, although developed and considered
reasonable by the Debtors, are inherently subject to significant
uncertainties and contingencies beyond the control of the Debtors, and are
also based upon assumption with respect to certain liquidation decisions
which could be subject to change. ACCORDINGLY, THERE CAN BE NO ASSURANCE
THAT THE VALUES REFLECTED IN THE LIQUIDATION ANALYSIS WOULD BE REALIZED AND
ACTUAL RESULTS COULD VARY MATERIALLY FROM THOSE SHOWN HERE. Some of the
risk factors associated with the values contained in the Liquidation
Analysis are described in Section VI.A, Risk That Distributions May Be Less
Than Estimated By Debtors. In addition, all distributions under the Plan
will be paid over time in accordance with the distribution procedures
outlined in Section IV.D, Provisions Governing Distributions.
- ----------------------------------------------------------------------------------------------------------------------------
Estimated Estimated Estimated Estimated
Amount of Amount of Recovery Recovery
Class of Claims Claims Claims Percentage Percentage
($millions) ($millions) (Low/High) (Low/High)
(Low/High) (Low/High)
- ----------------------------------------------------------------------------------------------------------------------------
Chapter 11 Chapter 7 Chapter 11 Chapter 7
- ----------------------------------------------------------------------------------------------------------------------------
Administrative Claims (1) $204.1 $231.2/$233.3 100% 100%/100%
- ----------------------------------------------------------------------------------------------------------------------------
Priority Tax Claims $9.8 $9.8 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
DIP Loan Claims $10.5 $10.5 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Class 1 - Other Priority Claims $0.1 $0.1 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Class 2 - Secured Lender Claims $0.0 $0.0 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Class 3 - Other Secured Claims $19.0 $19.0 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Class 4 - Demand Certificates Claims $20.0 $20.0 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Class 5 - Subordinated Certificates Claims $557.3 $557.3 60%/82% 42%/49%
- ----------------------------------------------------------------------------------------------------------------------------
Class 6 - Convenience Claims against $2.0 $2.0 100% 100%
Industries
- ----------------------------------------------------------------------------------------------------------------------------
Class 7 - General Unsecured Claims $274.6/$499.1 $499.1 60%/82% 44%/51%
against Industries
- ----------------------------------------------------------------------------------------------------------------------------
Class 8 - Industries Preferred Shares $100.0 $100.0 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Class 9 - Industries Common Shares $596.7 $596.7 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Class 10 - General Unsecured Claims $33.0 $33.0 100% 100%
against Foods
- ----------------------------------------------------------------------------------------------------------------------------
Class 11 - Old Securities of Foods n/a n/a See note 2 below See note 2 below
- ----------------------------------------------------------------------------------------------------------------------------
Class 12 - General Unsecured Claims $3.2 $3.2 100% 100%
against Transportation
- ----------------------------------------------------------------------------------------------------------------------------
Class 13 - Old Securities of n/a n/a 0% 0%
Transportation
- ----------------------------------------------------------------------------------------------------------------------------
Class 14 - General Unsecured Claims $2.2 $2.2 100% 100%
against SFA
- ----------------------------------------------------------------------------------------------------------------------------
Class 15 - Old Securities of SFA n/a n/a 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Class 16 - General Unsecured Claims $1.0 $1.0 100% 100%
against Pipeline
- ----------------------------------------------------------------------------------------------------------------------------
Class 17 - Old Securities of Pipeline n/a n/a 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
Class 18 - Intercompany Claims $198.0 $198.0 100% 100%
- ----------------------------------------------------------------------------------------------------------------------------
Class 19 - Subordinated Claims $0.0 $0.0 0% 0%
- ----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) In the context of a Chapter 7 liquidation, "Administrative Claims"
include both the Administrative Claims incurred in the Chapter 11
cases as well as the Chapter 7 administrative and wind-down expenses,
including, without limitation, Chapter 7 trustee fees, professional
fees, wind-down costs and other administrative expenses incurred in
the context of the Chapter 7 liquidations.
(2) The Class 11 distribution pool is not less than the estimated
distributions that the holders of the Minority Foods shares would
receive in a Chapter 7 liquidation.
</FN>
APPENDIX E
----------
Orders Related to Non-Debtor Owned Property(1)
1. Hutchinson, KS Steel Plant (4th and Airport Road) (Kansas Department
of Health and Environment, 95-E-0245, April 1996; 96-E-0247, October
18,1996)
2. North Kansas City, MO (Missouri Department of Natural Resources, June
13, 2002)
3. St. Joseph, MO Facility (Lower Lake Road) (Missouri Department of
Natural Resources, November 20, 2000)
4. St. Joseph, MO (4th and Senaca) (U.S. EPA, VII-90-0002)
5. Hastings, NE Far-Mar-Co Subsite (U.S. EPA and Nebraska Department of
Environmental Quality, USDC-Nebraska Civil Docket No. 4:960V3076, May
7, 1997)
- -------------------------------
(1) The Debtors reserve their right, at any time prior to the Effective
Date, upon prior consent of the Bankruptcy Committees, to amend
Appendix E to modify any other information contained thereon and to
provide notice of any such amendments to the Bankruptcy Court.