IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TENNESSEE
CHATTANOOGA DIVISION
IN RE: )
) CHAPTER 11
THE KRYSTAL COMPANY, )
) CASE NO. 95-15306
DEBTOR. )
) JUDGE COOK
________________________________________)
SECOND AMENDED AND RESTATED PLAN OF REORGANIZATION
NOW COMES The Krystal Company, as debtor and debtor-in-possession, and
proposes the following Second Amended and Restated Plan of Reorganization
pursuant to Section 1121(a) of the Bankruptcy Code.
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the following terms have the
respective meanings specified below, unless the context otherwise requires:
(1) "ADMINISTRATIVE EXPENSE CLAIM" means an expense or claim that
is entitled to administrative status under Section 503(b) of the Bankruptcy Code
and to treatment
under Section 507(a)(1) of the Bankruptcy Code, and any fees and charges
assessed against the Estate under Chapter 123 of Title 28 of the United States
Code.
(2) "ALLOWED AMOUNT" means, with regard to a Claim against the
Debtor, the dollar amount of such Claim that is an Allowed Claim.
(3) "ALLOWED CLAIM" or "ALLOWED INTEREST" means a Claim against the
Debtor or an Interest in the Debtor proof of which has been filed with the
Bankruptcy Court prior to the Bar Date or, if no proof of claim or proof of
interest was filed prior to the Bar Date, which Claim or Interest has been or
hereafter is listed by the Debtor in the Schedules as liquidated in amount, not
disputed and not contingent and, in all cases, as to which no objection to the
allowance thereof, or motion for the estimation thereof, has been interposed
within the applicable period of limitation fixed by the Plan, the Bankruptcy
Code, the Bankruptcy Rules or the Bankruptcy Court, or as to which an objection
or motion for estimation has been interposed, following which either (a) such
Claim or Interest has been allowed in whole or in part by a Final Order, or
(b) such Claim, Interest, objection, or motion otherwise has been withdrawn or
settled pursuant to a filed stipulation or Final Order.
(4) "AMENDED AND RESTATED PROVIDENT DOCUMENTS" means the
restructured note and security documents to be distributed to Provident on
account of its Class 3 Claims on the terms and conditions described in
Schedule 4.5 of this Plan.
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(5) "AMENDED AND RESTATED SCOTT DOCUMENTS" means the restructured
note and security documents to be distributed to Scott on account of its Class 4
Claims on the terms and conditions described in Schedule 4.6 of this Plan.
(6) "BANKRUPTCY CASE" means the bankruptcy case commenced on the
Filing Date by the Debtor by the filing of a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code, which case was filed and is pending in the
Bankruptcy Court as Case No. 95-15306.
(7) "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as
amended, 11 U.S.C. Sections 101, ET. SEQ., as now in effect or hereafter
amended.
(8) "BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Eastern District of Tennessee, Chattanooga Division, or, in the event such
court ceases to exercise jurisdiction over the Bankruptcy Case, such court or
adjunct thereof that exercises jurisdiction over the Bankruptcy Case in lieu of
the United States Bankruptcy Court for the Eastern District of Tennessee,
Chattanooga Division.
(9) "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy
Procedure, as promulgated and amended under 28 U.S.C. Section 2075, as now in
effect or hereafter amended, together with the local rules adopted by the
Bankruptcy Court, or similar rules as may be in effect from time to time in the
Bankruptcy Court, to the extent applicable to the Bankruptcy Case.
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(10) "BAR DATE" means June 6, 1996, the date fixed by the Bankruptcy
Court as the deadline for filing of proofs of claim in the Bar Order.
(11) "BAR ORDER" means that certain Order dated March 1, 1996, and
entered by the Bankruptcy Court in the Bankruptcy Case on March 4, 1996, in
which, among other things, the Bankruptcy Court established the Bar Date.
(12) "BONDHOLDER CLAIMS" means the respective Allowed Claims of (a)
Prudential arising from the Prudential Documents, and (b) Great-West and
Jefferson-Pilot arising from the Great-West/Jefferson-Pilot Documents.
(13) "BUSINESS DAY" means any day other than a Saturday, a Sunday,
or another day on which commercial banks are authorized or required by law to
close in Chattanooga, Tennessee.
(14) "CASH" means cash, cash equivalents and other readily
marketable securities or instruments.
(15) "CAUSES OF ACTION" means such of the Debtor's property or such
of the property of the Estate as constitutes actions, causes of action, suits,
accounts, controversies, agreements, promises, rights to legal remedies, rights
to equitable remedies, rights to payment, and Claims and counterclaims, whether
known or unknown, reduced to judgment, not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, unsecured, and whether asserted or assertable directly or derivatively,
at law, in equity, by agreement, or otherwise.
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(16) "CHAPTER 11" means Chapter 11 of the Bankruptcy Code.
(17) "CLAIM" means a claim, whether or not asserted, known or
unknown, as such term is defined as in 11 U.S.C. Section 101(5).
(18) "CLASS" means a class of Claims or Interests as specified in
Article 3 of the Plan.
(19) "COMMITTEE" means the Official Committee of Unsecured Creditors
appointed in the Bankruptcy Case.
(20) "CONFIRMATION DATE" means the date on which the Confirmation
Order is entered on the docket of the Bankruptcy Court.
(21) "CONFIRMATION OF THE PLAN" or "CONFIRMATION" means entry by the
Bankruptcy Court of an order confirming the Plan in accordance with Chapter 11.
(22) "CONFIRMATION ORDER" means the order entered in the Bankruptcy
Case confirming the Plan.
(23) "CREDITOR" means a creditor as such term is defined in
11 U.S.C. Section 101(10).
(24) "DEBTOR-IN-POSSESSION" means the Debtor, when exercising its
rights, powers, and duties under Section 1107(a) of the Bankruptcy Code in the
Bankruptcy Case.
(25) "DEBTOR" means The Krystal Company, a corporation organized and
existing under the laws of the State of Tennessee, as debtor and Debtor-in-
Possession under Chapter 11 of the Bankruptcy Code.
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(26) "DEBTOR'S PROPERTY" means all property of any nature
whatsoever, real or personal, tangible or intangible, owned by the Debtor on the
Filing Date or acquired thereafter.
(27) "DESIGNATED NOTICE" means notice and an opportunity for a
hearing as provided for in Section 102(1) of the Bankruptcy Code, with notice
limited to the Debtor, counsel for the Debtor, the Committee, counsel for the
Committee, and such other parties in interest, if any, who, subsequent to the
Confirmation Date, file a request for such notice with the clerk of the
Bankruptcy Court and serve a copy of that request on counsel for the Debtor and
counsel for the Committee. On and prior to the Effective Date, Designated
Notice means notice pursuant to Bankruptcy Rule 2002 or as otherwise ordered by
the Bankruptcy Court.
(28) "DISBURSEMENT ACCOUNT" means one or more accounts established
by the Debtor under Section 7.2 hereunder for the purpose of making
Distributions to the holders of Allowed Claims under this Plan.
(29) "DISCLOSURE STATEMENT" means the written disclosure statement
proposed by the Debtor pursuant to Section 1125 of the Bankruptcy Code and
approved by an order of the Bankruptcy Court, as such Disclosure Statement may
be amended, modified or supplemented (and all appendices, exhibits and schedules
annexed thereto or referred to therein).
(30) "DISPUTED CLAIM" or "DISPUTED INTEREST" means an alleged Claim
or Interest, respectively, that is listed by the Debtor in its Schedules as
disputed, contingent or unliquidated, or proof of which has been filed with the
Bankruptcy Court prior to the Bar Date and as to which an objection to allowance
or a motion to estimate has been or is interposed,
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which objection or motion has not been settled, withdrawn, or determined by
Final Order. For the purposes of Distributions under the Plan, a Claim shall
also be considered a Disputed Claim if a proof of claim has been filed with the
Bankruptcy Court prior to the Bar Date with respect to such Claim and, before an
objection to such Claim has been or may be filed, (a) the amount or
classification of the Claim specified in the proof of claim exceeds the amount
or differs from the classification, as applicable, of any corresponding Claim
listed by the Debtor in the Schedules, (b) the amount of the Claim specified in
the proof of claim is for an unliquidated or contingent amount, in whole or in
part, (c) any corresponding Claim listed by the Debtor in the Schedules has been
listed as disputed, contingent or unliquidated, (d) no corresponding Claim has
been listed by the Debtor in the Schedules or (e) such Claim is subject to a
timely motion for estimation in accordance with the Bankruptcy Code and
Bankruptcy Rules, which motion has not been settled, withdrawn, or determined by
Final Order.
(31) "DISTRIBUTION" means the distribution under the Plan to holders
of Allowed Claims.
(32) "DISTRIBUTION ACCOUNT" means the interest bearing escrow
account established and maintained pursuant to Section 7.1 of the Plan.
(33) "DISTRIBUTION DATE" means the date which is the Effective Date.
(34) "EFFECTIVE DATE" means the first Business Day following the
tenth (10th) calendar day after the Confirmation Date.
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(35) "ESTATE" means the estate created in the Bankruptcy Case
pursuant to Section 541 of the Bankruptcy Code upon the commencement of the
Bankruptcy Case.
(36) "FILING DATE" means December 15, 1995.
(37) "FINAL ORDER" means an order or judgment of the Bankruptcy
Court as entered on its docket that has not been reversed, stayed pursuant to
Bankruptcy Rule 8005, modified or amended, and as to which the time to appeal,
petition for certiorari, or seek reargument or rehearing has expired and as to
which no notice of appeal, petition for certiorari, or motion for reargument or
rehearing was timely filed, or as to which any right to appeal, petition for
certiorari or seek reargument or rehearing has been waived in writing in a
manner satisfactory to the Debtor, or, without waiving the right to require a
party filing a notice of appeal or petition for certiorari to obtain a stay
pending an appeal, if a notice of appeal, petition for certiorari, or motion for
reargument or rehearing was timely filed, the order or judgment of the
Bankruptcy Court has been affirmed by the highest court to which the order or
judgment was appealed or from which the reargument or rehearing was sought, or
certiorari has been denied, and the time to file any further appeal or to
petition for certiorari or to seek further reargument or rehearing has expired.
(38) "FLSA" means the Fair Labor Standards Act, as amended,
29 U.S.C. Sections 200, ET. SEQ., as now in effect or hereafter amended.
(39) "FLSA CLAIM" means a Claim asserted against the Debtor by a
current or former employee of the Debtor for an alleged violation of the FLSA.
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(40) "FLSA CLAIMANT" means a Person who holds an FLSA Claim.
(41) "FLSA REPRESENTATIVE" means Harold L. North, Jr., in his
capacity as Legal Representative for the FLSA Claimants, pursuant to the Agreed
Order Granting the Motion of The Krystal Company for the Appointment of a Legal
Representative for FLSA Claimants and Denying Without Prejudice the Motion to
Appoint a Committee for FLSA Claimants entered by the Bankruptcy Court on
January 22, 1996, in the Bankruptcy Case.
(42) "GREAT-WEST" means Great-West Life & Annuity Insurance Company.
(43) "GREAT-WEST/JEFFERSON-PILOT DOCUMENTS" means that certain Note
Agreement dated as of May 1, 1994, executed by and among the Debtor, Great-West
and Jefferson-Pilot, the notes evidencing the loans under such Note Agreement,
and any and all documents and instruments related thereto, all as amended or
supplemented.
(44) "INSURANCE COMPANIES" means Great-West, Jefferson-Pilot and
Prudential.
(45) "INSURANCE COMPANY" means Great-West, Jefferson-Pilot or
Prudential.
(46) "INTEREST" means any equity security of the Debtor, within the
meaning of Section 101(16) of the Bankruptcy Code.
(47) "JEFFERSON-PILOT" means Jefferson-Pilot Life Insurance Company.
(48) "LIEN" means any charge against, encumbrance on, or interest in
property to secure payment of a debt or performance of an obligation.
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(49) "OUTSTANDING SECURITIES" means the shares of common stock of
the Debtor that were issued and outstanding on the Filing Date.
(50) "PERSON" means any individual, corporation, partnership,
limited liability company, association, joint stock company, trust,
unincorporated organization, joint venture, estate, government unit or any
public subdivision thereof or any other entity.
(51) "PLAN" means this Plan of Reorganization, as the same may be
modified from time to time in accordance herewith or pursuant to applicable law.
(52) "PRIORITY CLAIM" means a Claim that is entitled to priority
under Section 507(a) of the Bankruptcy Code, other than an Administrative
Expense Claim or a Tax Claim.
(53) "PROFESSIONAL COMPENSATION" means any amounts due as
compensation earned, and reimbursement for expenses incurred, by Professional
Persons for the Debtor, the Committee or the FLSA Representative and any amounts
which are allowable to members of the Committee pursuant to Section 503(b) of
the Bankruptcy Code, all in connection with administration of the Bankruptcy
Case.
(54) "PROFESSIONAL PERSON" means attorneys, accountants, appraisers,
auctioneers, or other professionals within the meaning of Section 327 of the
Bankruptcy Code employed by the Debtor or the Committee with the Bankruptcy
Court's approval. Professional Person also includes the FLSA Representative.
(55) "PROVIDENT" means Provident Life and Accident Insurance
Company.
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(56) "PROVIDENT DOCUMENTS" means the Indenture of Mortgage, Deed of
Trust and Security Agreement between the Debtor and Provident dated as of
October 1, 1986, the Bond Purchase Agreement between the Debtor and Provident
dated as of October 1, 1986, and the Bond executed by the Debtor payable to
Provident dated as of October 1, 1986 and any and all other documents and
instruments related thereto, all as amended and supplemented.
(57) "PRUDENTIAL" means The Prudential Insurance Company of America.
(58) "PRUDENTIAL DOCUMENTS" means that certain Note Agreement dated
as of September 26, 1989, executed by and between the Debtor and Prudential, the
notes evidencing the loans under such Note Agreement, and any and all documents
and instruments related thereto, all as amended or supplemented.
(59) "RETIREE BENEFITS" means retiree benefits as that term is
defined in Section 1114(a) of the Bankruptcy Code.
(60) "SECURED CLAIM"means a Claim to the extent such Claim is either
secured by a valid, unavoidable Lien on or in any of the Debtor's Property or
property of the Estate or based upon a valid, unexercised right of set off
against any of the Debtor's Property or property of the Estate pursuant to
Section 553 of the Bankruptcy Code, other than the Class 3 Provident Claims or
the Class 4 Scott Claims. Pursuant to Section 506(a) of the Bankruptcy Code, a
Claim shall be a Secured Claim to the extent of the value of such Creditor's
interest in the Estate's interest in such property, or to the extent of the
amount subject to set off, as the case may be, and
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shall be an Unsecured Claim to the extent that the value of such Creditor's
interest or the amount so subject to set off is less than the Allowed Amount of
such Allowed Claim.
(61) "SCHEDULES" means the schedules of assets and liabilities filed
by the Debtor in accordance with section 521 of the Bankruptcy Code and
Bankruptcy Rule 1007, as they may be amended or supplemented from time to time
in accordance with the Bankruptcy Code, Bankruptcy Rules or other applicable
law.
(62) "SCOTT" means Robert T. Scott, as Trustee.
(63) "SCOTT DOCUMENTS" means the Promissory Note, Deed to Secure
Debt and Assignment of Rent between the Debtor and Scott dated as of August 1,
1991, and any and all other documents and instruments related thereto, all as
amended and supplemented.
(64) "SUBSTANTIAL CONSUMMATION" or similar phrases shall be defined
as in Section 1101(2) of the Bankruptcy Code and shall for purposes of this Plan
and Bankruptcy Case mean the initial Distribution Date.
(65) "TAX CLAIM" means any Claim of federal, state, or local
governmental units for unpaid federal, state, or local taxes or duties entitled
to priority under Section 507(a)(8) of the Bankruptcy Code.
(66) "TIMELY OBJECTION" means a written objection served in the
manner required by Designated Notice within twenty (20) days (or such other time
period as may be set by the Bankruptcy Court) after receipt by the objecting
party of notice relating to the matter as to which the objection is interposed.
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(67) "UNCLAIMED FUNDS" means funds represented by a Distribution
check which remains uncashed after (a) as to any check not returned by the
United States Postal Service, one hundred eighty (180) days following the
mailing of the check to the last known address to the intended recipient, or
(b) as to any check returned by the United States Postal Service, one hundred
and eighty (180) days following the Debtor's or other sender's reasonable, good
faith attempt to ascertain the intended recipient's correct mailing address, and
if a correct mailing address is found within such time period, the remailing of
the check.
(68) "UNSECURED CLAIM" means any unsecured Claim arising prior to
the Filing Date that is not an Administrative Expense Claim, a Bondholder Claim,
a Priority Claim or a Tax Claim.
(69) "WORKERS COMPENSATION CLAIM" means an unsecured Claim against
the Debtor compensable under state workers compensation laws, of a past or
present employee of the Debtor, which Claim arises from an accident or injury
occurring prior to the Filing Date. Claims asserted by insurance companies,
sureties, governmental units, or other entities against the Debtor for payments
made by holders of Workers Compensation Claims do not constitute Workers
Compensation Claims; such Claims, to the extent they are Allowed Claims, shall
be treated as Unsecured Claims.
1.2 UNDEFINED TERMS. Any term used herein that is not defined herein, but
that is defined in the Bankruptcy Code, shall have the meaning ascribed to such
term in the Bankruptcy Code.
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1.3 OTHER TERMS. The words "herein," "hereof," "hereunder," and other
words of similar import refer to the Plan as a whole, not to any particular
section, subsection, or clause, unless the context otherwise requires. Whenever
it appears appropriate from the context, each term stated in the singular or the
plural includes the singular and the plural, and each pronoun stated in the
masculine, feminine, or neuter includes the masculine, feminine, and the neuter.
The rules of construction set forth in Section 102 of the Bankruptcy Code shall
apply, unless superseded herein or in the Confirmation Order.
1.4 TIME. Whenever the time for the occurrence or the happening of an
event as set forth in this Plan falls on a day which is not a Business Day, then
the time for the next occurrence or happening of said event shall be extended to
the next Business Day thereafter.
1.5 EXHIBITS. All appendices, exhibits, and schedules, if any, attached
to the Plan are incorporated into and are a part of the Plan as if set forth in
full herein.
ARTICLE 2
CLASSIFICATION OF CLAIMS AND INTERESTS; IMPAIRMENT
2.1 CLASSIFICATION. Claims and Interests are classified as set forth in
Article 3 of the Plan.
2.2 TREATMENT. The treatment of each Class of Allowed Claims and the
Class of Allowed Interests is specified in Article 4 of the Plan.
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2.3 IMPAIRMENT. Classes 3, 4, 5 and 6 are impaired under the Plan.
Classes 1, 2 and 7 are unimpaired.
ARTICLE 3
CLASSES OF CLAIMS AND INTERESTS
The Claims of Creditors and Interests holders, other than Administrative
Expense Claims and Tax Claims, shall be divided into Classes outlined in this
Article 3. A Claim or Interest is classified in a particular Class only to the
extent that the Claim or Interest qualifies within the description of the Class
and is classified in a different Class to the extent the Claim or Interest
qualifies within that different Class. Administrative Expense Claims and Tax
Claims are not classified, but shall be treated as outlined in Section 4.1 and
4.2 below.
3.1 CLASS 1 (PRIORITY CLAIMS). Class 1 shall consist of all Allowed
Claims against the Debtor that are Priority Claims.
3.2 CLASS 2 (SECURED CLAIMS). Class 2 shall consist of all Allowed Claims
against the Debtor that are Secured Claims.
3.3 CLASS 3 (PROVIDENT CLAIMS). Class 3 shall consist of all Allowed
Claims held by Provident against the Debtor arising from the Provident
Documents.
3.4 CLASS 4 (SCOTT CLAIMS). Class 4 shall consist of all Allowed Claims
held by Scott against the Debtor arising from the Scott Documents.
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3.5 CLASS 5 (UNSECURED CLAIMS). Class 5 shall consist of all Allowed
Claims against the Debtor that are Unsecured Claims.
3.6 CLASS 6 (BONDHOLDER CLAIMS) Class 6 shall consist of all Allowed
Claims that are Bondholder Claims.
3.7 CLASS 7 (INTERESTS). Class 7 shall consist of the Allowed Interests
in the Debtor arising from the legal, beneficial, or equitable ownership of the
Outstanding Securities.
ARTICLE 4
TREATMENT OF CLAIMS AND INTERESTS
4.1 ADMINISTRATIVE EXPENSE CLAIMS. The Allowed Claims that are
Administrative Expense Claims shall be paid (a) in full and in Cash on the later
of (i) the Distribution Date, or (ii) the date on which such Administrative
Expense Claim becomes due and payable pursuant to the terms thereof, the
agreement upon which such Administrative Expense Claim is based, or any
applicable Final Order, or (b) in such amount, on such other date, and upon such
other terms as may be contained in a Final Order or agreed upon between the
holder of the Administrative Expense Claim and the Debtor.
4.2 TAX CLAIMS. The Allowed Claims that are Tax Claims shall at the
option of the Debtor be paid (a) in full and in Cash on the later of (i) the
Distribution Date, or (ii) the date on which such Tax Claim becomes due and
payable pursuant to the terms thereof or any applicable Final Order, or (b) in
such amount, on such other date, and upon such other terms as may be
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contained in a Final Order or agreed upon between the holder of the Tax Claim
and the Debtor, or (c) in full and in Cash over a period not to exceed six years
from the date of assessment of such Tax Claim in equal installments not less
frequently than quarterly with interest at the rate specified in Section 6621 of
the Internal Revenue Code of 1986, as amended, or at such other rate as may be
specified in a Final Order.
4.3 CLASS 1 CLAIMS (PRIORITY CLAIMS). The Class 1 Claims are not
impaired. The Allowed Claims in Class 1 (a) shall be paid in full and in Cash
on the later of (i) the Distribution Date, or (ii) the date on which such
Allowed Claim becomes due and payable pursuant to the terms thereof, the
agreement upon which such Claim is based, or any applicable Final Order, or
(b) shall be paid in such amount, on such other date, and upon such other terms
as may be contained in a Final Order or agreed upon between the holder of the
Priority Claim and the Debtor.
4.4 CLASS 2 CLAIMS (SECURED CLAIMS). The Class 2 Claims are not impaired.
The Allowed Claims in Class 2 shall at the option of the Debtor (a) be paid in
full and in Cash on the Distribution Date or as soon thereafter as is
practicable, or (b) be paid in such amount, on such other date, and upon such
other terms as may be contained in a Final Order or agreed upon between the
holder of the Secured Claim and the Debtor, (c) be satisfied in full through a
transfer to the holder of the Secured Claim of the Debtor's interest in the
Debtor's Property or the property of the Estate upon which the holder of the
Secured Claim holds a Lien to secure such Allowed Claim, or (d) pursuant to
Section 1124(2) of the Bankruptcy Code shall be paid in full
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and in Cash over time after (i) the cure on the Distribution Date or as soon
thereafter as is practicable of any default that occurred before or after the
Filing Date (other than a default of the kind specified in Section 365(b)(2) of
the Bankruptcy Code), (ii) the reinstatement at the time of such cure of the
maturity of the Allowed Claim as such maturity existed before such default,
(iii) the compensation at the time of such cure to the holder of the Secured
Claim for any damages incurred as a result of any reasonable reliance by such
holder on any contractual provision or applicable law that entitled the holder
to demand or receive accelerated payment of such Allowed Claim after the
occurrence of a default, and (iv) otherwise leaving unaltered the legal,
equitable, or contractual rights to which the holder of the Secured Claim is
entitled with regard to such Allowed Claim. Any dispute between the Debtor and
the holder of an Allowed Claim in Class 2 with regard to the existence or cure
of defaults, the reinstatement of maturity, or amounts due as compensation for
cure of defaults or for reliance damages may be determined by the Bankruptcy
Court upon motion of either party to the dispute, except as otherwise provided
for herein.
4.5 CLASS 3 CLAIMS (PROVIDENT CLAIMS). The Class 3 Claims are impaired.
On the Distribution Date, Provident, as the holder of the Allowed Class 3
Claims, shall at the option of the Debtor (a) be paid in full and in Cash on the
Distribution Date, or (b) receive on account of such Claim Amended and Restated
Provident Documents on the terms set forth in Schedule 4.5 hereto and a Cash
Distribution on the Distribution Date in the amount set forth in Schedule 4.5
attached hereto, or (c) pursuant to Section 1124(2) of the Bankruptcy Code shall
be paid in full and in Cash over time after (i) the cure on the Distribution
Date or as soon thereafter as is
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practicable of any default that occurred before or after the Filing Date (other
than a default of the kind specified in Section 365(b)(2) of the Bankruptcy
Code), (ii) the reinstatement at the time of such cure of the maturity of the
Allowed Claim as such maturity existed before such default, (iii) the
compensation at the time of such cure to the holder of the Provident Claim for
any damages incurred as a result of any reasonable reliance by such holder on
any contractual provision or applicable law that entitled the holder to demand
or receive accelerated payment of such Allowed Claim after the occurrence of a
default, and (iv) otherwise leaving unaltered the legal, equitable, or
contractual rights to which the holder of the Provident Claim is entitled with
regard to such Allowed Claim. Any dispute between the Debtor and the holder of
an Allowed Claim in Class 3 with regard to the existence or cure of defaults,
the reinstatement of maturity, or amounts due as compensation for cure of
defaults or for reliance damages may be determined by the Bankruptcy Court upon
motion of either party to the dispute, except as otherwise provided for herein.
4.6 CLASS 4 CLAIMS (SCOTT CLAIMS). The Class 4 Claims are impaired. On
the Distribution Date, Scott, as the holder of the Allowed Class 4 Claims, shall
receive on account of such claim the Amended and Restated Scott Documents on the
terms set forth in Schedule 4.6 hereto and a Cash Distribution on the
Distribution Date in the amount set forth in Schedule 4.6 attached hereto at the
option of the Debtor (a) be paid in full and in Cash on the Distribution Date,
or (b) receive on account of such Claim Amended and Restated Scott Documents on
the terms set forth in Schedule 4.5 hereto and a Cash Distribution on the
Distribution Date in the amount set forth in Schedule 4.5 attached hereto, or
(c) pursuant to Section 1124(2) of the
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Bankruptcy Code shall be paid in full and in Cash over time after (i) the cure
on the Distribution Date or as soon thereafter as is practicable of any default
that occurred before or after the Filing Date (other than a default of the kind
specified in Section 365(b)(2) of the Bankruptcy Code), (ii) the reinstatement
at the time of such cure of the maturity of the Allowed Claim as such maturity
existed before such default, (iii) the compensation at the time of such cure to
the holder of the Scott Claim for any damages incurred as a result of any
reasonable reliance by such holder on any contractual provision or applicable
law that entitled the holder to demand or receive accelerated payment of such
Allowed Claim after the occurrence of a default, and (iv) otherwise leaving
unaltered the legal, equitable, or contractual rights to which the holder of the
Scott Claim is entitled with regard to such Allowed Claim. Any dispute between
the Debtor and the holder of an Allowed Claim in Class 4 with regard to the
existence or cure of defaults, the reinstatement of maturity, or amounts due as
compensation for cure of defaults or for reliance damages may be determined by
the Bankruptcy Court upon motion of either party to the dispute, except as
otherwise provided for herein.
4.7 CLASS 5 CLAIMS (UNSECURED CLAIMS). The Class 5 Claims are
impaired. The holders of Allowed Claims in Class 5 shall be paid in full in Cash
on the later of (1) the Distribution Date or (2) the date that such Claim
becomes an Allowed Claim. Notwithstanding the foregoing, at the option of the
Debtor exercised prior to the Distribution Date and with 5 days notice to the
holder of the Unsecured Claim, an Allowed Class 5 Claim pursuant to
Section 1124(2) of the Bankruptcy Code, may paid in full and in Cash over time
on account of
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its Allowed Class 5 Claim after (i) the cure on the Distribution Date or as soon
thereafter as is practicable of any default that occurred before or after the
Filing Date (other than a default of the kind specified in Section 365(b)(2) of
the Bankruptcy Code), (ii) the reinstatement at the time of such cure of the
maturity of the Allowed Claim as such maturity existed before such default,
(iii) the compensation at the time of such cure to the holder of the Unsecured
Claim for any damages incurred as a result of any reasonable reliance by such
holder on any contractual provision or applicable law that entitled the holder
to demand or receive accelerated payment of such Allowed Claim after the
occurrence of a default, and (iv) otherwise leaving unaltered the legal,
equitable, or contractual rights to which the holder of the Unsecured Claim is
entitled with regard to such Allowed Claim. Any dispute between the Debtor and
the holder of an Allowed Claim in Class 5 with regard to the existence or cure
of defaults, the reinstatement of maturity, or amounts due as compensation for
cure or defaults or for reliance damages may be determined by the Bankruptcy
Court upon motion of either party to the dispute, except as otherwise provided
for herein.
4.8 CLASS 6 (BONDHOLDER CLAIMS) The Class 6 Claims are impaired. The
treatment of Class 6 Claims is set out in the Term Sheet Evidencing Consensual
Treatment of Noteholder Claims Negotiated By and Among the Debtor and the
Noteholders ("Term Sheet) which is attached hereto as Exhibit 4.8 and expressly
and completely incorporated herein, including without limitation, the Term
Sheet's requirement that the Bondholder Claims shall be deemed to constitute
"Allowed Claims" to the extent of the respective distributions required in the
Term Sheet.
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4.9 CLASS 7 INTERESTS (OUTSTANDING SECURITIES). The holders of the
Allowed Interests in Class 7 shall continue to hold the Outstanding Securities
and shall retain unaltered the legal, equitable, and contractual rights to which
such holders are entitled with regard to such Allowed Interests.
ARTICLE 5
ACCEPTANCE OR REJECTION OF THE PLAN
5.1 VOTING CLASSES. Each holder of an Allowed Claim in Class 3, 4, 5 and
6 shall be entitled to vote to accept or reject the Plan.
5.2 ACCEPTANCE BY IMPAIRED CLASSES. An impaired Class of Claims shall
have accepted the Plan if (1) the holders (other than any holder designated
under section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount
of the Allowed Claims actually voting in such Class have voted to accept the
Plan and (2) more than one-half in number (other than Claims held by any holder
designated under section 1126(e) of the Bankruptcy Code) of such Allowed Claims
actually voting in such Class have voted to accept the Plan.
5.3 PRESUMED ACCEPTANCE OF PLAN. Classes 1 and 2 are unimpaired under the
Plan and, therefore, are conclusively presumed to have accepted the Plan
pursuant to Section 1126(f) of the Bankruptcy Code.
5.4 CRAMDOWN. If all of the applicable requirements for confirmation of
the Plan are met as set forth in Section 1129(a) of the Bankruptcy Code except
subsection (8) thereof, the
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Debtor may, at its option, request the Bankruptcy Court to confirm the Plan
pursuant to section 1129(b) of the Bankruptcy Code, notwithstanding the
requirements of paragraph (8) of section 1129(a) of the Bankruptcy Code, on the
basis that the Plan is fair and equitable and does not discriminate unfairly
with respect to any impaired Class or Classes that have not accepted the Plan.
ARTICLE 6
TREATMENT OF EXECUTORY
CONTRACTS AND UNEXPIRED LEASES
6.1 ASSUMPTION. Subject to the requirements of Section 365 of the
Bankruptcy Code, on the Effective Date all executory contracts and unexpired
leases of the Debtor shall be deemed assumed, except any executory contracts or
unexpired leases that (a) were rejected prior to the Confirmation Date by Final
Order of the Bankruptcy Court or (b) are the subject of separate motions to
reject filed pursuant to Section 365 of the Bankruptcy Code before the entry of
the Confirmation Order. Any Final Order entered after the Confirmation Date by
the Bankruptcy Court authorizing the rejection of an executory contract or
unexpired lease shall cause such rejection to be a prepetition breach under
Sections 365(g) and 502(g) of the Bankruptcy Code, as if such relief was granted
and such order was entered prior to the Confirmation Date. Any Claim which
arises from the rejection of an executory contract or unexpired lease shall be
deemed to be an Unsecured Claim classified with other Unsecured Claims in Class
3. A proof of claim for any
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such Claim must be filed with the Bankruptcy Court by the earlier of (a) the
date set for the filing of such Claim in the Final Order authorizing the
rejection of the executory contract or unexpired lease to which the Claim
relates, or (b) thirty (30) days after the Confirmation Date.
6.2 DETERMINATION OF DISPUTES. Any disputes that are not the subject of
pending litigation as of the Confirmation Date between the Debtor and any holder
of an executory contract or unexpired lease which is being assumed pursuant to
this Plan with regard to the existence or cure of defaults, the sufficiency of
adequate assurance of future performance, or amounts due as compensation for
cure of defaults, may be determined by the Bankruptcy Court upon motion of
either party to the dispute, except as otherwise provided for herein.
ARTICLE 7
IMPLEMENTATION OF THE PLAN
7.1 DISTRIBUTION ACCOUNT. On or prior to the Distribution Date, the
Debtor shall establish the Distribution Account with a depository institution
having a place of business in Chattanooga, Tennessee, as may be selected by the
Debtor and approved by the Office of the United States Trustee. On the
Distribution Date, the Debtor shall deposit into the Distribution Account Cash
equal to the Distributions required on the Distribution Date under this Plan.
No withdrawals shall be made or permitted from the Distribution Account except
as provided for herein.
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7.2 DISBURSEMENT ACCOUNT. In addition to the foregoing, the Debtor may
establish one or more Disbursement Accounts for the purpose of making
Distributions to the holders of Allowed Claims or as may otherwise be necessary
or appropriate to enable them to carry out the provisions of this Plan. The
Debtor shall, from time to time, transfer Cash from the Distribution Account or
from the general operating funds of the Debtor into the Disbursement Accounts to
facilitate the making of Distributions to the holders of Allowed Claims as
required by this Plan.
7.3 SOURCES OF THE FUNDS. Funds sufficient to make the required
Distributions under this Plan will be derived from one or more of the following
sources: (a) Cash on hand generated from the operation of the Debtor's business,
(b) Cash proceeds from the sale, leasing or other disposition of any surplus or
investment assets not required in the ordinary course of operation of the
Debtor's business, or (c) Cash proceeds from loans or extensions of credit
obtained or to be obtained by the Debtor.
7.4 EXCESS FUNDS. The Cash, if any, remaining in the Distribution Account
after all Disputed Claims have been resolved and after all Distributions
required to be made under the Plan have been made to the holders of all Allowed
Claims shall be available for use by the Debtor in the ordinary course of its
business without restriction.
7.5 DISTRIBUTIONS. On the Distribution Date, the Debtor shall make the
Distributions under the Plan required to be made to the holders of Allowed
Claims.
7.6 FRACTIONAL CENTS. Notwithstanding any other provision of the Plan to
the contrary, no Distribution of fractions of cents will be made. Whenever any
Distribution of a
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fraction of a cent would otherwise be called for, the actual Distribution shall
reflect a rounding of such fraction to the nearest whole cent, with .50 cent
distributions being rounded up.
ARTICLE 8
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
8.1 OBJECTIONS. As soon as is practicable after the Effective Date, but
in no event later than 60 days after the Effective Date, the Debtor shall file
objections to Claims or Interests or motions for estimation of Claims with the
Bankruptcy Court and shall serve such objections and motions upon the holders of
each Disputed Claim or Disputed Interests as to which an objection or motion is
filed, or upon such holder's counsel, if known. All objections shall be in
writing.
8.2 PROSECUTION OF OBJECTIONS. After entry of the Confirmation Order,
only the Debtor shall have authority to file, litigate, settle, or withdraw
objections to Disputed Claims or Disputed Interests.
8.3 AMENDMENT OF CLAIMS. Subject to Section 502(j) of the Bankruptcy
Code, and except as otherwise provided in the Plan, a Claim may be amended
(a) prior to the Confirmation Date, only as agreed upon by the Debtor and the
holder of such Claim or as otherwise permitted by Final Order, the Bankruptcy
Rules or applicable law or (b) after the Confirmation Date, to decrease, but not
increase, the face amount of such Claim.
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8.4 DISALLOWANCE OF SETTLED CLAIMS. All Claims alleged in proofs of claim
filed by holders of Claims that have been settled and satisfied pursuant to any
specific Final Order addressing such Claims, shall be deemed disallowed, except
to the extent of the settled amounts thereof which shall be deemed to be Allowed
but previously satisfied for purposes of this Plan; and it shall be unnecessary
for the Debtor, to file and prosecute objections to such Claims for purposes of
disallowing alleged amounts exceeding the settled amounts or other rights
contrary to the terms of the settlement.
8.5 DISALLOWANCE OF POSTPETITION ADDITIONS. The Debtor shall not be
required to make specific objections to proofs of claim that allege a right to
recover postpetition interest, penalties, fees, and other accruals with respect
to prepetition claims (except secured claims entitled to such accruals pursuant
to section 506(b) of the Bankruptcy Code and as otherwise provided by this
Plan), and any claim amounts attributable to such postpetition interest,
penalties, fees, and other accruals shall be disallowed in full upon entry of
the Confirmation Order, except as otherwise agreed to by the Debtor and the
holder of the Claim.
8.6 INTEREST. Each Creditor in Class 5 shall receive interest on the
principal portion of its Allowed Claim at the rate of eight and one-half percent
(8.5%) per annum (or such market rate of interest determined by the court to be
appropriate at the Confirmation Hearing) from the later of (1) the Filing Date
or (2) the date on which the Allowed Claim first became or becomes due until it
is paid, unless the Debtor and the Creditor have agreed on an interest rate
(whether as a result of a contractual agreement in connection with transactions
out of which the Claim arises
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or the settlement or compromise of a dispute concerning the applicable rate of
interest), in which case interest shall be paid at the agreed rate from the date
on which the Allowed Claim first became or becomes due until it is paid, except
as otherwise agreed to by the Debtor and the holder of the Claim.
8.7 DISTRIBUTIONS ON ACCOUNT OF DISPUTED CLAIMS. Notwithstanding anything
to the contrary contained herein, no Distribution shall be made with respect to
all or any portion of any Disputed Claim unless and until the Disputed Claim
becomes an Allowed Claim.
8.8 UNCLAIMED FUNDS. All right, title and interest in and to any
Distribution that becomes Unclaimed Funds shall immediately and irrevocably vest
in, and revert to and become the property of, the Debtor, and the holder of the
Allowed Claim to which such Distribution relates shall be deemed to have no
further or additional Claim against the Debtor with regard to such Allowed Claim
or Distribution or the Unclaimed Funds represented thereby.
8.9 TRANSMITTAL OF DISTRIBUTED PROPERTY AND NOTICES. Except as otherwise
provided in the Plan and except as may otherwise be agreed to by the Debtor and
the holder of a particular Claim or Interest, any Cash or notice to which such
holder shall become entitled under the provisions of this Plan shall be
transmitted to such holder by first-class United States mail, postage prepaid,
in an envelope addressed to such holder as he or his authorized agent may direct
in a request filed with the Bankruptcy Court on or before the Effective Date,
but if no such request is filed, to the address shown in the Schedules, or, if a
different address is stated in a filed proof of claim, to the address contained
in the proof of claim. In all cases where delivery or
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distribution is effectuated by mail, the date of delivery or Distribution shall
be the date of mailing. Cash delivered in accordance with this Section will be
deemed delivered to the holder regardless of whether such Cash is actually
received by such holder.
8.10 RETURNED DISTRIBUTIONS. If a Distribution pursuant to the Plan to
any holder of an Allowed Claim is returned to the Debtor due to an incorrect or
incomplete address for the holder of such Allowed Claim, then the Debtor shall
use reasonable efforts to obtain an accurate address for such Creditor. If,
after one hundred and eighty (180) days, such reasonable efforts have not
yielded an accurate address for such holder, then the Cash to be distributed to
such Creditor shall be deemed to be Unclaimed Funds shall be treated as provided
under Section 8.8 of the Plan.
8.11 WITHHOLDING TAXES. Any federal, state or local withholding taxes or
other amounts required to be withheld under any applicable law shall be deducted
from any Distributions made hereunder. All holders of Allowed Claims as a
condition precedent to receiving any Distribution shall be required to provide
the Debtor with such information as they may reasonably require to effectuate
the withholding of all such taxes or other amounts..
8.12 DISTRIBUTION TO CERTAIN WAGE CLAIMANTS. The Debtor has entered into
a Settlement Agreement with approximately 6,000 current and former employees who
are represented by the law firm of Stewart, Estes & Donnell of Nashville,
Tennessee, who are asserting claims under the FLSA, as well as certain contract
claims. The Settlement Agreement has been submitted for approval by the
Bankruptcy Court. Any term used in this paragraph 8.12
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that is not defined in the Plan, but that is defined in the Settlement Agreement
shall have the meaning ascribed in the Settlement Agreement. The distribution
provided in the Settlement Agreement to the Wage Claimants represented by
Stewart, Estes & Donnell, acting under authority of certain Representative Wage
Claimants and with approval of those Representative Wage Claimants, shall be
distributed as follows:
(a) The Debtor shall pay $13 million dollars ($13,000,000.00) (the
"Settlement Amount") in a check or draft (if not wired) made payable to Stewart,
Estes & Donnell, on behalf of the Wage Claimants, less legally required
deductions for taxes, FICA and/or similar withholdings, which amounts shall be
determined as set forth in Paragraph 1(b) below. Such payment shall be made on
the Distribution Date.
(b) Stewart, Estes & Donnell shall be responsible for allocating
the Settlement Amount among the Wage Claimants and determining the portions of
the Settlement Amount representing backpay and an equal amount of liquidated
damages to the Wage Claimants. Currently, Krystal and the Wage Claimants
contemplate that the backpay portion of the Settlement Amount will be
approximately $4 million dollars ($4,000,000.00). No amounts will be allocated
to any contract claims since the Wage Claimants and Stewart, Estes & Donnell
acknowledge and agree that these contract claims are subject to substantial
meritorious defenses and counterclaims by Krystal and would be extremely
difficult to have certified as a class action. Following this allocation,
Stewart, Estes & Donnell will supply Krystal at least twenty (20) days prior to
confirmation of the Plan, but in no event prior to March 1, 1997, with a written
list of the
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gross amounts of backpay and liquidated damages allocated to each Wage Claimant
and the social security number and last known address of each Wage Claimant who
is to receive a payment from the Settlement Amount. Krystal will then calculate
the amount of withholding to be made with respect to the backpay portion of the
Settlement Amount, deduct such withholding amounts from the backpay portion of
the Settlement Amount, and pay the balance of the Settlement Amount to Stewart,
Estes & Donnell. Stewart, Estes & Donnell reserves the right to hold back a
certain portion of the liquidated damages portion of the Settlement Amount from
distribution to the Wage Claimants, if necessary, to provide for any unscheduled
and/or unanticipated claims or costs, if any, with the authorization of the
Representative Wage Claimants. Any amounts remaining in such hold back fund
shall, six (6) months after the initial distribution, be reallocated in
accordance with the original allocation. The percentage amount which Krystal
shall withhold from the backpay portion of the Settlement Amount for each Wage
Claimant for income taxes shall be determined pursuant to the IRS' "Tables for
Percentage Method of Withholding," Table 7 single person claiming one
withholding allowance - for annual payroll period, plus 6.2% for social security
taxes, plus 1.45% for Medicare taxes and any applicable state or local taxes.
Krystal shall withhold only those monies clearly required by applicable tax laws
and shall make no withholdings for amounts allocated to liquidated damages
unless it is legally compelled to do so. Krystal will prepare appropriate W-2's
and Form 1099's reflecting the above and distribute the same to the Wage
Claimants at the addresses provided by Stewart, Estes & Donnell on or before
January 31, 1998.
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(c) All disbursements of settlement proceeds by Stewart, Estes & Donnell
to the Wage Claimants shall be no later than 20 days after receipt of the
Settlement Amount by checks with the following legend:
"This payment is made pursuant to the Settlement Agreement
with The Krystal Company that includes a release of your
wage claims against it."
(d) In the event that any such checks are returned as Unclaimed Funds,
Stewart, Estes & Donnell shall retain the Unclaimed Funds for a period of one
year from the Confirmation Date and shall make a reasonable effort to distribute
Unclaimed Funds to the intended recipients. Any Unclaimed Funds will be
administered pursuant to 11 U.S.C. Section 347(b). All Unclaimed Funds shall be
held without interest by Stewart, Estes & Donnell in a special trust account for
a period of one (1) year from the confirmation of the Plan. Upon expiration of
that one (1) year period, all claims by the respective claimants to the said
distribution shall be barred; the Unclaimed Funds remaining in the special trust
account shall become property of the Debtor pursuant to 11 U.S.C. Section
347(b); and Stewart, Estes & Donnell shall disburse the remaining Unclaimed
Funds to the Debtor.
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ARTICLE 9
DISCHARGE, VESTING AND INJUNCTION
9.1 DISCHARGE OF THE DEBTOR. Except as otherwise provided in the Plan or
the Confirmation Order, in accordance with section 1141(d)(1) of the Bankruptcy
Code, entry of the Confirmation Order shall act as a discharge effective as of
the Effective Date of all debts of, Claims against, Liens on, and Interests in
the Debtor, and the Debtor's assets, or properties, including, without
limitation, the Debtor's Property or property of the Estate, which debts,
Claims, Liens, and Interests arose at any time before the entry of the
Confirmation Order. The discharge of the Debtor, shall be effective as to each
Claim, regardless of whether a proof of claim therefor was filed or whether the
Claim is an Allowed Claim or whether the holder thereof objects to Confirmation
of the Plan. On and after the Effective Date, as to each and every such
discharged Claim, Lien, and Interest, and except as is otherwise provided for
in the Plan, any holder of such Claim, Lien or Interest shall be precluded
from asserting against the Debtor or its assets or property, including,
without limitation, the Debtor's Property or property of the Estate, any
other or further Claim, Lien, or Interest based upon any document,
instrument, act, omission, transaction, or other activity of any kind or
nature that occurred before the Confirmation Date. Without limiting the
generality of the foregoing, (a) any Creditor having a Claim against the
Debtor that arose prior to the Filing Date and who failed to file a proof of
claim or elected not to file a proof of claim in the Bankruptcy Case on or
prior to the Bar Date is forever barred and
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precluded from asserting or prosecuting such Claim against the Debtor or its
assets and property, including, without limitation, the Debtor's Property or
property of the Estate, and (b) any Claimant who timely filed a proof of
claim in the Bankruptcy Case on or prior to the Bar Date is forever barred
and precluded from asserting or prosecuting its Claim against the Debtor or
its assets or property in any manner inconsistent with the terms of this Plan.
9.2 EFFECT OF CONFIRMATION; VESTING OF PROPERTY. Except as otherwise
provided for in the Plan or in the Confirmation Order, on the Effective Date
this Plan shall be binding on all parties in interest, including all Creditors,
regardless of whether any such Creditor filed a proof of claim, was the holder
of an Allowed Claim, or objected to Confirmation of the Plan. All of the
Debtor's Property and all of the property of the Estate, including, without
limitation, all Causes of Action, shall vest in the reorganized Debtor on the
Effective Date.
9.3 INJUNCTION. In accordance with Section 524 of the Bankruptcy Code,
the discharge provided by this Article and Section 1141 of the Bankruptcy Code,
INTER ALIA, acts as an injunction against the commencement or continuation of
any action, employment of process or act to collect, offset or recover the
Claims discharged hereby. In accordance therewith, the Confirmation Order shall
in all respects be deemed to constitute a permanent injunction prohibiting all
Persons holding any Claims, on or after the Confirmation Date, from, on account
of such Claims, taking any action to enforce rights, or alleged rights, against
the Debtor, against any of the Debtor's Property, against any property of the
Estate, or against any collateral in which said Creditors assert a Lien, which
rights, or alleged rights, are inconsistent with the terms of
- 34 -
this Plan, as the same may be amended and modified prior to the Confirmation
Date, and as confirmed by the Bankruptcy Court. The injunction provided for
herein does not prohibit creditors from taking any enforcement action against
the Debtor, its property or any other person in the event that the Debtor fails
to comply with the terms of this Plan.
9.4 RETENTION AND ENFORCEMENT OF CAUSES OF ACTIONS. Except as otherwise
provided expressly in this Plan, in accordance with Section 1123(b) of the
Bankruptcy Code, the Debtor shall retain and may enforce subsequent to the
Effective Date any and all of the Causes of Action; provided, however, the
Debtor shall not have the right to enforce, and shall not seek to enforce or
prosecute in any manner, any Cause of Action for the recovery or avoidance of
transfers avoidable under the Bankruptcy Code to the extent that insolvency of
the Debtor at the time of the alleged transfer is a necessary element of such
Cause of Action.
9.5 CONTINUED CORPORATE EXISTENCE. Subsequent to the Effective Date, the
Debtor shall continue to exist as a corporation organized under the laws of the
State of Tennessee and qualified to do business in those states in which such
qualification is required.
9.6 MANAGEMENT; CONTINUED BUSINESS OPERATIONS. Subsequent to the
Effective Date the management of the Debtor shall be vested in its duly
authorized board of directors and officers and, subject to the direction of such
board of directors and officers, the Debtor shall be entitled to continue to
manage the Debtor's Property and the property of the Estate and to engage in
such business operations as are authorized by its articles of incorporation and
by-laws.
- 35 -
9.7 CHARTER AMENDMENT. On or before the Confirmation Date the Debtor
shall obtain authorization from its board of directors and, if required, its
shareholders for the amendment of its articles of incorporation so as to
prohibit as of the Effective Date the issuance of any nonvoting equity
securities as required by Section 1123 (a) (6) of the Bankruptcy Code.
9.8 CONDITIONS TO CONFIRMATION. Confirmation of the Plan, and entry of
the Confirmation Order, shall be subject (1) to entry of a Final Order approving
the settlement of certain Claims filed by Stewart, Estes & Donnell on behalf of
their clients and, (2) the successful consummation of a loan transaction whereby
the Debtor will borrow at least $45,000,000 from a commercial lending
institution on or before the Distribution Date.
9.9 RETIREE BENEFITS. The Debtor after the Effective Date shall continue
all Retiree Benefits for the duration of the period the Debtor prior to the
Filing Date had obligated itself to provide such benefits.
9.10 CONDITIONS TO THE EFFECTIVE DATE. The occurrence of the "Effective
Date" shall be subject to satisfaction of the following conditions precedent:
(a) The Debtor shall have in its possession, custody or control
immediately available funds in an amount sufficient to enable
it to make all distributions required by the Plan to be made.
(b) All distributions required by the Plan to be made shall have
been made.
(c) The "Effective Date" shall occur no later than June 30, 1997.
- 36 -
ARTICLE 10
MODIFICATION OF PLAN
10.1 MODIFICATION GENERALLY. This Plan may be modified pursuant to
Section 1127 of the Bankruptcy Code.
10.2 REQUIRED NOTICE. The Plan may be modified, before or after
Confirmation, without notice or hearing, or on such notice and hearing as the
Bankruptcy Court deems appropriate, if the Bankruptcy Court finds that the
proposed modifications do not materially and adversely affect the rights of any
parties in interest which have not had notice and an opportunity to be heard
with regard thereto. Without limiting the generality of the foregoing, the Plan
may be modified after notice and hearing to Persons that have requested notice
pursuant to Bankruptcy Rule 2002.
10.3 POSTCONFIRMATION AMENDMENT. After the entry of the Confirmation
Order, the Debtor may modify the Plan to remedy any defect or omission or to
reconcile any inconsistencies in the Plan or in the Confirmation Order, as may
be necessary to carry out the purposes and effects of the Plan, provided such
modification shall not materially or adversely affect the interests, rights,
treatment or Distribution of any Class of Allowed Claims or Allowed Interests
under the Plan.
10.4 POSTCONFIRMATION/PRECONSUMMATION AMENDMENT. After the Confirmation
Date and before Substantial Consummation of the Plan, the Debtor may modify the
Plan in any
- 37 -
way that materially or adversely affects the interests, rights, treatment, or
distribution of a Class of Claims or Interests, provided: (a) the Plan, as
modified, meets applicable Bankruptcy Code requirements; (b) the Debtor obtains
Bankruptcy Court approval for such modification, after notice and a hearing; and
(c) the Debtor complies with Section 1125 of the Bankruptcy Code with respect to
the Plan, as modified.
10.5 CONSENT REQUIRED. The Plan may not be altered, amended or modified
without the written consent of the Debtor. Notwithstanding any provision
contained in the Plan to the contrary, the Debtor shall not cause the Plan to be
amended, modified or restated, in whole or in part, without the prior written
consent of each of the Insurance Companies, which consent shall not unreasonably
be withheld; provided, however, that each shall be deemed to have issued its
consent to a proposed modification, amendment or restatement (collectively, the
"Proposed Amendment") of the Plan if it shall have failed to have delivered to
the Debtor, within five (5) business days after the receipt by such Insurance
Company and its counsel of the Proposed Amendment, such Insurance Company's
written objection to the Proposed Amendment.
10.6 WITHDRAWAL OF THE PLAN. The Debtor reserves the right to modify or
withdraw the Plan at any time before the Confirmation Date.
ARTICLE 11
RETENTION OF JURISDICTION
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11.1 RETENTION OF JURISDICTION. Notwithstanding Confirmation of this Plan
or occurrence of the Effective Date, the Court shall retain jurisdiction over
the Bankruptcy Case through and after the Effective Date as to all matters,
including, but not limited to, those matters specifically set forth in this
Article 11. Prior to the entry of a final decree of the Bankruptcy Court
pursuant to Bankruptcy Rule 3022, the Bankruptcy Court shall retain
jurisdiction:
(1) over all Claims, Interests or rights in, Liens on or title to,
the Debtor's Property, its Estate and the Debtor, including, but not limited to,
over any equitable relief in connection therewith;
(2) to determine the allowability of Claims and Interests, upon
objection to such Claims by the Debtor;
(3) to determine any tax liability pursuant to Section 505 of the
Bankruptcy Code;
(4) to adjudicate any dispute under any executory contract or
unexpired lease assumed during the Bankruptcy Case pursuant to Section 365 of
the Bankruptcy Code, and to resolve all matters related to the assumption,
assumption and assignment, or rejection of any executory contract or unexpired
lease of the Debtor;
(5) to determine requests for payment of Administrative Expense
Claims;
(6) to resolve controversies and disputes regarding the
interpretation of this Plan;
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(7) to implement the provisions of this Plan and enter orders in
aid of Confirmation and consummation of this Plan;
(8) to determine classification, voting, treatment, allowance,
estimation, withdrawal, disallowance or reconsideration of Claims, and Interests
and any objections relating thereto;
(9) to fix, liquidate or estimate impaired Claims or Interests;
(10) to modify the Plan pursuant to Section 1127 of the Bankruptcy
Code;
(11) to correct any defect, to cure any mistake or omission or
reconcile any inconsistency in the Plan or the Confirmation Order as may be
necessary or appropriate to carry out the purposes and intent of the Plan;
(12) to resolve disputes concerning any Disputed Claims, or the
administration thereof and Claims for disputed Distributions;
(13) to resolve any disputes concerning whether a person or entity
had sufficient notice of the Bankruptcy Case, the applicable Bar Date, the
hearing on the approval of the Disclosure Statement as containing adequate
information, the hearing on the Confirmation of the Plan for the purpose of
determining whether a Claim or Interest is discharged hereunder or for any other
purpose;
(14) to order the removal, pursuant to Section 1452 of Title 28 of
the United States Code, of any suit instituted against the Debtor or the Estate
and to hear and determine any action so removed;
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(15) to enter a Final Order closing the Bankruptcy Case; and
(16) to hear and determine such other matters as may be provided for
under Title 28 or any other Title of the United States Code and any reference to
the Bankruptcy Court, the Bankruptcy Code, the Bankruptcy Rules, other
applicable law, the Plan or the Confirmation Order.
11.2 FURTHER ASSURANCES. The Debtor shall be entitled to seek from the
Bankruptcy Court such further orders, judgments, injunctions, and rulings as it
deems necessary or appropriate to enable it to carry out and further the
intentions and purposes, and to give full effect to, the provisions of the Plan.
ARTICLE 12
REQUEST FOR CONFIRMATION
12.1 REQUEST FOR CONFIRMATION. The Debtor, as proponent of the Plan,
requests confirmation of the Plan in accordance with Section 1129 of the
Bankruptcy Code.
ARTICLE 13
CLOSING OF THE BANKRUPTCY CASE
13.1 CLOSING OF THE CASE; FINAL DECREE. At such time as the Bankruptcy
Case has been fully administered, that is, when all things requiring action by
the Bankruptcy Court have been done, and the Plan has been Substantially
Consummated, the Bankruptcy Case shall be
- 41 -
closed. To close the Bankruptcy Case, the Debtor shall file an application for
final decree showing that the Bankruptcy Case has been fully administered, that
all U.S. Trustee quarterly fees have been paid and that the Plan has been
Substantially Consummated. The Bankruptcy Court after Designated Notice may
enter an order approving the report, granting the final decree, and closing the
Bankruptcy Case.
13.2 MONTHLY OPERATING REPORT AND QUARTERLY FEES. The Office of the
United States Trustee contends that (1) the Debtor is required to file monthly
operating reports and to pay quarterly fees until a final decree is entered, and
(2) the post-confirmation monthly reports should include a report as to when a
motion for a final decree is expected to be filed and the reasons why such a
motion cannot be filed presently. The Debtor disagrees with this contention,
but will file any monthly operating reports or pay any quarterly fees required
by Final Order of the Bankruptcy Court.
ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 SUCCESSORS AND ASSIGNS. The rights, benefits, and obligations of any
Person named or referred to in the Plan shall be binding upon, and shall inure
to the benefit of, the heirs, executors, administrators, successors, or assigns
of such Person.
14.2 CONFIRMATION ORDER AND PLAN CONTROL. To the extent the Confirmation
Order or the Plan is inconsistent with the Disclosure Statement or any agreement
entered into between
- 42 -
or among the Debtor and any third party, except to the extent that any such
agreement has been expressly and completely incorporated herein, this Plan
controls the Disclosure Statement and any such agreements and the Confirmation
Order (and any other orders of the Bankruptcy Court) controls the Plan.
14.3 HEADINGS. The headings used in this Plan are inserted for
convenience only and neither constitute a portion of this Plan nor in any manner
affect the construction of the provisions of this Plan.
14.4 NOTICES. All Notices, requests and demands to or upon the Debtor, to
be effective, shall be in writing (including, without limitation, by facsimile
transmission) and, unless otherwise provided for herein, shall be deemed to have
been made when actually delivered or, in the case of notice by facsimile
transmission, when received and confirmed, and addressed as follows:
with respect to the Debtor,
The Krystal Company
One Union Square
Chattanooga, TN 37402
Attn: Camden Scearce
Chief Financial Officer
Telecopier: (423) 757-5622
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with a copy to,
David G. Epstein
Sarah Robinson Borders
KING & SPALDING
191 Peachtree Street
Atlanta, Georgia 30303-1763
Telecopier: (404) 572-5149
14.5 EXISTENCE OF THE COMMITTEE. The Committee shall continue to exist
until Substantial Consummation of the Plan shall have occurred.
14.6 NOTICE AND HEARING. Whenever notice and hearing is required after
the Confirmation Date and provisions with regard thereto are not otherwise
specified in this Plan, Designated Notice providing for Timely Objection shall
be sufficient. Whenever notice and hearing or Designated Notice is required,
notice may be given by the Debtor or by Professional Persons employed by the
Debtor or the Committee.
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This 24th day of February, 1997.
THE KRYSTAL COMPANY
By: /s/ R. B. DAVENPORT, IV
------------------------------------
R. B. Davenport, IV, President
David G. Epstein
Sarah Robinson Borders
KING & SPALDING
191 Peachtree Street
Atlanta, Georgia 30303-1763
(404) 572-4600
ATTORNEYS FOR THE
KRYSTAL COMPANY
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