EXHIBIT 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
Fleming Companies, Inc., et al.,(1) ) Case No. 03-10945 (MFW)
) (Jointly Administered)
Debtors. )
INTERIM ORDER UNDER 11 U.S.C. SECTIONS 105(a), 362(a)(3), AND 541
LIMITING TRADING IN THE EQUITY SECURITIES OF THE DEBTORS
Upon consideration of the emergency motion (the "Motion")(2) of the
above-captioned debtors and debtors in possession (collectively, the "Debtors"),
for entry of an order, pursuant to sections 105(a), 362(a)(3), and 541 of title
11, United States Code (the "Bankruptcy Code"), requesting that this court limit
certain transfers of equity securities of the Debtors; and it appearing that the
relief requested is in the best interest of the Debtors' estates and it
appearing that notice is proper and that no further notice of the relief
requested in the Motion is required; and after due deliberation; and sufficient
cause appearing therefor; it is
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(1) The Debtors are the following entities: Core-Mark International, Inc.;
Fleming Companies, Inc.; ABCO Food Group, Inc.; ABCO Markets, Inc.;
ABCO Realty Corp.; ASI Office Automation, Inc.; C/M Products, Inc.;
Core-Mark Interrelated Companies, Inc.; Core-Mark Mid-Continent, Inc.;
Dunigan Fuels, Inc.; Favar Concepts, Ltd.; Fleming Foods Management
Co., L.L.C., Fleming Foods of Texas, L.P.; Fleming International, Ltd.;
Fleming Supermarkets of Florida, Inc.; Fleming Transportation Service,
Inc.; Food 4 Less Beverage Company, Inc.; Fuelserv, Inc.; General
Acceptance Corporation; Head Distributing Company; Marquise Ventures
Company, Inc.; Minter-Weisman Co.; Piggly Wiggly Company; Progressive
Realty, Inc.; Rainbow Food Group, Inc.; Retail Investments, Inc.;
Retail Supermarkets, Inc.; RFS Marketing Services, Inc.; and Richmar
Foods, Inc. (collectively, the "Debtors").
(2) Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Motion.
ORDERED, that the Motion is granted on an interim basis; and it is
further
ORDERED, that
(i) Any acquisition of equity securities of the Debtors (including
options to acquire stock, as defined below) by any person,
entity or Substantial Equityholder (as defined in paragraph
(iii), below) that would result in (a) an increase in the
amount of equity securities owned by a Substantial
Equityholder or (b) a person or entity becoming a Substantial
Equityholder (an "Equity Transferee") is hereby enjoined
through 5:00 p.m. (EST) on the date of the Final Hearing
(defined below).
(ii) Any disposition of equity securities of the Debtors (including
options to acquire stock, as defined below) by any person,
entity or Substantial Equityholder that would result in (a) a
decrease in the amount of equity securities owned by a
Substantial Equityholder or (b) a person or entity ceasing to
be a Substantial Equityholder (an "Equity Transferor") is
hereby enjoined through 5:00 p.m. (EST) on the date of the
Final Hearing (defined below).
(iii) For purposes of this Order: (a) a "Substantial Equityholder"
is any person or entity that owns equity securities of any of
the Debtors with an aggregate fair market value equal to or
greater than 5% of the fair market value of the common stock
of Fleming Companies, Inc.; (b) "ownership" of equity
securities includes direct and indirect ownership (e.g., a
holding company would be considered to own all shares owned or
acquired by its subsidiaries), ownership by such holder's
family members and persons acting in concert with such holder
to make a coordinated acquisition of stock and ownership of
shares which such holder has an option to acquire and (c) an
"option" to acquire stock includes any contingent purchase,
warrant, convertible debt, put, stock subject to risk of
forfeiture, contract to acquire stock or similar interest,
regardless of whether it is contingent or otherwise not
currently exercisable.
(iv) Any sale or other transfer of equity securities in the Debtors
in violation of this order shall be null and void and ab
initio shall confer no rights on the transferee unless the
Debtors' cases are hereafter dismissed or converted to Chapter
7.
ORDERED, that a final hearing on the Motion will be heard on June 4,
2003 at 4:00 p.m. (the "Final Hearing"), with objections, if any, to be filed
and served by June 2, 2003 at noon; and it is further
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ORDERED that within one business day of entry of this Order, the
Debtors shall provide notice to all Substantial Equityholders and all known
equity holders of the Motion and Interim Order; and it is further
ORDERED that the Debtors shall publish this Order in the business
section of the national edition of the Wall Street Journal within 4 business
days of the entry of this Order.
Dated: May 20, 2003 /s/ Mary F. Walrath
---------------------------------------
The Honorable Mary F. Walrath
United States Bankruptcy Judge
3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
Fleming Companies, Inc., et al.,(3) ) Case No. 03-10945 (MFW)
) (Jointly Administered)
Debtors. )
EMERGENCY MOTION FOR AN INTERIM ORDER UNDER 11 U.S.C. SECTIONS 105(a),
362(a)(3), AND 541 LIMITING TRADING IN EQUITY SECURITIES OF THE DEBTORS
The above-captioned debtors and debtors-in-possession (collectively,
the "Debtors") file this motion (the "Motion"), seeking entry of an order
limiting certain transfers of equity securities of the Debtors. In support of
this Motion, the Debtors respectfully state as follows:
JURISDICTION
1. This Court has jurisdiction over this Motion under 28 U.S.C. Sections
157 and 1334. This matter is a core proceeding within the meaning of 28
U.S.C. Section 157(b)(2). Venue of this proceeding and this Motion is
properly in this district pursuant to 28 U.S.C. Sections 1408 and 1409.
2. The statutory bases for the relief requested herein are sections
105(a), 362(a)(3) and 541 of title 11 of the United States Code (the
"Bankruptcy Code").
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(3) The Debtors are the following entities: Core-Mark International, Inc.;
Fleming Companies, Inc.; ABCO Food Group, Inc.; ABCO Markets, Inc.;
ABCO Realty Corp.; ASI Office Automation, Inc.; C/M Products, Inc.;
Core-Mark Interrelated Companies, Inc.; Core-Mark Mid-Continent, Inc.;
Dunigan Fuels, Inc.; Favor Concepts, Ltd.; Fleming Foods Management
Co., O.K., Fleming Foods of Texas, L.P.; Fleming International, Ltd.;
Fleming Supermarkets of Florida, Inc.; Fleming Transportation Service,
Inc.; Food 4 Less Beverage Company, Inc.; Fuelserv, Inc.; General
Acceptance Corporation; Head Distributing Company; Marquise Ventures
Company, Inc.; Minter-Weisman Co.; Piggly Wiggly Company; Progressive
Realty, Inc.; Rainbow Food Group, Inc.; Retail Investments, Inc.;
Retail Supermarkets, Inc.; RFS Marketing Services, Inc.; and Richmar
Foods, Inc. (collectively, the "Debtors").
EMERGENCY BASIS FOR RELIEF REQUESTED
3. As a result of their past operations, the Debtors have net operating
losses of approximately $367 million (the "NOL").(4) Pursuant to
section 172 of the Internal Revenue Code of 1986, as amended
(variously, the "IRC" or the "Tax Code"), the Debtors may use the NOL
to offset taxable income earned in future years, making it a valuable
asset of the Debtors' estates. Indeed, assuming a corporate tax rate of
35%, the Debtors estimate that the NOL could be worth up to $128.45
million.
4. Recently, and as further discussed herein, the Debtors learned that
there is a high risk that continued trading of the equity securities of
the Debtors could eliminate the value of the NOL by triggering the IRC
Section 382 provision that limits a taxpayer's ability to utilize net
operating losses to reduce future taxes.
5. Thus, by this Motion, pursuant to sections 105(a), 362(a)(3)
and 541 of the Bankruptcy Code, the Debtors seek an order limiting
certain transfers of equity securities of the Debtors on an interim
basis, subject to the Debtors providing full notice of the relief
requested. Accordingly, the Debtors request that the Court enter the
interim order attached hereto as Exhibit A (the "Interim Order").
BACKGROUND
6. On April 1, 2003 (the "Petition Date"), the Debtors filed their
voluntary petitions for relief under chapter 11 of the Bankruptcy Code
(the "Chapter 11 Cases"). The Debtors are operating their businesses
and managing their properties as debtors in possession pursuant to
sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or
examiner has been appointed in these cases. The Committee was appointed
on April 14, 2003.
7. On April 8, 2003, Core-Mark International, Inc., one of the Debtors in
these Chapter 11 Cases, obtained an order from the Supreme Court of
British Columbia (the "Core-Mark Order") recognizing the Chapter 11
Cases as "foreign proceedings" for purposes of Section 18.6 of the
Companies' Creditors Arrangement Act (Canada).
8. The Debtors are the largest multi-tier distributor of consumable goods
in the United States. As of the Petition Date, the Debtors were
supplying products to approximately 45,000 locations, including
supermarkets and convenience stores.
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(4) The Debtors' NOL was approximately $367 million as of December 31,
2002. It is likely that this amount has increased since then. See
Affidavit of August L. Helmbright, attached hereto as Exhibit B.
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IRC SECTION 382 COULD LIMIT THE DEBTORS' USE OF THEIR NOL IF UNFETTERED TRADING
OF EQUITY SECURITIES IN THE DEBTORS IS PERMITTED TO CONTINUE.
9. The Debtors must limit trading in equity securities in the
Debtors to preserve the value of Debtors' NOL. Thus the Court should
exercise its powers pursuant to sections 105(a) and 362(a)(3) of the
Bankruptcy Code to grant the requested relief.
10. IRC Section 172 generally permits corporations that meet
certain requirements to use net operating losses and built-in losses to
offset income from each of the five years preceding and twenty years
following the year of such losses. A corporation's ability to deduct
its net operating losses or built-in losses in any given year within
such period is normally limited only by the amount of income the
corporation earns. If a corporation undergoes an "ownership change" (as
described below), however, IRC Section 382(a) severely restricts the
corporation's ability to use its net operating losses or built-in
losses by capping the corporation's annual net operating loss deduction
at an amount equal to the long-term tax exempt rate (approximately 5%)
multiplied by the value of the corporation's equity prior to the
restructuring. (This cap is referred to herein as the "IRC Section 382
Limitation.") Thus, it is imperative that the Debtors avoid an
"ownership change" in order to preserve the value of their NOL, which
is estimated to be $367 million.
11. According to the Tax Code, an "ownership change" occurs
when, during a three year "testing period," the percentage of a
corporation's stock owned by one or more shareholders (each of whom own
at least 5 percent at the end of the period) increases by more than 50
percentage points over the lowest percentage of stock owned by such
shareholders. See IRC Section 382(i)(1). A simple example from the
Treasury regulations illustrates how this complex formula is applied:
A and B each own 40 percent of the outstanding stock of L, a loss
corporation. The remaining 20 percent of the L stock is owned by 100
unrelated individuals, none of whom own as much as five percent of L
stock. C, a third party, negotiates with A and B to purchase all their
stock in L. The acquisitions from both A and B are completed on
September 13, 1990. C's acquisition of 80 percent of L's stock results
in an ownership change because C's percentage ownership has increased
by 80 percentage points as of the testing date, compared to his lowest
percentage ownership in L at any time during the testing period (0
percent).
See Temp. Treas. Reg. Section 1.382-2T(c)(2).
12. Debtors' accountants, Ernst & Young LLP, have informed Debtors
that the percentage ownership of Debtors' stock by 5-percent
shareholders of the Debtors increased by as much as approximately 48
percentage points over the lowest percentage
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ownership by such shareholders during the most recent testing
period.(5) Thus it is abundantly clear that, absent the order requested
from this court, further unfettered trading by 5-percent shareholders
of the Debtors will soon push Debtors past the 50% change threshold,
trigger the Code Section 382 limitation, and effectively eliminate a
$128.45 million tax asset.(6)
13. In order to preserve this valuable asset, the Debtors propose
that:
(v) Any acquisition of equity securities of the Debtors (including
options to acquire stock, as defined below) by any person,
entity or Substantial Equityholder (as defined in paragraph
(iii), below) that would result in (a) an increase in the
amount of equity securities owned by a Substantial
Equityholder or (b) a person or entity becoming a Substantial
Equityholder (an "Equity Transferee") be enjoined through the
date of a final hearing on the Motion.
(vi) Any disposition of equity securities of the Debtors (including
options to acquire stock, as defined below) by any person,
entity or Substantial Equityholder that would result in (a) a
decrease in the amount of equity securities owned by a
Substantial Equityholder or (b) a person or entity ceasing to
be a Substantial Equityholder (an "Equity Transferor") be
enjoined through the date of a final hearing on the Motion.
(vii) For purposes of the Interim Order: (a) a "Substantial
Equityholder" is any person or entity that owns equity
securities of any of the Debtors with an aggregate fair market
value equal to or greater than 5% of the fair market value of
the common stock of Fleming Companies, Inc.; (b) "ownership"
of equity securities includes direct and indirect ownership
(e.g., a holding company would be considered to own all shares
owned or acquired by its subsidiaries), ownership by such
holder's family members and persons acting in concert with
such holder to make a coordinated acquisition of stock and
ownership of shares which such holder has an option to acquire
and (c) an "option" to acquire stock includes any contingent
purchase, warrant, convertible debt, put, stock subject to
risk of forfeiture, contract to acquire stock or similar
interest, regardless of whether it is contingent or otherwise
not currently exercisable.
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(5) See Affidavit of August L. Helmbright.
(6) The effect of an ownership change would be to limit the Debtors and the
reorganized Debtors to applying only a tiny fraction (approximately
$400,000 annually) of their NOL to offset future income. See Affidavit
of August L. Helmbright. The effect of this is limitation is
illustrated by the following example: Assume that in a future taxable
year Debtors have taxable income of $100 million. If Debtors' NOL were
not restricted by IRC Section 382, Debtors would be able to offset
their entire taxable income by carrying forward their NOL. Thus,
Debtors would pay no federal income tax. If the Code Section 382
Limitation applied, Debtors would only be permitted to offset $400,000
of income with their NOL. Thus Debtors would owe tax on $99,600,000. At
the current corporate tax rate (35%), Debtors would owe tax of $34.8
million.
4
14. To preserve the Debtors' NOL for use by the Debtors and
the reorganized Debtors, the Debtors must - at a minimum - avoid an
"ownership change" prior to the effective date of the Debtors'
bankruptcy plan. The best way to accomplish this goal is to enter the
order requested by Debtors, limiting trading in the equity securities
of Debtors.
A. A DEBTOR'S NOL IS PROPERTY OF ITS ESTATE ENTITLED TO COURT PROTECTION
15. Courts have uniformly held that a debtor's NOL constitutes
property of the estate under section 541 of the Bankruptcy Code, and,
consequently, courts have the authority to impose measures intended to
protect and preserve such NOL. The seminal case articulating this rule
is In re Prudential Lines, Inc., 107 B.R. 832 (Bankr. S.D.N.Y. 1989),
aff'd, 119 B.R. 430 (S.D.N.Y. 1990), aff'd, 928 F.2d 565 (2d Cir.
1991), cert. denied 502 U.S. 821 (1991). In Prudential Lines, the
Bankruptcy Court for the Southern District of New York enjoined a
parent corporation from taking a worthless stock deduction with respect
to its wholly-owned subsidiary, which was in bankruptcy, on the grounds
that allowing the parent to take such a deduction would destroy its
debtor-subsidiary's NOL. In issuing the injunction, the court held that
a "debtor's potential ability to utilize NOLs is property of an
estate." 107 B.R. at 838. The court further held that "the taking of a
worthless stock deduction is an exercise of control over a debtor's
NOLs" and was thus properly subject to the automatic stay of section
362 of the Bankruptcy Code. 107 B.R. at 842; see also In re Southeast
Banking Corp., Case No. 91-14561-BKC-PGH (Bankr. S.D. Fla., July 21,
1994) (debtor's interest in its NOL "constitutes property of the estate
within the scope of 11 U.S.C. Section 541(a)(1) and is entitled to the
protection of the automatic stay imposed pursuant to 11 U.S.C. Section
362(a)(3)"); In re Phar-Mor, Inc., 152 B.R. 924 (Bankr. N.D. Ohio 1993)
("the sale of stock is prohibited by Section 362(a)(3) as an exercise
of control over the NOLs, which is property of the estate"); In re
Grossman's, Inc., Case No. 97-695 (PJW) (Bankr. D. Del. Oct. 9, 1997)
(the debtors' NOL carryforward is property of the debtors' estates and
is protected by the automatic stay).
B. THE REQUESTED RELIEF IS APPROPRIATE TO PRESERVE THE DEBTORS' NOL
16. Courts have not hesitated to restrict or enjoin transfers
of equity securities or issue other injunctive relief in order to
protect a debtor against the possible loss of its NOL carryforwards.
See, e.g., In re Conseco, Inc., Case No. 02-49672 (Bankr. N.D. Ill.
Dec. 17, 2002) (5-percent shareholders required to give notice of
intended acquisitions and dispositions of debtors' stock and to show
that such transactions would not impair debtors' ability to utilize
debtors' NOL); In re US Airways Group, Inc., Case No. 02-83984 (Bankr.
E.D. Va. Sept. 29, 2002) (debtor allowed advance notice to object to
proposed transfers of (a) equity securities in the debtor that would
increase the transferee's holdings to or above 3,000,000 shares,
representing approximately 4.5% of all issued and outstanding shares of
debtor's common stock, or (b) claims against the debtors in an
aggregate principal amount of $100,000,000 or more); In re Williams
Communications Group, Inc., Case No. 02-11957 (BRL) (Bankr. S.D.N.Y.
July 24, 2002) (debtor provided 30 days notice to object to proposed
transfers of claims against
5
the debtor that would increase the transferee's holdings to or above
$200 million in the aggregate face amount; $200 million in claims was
the lowest amount that could reasonably be expected to lead to a
distribution of 5% of the stock in the reorganized debtor); In re
Metrocall, et al., Case No. 02-11579 (RB) (Bankr. D. Del. June 6, 2002)
(debtor provided five business days notice to object to proposed
transfers of stock that would result in the transferee holding 5% or
more of the debtor's stock or a reduction in the ownership interest of
an existing 5% or greater shareholder); In re Casual Male Corp., Case
No. 01-41404 (REG) (Bankr. S.D.N.Y. May 18, 2001) (enjoining transfers
of common stock and convertible notes that would result in the
transferee's holdings increasing to or beyond 4.99%; debtor provided 30
days notice to object to proposed transfers of senior subordinated
notes or other general unsecured claims (excluding the convertible
notes) against the debtor); In re Worldtex, Inc., Case No. 01-785 (MFW)
(Bankr. D. Del. Apr. 2, 2001) (debtor provided 30 days notice to object
to proposed transfers that would result in the transferee holding 5% or
more of the debtor's common stock or decrease the ownership interest of
an existing 5% or greater shareholder); In re Reliance Acceptance
Group, Inc., Case No. 98-288 (PJW) (Bankr. D. Del. Apr. 28, 1998)
(debtor provided 30 days notice to object to proposed transfers that
would result in the transferee holding 5% or more of debtor's common
stock); In re First Merchants Acceptance Corp., 1998 Bankr. LEXIS 1816
(Bankr. D. Del. 1998) (debtor provided 30 days notice to object to
proposed transfers of stock in the debtor that would increase the
transferee's holdings to or above 300,000 shares of the debtor's stock
and to any proposed transfers of 1995 subordinated reset notes or
general unsecured claims against the debtor); In re Grossman's, Inc.,
Case No. 97-695 (PJW) (Bankr. D. Del. Oct. 9, 1997) (debtor provided 30
days notice to object to proposed transfers of stock that would
increase the transferee's holdings to or above 1,350,000 shares of
debtor's stock and to proposed transfers of general unsecured claims
that would increase the transferee's holdings to or above an aggregate
face amount of $3,500,000); In re Southeast Banking Corp., Case No.
91-14561-BKC-PGH (Bankr. S.D. Fla. July 21, 1994) (enjoining 5% trades
of common stock); In re Phar-Mor, Inc., 152 B.R. 924 (Bankr. N.D. Ohio
1993) (enjoining shareholders from selling stock in the debtor unless
they obtained relief from the automatic stay); In re McLean Indus.
Inc., Case Nos. 86-B-12238-l2241 (Bankr. S.D.N.Y. Feb. 16, 1989)
(requiring an application to the court for authority to transfer any
claims).
17. Because the Debtors' NOL is property of their estates under
section 541 of the Bankruptcy Code, this Court has the authority under
section 362(a)(3) of the Bankruptcy Code to enforce the automatic stay
by restricting the transfer of equity securities in the Debtors in
order to protect this valuable asset.
THE REQUESTED RELIEF IS NECESSARY TO AVOID IRREPARABLE HARM TO THE DEBTORS
18. Once an NOL is limited under IRC Section 382, its use is
limited forever, and once an equity interest is transferred, the
transfer cannot be undone. The relief sought herein is necessary to
avoid an irrevocable loss of the Debtor's NOL - and the irreparable
harm which could be caused thereby.
6
THE REQUESTED RELIEF IS NARROWLY TAILORED
19. The requested relief does not bar all equity securities
trading. At this juncture, the Debtors seek only to limit equity
securities trading that poses a serious risk under the IRC Section 382
ownership change test. The temporary restriction requested by the
Debtors would permit most equity securities trading to continue subject
only to Fed. R. Bankr. P. 3001(e) and applicable securities, corporate
and other laws.
20. Given that the requested relief is both narrowly tailored
and necessary to avoid irreparable harm, the Court should not hesitate
in exercising its authority under sections 105(a) and 362(a)(3) to
limit certain trading in equity securities of the Debtors and enter the
requested order.
NOTICE
21. Notice of this Motion has been given to (a) the United
States Trustee; (b) counsel to the Senior Secured Lenders; (c) counsel
to the Indenture Trustees; (d) proposed counsel to the Official
Committee of Unsecured Creditors; and (e) those persons who have
requested notice pursuant to Rule 2002 of the Federal Rules of
Bankruptcy Procedure.
22. Given the nature of the relief requested, the Debtors
submit that broader notice of the Motion before entry of the Interim
Order would defeat the purpose of the Motion. If the Debtors provided
notice of the Motion to known 5% holders or greater of the Debtors'
equity interests, those holders may likely trade and trigger the change
of ownership, depriving the Debtors of a significant estate asset. The
Debtors do propose that within one business day of entry of this Order,
the Debtors shall provide notice to all Substantial Equityholders and
all known equity holders of the Motion and Interim Order and that they
shall publish the Interim Order in the business section of the national
edition of the Wall Street Journal within 4 business days of the entry
of this Order.
23. In light of the nature of the relief requested, the Debtors
submit that no further notice is required.
NO PRIOR REQUEST
24. No prior motion for the relief requested herein has been
made to this or any other Court.
CONCLUSION
25. The Debtors' NOL is a valuable asset of their estates which
will inure to the benefit of their stakeholders and facilitate Debtors'
reorganization. Unfettered trading in equity securities of the Debtors
jeopardizes the NOL and consequently threatens a source of value to the
Debtors' stakeholders. Accordingly, this Court should grant the
requested relief. The requested relief imposes a minimal burden to
achieve a substantial benefit, and the Debtors believe that granting
the relief requested in this Motion is in the best interest of the
Debtors' estates, their creditors and other interested parties.
7
WHEREFORE, the Debtors respectfully request that the Court enter the
Interim Order substantially in the form attached hereto as Exhibit A, (a)
limiting certain transfers of equity securities of the Debtors and (b) granting
such other and further relief as the Court deems appropriate.
Dated: May 16, 2003
Respectfully Submitted,
KIRKLAND & ELLIS
James H. M. Sprayregen, P.C. (ARDC No. 6190206)
Richard L. Wynne (CA Bar No. 120349)
777 South Figueroa Street
Los Angeles, CA 90017
Telephone: (213) 680-8400
Facsimile: (213) 680-8500
and
PACHULSKI, STANG, ZIEHL, YOUNG, JONES &
WEINTRAUB P.C.
---------------------------------------------------
Laura Davis Jones (Bar No. 2436)
Ira D. Kharasch (CA Bar No. 109084)
Scotta E. McFarland (Bar No. 4184)
Christopher J. Lhulier (Bar No. 3850)
919 North Market Street, 16th Floor
P.O. Box 8705
Wilmington, Delaware 19899-8705 (Courier No. 19801)
Telephone: (302) 652-4100
Facsimile: (302) 652-4400
Counsel for the Debtors and Debtors in
Possession
Exhibit A
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Chapter 11
)
Fleming Companies, Inc., et al.,(7) ) Case No. 03-10945 (MFW)
) (Jointly Administered)
Debtors. )
INTERIM ORDER UNDER 11 U.S.C. SECTIONS 105(a), 362(a)(3), AND 541
LIMITING TRADING IN THE EQUITY SECURITIES OF THE DEBTORS
Upon consideration of the emergency motion (the "Motion")(8) of the
above-captioned debtors and debtors in possession (collectively, the "Debtors"),
for entry of an order, pursuant to sections 105(a), 362(a)(3), and 541 of title
11, United States Code (the "Bankruptcy Code"), requesting that this court limit
certain transfers of equity securities of the Debtors; and it appearing that the
relief requested is in the best interest of the Debtors' estates and it
appearing that notice is proper and that no further notice of the relief
requested in the Motion is required; and after due deliberation; and sufficient
cause appearing therefor; it is
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(7) The Debtors are the following entities: Core-Mark International, Inc.;
Fleming Companies, Inc.; ABCO Food Group, Inc.; ABCO Markets, Inc.;
ABCO Realty Corp.; ASI Office Automation, Inc.; C/M Products, Inc.;
Core-Mark Interrelated Companies, Inc.; Core-Mark Mid-Continent, Inc.;
Dunigan Fuels, Inc.; Favar Concepts, Ltd.; Fleming Foods Management
Co., L.L.C., Fleming Foods of Texas, L.P.; Fleming International, Ltd.;
Fleming Supermarkets of Florida, Inc.; Fleming Transportation Service,
Inc.; Food 4 Less Beverage Company, Inc.; Fuelserv, Inc.; General
Acceptance Corporation; Head Distributing Company; Marquise Ventures
Company, Inc.; Minter-Weisman Co.; Piggly Wiggly Company; Progressive
Realty, Inc.; Rainbow Food Group, Inc.; Retail Investments, Inc.;
Retail Supermarkets, Inc.; RFS Marketing Services, Inc.; and Richmar
Foods, Inc. (collectively, the "Debtors").
(8) Capitalized terms used but not defined herein shall have the meanings
ascribed to such terms in the Motion.
ORDERED, that the Motion is granted on an interim basis; and it is
further
ORDERED, that
(viii) Any acquisition of equity securities of the Debtors (including
options to acquire stock, as defined below) by any person,
entity or Substantial Equityholder (as defined in paragraph
(iii), below) that would result in (a) an increase in the
amount of equity securities owned by a Substantial
Equityholder or (b) a person or entity becoming a Substantial
Equityholder (an "Equity Transferee") is hereby enjoined
through 5:00 p.m. (EST) on the date of the Final Hearing
(defined below).
(ix) Any disposition of equity securities of the Debtors (including
options to acquire stock, as defined below) by any person,
entity or Substantial Equityholder that would result in (a) a
decrease in the amount of equity securities owned by a
Substantial Equityholder or (b) a person or entity ceasing to
be a Substantial Equityholder (an "Equity Transferor") is
hereby enjoined through 5:00 p.m. (EST) on the date of the
Final Hearing (defined below).
(x) For purposes of this Order: (a) a "Substantial Equityholder"
is any person or entity that owns equity securities of any of
the Debtors with an aggregate fair market value equal to or
greater than 5% of the fair market value of the common stock
of Fleming Companies, Inc.; (b) "ownership" of equity
securities includes direct and indirect ownership (e.g., a
holding company would be considered to own all shares owned or
acquired by its subsidiaries), ownership by such holder's
family members and persons acting in concert with such holder
to make a coordinated acquisition of stock and ownership of
shares which such holder has an option to acquire and (c) an
"option" to acquire stock includes any contingent purchase,
warrant, convertible debt, put, stock subject to risk of
forfeiture, contract to acquire stock or similar interest,
regardless of whether it is contingent or otherwise not
currently exercisable.
(xi) Any sale or other transfer of equity securities in the Debtors
in violation of this order shall be null and void and ab
initio shall confer no rights on the transferee unless the
Debtors' cases are hereafter dismissed or converted to Chapter
7.
ORDERED, that a final hearing on the Motion will be heard on June ___,
2003 at ____ a.m./p.m. (the "Final Hearing"), with objections, if any, to be
filed and served by June __, 2003 at _____ a.m./p.m.; and it is further
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ORDERED that within one business day of entry of this Order, the
Debtors shall provide notice to all Substantial Equityholders and all known
equity holders of the Motion and Interim Order; and it is further
ORDERED that the Debtors shall publish this Order in the business
section of the national edition of the Wall Street Journal within 4 business
days of the entry of this Order.
Dated: ______________, 2003
--------------------------------------------
United States Bankruptcy Judge
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