Exhibit 2.5
Christopher R. Kaup, Esq. (014820)
TIFFANY & BOSCO, P.A.
1850 North Central Avenue Fifth Floor Phoenix,
Arizona, 85004
Attorneys for Debtors and
Debtors-in-Possession
UNITED STATES BANKRUPTCY COURT
DISTRICT OF ARIZONA
In re: | Chapter 11 Proceedings
|
E-BIZ ENTERPRISES, INC., | Case Nos. 01-11843-ECF CGC and
a Nevada corporation, | 01-11844-ECF-CGC
Debtor. |
- ---------------------------------------| (Jointly Administered)
|
In re: | SECOND IMMATERIAL
JONES BUSINESS SYSTEMS, INC., | MODIFICATIONS TO AMENDED
a Texas corporation, | JOINT PLAN OF REORGANIZATION
Debtor. | AND MEMORANDUM OF LAW IN
| SUPPORT OF IMMATERIAL MODIFICATIONS
- ---------------------------------------|
E-Biz Enterprises, Inc., ("EBIZ") and Jones Business Systems, Inc.
("JBSI"), the Debtors and Debtors-in-Possession in the above-captioned
Bankruptcy Cases (collectively, the "Debtors") hereby submit, pursuant to 11
U.S.C. ss.1127(a), these Second Immaterial Modifications to the Amended Joint
Plan of Reorganization (the "Plan") filed on or about January 24, 2002 by the
Debtors.
The modifications set forth herein address the treatment of the claims of
Citicorp Vendor Finance, Inc., ("Citicorp") and the Arizona Department of
Revenue. The holder of the claim in Class 4 of the Plan is Citicorp. At the time
of the preparation of the Plan, the Debtors believed that Citicorp held a
secured claim based upon three agreements (the "Agreements") that are, in
reality, "disguised security agreements." Citicorp filed a Motion to Compel
Assumption or Rejection of Leases on February 13, 2002, to which the Debtors
filed a timely Objection. In its Motion to Compel, Citicorp asserts that the
Agreements are true leases.
The Debtors subsequently discovered that Citicorp failed to file a UCC-1
Financing Statement with respect to two of the Agreements and, therefore, its
security interest in certain property of the Bankruptcy Estate purchases from
Citicorp's predecessor in interest, Copelco Leasing Corporation, is avoidable,
pursuant to 11 U.S.C. ss.544(a). Accordingly, the Debtors filed an Objection to
Claim of Citicorp on April 4, 2002.
The Debtors have negotiated with Citicorp regarding the nature and
treatment of its claims. In addition, without waiving any of its rights or
claims as to whether Agreement No. 1326490, one of the Agreements at is sue, is
a disguised security agreement or as to the nature of Citicorp's claim relating
to that Agreement, the Debtors have rejected Agreement No. 1326490 and have
informed Citicorp that the property purchased from Citicorp through that
Agreement will be made available for pick up by Citicorp.
The modifications set forth below address the fact that Citicorp's claims
are in dispute, the rejection of Agreement No. 1326490, a change in the payment
amount to Citicorp due to the return of a large portion of its collateral and
alternative treatment for Citicorp's claims arising from the remaining two
Agreements, depending upon decisions by the Court regarding the nature and
amount of those claims. Through these modifications, the Debtors clarify that
they will pay the full amount of any administrative claim of Citicorp as allowed
by the Court on the Effective Date or the date on which the Court's Order
allowing that claim becomes final, whichever is later. In addition, the
modifications provide that Citicorp will either: (1) retain its liens on the
property securing its claims arising under Agreement No. 1315110 and Agreement
No. 2153520 and receive cash payments, over a period of two years, with interest
equal to the allowed amount
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of Citicorp's Secured Claims, as determined by the Court; or (2) return the
property acquired by JBSI through the Agreements, depending upon the decisions
by the Court as to whether the Agreements are disguised security agreements and
the aggregate amount of Citicorp's Administrative and Secured Claims. Citicorp
will either be paid the full amount of its Allowed Secured Claims or obtain the
return of the property which it claims it leased to the Debtors and which the
Debtors assert is Citicorp's collateral.
These Immaterial Modifications also address and clarify the treatment of
the Arizona Department of Revenue. The Arizona Department of Revenue will be
paid monthly as a result of this modification. These Immaterial Modifications
are supported by the Memorandum of Law set forth herein. The Plan is, hereby,
modified to provide as follows:
I. TREATMENT OF CITICORP CLAIMS IN CLASS 4
Citicorp holds a claim in the aggregate amount of $295,995.62. The Debtors
assert that this Claim is secured by a security interest in office furniture, a
computer system network and a Konica copy printer and controller by virtue of
three "financing" or "capitalized" leases. Citicorp disputes the Debtors'
characterization of the Agreements at issue as security agreements and claims
that they are "true leases." On account of its Class 4 claims, Citicorp will
receive:
(1) If Citicorp is determined to hold a Secured Claim as to Agreement No.
1315110 and/or a Secured Claim as to Agreement No. 2153520 and the aggregate
amount of Citicorp's Allowed Administrative Claims and Allowed Secured Claim(s)
as to those Agreements is equal to or less than $45,000.00, the Debtors will:
A. Retain the equipment and software associated with Agreement No.
1315110 and the Konica photocopier associated with Agreement No. 2153520, and
Citicorp will retain its liens therein until it has received payment in full of
the amounts set forth below;
B. Pay the full amount of Citicorp's Allowed Administrative Claims
related to or arising out of those Agreements on the Effective Date or the date
on which the Order of the Court allowing those claims becomes final and
nonappealable, whichever is later; and
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C. Pay the amount of Citicorp's Allowed Secured Claim(s), plus
interest at the rate of 8% PER ANNUM over a period of two years, in equal
monthly installments of principal and interest, beginning on the date which is
30 days after the Effective Date or the date which is 30 days after the date on
which the Order of the Court allowing that claim becomes final and
nonappealable, whichever is later;
(2) If either Agreement No. 1315110 or Agreement No. 2153520 is determined
to be a "true lease" and not a "disguised security agreement," the Debtor will
reject the Agreement determined to be a true lease and will make available to
Citicorp all of the property related to that Agreement for pick up by Citicorp
on the date that the Order of the Court determining that Agreement to be a true
lease becomes final and nonappealable and will pay to Citicorp the full amount
of Citicorp's Allowed Administrative Claim associated with or arising from that
Agreement on the Effective Date or the date on which the Order of the Court
allowing that claim becomes final and nonappealable, whichever is later;
(3) If the aggregate amount of Citicorp's Allowed Administrative Claims,
related to or arising from Agreement No. 1315110 and Agreement No. 2153520, plus
the amount of Citicorp's Allowed Secured Claims, if any, as to those Agreements
is greater than $45,000.00, the Debtors will reject those Agreements, to the
extent that such rejection is necessary, and will make available for pick up by
Citicorp all of the property related to those Agreements on the date that the
Order of the Court determining the allowed amounts of Citicorp's Administrative
Claims and Secured Claims becomes final and nonappealable and will pay to
Citicorp the full amount of Citicorp's Allowed Administrative Claims associated
with or arising from those Agreements on the Effective Date or the date on which
the Order of the Court allowing that claim becomes final and nonappealable,
whichever is later; and
(4) The Debtors have already rejected Agreement No. 1326490 with Citicorp
and have notified Citicorp that they will make available for pick up by Citicorp
all of the property related to that Agreement. The Debtors will pay the full
amount of Citicorp's Administrative Claim related to or arising from Agreement
No. 1326490 on the Effective Date or the date on which the Order of the Court
allowing that claim becomes final and nonappealable, whichever is later.
The entirety of Article VII(E)(1)(d) of the Plan regarding "Class 4" is
hereby stricken and replaced with the language set forth immediately above.
Article XV of the Plan is also, to the extent necessary, hereby, modified and
amended in such a manner so as to give full effect to the immaterial
modification set forth above.
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II. TREATMENT OF UNSECURED PRIORITY CLAIM OF THE ARIZONA DEPARTMENT OF REVENUE
This modification addresses the priority claims held by the Arizona
Department of Revenue. The Plan is, hereby, modified as follows:
On account of its priority unsecured claim, including prepetition
interest on that claim, the Arizona Department of Revenue shall
receive deferred cash payments, on a monthly basis, over a period not
exceeding six years after the date of assessment of such claim having
a value, as of the Effective Date, equal to the allowed amount of such
claim.
The failure of the Debtor to comply with the provisions of the Plan
concerning the liability owed to the Arizona Department of Revenue,
which includes, but is not limited to, the failure to make the full
and timely payment(s) shall constitute a default of the Plan. If the
Debtor fails to cure the default within ten (10) days after written
notice of the default from the Arizona Department of Revenue or its
agents, the entire balance due the Arizona Department of Revenue shall
be immediately due and owing. Further, in the event of a default, the
Arizona Department of Revenue may enforce the entire amount of its
claim, exercise any and all rights and remedies under applicable
non-bankruptcy law, which includes, but is not limited to, state tax
collection procedures, and any other such relief as may be deemed
appropriate by the Bankruptcy Court.
Articles VII(A) & (D)(2) and XV of the Plan are, hereby, modified and
amended in such a manner so as to give full effect to the immaterial
modification set forth above.
III. THE MODIFICATIONS COMPLY WITH SECTIONS 1122 AND 1123, AND NO FURTHER NOTICE
IS REQUIRED BY THE BANKRUTPCY CODE AND RULES
First, the modifications set forth above do not adversely change the
treatment of any creditor or the interest of any equity security holder.
Citicorp will receive either payment in full of its Secured Claims in the amount
allowed by the Court or the indubitable equivalent of those claims through the
return of the property associated with the Agreements. Second, the Plan, as
modified, satisfies each of the required elements 11 U.S.C. ss.1123(a).
Third, the Plan, itself, contemplates that there may be modifications. In
Article XVI, the Plan provides that: "the Debtor may propose amendments or
modifications in accordance with
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11 U.S.C. ss.1127(a)" prior to confirmation of the Plan. Thus, the Immaterial
Modifications to the Plan made by thE Debtors herein are consistent with the
notice previously given to all creditors and parties-in-interest.
Section 1127(a) of the Code provides that the proponent of a Chapter 11
Plan desiring to modify that plan may do so. The Historical and Revision Notes
make it clear that compliance noticing provision is not necessary if the
modifications are so minor as not to require additional disclosure:
Subsection (c) requires the proponent of a modification to
comply with the disclosure provisions of section 1125. Of
course, if the modification were sufficiently minor, the
court might determine that additional disclosure was not
required under the circumstances.
Rule 3019, Fed.R.Bankr.P. (adopted after ss. 1127 was in place), addresses
the application of 11 U.S.C. ss. 1127 and follows the Historical Note in that it
EXPRESSLY AUTHORIZES the court to proceed without renoticing creditors or other
parties-in-interest. It states:
In a chapter 9 or chapter 11 case, after a plan has been
accepted and BEFORE ITS CONFIRMATION, the proponent may file
a modification of the plan. If the court finds after hearing
on notice to the TRUSTEE, ANY COMMITTEE APPOINTED UNDER THE
CODE and any other entity designated by the court THAT THE
PROPOSED MODIFICATION DOES NOT ADVERSELY CHANGE THE
TREATMENT OF THE CLAIM of any creditor or the interest of
any equity security holder who has not accepted in writing
the modification, it shall be deemed accepted by all
creditors and equity security holders who have previously
accepted the plan.
(emphasis supplied).
III. CONCLUSION
The Immaterial Modifications to the Plan, set forth herein, do not
adversely affect any creditor or party-in-interest. No further noticing of the
Immaterial Modifications or the Plan, as modified, is necessary. Accordingly,
the Court should confirm the Plan, as so modified.
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RESPECTFULLY SUBMITTED this 9th day of April, 2002.
TIFFANY & BOSCO, P.A.
By /s/ C.K. #014820
---------------------------------------
Christopher R. Kaup, Esq.
1850 North Central Avenue Suite 500
Phoenix, Arizona, 85004
Counsel for the Debtors
COPY of the foregoing sent via facsimile
and first class mail this 9th day of
April, 2002, to:
David N. Ingrassia, Esq.
Marce & Ingrassia
818 East Osborn Rd., Suite 105
Phoenix, Arizona 85014
Attorneys for Citicorp Vendor Finance, Inc.
Robert Hall, Esq.
Office of the Attorney General
1275 W. Washington
Phoenix, Arizona 85007
Attorney for Ariz. Dept. of Revenue
Joseph E. Cotterman, Esq.
Gallagher & Kennedy, P.A.
2575 E. Camelback Road
Phoenix, Arizona 85016
Attorneys for Official Committee
of Unsecured Creditors
Tina Picolo
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