IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
____________________________________
: CHAPTER 11
In re: :
:
CORECARE BEHAVIORAL HEALTH :
MANAGEMENT, INC. : BANKRUPTCY NO. 02-16792(SR)
:
Debtor :
____________________________________:
_______________________________
SECONDFOURTH MODIFIED
THIRD AMENDED PLAN OF REORGANIZATION
PROPOSED BY DEBTOR-IN-POSSESSION
_______________________________
May 24, 2004
CoreCare Behavioral Health Management, Inc., Debtor-in-Possession, (the
"Debtor" or "CCBHM") hereby proposes the following Plan of Reorganization (the
"Plan") under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. Section
101, et seq. The Debtor is jointly administered with Corecare Realty, Corp.
("Realty") (collectively CCBHM and Realty are referred to as the "Debtors").
ARTICLE I
Definitions
For the purposes of this Plan, the following terms shall have
the respective meanings hereinafter set forth, such meanings to be equally
applicable to the singular and plural forms of the terms defined except as the
context otherwise requires. Any term defined in the Bankruptcy Code and not
otherwise defined herein shall have the meaning specified in the Bankruptcy Code
unless the context otherwise requires.
1.1 "ACCOUNTS RECEIVABLE" means any account as that term is
defined in Section 9106 of the Pennsylvania Uniform Commercial Code, 13 P.S.
Section 1101, et seq. (the "PA U.C.C."), and includes any right of the Debtor to
payment for goods sold or leased or for services rendered which is not evidenced
by an instrument or chattel paper (as those terms are defined in the PA U.C.C.),
whether or not it has been earned by performance.
1.2 "ADMINISTRATIVE CLAIM" means a Claim incurred by the
Debtor on or after the Petition Date and before the Effective Date for a cost or
expense of administration of the Chapter 11 case allowable under Section 503(b)
of the Bankruptcy Code, and entitled to priority under Section 507(a)(1) of the
Bankruptcy Code.
1.3 "ADMINISTRATIVE CLAIMANT" means the holder of an
Administrative Claim.
1.4 "ALLOWANCE DATE" means the date a Claim or Interest
becomes an Allowed Claim or Allowed Interest, respectively.
1.5 "ALLOWED" The use of the term "Allowed" with reference to
a Claim or Interest (e.g., "Allowed Unsecured Claim") shall mean one which (a)
is listed in the Bankruptcy Schedules or List of Equity Security Holders
(including any amendments thereto) filed in this case as of the Confirmation
Date and (i) not listed therein as disputed, contingent or unliquidated or (ii)
not objected to by the Debtor in accordance with Section 13.1; (b) is set forth
in a Proof of Claim or Interest properly filed in this case on or before the
date fixed by the Bankruptcy Court (or by applicable rule or statutes as the
last day for filing such proof) and as to which no objection is filed in
accordance with Section 13.1 hereof; or (c) is determined to be allowed in a
Final Order.
1.6 "ALLOWED CLAIM" means (a) a Claim that has been allowed by
a Final Order; (b) a Claim which is specified herein to be an Allowed Claim; or
(c) a Claim timely filed with the Office of the Clerk of the Court or scheduled
by the Debtor in its Schedules as neither unliquidated, disputed or contingent
and as to which Claim (i) no objection with respect to the allowance thereof has
been or shall be interposed in accordance with Section 13.1 hereto, or (ii) as
to which Claim either an objection to the Claim or an application to amend the
Schedules with respect to a scheduled Claim has been interposed, which objection
or application has been resolved by a Final Order to the extent such objection
or application is determined in favor of the holder of such Claim. Unless
otherwise specified, "Allowed Claim" shall not include interest on the principal
amount of such Claim accruing from or after the Petition Date to the Effective
Date.
1.7 "ALLOWED INTEREST" shall mean an Interest (a) in respect
to which a proof of interest has been filed with the Court within the applicable
period of limitation fixed by Rule 3003 or (b) scheduled in the list of equity
security holders prepared and filed with the Court pursuant to Rule 1007(b), in
either case as to which no objection to the allowance thereof has been
interposed within any applicable period of limitation fixed by Rule 3003 or an
Order of the Court, or as to which any such objection has been determined by an
order or judgment which is not longer subject to appeal or certiorari proceeding
and as to which no appeal or certiorari proceeding and as to which no appeal or
certiorari proceeding pending.
1.8 "ASSETS" means all of the Debtor's property, real and
personal, tangible and intangible, including, without limitation, cash, Accounts
Receivable, equipment and inventory, goods, chattel paper, documents,
instruments, money, fixtures, contract rights, general intangibles, insurance
proceeds, tax refunds and good will, Causes of Action, claims and rights of any
kind, wherever situated, together with the proceeds thereof.
1.9 "BANKRUPTCY CODE" means Title 11 of the United States
Code, as amended from time to time, applicable to this case as of the Petition
Date.
1.10 "BANKRUPTCY COURT" or "COURT" means the United States
Bankruptcy Court for the Eastern District of Pennsylvania.
1.11 "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy
Procedure, as amended from time to time promulgated by the Supreme Court of the
United States.
1.12 "BAR DATE" means the last date fixed by Order of the
Court for the filing of proofs of claim.
1.13 "BUSINESS DAY" means any day except a Saturday, Sunday,
or other day on which commercial banks located in Philadelphia, are authorized
by law to close.
1.14 "CASE" means the reorganization case of the Debtor under
Chapter 11 of the Bankruptcy Code presently captioned "In re Corecare Behavioral
Health Management, Inc., 02-16792SR".
1.15 "CASH COLLATERAL ORDERS" means all Orders entered by the
Court approving use of cash collateral by Debtor including any budget attached.
1.16 "CAUSES OF ACTION" means all claims and causes of action
now owned or hereafter acquired by the Debtor, whether arising under the Code or
other federal or state law, including, without limitation, any causes of action
arising under Sections 544, 547, 548, 550, 551, 553 or other sections of the
Code.
1.17 "CLAIM" means a claim against the Debtor within the
meaning of Section 101(5) of the Bankruptcy Code and is intended to include,
without limitation, any claim, suit, demand, Note, liability, setoff, recoupment
or charge, and any claim for reimbursement, contribution, indemnity or
exoneration.
1.18 "CLAIMANT" means a person or entity holding a Claim or
Interest (including, his, her or its successors, assigns, heirs, executors, or
personal representatives).
1.19 "CLASS" means a group of Claims, consisting of Claims
which are substantially similar to each other, as classified pursuant to this
Plan.
1.20 "CBH" means Community Behavioral Health, an agency of the
City of Philadelphia.
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1.21 "CONFIRMATION DATE" means the date on which the
Confirmation Order confirming the Plan at or after a hearing convened pursuant
to Section 1129 of the Bankruptcy Code becomes a Final Order.
1.22 "CONFIRMATION HEARING" means the hearing at which the
Court considers confirmation of this Plan.
1.23 "CONFIRMATION ORDER" means the Order of the Court
confirming the Plan pursuant to Section 1129 of the Bankruptcy Code.
1.24 "CONTESTED CLAIM" means any Claim as to which the Debtor
or any other party in interest has interposed an objection, in accordance with
the Bankruptcy Code and Bankruptcy Rules, which objection has not been
determined by a final order or a Claim which is scheduled as contingent or
disputed.
1.25 "CREDITOR" means the holder of a Claim against the
Debtor.
1.26 "DEED-IN-LIEU OF FORECLOSURE" means the Deed-in-Lieu of
Foreclosure provided to Kirkbride Holdings, LLC ("KBH") pursuant to the Deed in
Lieu and Transfer Agreement.
1.27 "DEED IN LIEU AND TRANSFER AGREEMENT" means the Agreement
between KBH and KRC which allows KBH to record a Deed to the real property owned
by KRC on certain events of default.
1.28 "DEFICIENCY CLAIM" means, with reference to a Creditor
having an Allowed Secured Claim, that portion of the Creditor's Allowed Claim
that is not an Allowed Secured Claim only because (a) the monetary benefit
derived from the exercise of any available right of setoff and the application
to the Claim of the net proceeds available from disposition of Assets securing
the Creditor's Allowed Claim is insufficient to permit payment in full of the
Allowed Claim, or (b) a Final Order entered in a proceeding to determine the
extent of the Secured Claim provides that part of the Creditor's Allowed Claim
is not an Allowed Secured Claim based on a valuation of the Creditor's interest
in the Debtor' interest in the Assets securing the Claim.
1.29 Intentionally omitted.
1.30 "DISPUTED CLAIM" means any Claim which is scheduled as
disputed, contingent or unliquidated, or which is objected to in whole or in
part in accordance with Section 14.1 hereof.
1.31 "DISTRIBUTION" means any payment by the Debtor to a
Creditor on account of a Claim.
1.32 "DISTRIBUTION RESERVE" means all cash in an amount equal
to the distribution or distributions with respect to Class 10 Claims that are
Contested Claims, which cash will be held by the Distribution Trustee, in trust
for the benefit of the holders of such Contested Claims, pending allowance of
such Contested Claims and then distributed on account of Allowed Class 10 Claims
in accordance with the Plan.
1.33. "DISTRIBUTION TRUST ADMINISTRATIVE EXPENSE" means all
reasonable costs, expenses and fees incurred in connection with maintaining the
Distribution Trust and the Distribution Trust Assets, including without
limitation: (a) all reasonable costs, fees and expenses incurred by the
Distribution Trustee in employing attorneys, accountants, experts, advisors or
other professionals to represent or assist the Distribution Trustee in carrying
out the Distribution Trustee's duties under the Plan and Distribution Trust
Agreement, (b) the compensation paid to the Distribution Trustee under the
Distribution Trust Agreement, and (c) all of the reasonable costs incurred in
connection with the Plan, Confirmation Order and Distribution Trust Agreement.
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1.34 "DISTRIBUTION TRUST" means the trust established pursuant
to the Distribution Trust Agreement.
1.35 "DISTRIBUTION TRUST AGREEMENT" means that certain trust
agreement which will establish and govern the Distribution Trust, substantially
in the form attached as Exhibit "1" to hereto.
1.36 "DISTRIBUTION TRUST ASSETS" means all Assets transferred
into the Distribution Trust pursuant to the terms hereof, including Causes of
Action and the amounts paid to the Distribution Trust pursuant to paragraph 3.10
hereof.
1.37 "DISTRIBUTION TRUSTEE" means the trustee of the
Distribution Trust. Howard Cohen of the accounting firm of Parente Randolph, LLC
shall serve as the Distribution Trustee.
1.38 "EFFECTIVE DATE" means following the entry of the
Confirmation Order, eleven (11) days after the date after the Confirmation Order
becomes a Final Order. However, at the option of the Debtor, a Confirmation
Order subject to a pending appeal or certiorari proceeding may be considered a
Final Order provided no order has been entered by any court of competent
jurisdiction staying the effect of the Confirmation Order.
1.39 "FEE CLAIM" means a Claim under section 330 or 503 of the
Bankruptcy Code for allowance of compensation and reimbursement of expenses in
this Chapter 11 case.
1.40 "FINAL ORDER" means (a) a judgment, order or other decree
issued and entered by the Court, which judgment, order or other decree (i) has
not been reversed or stayed and as to which the time to appeal has expired and
as to which no appeal or petition for review, rehearing or certiorari is pending
or (ii) with respect to which any appeal has been finally decided and no further
appeal or petition for certiorari can be taken or granted; and (b) a stipulation
or other agreement entered into which has the effect of any such judgment, order
or other decree described in clause (a) above.
1.41 "IMPAIRED CLASS" means any Class of Claims which is
impaired within the meaning of Section 1124 of the Bankruptcy Code.
1.42 "INSIDER" means any "insider" as that term is defined in
Paragraphs (B), (E) or (F) of Section 101(31) of the Bankruptcy Code.
1.43 "INTEREST" means Interest in the Debtor of a holder of
common stock issued by the Debtor prior to the Petition Date.
1.44 "KBH MORTGAGE" means that mortgage dated February 1998
between Debtor and WRH Mortgage, Inc. which is a first mortgage on Debtor's real
estate, which has been assigned to KBH.
1.45 "KIRKBRIDE HOLDINGS, LLC" OR "KBH" means Kirkbride
Holdings, LLC the successor to WRH Mortgage, Inc.
1.46 "KIRKBRIDE LEASE" means the non-residential real property
lease entered into by and between Debtor and KRC on the Effective Date for the
North and Lawler Buildings and such other property as currently occupied or
operated by the Debtor.
1.47 "KIRKBRIDE REALTY CORP." OR "KRC" means the entity to be
formed by Corecare Systems, Inc., the Debtor's parent, on or before the
Effective Date to take title to the real estate owned by the Debtor.
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1.48 "LIEN" means, with respect to any of the Assets of the
Debtor, any mortgage, lien, pledge, charge, security interest, or other security
device (including a lease which is not a true lease) or encumbrance of any kind
affecting such Asset.
1.49 "PERSON" means a person within the meaning of Section
101(41) of the Bankruptcy Code.
1.50 "PETITION" means the Petition for Relief, filed by the
Debtor with the Court pursuant to Chapter 11 of the Bankruptcy Code commencing
this proceeding.
1.51 "PETITION DATE" means May 6, 2002, the date upon which
the Debtor filed its petition.
1.52 "PLAN" means this Plan of Reorganization, as it may be
further amended, modified or supplemented from time to time, and any exhibits
and schedules thereto.
1.53 "PLAN PROPONENT" means the Debtor.
1.54 "PRIORITY NON-TAX CLAIM" shall mean a Claim or a portion
of a Claim for which priority is asserted under Section 507(a)(3), (4), (5), (6)
or (7) of the Bankruptcy Code.
1.55 "PRIORITY TAX CLAIM" shall mean a Claim or a portion of a
Claim for which priority is asserted under Section 507(a)(8) of the Bankruptcy
Code.
1.56 "PRO RATA" means with respect to any distribution to the
holder of an Allowed Claim of a particular Class of the Plan on a particular
date, the same proportion that the amount of such Allowed Claim bears the
aggregate amount of all Claims of such Class, including Contested Claims.
1.57 "PROPONENT" means the Debtor.
1.58 "REJECTION CLAIM" means any Claim for amounts due as a
result of the rejection of any executory contract or lease which is rejected by
the Debtor by Final Order.
1.59 "REORGANIZED DEBTOR" means Corecare Behavioral Health
Management, Inc. as reorganized and existing on the Effective Date.
1.60 "SCHEDULES" means the schedules of assets and liabilities
heretofore filed by the Debtor with the Office of the Clerk of the Court
pursuant to Bankruptcy Rule 1007, as they maybe amended from time to time.
1.61 "SECURED CLAIM" shall mean a Claim that is (a) secured by
a valid, perfected and enforceable Lien on Assets of the Debtor, to the extent
of the value of the interest of the holder of such Secured Claim in such Assets;
or (b) a Claim which is specified herein as an Allowed Secured Claim, to the
extent of the value of the interest of the holder of such Secured Claim in such
Assets.
1.62 "UNIMPAIRED CLASS" means any Class of Claims which is not
impaired within the meaning of Section 1124 of the Bankruptcy Code.
1.63 "UNSECURED CLAIM" means any Claim, including a Rejection
Claim or a Deficiency Claim arising out of any default of the Debtor under a
contract entered into by the Debtor prior to the Petition Date, other than an
Administrative Claim, Priority Non-Tax Claim, Priority Tax Claim, Secured Claim
or Interest.
1.64 "WESTMEADE" means Westmeade Healthcare, Inc., a
Pennsylvania corporation and an Affiliate of the Debtor.
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ARTICLE II
Classification of Claims
For the purpose of this Plan, Claims are divided into the
following classes. A Proof of Claim asserting a claim which is properly included
in more than one class is included in each such class to the extent that it
qualifies within the description of such class.
2.1. Class 1. Secured Claim of KBH. Class 1 consists of the
Allowed Secured Claims of KBH and any subsidiaries and affiliates. Class 1
Claims are impaired under the Plan.
2.2. Class 2. Secured Claim of Internal Revenue Service. Class
2 consists of the Allowed Secured Claims of the Internal Revenue Service. Class
2 Claims are not impaired under the Plan.
2.3 Class 3. Secured Claim of Heller Healthcare Finance Inc.
Class 3 consists of the Allowed Claims of Heller Healthcare Finance, Inc. Class
3 Claims are impaired under the Plan.
2.4 Class 4. Secured Claim of the Commonwealth of Pennsylvania
- - Department of Revenue. Class 4 consists of the Secured Claim of the
Commonwealth of Pennsylvania, Department of Revenue. Class 4 Claims are not
impaired under the Plan.
2.5 Class 5. Secured Claim of the Commonwealth of Pennsylvania
- - Department of Labor and Industry. Class 5 consists of the Secured Claim of the
Commonwealth of Pennsylvania, Department of Labor and Industry. Class 5 Claims
are not impaired under the Plan.
2.6 Class 6. Secured Claims of Advanta Leasing Services. Class
6 consists of the Secured Claim of Advanta Leasing Services. Class 6 Claims are
unimpaired under the Plan.
2.7 Class 7. Secured Claims of Citicorp Vendor Finance. Class
7 consists of the Secured Claim of Citicorp Vendor Finance. Class 7 Claims are
impaired under the Plan.
2.8 Class 8. Secured Claim of the City of Philadelphia -
Department of Revenue. Class 8 consists of the Secured Claim of the City of
Philadelphia Department of Revenue. Class 8 Claims are impaired under the Plan.
This Class does not include CBH.
2.9 Class 9. Priority Non-Tax Claims. Class 9 consists of the
Allowed Priority Non-Tax Claims. Class 9 Claims are not impaired under the Plan.
2.10. Class 10. General Unsecured Claims. Class 10 consists of
all Allowed Unsecured Claims not otherwise classified herein and all Judgment
holders not specifically classified. Class 10 Claims are impaired under the
Plan.
2.11 Class 11. Interest Holders in Debtor. Class 11 consists
of the Allowed Interests of the Debtor's sole shareholder. Class 11 Interests
are impaired under the Plan.
2.12. Claims and Equity Interests Classified. For purposes of
voting and all confirmation matters, except as otherwise classified herein, all
Claims (except for Administrative Claims and Priority Tax Claims), and all
Interests are classified as set forth in this Article II of the Plan.
2.13. Administrative and Priority Tax Claims. As provided in
section 1123(a)(1) of the Bankruptcy Code, Administrative Claims and Priority
Tax Claims shall not be classified for purposes of voting or receiving
distributions under the Plan. Rather, all such Claims shall be treated
separately as unclassified Claims pursuant to the terms set forth in Article IV
of this Plan. The Debtor notes that the treatment of secured tax claims is
classified and encompasses the secured and priority unsecured claims of such
taxing authorities.
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ARTICLE III
Treatment of Classes of Claim
3.1 Class 1. Secured Claim of KBH or its Assignee. All Claims of the
Class 1 Creditor are treated in this Class 1. The treatment in Class 1 is in
full and final satisfaction of all claims of the Class 1 Creditor. Class 1
Claims are impaired under the Plan.
A. Nature of Debt. The Class 1 Creditor holds a Mortgage and
Note on the Debtor's real estate and a lien on Debtor's accounts. Pursuant to
the Mortgage Modification Agreement described herein below, the Class 1 Creditor
shall have a first lien on all real estate, fixtures, personal property,
accounts, (except as set forth in 3.2.A.2) and all other assets of the Debtor,
KRC, Corecare Systems, Inc., Westmeade, (except as provided in the following
sentence), Quantum, and any other affiliates of the Debtor that own, operate or
manage all or any part of the real estate or any business conducted thereon. The
Class 1 Creditor will be granted a second lien on the account receivablesassets
of Westmeade, junior only to the lien of the Internal Revenue
Servicepre-existing liens of the Internal Revenue Service and Commonwealth of
Pennsylvania.
B. Treatment. Class 1 shall be treated as follows:
1. KBH shall have an allowed secured claim inclusive of
the KBH Advance (defined below) under the Plan in the amount of Fifteen Million
Two Hundred Seventy-five Thousand ($15,275,000.00) (the "KBH Secured Claim")
2. Upon the Effective Date of the Plan, KRC shall execute
and deliver to KBH an Amended and Restated Note in the amount of the KBH Secured
Claim (the "Amended Note"), secured by the KBH Mortgage, as modified by the
Mortgage Modification Agreement, the form of which will be agreed prior to entry
of the Confirmation Order. Pursuant to the Amended Note and Plan, KBH will
advance to the Debtor an additional amount of One Million Two Hundred and Fifty
Thousand Dollars ($1,250,000) (the "KBH Advance"). Final versions of the loan
documents and the Kirkbride Lease will be submitted prior to entry of the
Confirmation Order. The Debtor, Corecare Systems, Inc., Westmeade, Thomas
Fleming, and Rose DiOttavio, collectively "Guarantors", shall be guarantors of
the Amended Note. KRC shall also execute an Assignment of Leases and such other
documents as are reasonably necessary including a mortgage modification
agreement in the form which will be agreed to and executed prior to entry of the
Confirmation Order.
The Amended Note shall have two (2) tranches. The
principal balance of Tranche A shall consist of (i) the original principal
amount of the Note, (ii) accrued and unpaid interest, (iii) legal fees, and (iv)
late charges. The principal balance of Tranche B shall consist of the amount of
the KBH Advance, plus any increases thereto as set forth below. Tranche A and
Tranche B will both accrue interest at Libor plus 1000 basis points, adjusted
monthly. Libor shall be capped at 2.5%, provided there is no KBH Default or
Non-KBH Default (as defined below). Tranche A and Trance B will be repaid in
equal monthly installments of principal based on a thirty (30) year straight
line amortization schedule. The Amended Note is subject to a hyper-amortization
schedule as provided below.
Interest shall accrue only on those amounts as set forth
in the Amended Note as interest bearing and shall not accrue on interest,
penalties or late charges (other than default interest on account of a KBH
Default or a Non-KBH Default as provided in the Amended Note). Payment of
principal, interest, insurance, and taxes shall be due monthly in arrears. The
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Debtor shall make payments under the cash collateral orders through the entry of
the Confirmation Order. The treatment in this section 3.1.B.2 shall commence
with the month of FebruaryApril 2004 with the payment due on or before February
28April 30, 2004. Class 1 shall be permitted in FebruaryApril 2004 and in all
successive months to sweep from the KBH Lockbox on a weekly basis an amount no
greater that twenty-five percent of the principal, interest, insurance, and tax
payment ("KBH Monthly Payment") due by the end of that month. The sweep shall
occur on the Wednesday of each week. If, in a given week, twenty-five percent of
the KBH Monthly Payment is not available, KBH may recover the deficiency in the
following week. On the last Tuesday of the last week of the thirty-sixth (36th)
month after the entry of the Confirmation Order, the Amended Note and all
accrued interest thereon will be due and payable in full. In addition, on a
monthly basis, KRC shall pay additional principal payments of thirty percent of
the gross rental revenue on leases executed by KRC after January 31, 2004 except
such leases that are renewals of existing leases as set forth on Exhibit "A"
hereto. These payments shall commence June 1, 2004.
The hyper-amortization schedule of Tranche B will be as
follows:
(1) commencing MarchJuly 1, 2004 - four (4) monthly payments
of $59,000 each;
(2) on JulyNovember 1, 2004 - a payment of $19,000;
(3) commencing MarchJuly 1, 2004 - three (3) monthly
payments of $10,000.00 each;
(4) commencing JuneOctober 1, 2004 - three (3) monthly
payments of $15,000 each;
(5) commencing SeptemberJanuary 1, 2004 - eight (8) monthly
payments of $20,000 each;
(6) commencing MaySeptember 1, 2005, and continuing for each
month thereafter - monthly payments of $100,000 each
until Tranche B (including the Kicker Payments) is paid
in full.
The payments in (1) and (2) are to be paid by Westmeade,
however, the failure of Westmeade to make the payments shall not relieve the
Debtor of its obligation to make those payments. The principal amount of Tranche
B is subject to increase based on actual collections of accounts receivable
owing as of JanuaryMarch 31, 2004 (the "Kicker Receivables"), as provided for in
the Account Receivable Schedule attached to this Plan as Exhibit "C", and
pursuant to the following: (a) $175,000 once collected Kicker Receivables total
$1,200,000, (b) fifty percent (50%) of collected Kicker Receivables totaling
between $1,800,000 and $3,000,000, and (c) twenty-five percent (25%) of
collected Kicker Receivables in excess of $3,000,000 (collectively, the "Kicker
Payments"). Medicare overpayments or underpayments, disproportionate share or
tobacco settlement subsidies shall not be included in this calculation either to
increase or decrease collections. Upon payment of the Tranche B claim, including
all kicker payments, the Debtor will be permitted to refinance its accounts
subject to the Tranche A remaining lien. KBH shall have the right of first
refusal to provide the account receivable financing on terms equal to the lender
proposed by the Debtor.
As the Kicker Payments are earned, they will be added to the
principal balance of the Amended Note and interest will accrue on such amounts
as provided for in the Amended Note commencing as of the date such Kicker
Payment is earned. The Kicker Payments will be accounted for on a monthly basis
and KBH will be granted access to the Debtor's books and records. The
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Debtor will cooperate with KBH in determining the status of each Kicker
Receivable.
In the event of either a KBH Default or a Non-KBH Default (as
defined below), the aggregate amount of the Kicker Payments shall be deemed to
be $800,000.00, unless, at that time, all Kicker Receivables have been
collected.
If, within twelve (12) months after the Effective Date, the
Debtor has failed to collect all Kicker Receivables owing as of JanuaryMarch 31,
2004, KBH shall have the right to retain a collection agency or similar agent,
to collect the outstanding Kicker Receivables . The Debtor shall not waive,
modify, negate or discharge any Kicker Receivable owing from a account debtor
without the prior written consent of KBH. Any amounts collected
post-Januarypost-March 31, 2004 shall be accounted for on account of the Kicker
Receivables.
All receivables of the Debtor, KRC, Westmeade shall be
directly deposited into the KBH Lockbox pursuant to the KBH Loan Documents. If
there is a default, after Notice of Default, all Affiliates of the Debtor shall
enter into a lockbox agreement and deposit their accounts into the KBH Lockbox.
The Amended Note, the Mortgage Modification Agreement, the
Deed-in-Lieu and Transition Agreement, the Lease, the Guaranty, and the Cash
Collateral Account Agreement referred to in this Section and any and all related
documents evidencing the obligation of KRC, the Debtor and/or the guarantors to
KBH are collectively referred to as the "KBH Loan Documents". In the case of any
conflict between the terms of the Plan, the Order confirming the Plan and terms
of the KBH Loan Documents, the KBH Loan Documents shall control and shall be
effective as the terms and conditions of the Plan.
3. Without limiting the terms of the KBH Loan Documents, it
shall be considered a default under the KBH Loan Documents and this Plan if: (a)
any payment is not made to KBH under the terms of the KBH Loan Documents within
ten (10) days of the date due ("KBH Default"), or (b) the Debtor defaults under
any payment obligations to any other Creditors provided for by this Plan and
such Creditors pursue any Enforcement Action ("Non-KBH Default"). "Enforcement
Action" shall mean, with respect to any Claim, any of the following: (i)
acceleration of, or demand or action taken in court to collect, all or any of
the indebtedness that is the subject of such Claim; (ii) the application of any
collateral securing such indebtedness to the obligations secured by such
collateral, including any indemnification obligation; (iii) any judicial or
non-judicial foreclosure proceeding with respect to such collateral, the
exercise of any power of sale with respect to such collateral, the taking of a
deed or assignment of such collateral in lieu of foreclosure, the obtaining of a
receiver or the taking of any other enforcement action against such collateral
or against Debtor; (iv) the taking of control or possession of such collateral,
the exercise of voting rights with respect to such collateral, or the sale or
other disposition of any interest in such collateral; (v) the exercise of any
right of setoff except for the rights in Section 3.2A(4); (vi) the taking of any
action to interfere with any rights in respect of such collateral of any Person
recognized as the holder of a Lien on such collateral or such holder's ability
to realize upon or otherwise deal with such collateral; (vii) the commencement
or maintenance of any action, suit or other proceeding at law, in equity or
otherwise in furtherance of any of the foregoing or to otherwise enforce rights
in respect of a Lien on such collateral or to direct the owner of such
collateral to sell or otherwise dispose of any interest therein; or (viii) the
exercise of any right or remedy available to such Claimant under the
documentation evidencing such indebtedness at law, in equity or otherwise. If
the Class 1 Creditor opts for the 363 Sale remedy after a KBH default, the
notice of default and opportunity to cure shall be 30 days.
In the event of a KBH Default, KBH may exercise its remedies
after twenty four (24) hours written notice to the Debtor pursuant to the
Mortgage Modification Agreement or the Deed-in Lieu and Agreement, including but
not limited to, recording of the Deed-in-Lieu Of Foreclosure (the "Deed"). Upon
a KBH Default, KBH may, at its sole option, require the Debtor to file a motion
selling the real property pursuant to 11 U.S.C. ss. 363 ("363 Sale"). The 363
Sale shall occur on no less than sixty days notice. Upon a Non-KBH Default, KBH
may, at its sole option, require the Debtor to file a motion selling the real
property pursuant to the 363 Sale on no less than six (6) months notice. Either
363 Sale will be held pursuant to 11 U.S.C. ss. 363 and ss. 1146(c) and shall
permit competitive bidding and shall result in a free and clear transfer of
title. The minimum bid at the 363 Sale shall be the remaining KBH Secured Claim.
The transfer pursuant to Deed in Lieu and Transition Agreement shall be
considered a transfer under the Plan and thus exempt from state and local
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transfer tax or similar tax pursuant to 11 U.S.C. ss. 1146(c). The Court shall
retain jurisdiction over the 363 Sale and the provisions related thereto.
In the event KBH records the Deed pursuant to the Deed in Lieu
and Transition Agreement and the Plan, KBH will permit the Debtor to manage the
real property for a period of the lesser of six (6) months or the date of either
a 363 Sale or a foreclosure sale. The Debtor's management of the real property,
as provided for herein, will be subject to the terms of the KBH Loan Documents.
4. As part of the Plan, the Debtor's real estate and all of
its real property leases will be transferred as of the Effective Date to KRC
subject only to the liens of Class 1, Class 2, Class 3, Class 4, Class 5, Class
8, and Class 10. At time of transfer KRC shall provide KBH with an updated title
policy at KRC's cost insuring the first priority lien of KBH as the Class 1
Creditor.
5. With regard to the Class 1 Claim only, KRC shall be
permitted to sell the Kirkbride Building and any of the vacant land of KRC so
long as at the time of the sale, Class 1 through refinance or sale proceeds or a
combination of the same, is paid in full or if KBH consents. This provision
shall not affect other classes.
6. There shall be no prepayment penalty on the Class 1 claim.
7. KBH, Corecare Systems, Inc., Westmeade, Thomas Fleming, and
Rose DiOttavio shall enter into a separate agreement which shall provide for
discontinuance of pending litigation related to the existing guarantees and a
release of KBH.
8. The Lease between KRC and Debtor shall contain the terms
set forth in 5.13 and in the form which will be agreed prior to entry of the
Confirmation Order.
9. Debtor, its parents, affiliates, officers, directors,
employees and assigns shall release and discharge KBH, its parents, affiliates,
officers, directors, employees and assigns from any and all claims existing as
of the Confirmation Date, whether known or unknown, contingent or liquidated,
direct or indirect, or whether arising pre-petition or post-petition, including
any and all claims which may otherwise be asserted under Section 5.7 or Section
6.1(d) of the Plan. Upon payment of the Class 1 claim or transfer of free and
clear title to KBH under a 363 Sale, all guarantees, claims, and security of
Debtor and the Guarantors shall be released by KBH.
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10. The Cash Collateral Account Agreement, the form of which
will be agreed to prior to entry of the Confirmation Order, between the Debtor
and KBH shall remain in place, as modified by the parties thereto, until the KBH
Secured Claim is paid in full. Furthermore, the Debtor agrees to execute any and
all additional documents reasonably requested by KBH in order to effectuate the
terms and conditions of the Plan.
11. KBH shall not be required to make the KBH Advance until
the Debtor, KRC and Guarantors have executed all loan documents, complied with
all requirements of the loan and provided all required due diligence documents.
3.2. Class 2. (Internal Revenue Service) Class 2 consists of
the Secured and Priority Claims of the Internal Revenue Service. This Class is
impaired.
A. Secured Claim. The Secured Claim of the Internal Revenue Service is
$2,200,000 which is the original secured claim of $3,100,000.00 less all
adequate protection payments made through the Effective Date subject to increase
for post-petition interest under 11 U.S.C. ss. 506(b). This Claim will be paid
as follows:
1. Nine Hundred Thousand Dollars ($900,000) shall be paid on
the Effective Date from the proceeds of the KBH Advance and then equal monthly
installments of principal and interest at the statutory rate for seventy-two
months. If the IRS receives an additional principal payment during the Plan, the
payment under this paragraph shall adjust, at the option of the Debtor, to the
reduced principal amount plus interest over the remaining months under the
original seventy-two month schedule.
2. Class 2 shall retain its lien on all assets but said lien
shall be subordinate to the lien of KBH on all assets with the exception of
accounts on which the IRS lien will be subordinate only to the extent the IRS
receives proceeds of the KBH Advance. The IRS shall retain its lien, to the
extent it remains, on the real estate to be transferred to KRC. Upon payment of
the Allowed Class 2 Secured Claim of the IRS, such liens shall be extinguished
and the IRS shall provide the Debtor, KRC, and KBH with any and all
documentation reasonably requested to release the lien of record.
3. $37425,000 shall be paid to the IRS on account of the
Tobacco Settlement Funds distribution.
4. To the extent the Debtor is entitled to over payment from
CMS through the 1999-2002 Cost Report Year, such overpayments will be applied to
the IRS secured claim and then Priority Claim.
5. On Default, Class 2 reserves the right to reallocate its
payments from the Secured Claim to the Priority Claim.
B. Priority Claim. The Priority Claim of the Internal Revenue Service
is $1,022,000. This claim will be paid as follows:
1. Equal monthly installments of principal and interest at the
statutory rate for seventy-two months.
C. Unsecured Claim. This Unsecured Claim of the Internal Revenue
Service shall receive treatment as a Class 10 Claim.
D. IRS Administrative Claim. The IRS Administrative Claim shall be
fixed at $200,000 including interest and penalty though third quarter 2003. This
sum shall be paid in twelve (12) monthly installments commencing MarchJune 15,
2004.
3.3 Class 3 (Secured Claim of Heller Healthcare Finance). Class 3 consists
of the Secured Claim of Heller Healthcare Finance. Class 3 is impaired.
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A. Nature of Debt. Class 3 is owed $312,000 and is secured by a lien in
accounts and a second priority mortgage on Debtor's real property. Heller is
currently receiving monthly payments through Confirmation from the Debtor and a
non-debtor. These payments will reduce the claim which will be determined as of
the Confirmation Hearing.
B. Treatment. Class 3 will be paid as follows: 1. Heller shall receive
$255,000A. The Heller Secured Claim shall be $240,000 plus contractual interest
and collateral management fees through date of payment.
B. The Debtor shall pay the Heller Secured Claim on the Effective Date.
Heller shall continue to apply payments received pursuant to the cash collateral
order and any payments from the proceeds of the KBH Advance in full and final
satisfaction of its Claim. Westmeade received after February 5, 2004. Such
payment shall reduce the Heller Secured Claim dollar for dollar.
3.4 Class 4. (Commonwealth of Pennsylvania Department of Revenue) Class 4
consists of the Secured and Priority Claims of the Commonwealth of Pennsylvania
Department of Revenue. This Class is unimpaired.
A. Secured Claim. The Secured Claim of the Commonwealth of Pennsylvania
Department of Revenue is $425,690$427,745.8514 which includes adequate
protection payments made through DecemberMarch 310, 20034. This Claim will be
paid as follows:
1. Equal monthly installments of principal and interest at the
statutory rate for seventy-two months.
2. Class 4 shall also receive $75,000 from the Tobacco
Settlement Funds distribution.
3. Class 4 reserves the right to reallocate payments received
on its Secured Claim to its Priority Claim if there is a default.
B. Priority Claim. The Priority Claim of the Commonwealth of
Pennsylvania Department of Revenue is $249,461.95. This claim will be paid as
follows:
1. Equal monthly installments of principal and interest at the
statutory rate for seventy-two months.
C. Unsecured Claim. This Unsecured Claim of the Commonwealth of
Pennsylvania Department of Revenue in the amount of $84,659.38 shall receive
treatment as a Class 10 Claim.
D. All liens of the Class 4 creditor are retained until the secured
claim is paid in full.
E. The Administrative Tax Claim of the Commonwealth of Pennsylvania
Department of Revenue is $173,294.24$184,558.70 for the periods 4/02, 1/03 and,
2/03 and 3/03. The Debtor shall pay the $50, i000 on the Effective Date. If the
payments are timely made hereunder, the Commonwealth shall accept $ 1340,000,
if, onincluding the Effective Date Class 4 receives $50,000 from the KBH
Advancepayment, and commencing March 20 June 1, 2004, twelve monthly payments of
$6700$7,500 plus interest on the $890,000. If the payments, including the
$50,000 payment, are not timely made the Class 4 administrative claim shall
revert to the full amount of $173,294.24 $184,558.70 less payments made
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hereunder plus applicable interest. The Debtor shall promptly file (on or before
June 30, 2004) and pay or appeal all taxes due on the corporate tax reports for
1999, 2000, 2001, and 2002. 3.5 Class 5. (Commonwealth of Pennsylvania
Department of Labor) Class 5 consists of the Secured and Priority Claims of the
Commonwealth of Pennsylvania Department of Labor. This Class is unimpaired.
A. Secured Claim. The Secured Claim of the Commonwealth of Pennsylvania
Department of Labor is $73,360.53 less all adequate protection payments made
through the Effective Date. This Claim will be paid as follows:
1. Equal monthly installments of principal and interest at the
statutory rate for seventy-two months from date of assessment pursuant to a
mutually agreeable amortization schedule.
2. Class 5 shall also receive $50,000 from the Tobacco
Settlement Funds distribution.
B. Priority Claim. The Priority Claim of the Commonwealth of
Pennsylvania Department of Labor is 162,083.27. This claim will be paid as
follows:
1. Equal monthly installments of principal and interest at the
statutory rate for seventy-two months from date of assessment pursuant to a
mutually agreeable amortization schedule.
C. Unsecured Claim. This Unsecured Claim of the Commonwealth of
Pennsylvania Department of Labor shall receive treatment as a Class 10 Claim.
D. Any administrative claim owed to Class 5 shall be paid in fourteen
(14) equal weekly installments commencing March 1, 2004.
3.6 Class 6. Secured Claims of Advanta Leasing Services. Class 6 consists
of the Secured Claim of Advanta Leasing Services. Class 6 is impaired. The
treatment in Class 6 is in full and final satisfaction of all claims of the
Class 6 Creditor. Class 6 is unimpaired.
A. Nature of Debt.
1. The Class 6 Creditor has a Secured Claim in the amount of
$8,403.00.
B. Treatment. The claim will be treated in accordance with the
pre-petition loan agreements.
3.7 Class 7. Secured Claims of Citicorp Vendor Finance. Class 7 consists of
the Secured Claim of Citicorp Vendor Finance. Class 7 is impaired. The treatment
in Class 7 is in full and final satisfaction of all claims of the Class 7
Creditor. Class 7 is impairedhas a total claim of $323,562.24.
A. Nature of Debt.
1. The Class 7 Creditor has a Secured Claim in anthe amount to
be determined at Confirmationof $75,000.
B. Treatment. The claim will be treated as follows:
1. The finance agreement will be modified to allow for equal
monthly installments of principal and interest over sevenfive years with
interest at the contract rate ten percent with principal reduced to the Secured
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Claim. Any deficienciesThe Note shall balloon in the three years from the
Effective Date. The deficiency Claim of $248,562.24 will be a Class 10 Claim.
3.8 Class 8. Secured Claim of the City of Philadelphia - Department of
Revenue. Class 8 consists of the Secured Claim of the City of Philadelphia
Department of Revenue. Class 8 Claims are impaired under the Plan. This Class
does not include CBH.
A. Secured Claim. The City of Philadelphia shall have a secured claim
of $3,019,633.07, plus all principal and interest from any and all unfiled tax
returns. The secured Class 8 claim includes all claims, including administrative
wage tax claims, of the City through the Effective Date except for real estate
taxes. $2,100,000.00 of this amount shall be paid in equal monthly installments
of principal and interest at the statutory rate for one hundred twenty months.
During the final forty-eight months of the payment schedule, the remaining
$919,633.07 shall be paid out, in addition, in equal monthly installments added
to such payments for the $2,100,000.00 portion, plus any accruing interest.
B. Other Conditions:
1. The Class 8 creditor shall retain the lien and judgment for
its secured claim referenced above until the secured claim is paid in full.
2. The Debtor shall maintain its current deposit with PECO
until Class 8 is paid in full.
3. The Debtor shall file any tax returns necessary to bring
the Debtor into compliance by the Confirmation Hearing.
4. The Debtor agrees that is shall not pay any dividend to its
parent until Class 8 is satisfied unless Class 8 receives as a principal
reduction an amount equal to any dividend paid to Corecare Systems, Inc.
5. To the extent KRC seeks to sell any real estate, KRC shall
provide notice to Class 8 at least 30 days prior to Closing.
6. Debtor reporting requirements:
(a) The Debtor shall provide to the City weekly reports
stating Debtor's inventory of all food supplies, whether administered by the
Debtor or by any affiliate.
(b) The Debtor shall provide to the City weekly reports
stating meals provided, whether administered by the Debtor or by any affiliate.
(c) The Debtor shall provide to the City detailed monthly
financial reports including all Accounts Receivable, as well as all entries in
the Debtor's Check Registry.
(d) The Debtor shall provide to the City, immediately upon
receipt, any and all default notices sent by any and all vendors and/or
creditors, whether such defaults are based on pre-petition or post-petition
obligations.
(e) The Debtor shall provide to the City immediate notice
of any agreement of sale of real property owned by the Debtor or any affiliate,
including any property or properties not part of the Kirkbride Center campus.
(f) The Debtor shall provide to the City documentation
that all insurance requirements have been met.
(g) All reports to the City cited in paragraphs (a)
through (e) above shall be sent to Joseph DiGiuseppe, Deputy City Solicitor, Tax
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Unit, City of Philadelphia Law Department, One Parkway Building, 1515 Arch
Street, 15th Floor, Philadelphia, Pennsylvania, 19102-1595.
7. Thomas T. Fleming, Chairman of the Board and Chief
Executive officer, and Rose S. DiOttavio, President and Chief Operating Officer,
shall, before confirmation (or Plan voting, whichever is feasible), execute
personal guarantees an stipulated judgments providing for joint and several
liability for all principal, interest, and penalties of City of Philadelphia
Wage Withholding taxes, in the amount of $ 3,912,507.40, plus all principal,
interest, and penalties generated from any and all unfiled City of Philadelphia
Wage Withholding returns. Such Stipulated Judgment shall allow judgments for any
Wage Withholding tax deficiency to be entered against either and/or both parties
without filing any complaint in any Commonwealth of Pennsylvania Court in the
event of default, and after notice and opportunity to cure, by the Debtor on its
obligations under the Plan to the City of Philadelphia.
3.9 Class 9. (Priority Non-Tax Claims). Class 9 is not impaired. The
treatment and consideration to be received by holders of Class 9 Allowed Claims
shall be deemed to be in full settlement, satisfaction, release and discharge of
their respective Claims and Liens. All Class 9 claims shall be paid on the
Effective Date.
3.10 Class 10. (Unsecured Claims). Class 10 is impaired. The treatment and
consideration to be received by holders of Class 10 Allowed Claims shall be in
full settlement, satisfaction, release and discharge of their respective Claims
and Liens. Class 10 consists of all Allowed Claims not otherwise classified
herein, including all judgment creditors whose claims are not separately
classified. To the extent a Class 10 creditor has an identical claim in the case
of a related debtor, the creditor shall receive distribution only on one claim.
If the creditor has separate and distinct claims in both cases, such creditor
shall receive distribution on both claims. Class 10 creditors shall receive the
following treatment:
(a) Debtors shall execute a promissory note in favor of the
Distribution Trust (the "Class 10 Note"), which KRC and Westmeade shall
guarantee (provided, however, Westmeade's guaranty of the Class 10 Note shall
provide that the Distribution Trustee shall not exercise any of its remedies
thereunder in the event of a default without first giving Westmeade 120 days
notice of default), requiring the following payments:
(i) commencing ninety (90) days after the Effective Date
and continuing monthly for an aggregate of 12 months, payments of $41,667;
(ii) commencing thirty (30) days after completion of the
payments in (i), twelve equal monthly payments of $42,592;
(iii) commencing thirty (30) days after completion of the
payments in (ii), twelve equal monthly payments of $62,094; and
(iv) commencing thirty (30) days after completion of the
payments in (iii), twelve equal monthly payments of $75,000, and then monthly
payments of $100,000 until the Class 10 Claims have received sufficient funds to
satisfy one hundred percent of principal, interest, and all other sums due under
the Class 10 Note.
(b) KRC shall deliver a Mortgage (as defined below) securing
the Class 10 Note to the Distribution Trust to hold for the benefit of the
holders of Class 10 Claims, which Mortgage shall be junior in lien priority to
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all existing lien holders. The Mortgage shall require subordination of the
mortgagee's interest to any refinancing of any obligation with a lien priority
higher than Class 10, so long as all proceeds are used to satisfy or reduce lien
claims superior to Class 10 lien claims. Further, until the Class 1 Claim is
satisfied, the Distribution Trustee shall release the Mortgage or such portion
thereof on a sale by the Debtor to a bona fide third party purchaser in an arms
length transaction, so long as the purchase price is at least equal to the fair
market value to the property being conveyed. The Bankruptcy Court will retain
jurisdiction of this Case to hear any dispute relating to any such proposed
sale. Subject to the rights of KBH and the provisions of the Plan, the
Distribution Trustee shall have the right to exercise any of the remedies in the
Mortgage following 90 days after the occurrence of a default under the Mortgage
or Class 10 Note.
(c) Payments under the Class 10 Note shall first be
applied to interest and then principal. Total interest due shall be calculated
on the total amount of Allowed Class 10 Claims. Interest shall accrue on the
original principal balance of the Class 10 Note at six percent (6%) per annum.
(d) The Distribution Trust shall distribute on a
semi-annual basis to holders of Allowed Class 10 Claims subject to the
Distribution Reserve.
(e) In addition to monthly payments, as aforesaid, on or
before February 28 of each year, the Debtor shall distribute Free Cash Flow over
$100,000 ("Excess Free Cash Flow") for the immediately prior calendar year, as
follows:
(i) Twenty percent (20%) of Excess Free Cash Flow shall
be distributed to a repair and reserve account (the "Reserve Fund") for Debtor's
discretionary use in repairs, maintenance and tenant improvements.
(ii) Eighty percent (80%) of Excess Free Cash Flow shall
be distributed to the Distribution Trust. The distribution of amounts to the
Distribution Trust pursuant to this Section 3.10(f)(ii) shall constitute
prepayments to the Distribution Trustee on account of the unpaid principal
balance of the Class 10 Note in the reverse order of their maturity (last
installment credited first).
(iii) For purposes of this Section, the following terms
have the meanings specified.
(A) "Free Cash Flow" means net income/(loss) in each
fiscal year ending December 31, less the change in working capital (defined as
current assets excluding cash minus current liabilities, excluding current
portion of long term debt) plus depreciation, amortization, and proceeds from
any asset sales including non-core real estate, less capital expenditures and
any principal payments on debt from the Debtor, KRC or Westmeade as consolidated
entities.
(f) The obligations of the Debtor under the Class 10 Note
shall be secured by the following, each of which shall be subordinate to the
liens and security interests of Class 1 and all other prior classes and each of
which shall be documented in a manner satisfactory to the Distribution Trustee
(collectively, the "Collateral Documents"). The Debtor, KRC, and their
affiliates shall execute documentation, appropriate to effectuate, junior to all
existing lienholders:
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(i) a lien on and security interest in all of the
Debtor's respective assets;
(ii) a lien on and security interest in all of KRC's
assets;
(iii) a mortgage lien on certain premises (the
"Mortgage Premises") situated at 111 North 49th Street, Philadelphia,
Philadelphia County, Pennsylvania (the "Mortgage");
(iv) an assignment of all leases and rents arising
with respect to the Mortgage Premises; and
(v) a lien and security interest in the assets of
Westmeade.
(g) If any amount due under the Class 10 Note is not paid
within fifteen (15) days after such payment is due, then there shall also be
immediately due and payable a late charge at the rate of five percent (5%) of
the delinquent payment for each month of delinquency.
(h) All payments made to the Distribution Trust under the
Class 10 Note shall be made by wire transfer to accounts designated in writing
by the Distribution Trustee.
3.11 Class 11. (Interest Holder ). Class 11 is impaired. The holder of
Class 11 interest shall retain all of its interest.
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ARTICLE IV
TREATMENT OF UNCLASSIFIED CLAIMS
4.1 Administrative Claims. All Administrative Claims shall be treated as
follows:
a. Time for Filing Administrative Claims. The holder of an
Administrative Claim, other than (i) a Fee Claim or (ii) a liability incurred
and paid in the ordinary course of business by the Debtor, must file with the
Bankruptcy Court and serve on the Debtor and its counsel and the Committee's
counsel, notice of such Administrative Claim within (30) days after the
Effective Date. Such notice must include at minimum (i) the name of the holder
of the claim, (ii) the amount of the claim and (iii) the basis of the claim.
Failure to file this notice timely and properly shall result in the
Administrative Claim being forever barred and discharged.
b. Time for Filing Fee Claims. Each professional person who holds or
asserts an Administrative Claim that is a Fee Claim incurred before the
Effective Date shall be required to file with the Bankruptcy Court a fee
application within sixty (60) days after the Effective Date for all services
provided through the Effective Date. Failure to file the fee application timely
shall result in the Fee Claim being forever barred and discharged.
c. Allowance of Administrative Claims. An Administrative Claim with
respect to which notice is required and has been properly filed pursuant to
Section 4.1(a) of this Plan shall become an Allowed Administrative Claim if no
objection is filed within thirty (30) days of the filing and service of notice
of such Administrative Claim. If an objection is filed within such (30) day
period, the Administrative Claim shall become an Allowed Administrative Claim
only to the extent allowed by Final Order. An Administrative Claim that is a Fee
Claim, and with respect to its fee application has been properly filed pursuant
to Section 4.1(b) of the Plan, shall become an Allowed Administrative Claim only
to the extent allowed by Final Order.
d. Payment of Allowed Administrative Claim. Each holder of an Allowed
Administrative Claim shall receive (i) the amount of such holder's Allowed Claim
on the Effective Date, (ii) such other treatment as may be agreed upon in
writing by the Debtor and such holder as long as no payment is made thereon
prior to the Effective Date, or (iii) as may be otherwise ordered by the Court,
provided that an Administrative Claim representing a liability incurred in the
ordinary course of business by the Debtor may be paid in the ordinary course of
business. Fees for pre-Effective Date services not approved until after the
Effective Date shall be paid within ten (10) days of any order approving said
fees.
e. Professional Fees Incurred After the Effective Date. Any
professional fees incurred by the Debtor or Committee after the Effective Date
must be approved by the Debtor and the Committee and, thereafter, paid. Any
invoices for services rendered by professionals for the Debtor or the Committee
shall be paid within ten (10) days after a copy of the invoice relating to those
services has been served on counsel for the Debtor and Committee, provided,
however, in the event the Debtor or Committee objects to the payment of any
invoice shall not be made until further order of the Court. Any dispute which
may arise with regard to professional fees after the Effective Date shall be
submitted to the Bankruptcy Court, which shall retain jurisdiction to settle
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these types of disputes. In the event of such dispute, the Debtor shall pay that
portion of the fees, if any, which is not in dispute, punctually.
f. Administrative Claim Fund. The Debtor shall establish an
Administrative Claim Fund from the Tobacco Settlement Fund in the amount of
$40350,000 which shall be used to pay the claims of professionals employed by
the Debtor and Committee for which fee orders have not been entered prior to
Confirmation. The fund shall be created prior to the Confirmation Hearing from
funds available from the Tobacco Settlement Funds and supplemented with funds
from operations. This fund shall be supplemented by the Debtor monthly in the
amount of $10,000 until the Administrative Claims are paid in full.
4.2 Treatment of Priority Tax Claims. Each holder of an Allowed Priority
Tax Claim shall receive, at the sole option of the Debtor (i) the amount of such
holder's Allowed Claim on the Effective Date; (ii) the amount of such holder's
Allowed Claim, plus interest accrued at the applicable statutory rate, in equal
monthly cash payments in accordance with the provisions of Subsection
1129(a)(9)(c) of the Bankruptcy Code commencing on the Effective Date or (iii)
such other treatment as may be agreed upon in writing by the Debtor and such
Creditor. To the extent, such taxing authority also has a secured claim creditor
shall retain its lien until paid in full and the treatment shall be as set forth
in the appropriate Class in Article III.
ARTICLE V
Provisions For Execution of The Plan
5.1 Funding of the Plan. The Debtor's Plan shall be funded from the
Debtor's current operations. The Debtor has sufficient cash flow from operations
to make all plan payments required. In addition, the Debtor shall obtain funds
from the following sources:
A. The KBH Advance.
The proceeds of the KBH Advance shall be paid as follows:
1. IRS $900,000
2. Comm of PA $ 50,000
3. Debtor working capital $ 50,000
4. Heller $25540,000
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B. The Debtor shall use the Tobacco Settlement Fund of $997,000 as follows:
1. IRS $37425,000
2. Admin. Claims $40350,000
3. Comm of PA $75,000
4. Labor & Ind. $ 50,000
The release of these funds is contingent on confirmation of
the Plan and the payment of $900,000 to the IRS, unless the IRS waives or
modifies its rights in writing with respect to the payment of said $900,000. If
the Plan is not confirmed, all parties reserve all rights as to the Tobacco
Settlement Funds. The balance of the Tobacco Settlement Funds shall be retained
by the Debtor for working capital.
5.2 Execution of Documents. Prior to the Effective Date, the
Debtor is authorized and directed to execute and deliver all documents and to
take and to cause to be taken all action necessary or appropriate to execute and
implement the provisions of this Plan.
5.3 Alterations, Amendments or Modifications. This Plan may be
altered, amended, or modified by the Proponent before or after the Confirmation
Date, as provided in Section 1127 of the Code.
5.4 Distribution Trustee. There shall be no Distribution
Trustee other than for Class 10. The Distribution Trust will effect distribution
to the holders of Allowed Class 10 Claims. The Debtor shall make all other
payments under the Plan directly.
5.5 Final Decree. After the Effective Date, the Reorganized
Debtor may file a Motion to close the case and request that a final decree be
issued.
5.6 Corporate Charter. The Debtor's corporate charter will be
amended after the Effective Date to any extent necessary to permit the Debtor to
implement the terms of this Plan.
5.7 Retention and Enforcement of Claims. Pursuant to Section
1123(b)(3)(B) of the Bankruptcy Code, except as set forth herein, all Causes of
Action shall be conveyed and transferred to the Distribution Trust which
Distribution Trust may retain and may enforce any and all Causes of Action of
the Debtor on behalf of, and as a representative of, the Debtor or its estate,
including, without limitation, all claims arising or assertable at any time
under the Bankruptcy Code, including under Sections 510, 542, 543, 544, 545,
547, 548, 549, 550, 552 and 553 thereof. However, Debtor shall pursue all
litigation against Travis TBS, Inc. d/b/a Brown Schools et al. The Debtor shall
also pursue all appeals of its Disproportionate Share calculation with the
Commonwealth of Pennsylvania and any cost report appeals, audits or reviews with
CMS.
5.8 Transfer of Real Property, Personal Property and Leases.
On the Effective Date, Debtor shall transfer the Real Property, fixtures, and
personal property excluding all computer hardware and software owned by the
Debtor, to KRC subject to the liens of Classes 1, 2, 4, 5, 8, and 10. KRC and
Debtor shall execute the Kirkbride Lease and Debtor shall cause Realty to
transfer to KRC all of the leases and any agreement relating to the Real
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Property. This transfer shall be tax neutral and the Debtor reserves the right
to modify the structure to preserve any tax loss carryforwards and prevent the
imposition of a tax on any gain on the transfer. The transfer shall be an
inter-company sale. This transfer shall not affect the lien priority of any
creditor who holds a lien on the Real Estate after the Court has determined such
priority pursuant to the Debtor's Complaint to Determine Extent, Priority and
Validity, nor shall it affect the tax consequences to the Class 1 Creditor. The
IRS has made no comment or opinion as to whether the transfer will be tax
neutral. This transfer shall not trigger any right of first refusal of
Pennsylvania Hospital. KRC's obligations to any creditor other than Class 1
shall be limited to the real estate and proceeds thereof. KRC shall be
considered a guarantor and not direct obligor of all other Classes.
5.9 Section 1146(c) Exemptions. The transfer under Section 5.8
and, if appropriate, the Deed in Lieu under Article 3, shall be exempt from
state or local transfer tax and shall be considered transfers under a Plan. In
addition, if KBH consents to any such sale, the Debtor has a pending Sale of 4.0
acres with Midatlantic Real Estate and a pending sale of 1 1/2 acre with Terry
Funeral Home, Inc. Those sales shall be considered sales under a Plan and exempt
form transfer tax under 11 U.S.C. ss.1146(c) is such sales close within one (1)
year of the Effective Date.
5.10 Subordination on Refinance of Class 1. All creditors in
Classes 2 through 10 shall subordinate their liens, if any, to the first
mortgage lien of any lender which agrees to refinance the Class 1 claim or the
claims of Class 2 through 9 so long as proceeds are applied in order of lien
priority to satisfy debt.
5.11 Complaint to Determine Extent, Priority and Validity of
Liens. The Debtor shall filed a Complaint to Determine the extent, priority and
validity of all liens on its assets. To the extent a lien is determined to be
wholly unsecured, the confirmation order shall contain a specific directive to
the Office of the Prothonotary, Recorder of Deeds, Secretary of State or such
other agency to remove said lien from any records relating to the Debtor.
5.12 Capital Contribution of Corecare Systems, Inc. Corecare
Systems, Inc. is the sole stockholder of the Debtor. Corecare Systems, Inc.
shall cause its subsidiary, Westmeade Healthcare to satisfy the Class 3 claim in
the approximate amount of $445,000 plus any additional funds contributed under
the excess cash flow formula for Class 10. This shall represent a capital
contribution of Corecare Systems, Inc. and the Debtor intends to consider this
contribution New Value, if Class 10 shall reject the Plan. The Debtor will
consider the requests of other parties to contribute capital in order to test
the value of the retained interest of Class 11 and such other parties may
present offers for capital contribution through the date of the Confirmation
Hearing.
5.13 Kirkbride Lease. On the Effective Date, Debtor shall
execute the Kirkbride Lease.
5.14 KRC Board of Directors. Four directors shall be chosen by
Corecare Systems, Inc. and one by KBH Mortgage, Inc. KBH shall be issued one (1)
share of KRC and shall hold such share until the KBH Secured Claim is paid in
full. KRC shall be prohibited by its charter and by-laws from filing a voluntary
petition for bankruptcy or amending its charter and by-laws without the
unanimous written consent of all five (5) Board Members and all shareholders. A
copy of the by laws will be provided at the Confirmation Hearing. KRC will
provide an opinion letter of counsel regarding the validity and enforceability
of the charter and bylaw provisions restricting the ability to file a bankruptcy
which shall be reasonably acceptable to KBH.
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5.15 Post-Petition Tax Obligations. Any obligation of the
Debtor to any taxing authority which arose post-petition shall be cured on or
before the Effective Date unless the taxing authority has agreed in writing to a
different treatment.
5.16 Balance Sheet. Debtor shall file with the Court on or
before the Confirmation Date a starting balance sheet for the reorganized Debtor
and for KRC, which shall be made available to all Creditors. Such balance sheet
shall not be audited but reviewed by accountants to the Committee.
5.17 Distribution Trust. The Distribution Trust may use,
acquire, liquidate or reduce to Cash, and dispose of the Distribution Trust
Assets subject to the terms and conditions of this Plan, the Confirmation Order,
and the Distribution Trust Agreement. The Plan shall constitute a request by the
Debtors and the Creditors' Committee for entry of an order approving the terms
and conditions of the Distribution Trust Agreement, which shall be approved be a
decretal paragraph within the Confirmation Order.
5.18 Cooperation. The Debtor, the Committee and the
Distribution Trustee agree to cooperate with each other to implement the Plan
and the transactions contemplated hereby.
5.19 Dissolution of the Creditors' Committee. As of the date
of the transfer of Distribution Trust Assets to the Distribution Trust, and the
establishment of the Distribution Trust, the Creditors' Committee shall be
dissolved and thereby released and discharged of and from all further authority
duties, responsibilities and obligations relating to, arising from, and in
connection with this Case, unless prior thereto the Court shall have entered an
order, or a request for such extension is pending, extending the existence of
the Creditors' Committee. This Section 5.19 shall have no adverse effect upon
any professional's filing and prosecution of a final application for allowance
of a Fee Claim.
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ARTICLE VI
Distribution Trust
6.1 Establishment of the Distribution Trust and Appointment of
the Distribution Trustee. On or before the date which is thirty (30) days after
the Effective Date, the Debtors and the Committee shall (i) to the extent
necessary, execute the Distribution Trust Agreement in substantially the form
attached as Exhibit "B" hereto, (ii) take all other steps necessary or
appropriate to establish the Distribution Trust, and (iii) to the extent
necessary, transfer and deliver to the Distribution Trust all Assets required to
be so transferred and delivered pursuant to this Plan. The Assets to be
distributed to the Distribution Trust shall be the Causes of Action and the
Class 10 Note, Mortgage, security interests and other assets and the proceeds
thereof referenced in Section 3.10.
(a) Purposes of the Distribution Trust. The Distribution
Trust will be organized for the purposes set forth in the Distribution Trust
Agreement, the terms of which are approved by entry of the Confirmation Order.
(b) Powers and Obligations of the Distribution Trustee. In
addition to all powers enumerated in the Distribution Trust Agreement, the
Distribution Trustee shall succeed to all of the rights of the Debtors necessary
to protect, conserve, preserve, and liquidate all Distribution Trust Assets. In
that capacity, the Distribution Trustee shall have the exclusive power to
prosecute, defend, compromise, settle and otherwise deal with all Distribution
Trust Assets without further Court approval, subject to the terms and conditions
of the Distribution Trust Agreement, the Plan, and the Confirmation Order, and
the Court shall vest in the Distribution Trust all rights, power, and authority
the Debtors have under the Code to prosecute and defend the Causes of Action.
(c) Distribution Trustee. Howard Cohen of the accounting
firm Parente Randolph LLC shall serve as the Distribution Trustee. The
Distribution Trustee shall administer the Distribution Trust in accordance with
the terms and conditions of the Distribution Trust Agreement, the Plan, and the
Confirmation Order. The Distribution Trustee shall file semi-annual status
reports with the Court, with copies to counsel of the United States Trustee,
starting six (6) months after the Effective Date. Such reports shall include
actual expenditures and proceeds or income for the previous six (6) month
period.
(d) Retention of Professionals and Other Persons. The
Distribution Trustee shall be authorized to retain and pay professionals and
such other Persons the Distribution Trustee determines in his sole discretion to
be necessary to carry out his duties and responsibilities, or otherwise to
accomplish the purposes of the Plan, the Confirmation Order, and the
Distribution Trust Agreement. Professionals retained by the Distribution Trust
shall submit invoices to the Distribution Trustee, to the Office of the U.S.
Trustee who shall have the authority to pay such invoices without further order
of the Court. Any objections are to be filed within 30 days of submission. Court
retains jurisdiction to resolve objections.
(e) Resignation, Death or Removal of Distribution Trustee.
The Distribution Trustee may resign at any time upon thirty (30) days' written
notice, filed with the Court and delivered to counsel for the United States
Trustee. Such resignation may become effective prior to the expiration of such
thirty (30) day notice period upon Court appointment of a permanent or interim
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successor Distribution Trustee. The Distribution Trustee may be removed by the
Court upon application based only upon gross negligencecause orf fraud shown,
which application may be brought only by the United States Trustee or Persons
holding unpaid Allowed Class 10 Claims.
In the event the Distribution Trustee position becomes vacant,
the vacancy shall be filled by the Court based upon recommendations submitted by
the United States Trustee or Persons holding unpaid Allowed Class 10 Claims.
Upon appointment, the successor Distribution Trustee, without any further act or
notice being required, shall become fully vested with all of the rights, powers,
duties, and obligations of the former Distribution Trustee.
(f) Compensation of Distribution Trustee. In addition to
reimbursement of reasonable, actual and necessary out-of-pocket expenses
incurred, the Distribution Trustee shall be entitled to reasonable compensation
and benefits. The Distribution Trust Agreement shall set forth the amounts of
reasonable compensation and benefits that shall be paid to the Distribution
Trustee or any successor. Any objections are to be filed within 30 days of
submission. Court retains jurisdiction to resolve objections.
(g) Transfer of Books and Records; Preservation of
Privileges and Immunities. The Debtors shall provide the Distribution Trustee
with reasonable access to company books and records.
(h) Duties and Powers of the Distribution Trustee. The
duties and powers of the Distribution Trustee shall include the following, but
in all events shall be consistent with the terms of the Plan, the Confirmation
Order, and the Distribution Trust Agreement:
(1) To open and maintain bank accounts on behalf of or
in the name of the Distribution Trust; calculate and make distributions and take
other actions consistent with the Plan, including the establishment, adjustment
and maintenance of appropriate reserves; take any such actions as may be
required to comply with or effectuate the terms, conditions, and obligations as
set forth in the Plan, the Confirmation Order, and the Distribution Trust
Agreement, all in the name of the Distribution Trust; and to take any action
necessary to preserve the integrity and condition of the Distribution Trust
Assets.
(2) To receive, hold legal title to, collect, use,
spend, invest, conserve, protect, sell, transfer, abandon, bring suit upon or
otherwise manage the Distribution Trust Assets, and to enter into contracts on
behalf of the Distribution Trust.
(3) To object to any asserted Class 10 Claim or to any
other claim which seeks recovery against the Distribution Trust Assets.
(4) With respect to Class 10 Claims or with respect to
any other claim which seeks recovery against the Distribution Trust Assets,
exercise such rights of setoff or recoupment, subrogation, indemnification or
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contribution as the Debtors may have had with respect to such Claims or claims,
and/or seek Court approval of such exercise.
(5) Negotiate, litigate, voluntarily engage in
arbitration or mediation, waive or settle, prosecute or not prosecute any (i)
Class 10 Claim, (ii) Causes of Action transferred to the Distribution Trust
pursuant to the Plan, or any judgment with respect thereto, or (iii) other
dispute which has or may have an effect on the Distribution Trust or the
Distribution Trust Assets, and to take all actions deemed necessary or advisable
to liquidate or collect any of the Distribution Trust Assets, without further
order of the Court.
(6) To make decisions regarding the retention or
engagement of professionals, employees, consultants, or other persons, by the
Distribution Trust and to pay, from the Distribution Trust Assets, the
reasonable fees and costs incurred by the Distribution Trust, without
application to the Court.
(7) To (i) file, if necessary, any and all tax and
information returns required with respect to the Distribution Trust, treating
the Distribution Trust as a grantor trust pursuant to Treas. Reg. l.6714(a) or
otherwise, (ii) make tax elections by and on behalf of the Distribution Trust
and (iii) pay taxes, if any, owed by the Distribution Trust.
(8) To pay all lawful expenses, debts, costs, and
liabilities of the Distribution Trust.
(9) To take all other actions consistent with the
provisions of the Plan, or the Distribution Trust Agreement which the
Distribution Trustee deems reasonably necessary or desirable.
(10) To make Distributions to holders of Allowed Class
10 Claims and to withhold from the amount distributable to any holder of an
Allowed Class 10 Claim such amount as may be sufficient to pay any tax or other
charge which the Distribution Trustee has determined, in his sole discretion,
may be required to be withheld under the income tax laws of the United States or
of any state or political subdivision thereof. In the exercise of his sole
discretion and judgment, the Distribution Trustee may enter into agreements with
taxing or other governmental authorities for the payment of such amounts as may
be withheld in accordance with the provisions of this subparagraph.
(11) To invest Cash as deemed appropriate by the
Distribution Trustee in Cash Equivalents; provided, however, that the scope of
any such permissible investments shall be limited to include only those
investments, or shall be expanded to include any additional investments, as the
case may be, that a "liquidating trust", within the meaning of Treasury
Regulation Section 301.7701-4(d), may be permitted to hold, pursuant to the
Treasury Regulations, or any modification of the IRS guidelines, whether set
forth in the IRS rulings, other IRS pronouncements or otherwise.
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(12) To hold title to any investment in the name of the
Distribution Trustee or in a nominee name.
(13) To enter into an agreement or execute any document
required by or consistent with the Plan, the Confirmation Order, or the
Distribution Trust Agreement, and perform all obligations thereunder.
(i) Termination of Creditors' Distribution Trust. The
Distribution Trust will terminate no later than on the seven year anniversary of
the Effective Date; provided, however, that, on or before the date of such
termination, the Court, upon motion by the Distribution Trustee, may extend the
existence of the Creditors' Distribution Trust if deemed appropriate.
Notwithstanding the foregoing, multiple extensions can be obtained provided that
court approval is obtained prior to the expiration of each extended period
(including any bridge extensions pending a hearing on the merits). If the
administration of the Creditors' Distribution Trust concludes before the then
applicable termination date, the Distribution Trustee may take any action
reasonably required to terminate the Creditors' Distribution Trust.
(j) Final Accounting. Prior to termination of the
Distribution Trust, the Distribution Trust will provide a final accounting as
required by the Court.
(k) Bond. The Distribution Trustee shall, prior to receipt
of any funds, obtain a Bond in an amount no less than the maximum amount of
funds the Distribution Trustee will hold at any one point in time.
(l) Trustee Standard of Care; Exculpation. Neither the
Distribution Trustee, nor any director, officer, affiliate, employee, employer,
professional, agent or representative of the Distribution Trust shall be
personally liable, in connection with affairs of the Distribution Trust, to any
holder of an Allowed Class 10 Claim or beneficiary of the Distribution Trust, or
any other Person, except for such acts or omissions which shall constitute
willful misconduct or negligence. Persons dealing with the Distribution Trustee,
or seeking to assert claims against the Distribution Trust, shall look only to
the Distribution Trust Assets to satisfy any liability incurred by the
Distribution Trust, the Distribution Trustee, or other Persons employed or
retained by the Distribution Trust to carry out the terms of the Plan, the
Confirmation Order, and the Distribution Trust Agreement. The Distribution
Trustee is entitled to rely upon and shall have no liability in relying upon the
advice of professionals retained by the Distribution Trust.
(m) Indemnification. Except as otherwise set forth in this
Plan or in the Distribution Trust Agreement, the Distribution Trustee and any
Person employed or retained by the Distribution Trust shall be defended, held
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harmless and indemnified from time to time by the Distribution Trust against any
and all losses, Claims, costs, expenses and liabilities to which such
indemnified parties may be subject by reason of such indemnified party's
performance of duties pursuant to the discretion, power and authority conferred
on such Person by the Distribution Trust Agreement, the Plan or the Confirmation
Order; provided, however, that the indemnification obligations arising pursuant
to this Section shall not indemnify either the Distribution Trustee, or any
Person employed or retained by the Distribution Trust, for any actions taken by
such Persons which constitute willful misconduct, negligence, willful disregard
of their duties, or intentional breach of the Plan, Confirmation Order, or
Distribution Trust Agreement. Satisfaction of any obligation of the Distribution
Trust arising pursuant to the terms of this Section shall be payable only from
the Distribution Trust Assets.
ARTICLE VII
Provisions Governing Distributions
and General Provisions
7.1 Distributions pursuant to this Plan shall be made by the
Distribution Trustee as provided herein and shall be made, unless otherwise
provided herein, on the Effective Date, or as soon as practicable thereafter or
as may be otherwise ordered by the Court.
a. No Distribution Pending Allowance. Notwithstanding
any other provision of the Plan, no payment or Distribution shall be made on
account of any Claim to the extent it is a Disputed Claim, unless and until such
Disputed Claim becomes an Allowed Claim.
b. Distributions After Allowance. Distributions to
each holder if a Disputed Claim, to the extent that such Disputed Claim
ultimately becomes Allowed, shall be made in accordance with the provisions of
the Plan governing Allowed Claims; provided, however, the Distribution Trustee
shall determine and reserve a sufficient amount of Cash for the purpose of
making Distributions with respect to Disputed, contingent or unliquidated
Claims, if and when such Claims become Allowed.
c. Disputed Payments. if any dispute arises as to the
identity of a holder of an Allowed Claim who is to receive any Distribution, the
Debtors or the Distribution Trustee may, in lieu of making a Distribution to
such Person, make such Distribution into a segregated account until the
disposition thereof shall be determined by Court order or by written agreement
among the interested parties to such dispute. The Debtors or the Distribution
Trustee shall have no liability if either acts in accordance with this Section.
d. Unclaimed Property, If any Distribution remains
unclaimed for a period of six months after it has been delivered (or attempted
to be delivered) in accordance with the Plan to the holder entitled thereto,
such unclaimed property shall be forfeited by such holder, whereupon all right,
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title and interest in and to the unclaimed property shall immediately and
irrevocably vest in the Distribution Trust. The holder of the Allowed Claim
previously entitled to such unclaimed property shall cease to be entitled
thereto, and such property shall be Distributed by the Distribution Trust,
pursuant to the terms of the Plan.
e. Withholding Taxes and Expenses of Distribution.
Any federal, state or local withholding taxes or other amounts required to be
withheld under applicable law shall be deducted from Distributions hereunder.
All Persons holding Claims shall be required to provide any information
necessary to effect the withholding of such taxes. If no information is supplied
the Distribution Trustee shall withhold and pay to the appropriate taxing
authority a reasonable amount as defined in the applicable tax statute(s).
f. Fractional Cents. When any payment of a fraction
of a cent would otherwise be called for, the actual payment shall reflect a
rounding of such fraction to the nearest whole cent (rounding down in the case
of less than $0.50 and rounding up in the case of $0.50 or more).
g. Delivery of Distributions. Distributions and
deliveries to holders of Allowed Claims will be made at the addresses set forth
on the proofs of claim filed by the holders (or at the last known address). If
any holder's distribution is returned as undeliverable, no further distributions
to the holder will be made unless and until the Debtor is notified of the
holder's then current address, at which time all missed distribution will be
made to the holder without interest. The Reorganized Debtor shall use reasonable
efforts to obtain current addresses of creditors to enable distributions to be
made hereunder. All claims for undeliverable distributions must be made to the
Distribution Trustee within one-hundred and twenty (120) days after the
respective distribution was made. After that date, all unclaimed property will
become property of the Reorganized Debtor, and the Claim of any holder with
respect to such property will be discharged and forever barred. For all checks
that have not cleared 60 days after the respective distributions were made, the
Distribution Trustee shall provide the Debtor and Committee with a list of any
payments that have not cleared and the addresses to which the disbursement were
sent.
h. Means of Cash Payment. Cash payments made pursuant
to the Plan will be in United States funds, by check drawn on a domestic bank or
by wire transfer from a domestic bank. All cash distributions will be made by
the Distribution Trustee.
i. Time Bar to Cash Payments. Checks issued by the
Debtor or Distribution Trustee in respect of Allowed Claims will be null and
void if not cashed within 120 days of the date of their issuance. Requests for
reissuance of any check shall be made to the Distribution Trustee by the holder
of the Allowed Claim with respect to which the check originally was issued. Any
claim in respect of such a voided check must be made on or before (120) days
after the date of issuance of the check. After the date, all claims in respect
of void checks will be discharged and forever barred and the cash, including
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interest earned shall be revested in the Reorganized Debtor.
j. Set-offs. The Debtor may, but will not be required
to, set off against any Claim and the payments to be made pursuant to the Plan
in respect of the Claim, any claims of any nature whatsoever the Debtor may have
against the Claimant, but neither the failure to do so nor the allowance of any
Claim hereunder will constitute a waiver of release by the Debtor or Claimant of
any such claim the Debtor may have against such Claimant or any claim or defense
such claimant may have against the Debtor. Debtor has no setoff claim against
Class 1. Debtor shall not have the right to set off obligations it owes to the
City of Philadelphia on a contract with regard to funds the City of Philadelphia
may owe on another contract.
k. Saturday, Sunday or Legal Holiday. If any payment
or act under the Plan is required to be made or performed on a date that is not
a Business Day, then the making of such payment or the performance of such act
may be completed on the next succeeding Business Day, but will be deemed to have
been completed as of the required date.
7.2 Notices. Any notice described in or required by the terms
of this Plan or the Code and Rules shall be deemed to have been properly given
when actually received, or if mailed, five (5) days after the date of mailing as
such may have been sent by certified mail, return receipt requested, and if sent
to:
(a) If to the Reorganized Debtor, addressed to:
Corecare Behavioral Health Management, Inc.
111 N. 49th Street Philadelphia, PA 19139
Attn: Thomas Fleming
(b) With copies to Counsel for the Debtor:
Albert A. Ciardi, III, Esquire Janssen
Keenan & Ciardi, Maschmeyer & Karalis, P.C.
1900 SpruceOne Commerce Square, Suite 2050
2005 Market Street Philadelphia, PA 19103
(c) If to the Committee:
Morton R. Branzburg, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers, LLP
260 S. Broad Street
Philadelphia, PA 19102-5003
7.3 Default. No default, excluding Class 1 or Class 2, shall
be declared under this Plan unless any payment due under this Plan shall not
have been made within 30 days after written notice to the Reorganized Debtor and
counsel for the Debtor of failure to make payment when due under the Plan. Class
1 shall have the default remedies set forth in Class 1. Class 2 shall have its
administrative remedies under the Internal Revenue Code on default.
ARTICLE VIII
Executory Contracts
8.1 Assumption. As of the Effective Date, the Debtor will
assume all executory contracts and tenant leases on Exhibit "A", which have not
already (a) been subject to a Final Order or decree entered by the Bankruptcy
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Court or (b) been subject to a prior stipulation or other agreement entered into
and approved by the Bankruptcy Court during the pendency of these proceedings.
As of the Effective Date, Debtor will assume all tenant leases which are
nominally in the name of Corecare Realty, Corp. and assign the same to Kirkbride
Realty Corp.
8.2 Rejection. All executory contracts and unexpired leases
that are not assumed as provided in Section 7.1 as of the Confirmation Hearing
or rejected during this case shall be deemed rejected pursuant to Section 365 of
the Bankruptcy Code as of the Petition Date.
8.3 Damages. Any Claim for damages arising by reason of the
rejection of any executory contract or unexpired lease will constitute a
Rejection Claim, if, but only if, a proof of claim therefore shall be filed with
the Clerk of the Court within thirty days after the date of rejection. If a
Rejection Claim becomes an Allowed Claim then it shall constitute a general
unsecured claim under Class 10.
8.4 Notice of Rejection. The Debtor shall serve a notice by
regular mail to all parties whose contracts are rejected immediately following
the Confirmation Hearing advising of the date by which any claim shall be filed.
8.5 Assumption of CBH and Medicare Provider Agreements. Debtor
shall assume on the Effective Date all of its provider agreements with CBH and
CMS subject to any over payment obligations. To the extent an overpayment exists
as of the Effective Date, the Debtor shall enter into a separate agreement with
CMS prior to Confirmation. Debtor shall assume all other provider agreements
whether specifically listed on Exhibit "A" or not. To the extent any provider
believes a default exists under the provider agreement, notice of the claim
shall be filed with the Debtor and Debtor's Counsel as well as with the Court no
later than the Confirmation Hearing.
ARTICLE IX
Cramdown Provisions and Confirmation Request
9.1 In the event that sufficient votes to confirm said Plan
are not received, the Debtor requests confirmation of the Plan pursuant to the
provision of Section 1129(b) of the Bankruptcy Code.
ARTICLE X
Modification of the Plan
10.1 Pre-Confirmation Modification. At any time before the
Confirmation Date, the Plan may be modified by the Proponent upon approval of
the Bankruptcy Court, provided that the Plan, as modified, does not fail to meet
the requirements of Section 1122 and 1123 of the Bankruptcy Code. In the event
that there is a modification of the Plan, then the Plan as modified, shall
become the Plan.
10.2 Pre-consummation Modification. At any time after the
Confirmation Date of the Plan, but before substantial consummation of the Plan,
the Plan may be modified by the Proponent and upon approval of the Bankruptcy
Court, provided that the Plan, as modified, does not fail to meet the
requirements of Section 1122 and 1123 of the Bankruptcy Code. The Plan, as
modified under this section, becomes a Plan only if the Court, after notice and
hearing, confirms such Plan, as modified, under Section 1129 of the Bankruptcy
Code.
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10.3 Non-Material Modifications. At any time, the Proponent
may, without the approval of the Court so long as it does not materially or
adversely effect the interest of Creditors, remedy any defect or omission, or
reconcile any such inconsistencies in the Plan or in the Confirmation Order, as
such matters may be necessary to carry out the purposes, intent and effect of
this Plan.
ARTICLE XI
Retention of Jurisdiction
11.1 The Court shall retain jurisdiction of the case after the
Confirmation Date for the following purposes:
(a) to determine any and all objections in the
allowance of claims and amendments
to schedules;
(b) to classify the Claim of any Creditor and to
re-examine Claims which have been allowed for purposes of voting, to determine
such objections as may be filed to Claims;
(c) to determine any and all disputes arising under
or in connection with the Plan, including, but not limited to, any default
remedies granted herein, and the sale of any of the Debtor' assets, collection
or recovery of any assets;
(d) to determine any and all applications for
allowance of compensation and reimbursement of expenses herein;
(e) to determine any and all pending applications for
rejections of executory contracts and unexpired leases and the allowance of any
claims resulting from the rejection thereof or from the rejection of executory
contracts or unexpired leases pursuant to the Plan;
(f) to determine any and all applications, adversary
proceedings and contested and litigated matters pending in the case as of, or
after, the Confirmation Date;
(g) to determine any and all proceedings for recovery
of payments pursuant to any Cause of Action;
(h) to modify any provision of the Plan to the full
extent permitted by the Bankruptcy Code;
(i) to correct any defect, cure any omission or
reconcile any inconsistency in the Plan or the Confirmation Order as may be
necessary to carry out the purposes, intent and effect of the Plan;
(j) to determine such other matters which may be
provided for in the Confirmation Order as may be authorized under the provisions
of the Bankruptcy Code;
(k) to enforce all discharge provisions under the
Plan;
(l) to enter any order, including injunctions,
necessary to enforce the terms of the Plan, the powers of the Debtor under the
Bankruptcy Code, this Plan and as the Court may deem necessary.
ARTICLE XII
Causes of Action
12.1 Suits, Etc. Except as otherwise provided in this Plan,
the Debtor reserves the right to initiate or continue any litigation or
adversary proceeding permitted under Title 11 of the United States Code and
applicable Federal Rules of bankruptcy procedure with respect to any Cause of
Action.
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ARTICLE XIII
Miscellaneous
13.1 Choice of Law. Except to the extent superseded by the
Bankruptcy Code or other federal law, the rights, duties and obligations arising
under the Plan shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to the choice
of law rules thereof.
13.2 Payment of Quarterly Fees. All fees payable pursuant to
Section 1930 of Title 28 of the United States Code shall continue to be paid
pursuant to the provisions of such Section until closing of the case.
13.3 Effect of Confirmation Order. Except as provided in
Section 1141(d) of the Bankruptcy Code and subject to the occurrence of the
Effective Date, the provisions of the Plan and the Confirmation Order shall bind
the Reorganized Debtor and all holders of claims or interests and will be a
judicial determination of discharge of the Debtor from all debts that arose
before the Confirmation Date and any liability on a Claim that is determined
under Section 502 of the Bankruptcy Code as if such Claim had arisen before the
Confirmation Date, whether or not a proof of claim based on any such date or
liability is filed under Section 501 of the Bankruptcy Code and whether or not a
Claim based on such debt or liability is allowed under Section 502 of the
Bankruptcy Code and whether or not such holder is impaired under the Plan and
whether or not such holder has accepted the Plan, and shall terminate all
rights, claims and interests of such holder, except as provided in the Plan. Any
claim to a taxing authority shall not be discharged until paid in full under the
terms of the Plan.
13.4 Automatic Stay. Except as provided in the Stipulations,
the automatic stay of Section 362 of the Code shall remain in effect until the
Effective Date.
13.5 Severability. Should any provision in this Plan be
determined to be unenforceable, that determination will in no way limit or
affect the enforceability and operative effect of any provision of the Plan.
13.6 Successors and Assigns. The rights and obligations of any
person named or referred to in the Plan shall be binding upon, and shall inure
to the benefit of, the successors and assigns of that Person.
13.7 Binding Effect. Subject to the occurrence of the
Effective Date, the Plan will be binding upon and inure to the benefit of the
Debtor, its Creditors, the holders of Equity Interests, and their respective
successors and assigns.
13.8 Withholding and Reporting Requirements. In connection
with the Plan and all instruments issued and distributions made pursuant to the
Plan, the Debtor will comply with all withholding and reporting requirements
imposed by any federal, state, local or foreign taxing authority and all
distributions made pursuant to the Plan will be subject to any such withholding
and reporting requirements.
ARTICLE XIV
Provisions for Resolving and Treating Claims
14.1 Objections to Claims; Prosecution of Contested Claims. If
the Debtor intends to object to any claims, then within thirty (30) days of the
Effective Date, the Debtor shall file objections to such Claims and all
objections to the allowance of Claims shall be litigated to Final Order or
compromised and settled, subject to approval of the Bankruptcy Court after
notice only to the Debtor, the holder of such Claim, the Committee, and a
hearing.
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14.2 Late Filed Claims. No objection need be filed with
respect to any Proof of Claim filed after the Bar Date, and the holder of any
such late filed Proof of Claim shall receive no distribution under the Plan,
except as specifically ordered by the Bankruptcy Court, after notice to the
Debtor, counsel for the Debtor and such parties as the Court may direct, and a
motion and hearing thereon. The Debtor at its option may filed an objection to a
late filed claim. Any such motion shall be filed on or before the Effective Date
or the holder of such Claims shall be forever barred and all such Claims shall
be discharged. Nothing herein shall constitute a waiver by the Debtor of any
counterclaims, set-offs, or of any defenses with respect to such late filed
Proofs of Claim, including defenses as to the timeliness of the filing of such
Proofs of Claim.
14.3 No Distributions Pending Allowance. No payments or
distributions will be made with respect to any Contested Claim except to the
extent that the Contested Claim becomes an Allowed Claim.
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14.4 Distributions After Allowance. Payments and distribution
to each holder of a Contested Claim, to the extent that the Contested Claim
becomes an Allowed Claim, will be made in accordance with the provisions of the
Plan governing the Class of Claims to which the respective holder belongs as
soon as practicable after the date that the order or judgment of the Court
allowing the Claim becomes a Final Order.
CORECARE BEHAVIORAL HEALTH
MANAGEMENT, INC.
By: /S/ Thomas Fleming
-------------------------------------
Mr. Thomas Fleming
Chief Executive Officer
JANSSEN KEENAN & CIARDI, P.C.
By: /S/ Albert A. Ciardi, III, Esquire
-------------------------------------
Albert A. Ciardi, III, Esquire
2005 Market Street, Suite 2050
Philadelphia, PA 19103
(215) 665-8888
Attorney for Debtor
Dated: February 4May 17, 2004
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