EXHIBIT 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF KANSAS
IN RE: )
)
AFI MORTGAGE CORP. ) Case No. 97-43122-11-JAP
) Chapter 11
Debtors )
)
)
IN RE )
)
ADVANCED FINANCIAL, INC. ) Case No. 98-41228-11-JAP
) Chapter 11
Debtors. )
)
ORDER APPROVING DEBTORS' FIRST AMENDED DISCLOSURE
STATEMENT AND CONFIRMING DEBTORS' FIRST AMENDED JOINT PLAN
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On the 30th day of September, 1998, came on for consolidated hearing the
hearing on approval of the Debtors' First Amended Joint Disclosure Statement
Dated July 29, 1998, (Amended Disclosure Statement) and Confirmation of the
Debtors' First Amended Joint Plan of Reorganization Dated July 29, 1998, (the
"Amended Plan"). The Debtors appeared through their representative, William B.
Morris, and through their counsel, Thomas M. Mullinix and Joanne B. Stutz of
EVANS & MULLINIX, P.A. Other appearances were as follows: Tom O'Neal of SHUGHART
THOMSON & KILROY, counsel for FMIC; Tom Carew of HILLIX, BREWER, HOFFHAUS,
WHITTAKER & WRIGHT, L.L.C., special counsel for the Debtors; Ronald S. Weiss of
BERMAN, DELEVE, KUCHAN & CHAPMAN, L.C., counsel for Commercial Federal Bank; and
Tonya Wilson, Assistant US Attorney, counsel for the Internal Revenue Service.
After hearing the statements of counsel and William B. Morris and Charles
Holtgraves, witnesses for the Debtors, and reviewing the file and the Summary of
Ballots submitted by Debtors' counsel, the Court finds and it is hereby Ordered
as follows:
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1. The Amended Disclosure Statement and Amended Plan were duly transmitted
to creditors, parties in interest and equity security holders.
2. The court has fully considered the Amended Disclosure Statement and
notes that no objections were filed. Therefore, the Disclosure Statement is
found to contain adequate information as required pursuant to Title 11, U.S.C.
ss. 1125, The Bankruptcy Code.
Accordingly, IT IS ORDERED that the Disclosure Statement is approved.
1. The Amended Plan was duly transmitted to creditors, parties in interest
and equity security holders along with a copy of the First Amended Disclosure
Statement Dated July 29, 1998.
2. The Amended Plan has been accepted in writing by at least one impaired
Class of Creditors and equity security holders whose acceptance is required by
law.
3. The provisions of Chapter 11 of the Bankruptcy Code have been complied
with and the Amended Plan has been proposed in good faith and not by any means
forbidden by law.
4. Each holder of a Claim or interest accepting the Amended Plan will
receive or retain under the Amended Plan property of a value, as of the
effective date of the Amended Plan, that is not less than the amount that such
holder would receive or retain if the Debtors were liquidated under Chapter 7 of
the Code on such date.
5. All payments made or promised by the Debtors or by any person issuing
securities, if applicable, or acquiring property under the Amended Plan or by
any other person for services or for costs and expenses in, or in connection
with, the Amended Plan and incident to the case, have been fully disclosed to
the Court and are reasonable or, if to be fixed after Confirmation of the
Amended Plan, will be subject to the approval of the Court.
6. The identity, qualifications, and affiliations of the persons who are to
be directors or officers, or voting trustees, if any, of the Debtors after
Confirmation of the Amended Plan have been fully disclosed and the appointment
of such persons to such offices, or their continuance therein, is equitable, and
consistent with the interests of the Creditors and equity security holders and
with public policy.
7. The identity of any insider that will be employed or retained by the
Debtors and his compensation have been fully disclosed.
8. All payments made or promised by the Debtors in connection with the
Amended Plan have been fully disclosed to the Court and are reasonable.
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9. One objection to Confirmation of the Amended Plan has been filed with
the Court by Commercial Federal Bank (CFB). That objection has been resolved
through modification of the Amended Plan as follows:
a. Paragraphs 4.5 and 4.11 of the Amended Plan shall be modified to
reflect the following revision:
The Board of Directors of the Reorganized Advanced shall have
the right, at any time after the bid price of the common
stock is at least 130% of the exercise price and remains at
such price for a period of twenty (20) consecutive trading
days, to call any or all of such Warrants for redemption at a
par value price of $.001 per warrant upon thirty (30) days'
written notice to the warrantholders, provided that the bid
price is at least 130% of the exercise price on the call
date.
b. A member of the Unsecured Creditors' Committee may, at the Committee's
option, sit on the interim Board of Directors.
c. The Unsecured Creditors' Committee shall continue in existence after
Confirmation during the performance of the Plan with the same rights
and powers as provided in 11 U.S.C.ss. 1103. The committee shall have
the right to receive financial information relevant to the performance
of the Plan and shall have standing to bring whatever actions are
necessary and consistent with this Order and the Bankruptcy Code to
enforce the rights of the Unsecured Creditors' Class.
d. By the Effective Date the Debtors shall provide the Committee with
written opinions from tax counsel addressing the Committee's inquiries
regarding the repurchase terms of the stock warrants.
10. The Amended Plan shall be further amended as follows:
a. Section 5.2(a) shall be amended to reflect that the Debtors, as soon
as practicable after the Effective Date, shall consummate the FMIC
transaction and the sale of the building to FMIC. The Debtors
anticipate that distribution of the sale proceeds to Class 5, 10 and
11 Creditors shall occur by January 31, 1999.
b. Article IV(A)(d) shall be amended to provide that: (a) the stock
interests in Advanced shall be cancelled and of no further force and
effect on the
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date the FMIC Transaction is consummated, effective immediately prior
such consummation, (b) the distribution of common stock of Reorganized
Advanced to holders of stock interests in Advanced may be made without
requiring such holders to turn in their original stock certificates
evidencing such interests; (c) the holders of stock interests in
Advanced entitled to receive such distribution shall be the holders of
record of stock interests in Advanced on the record date for such
distribution; and (d) the original stock certificates representing
stock interests in Advanced shall be void and of no further force and
effect as of the time the stock interests are cancelled under the
Amended Plan.
c. Section 5.5 shall be amended to reflect that the record date for the
purpose of determining the holders of stock interests in Advanced
entitled to receive common stock of Reorganized Advanced shall be the
date on which the FMIC Transaction is consummated at the time
immediately prior to the time at which such stock interests are
cancelled under the Amended Plan.
11. In order to (a) implement the amendment to the Certificate of
Incorporation of Reorganized Advanced set forth in Section 5.2(c) of the Amended
Plan and (b) to include in the Certificate of Incorporation of Reorganized
Advanced the provision required to be included therein by Title 11, U.S.C.
Section 1123, The Bankruptcy Code; the amendments to the Certificate of
Incorporation of Reorganized Advanced set forth in Exhibit A attached hereto are
hereby approved. The officers of Advanced are authorized to execute and to make
all filings on behalf of Advanced with the Delaware Secretary of State which are
necessary to cause such amendments to become effective under Delaware law in
accordance with the Amended Plan.
12. The Unsecured Creditors' Committee was provided an opportunity, until
October 15, 1998, to review the sale of AFI's office building to FMIC and to
determine if the Committee desired to market the property. The Committee having
decided not to market the property, the Court finds that the sale of the AFI
office building to FMIC shall proceed as provided for in the Amended Plan.
13. The Court finds after hearing on notice pursuant to Fed. R. Bankr. P.
3019 that the proposed treatment set forth herein does not adversely change the
treatment of the Claim of any
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Creditor or the interest of any equity security holder who has not accepted in
writing the modifications and that such treatment shall be deemed accepted by
all Creditors and equity security holders who have not accepted the Amended
Plan.
14. Confirmation of the Amended Plan is not likely to be followed by the
liquidation or the need for further financial reorganization of the Debtors
under the Amended Plan.
15. The Amended Plan is feasible.
16. All fees due or payable pursuant to 28 U.S.C ss. 1930 have been paid or
will paid out of the bankruptcy Estates when appropriate.
17. Other than as provided in the Amended Plan, the Debtors are released
from any liability debts arising before the date of this Order Confirming
Debtors' First Amended Joint Plan and any debt of a kind specified in ss.
502(g), ss. 502(h), or of ss. 502(i) of Title 11, whether or not a proof of
Claim based on the debt is filed or deemed filed under ss. 501; such a Claim is
allowed under ss. 502; or the holder of such Claim has accepted the Amended
Plan.
18. Any judgment heretofore or hereafter obtained in any court other than
this Court is null and void as a determination of the liability of the Debtors
with respect to any Claims arising prior to entry of this Order.
19. All Creditors are enjoined from instituting or continuing any action or
employing any process or engaging in any act to collect such debts as
liabilities of the Debtors.
20. The Disclosure Statement shall be deemed incorporated into and a part
of the Amended Plan.
21. The First Amended Joint Plan of Reorganization Dated July 29, 1998,
should be and hereby is confirmed.
IT IS SO ORDERED.
/s/ James A. Pusateri
--------------------------------
Hon. James A. Pusateri
United States Bankruptcy Judge
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APPROVED BY:
EVANS & MULLINIX, P.A.
/s/ Joanne B. Stutz
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Joanne B. Stutz, Ks #12365; Mo #30810
15301 W. 87th Street Parkway, Suite 220
Lenexa, Ks 66219-1428
(913) 541-1200; (913) 541-1010 (FAX)
ATTORNEYS FOR AFI MORTGAGE CORP &
ADVANCED FINANCIAL, INC.
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EXHIBIT A
TO
ORDER APPROVING DEBTORS' FIRST AMENDED DISCLOSURE
STATEMENT AND CONFIRMING DEBTORS' FIRST AMENDED JOINT PLAN
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The Certificate of Incorporation of Advanced Financial, Inc., a Delaware
corporation, shall be amended as follows:
(1) By deleting the first sentence of Article IV of the Certificate of
Incorporation as the same now appears and substituting therefor the
following:
The total number of shares of all classes of capital stock which the
Corporation shall have the authority to issue is Eleven Million
(11,000,000) shares, which are divided into two classes as follows:
Ten Million (10,000,000) shares of Common Stock, $0.001 par
value per share ("Common Stock"), and
One Million (1,000,000) shares of Preferred Stock, $0.005 par
value per share ("Preferred Stock").
(2) By adding at the end of Article IV of the Certificate of Incorporation
the following:
Nonvoting Equity Securities
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Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the Corporation will not issue
nonvoting equity securities to the extent prohibited by Chapter 11 of
Title 11 of the United States Code (the "Bankruptcy Code"); provided,
however, that this paragraph: (a) will have no further force and
effect beyond that required under the Bankruptcy Code, (b) will have
such force and effect, if any, only for so long as the prohibitions
imposed by the Bankruptcy Code are in effect and applicable to the
Corporation, and (c) in all events may be amended or eliminated in
accordance with applicable law from time to time in effect.
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