EXHIBIT 2.1
Daniel C. Masters (SBN 220729)
P. O. Box 66
La Jolla, CA 92038
Telephone: (858) 459-1133
Facsimile: (858) 459-1103
ATTORNEY FOR DEBTOR
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) Case No.: 1:10-bk-22504-GM
)
)
) DEBTOR'S JOINT PLAN OF REORGANIZATION
)
SPICY GOURMET ORGANICS, INC., )
a CALIFORNIA corporation, )
) Plan Confirmation Hearing
DEBTOR. ) Date: November 16, 2010
) Time: 10:00 AM
) Place: 21041 Burbank Blvd. Room 303
) Woodland Hills, CA 91367
I. INTRODUCTION
Spicy Gourmet Organics, Inc., a California corporation (the "Debtor" or
"Proponent"), will be the Debtor in a Chapter 11 bankruptcy case which
management of the Debtor expects to file in the United States Bankruptcy Court
for the Central District of California (the "Court"). Chapter 11 allows the
Debtor and, under some circumstances, creditors and other parties in interest,
to propose a plan of reorganization (the "Plan"). This is a Joint Plan of
Reorganization being proposed jointly by six parties: the Debtor, its four
Subsidiaries, and one unrelated creditor.
THIS DOCUMENT IS THE JOINT PLAN OF REORGANIZATION
This is a reorganizing Plan. The Debtor seeks to satisfy its obligations to
Creditors by issuing to them a combination of cash ($40,000) and stock (80,000
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shares) in this reorganized company in exchange for their respective claims and
interests. The Debtor's Equity Interest Holders will retain 5,000 common shares
in the reorganized company. Additionally, the Debtor will issue to its Creditors
and Equity Interest Holders stock in each of the Debtor's four subsidiaries and
will divest itself of all ownership in these companies.
II. DEFINITIONS
As used herein, the following terms shall have the following meanings:
1. "Administrative Claim" means a Claim entitled to priority pursuant to
Section 507(a)(1) or Section 507(b) of the Bankruptcy Code. Such Claims include,
without limitation, a Claim for payment of an administrative expense of the kind
specified in Section 503(b) of the Bankruptcy Code, including without
limitation, the actual and necessary costs and expenses of preserving and
operating the Debtor's Estate, compensation and reimbursement of expenses for
professional services awarded under Sections 330(a) and/or 331 of the Bankruptcy
Code, and all fees and charges assessed against the Debtor's Estates pursuant to
Chapter 123 of Title 23, United States Code.
2. "Administrative Claimant" means the holder of an Allowed Administrative
Claim.
3. "Allowed Claim" means a Claim against the Debtor to the extent that:
a. Proof of such Claim was:
(1) Timely filed;
(2) Deemed filed pursuant to Section 1111(a) of the Bankruptcy
Code; or
(3) Late filed with leave, and pursuant to Final Order, of the
Court; and
b. (1) No objection to such Claim is filed with the Court;
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(2) The Court, pursuant to Final Order, allows such
Claim; or
(3) The Plan allows such Claim.
4. "Allowed Secured Claim" means a Secured Claim which is or has become an
Allowed Claim.
5. "Allowed Tax Claim" means a Tax Claim, which is or has become an Allowed
Claim, and does not include claims, held by Tax Claimants assessed on the basis
of taxable income of the Debtor earned or arising after the Petition Date.
6. "Allowed Unsecured Claim" means any Allowed Claim which is not an
Administrative Claim, a Secured Claim, a Tax Claim, a Priority Claim, or an
Insider Claim.
7. "Bankruptcy Code" means Title 11 of the United States Code, Section 101,
et seq., as amended.
8. "Bankruptcy Rules" means, collectively, the Federal Rules of Bankruptcy
Procedure and the Local Bankruptcy Rules for the Central District of California
as now in effect or hereafter amended.
9. "Bar Date" means the date set by the Bankruptcy Court as the last day to
file proofs of claim in this case.
10. "Business Day" means any day except Saturday, Sunday or any other day
on which state or federal law authorizes commercial banks in Santa Barbara,
California, to close.
11. "Case" means the Voluntary Chapter 11 Bankruptcy Case of Spicy Gourmet
Organics, Inc., after it is filed with the United States Bankruptcy Court for
the Central District of California. The case has not yet been filed.
12. "Chapter 11" means Chapter 11 of the Bankruptcy Code.
13. "Claim" means any right to payment from the Debtor that arose prior to
Confirmation, whether or not such right or demand is reduced to judgment,
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liquidated, unliquidated, fixed, contingent, matured, un-matured, disputed,
undisputed, legal, equitable, secured or unsecured, or, any right or equitable
remedies for breach of performance, if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, un-matured, disputed, undisputed, legal,
equitable, secured or unsecured.
14. "Claimant" means the holder of any Allowed Claim.
15. "Class" means a class of Claims or Equity Interests described in this
Plan.
16. "Confirmation" means the entry of the Order of Confirmation confirming
the Plan pursuant to Section 1129 of the Bankruptcy Code.
17. "Court" means the United States Bankruptcy Court for the Central
District of California, or such other Court as has jurisdiction over the Case.
18. "Debtor" means Spicy Gourmet Organics, Inc., a California corporation,
the debtor in the Case.
19. "Disbursinq Agent" means Debtor or such other party as the Court may
designate.
20. "Disclosure Statement" means the Disclosure Statement describing the
Plan and containing adequate information thereon in conformity with Section 1125
of the Bankruptcy Code.
21. "Disputed Claim" means a Claim either: (a) scheduled by the Debtor as
disputed, contingent or unliquidated in the Schedules to be filed with the
Court, as may be amended or modified; or (b) as to which an objection has been
filed and which objection either (i) has not been withdrawn or (ii) has not been
determined by a Final Order.
22. "Effective Date" means that date which is eleven (11) days after the
entry of the Order of Confirmation.
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23. "Estate" means the estate in the Case created pursuant to Section
541(a) of the Bankruptcy Code.
24. "Final Order" means an order, judgment, or other decree of the Court or
any court of competent jurisdiction as to which: (a) the operation or effect has
not been reversed, stayed, modified or amended; (b) any appeal that has been or
may be taken has been resolved; or (c) the time for appeal, review or rehearing
has expired.
25. "The Yonja Group, A.S." or "Yonja" means The Yonja Group, A.S., a
corporation formed under the Laws of Turkey and based in Istanbul, Turkey which
is engaged in the retail and wholesale sales of products in Turkey.
26. "Interest" means: (a) the common or preferred stock of the Debtor; and
(b) any right, warrant or option, however arising, to acquire the common or
preferred stock or any other equity interest, or any rights therein, of the
Debtor.
27. "Order of Confirmation" means the Order of the Court confirming the
Plan pursuant to Section 1129 of the Bankruptcy Code.
28. "Petition Date" means the date on which Debtor's voluntary petition for
bankruptcy is filed.
29. "Plan" means the Debtor's "Plan of Reorganization" as may be further
amended.
30. "Post-Consolidated Common" means the shares of the Debtor's common
stock after all shares currently issued and outstanding as of the date hereof
have been consolidated into a total of approximately 5,000 shares.
31. "Pre-Consolidated Common" means the 1,000,000 shares of Debtor's common
stock, which are issued and outstanding as of the date hereof.
32. "Priority Claim" means a claim entitled to priority under section
507(a) of the Bankruptcy Code, other than an Administrative Claim or a Tax
Claim.
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33. "Pro Rata" means the ratio that the amount of a particular Allowed
Claim or Interest bears to the total amount of Allowed Claims or Interests of
the same Class.
34. "Reorganized Debtor" means the Debtor after Confirmation of the Plan.
35. "Schedules" means the Schedules of Assets and Liabilities to be filed
by the Debtor with the Court, including any amendments thereto.
36. "Secured Claim" means a claim which is secured by a properly perfected
lien on, or security interest in, any property of the Debtor's Estate, only to
the extent provided in Section 506(a) and 506(b) of the Bankruptcy Code.
37. "Securities Act" means the Securities Act of 1933, as amended.
38. "Subsidiaries" means the four business divisions currently owned and
operated by the Debtor and their incorporated successors: Retail Sales,
Wholesale Sales, Importing, and Manufacturing.
39. "Tax Claim" means a claim entitled to priority pursuant to Section
507(a)(8) of the Bankruptcy Code.
40. "Tax Claimant" means the holder of an Allowed Tax Claim.
41. "Unit" means one (1) share of Post-Consolidated Common Stock and one
(1) Class A Warrant, one (1) Class B Warrant, one (1) Class C Warrant, one (1)
Class D Warrant, and one (1) Class E Warrant.
42. "Unit Holder" means the holder of a Unit issued pursuant to the Plan.
43. "Warrant" means a right to purchase a share of stock of the Reorganized
Debtor to be issued pursuant to the Plan. One (1) Warrant shall entitle the
holder thereof to acquire one (1) share of Post-Consolidation Common Stock upon
payment of the stated exercise price. The exercise price for the Class A Warrant
will be $3.00; for the Class B Warrant it will be $4.00; for the Class C Warrant
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it will be $5.00; for the Class D Warrant it will be $6.00; for the Class E
Warrant it will be $7.00. The exercise price for a Warrant may be reduced, but
not increased, by vote of the Board of Directors of the Corporation. All
Warrants shall expire, if not previously exercised, five years after the
Effective Date, defined supra, unless extended or called by vote of the Board of
Directors of the Corporation. If called, the Directors shall give holders of the
Warrants a period of not less than thirty (30) days following notice of the call
during which they may exercise their Warrants.
TERMS DEFINED IN THE BANKRUPTCY CODE.
A term not otherwise defined here, but used in the Bankruptcy Code, shall
have the definition assigned to such term in the Bankruptcy Code.
RULES OF INTERPRETATION, COMPUTATION OF TIME AND GOVERNING LAW.
1. Rules of Interpretation.
For purposes of the Plan: (a) whenever from the context it is appropriate,
each term, whether stated in the singular or the plural, shall include both the
singular and the plural; (b) any reference in the Plan to a contract,
instrument, release or other agreement or document being in a particular form or
on particular terms and conditions means that such agreement or document shall
be substantially in such form or substantially on such terms and conditions; (c)
any reference in the Plan to an existing document or exhibit filed or to be
filed means such document or exhibit, as it may have been or may be amended,
modified or supplemented; (d) unless otherwise specified, all references in the
Plan to Sections, Articles and Exhibits are references to Sections, Articles and
Exhibits of or to the Plan or Disclosure Statement as the case may be; (e) the
words "herein" and "hereto" refer to the Plan in its entirety rather than to a
particular portion of the Plan; (f) any reference in this Plan to the word
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"including" shall mean "including without limitation"; and (g) captions and
headings to Articles and Sections are inserted for convenience of reference only
and are not intended to be a part of, or to affect, the interpretation of the
Plan.
2. Computation of Time.
In computing any period of time prescribed or allowed by the Plan or
Disclosure Statement, the provisions of Bankruptcy Rule 9006(a) shall apply.
3. Governing Law.
Except to the extent that the Bankruptcy Code or Bankruptcy Rules are
applicable, and subject to the provisions of any contract, instrument, release
or other agreement or document entered into in connection with the Plan, the
rights and obligations arising under the Plan shall he governed by, and
construed and enforced in accordance with, the laws of the State of California,
without giving effect to the principles of conflict of the laws of the State of
California.
III. CLASSIFICATION AND TREATMENT OF CLAIMS & EQUITY INTERESTS
A. GENERAL OVERVIEW
As required by the Bankruptcy Code, the Plan classifies claims and equity
interests in various classes according to their right to priority. The Plan
states whether each class of claims or equity interests is impaired or
unimpaired. The Plan provides the treatment each class will receive.
1. UNCLASSIFIED CLAIMS
Certain types of claims are not placed into voting classes; instead they
are unclassified. They are not considered impaired and they do not vote on the
Plan because they are automatically entitled to specific treatment provided for
them in the Bankruptcy Code. As such, the Proponent has not placed the following
claims in a class.
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(a) Administrative Expenses
Administrative expenses are claims for costs or expenses of administering
the Debtor's Chapter 11 case which are allowed under Code section 507(a)(2). The
Bankruptcy Code requires that all administrative claims be paid on the Effective
Date of the Plan, unless a particular claimant agrees to a different treatment.
The following chart lists all of the Debtor's ss. 507(a)(2)
administrative claims and their treatment under the Plan:
Name Amount Owed Treatment
---- ----------- ---------
Administrative Up to To be paid on or before June 30,
Lenders $50,000 2015, with interest at an annual
(no more than if not converted rate of 6%, with the option to
ten persons) convert the debt to Units (defined
above) in the Reorganized Debtor
and in each of the four
Subsidiaries at a ratio of one Unit
per five cents ($0.05) of loan
principal within two years of the
Effective Date of the Plan.
Daniel C. Masters Subject to Court Subject to approval by the Court,
Attorney for approval, an fee to be paid upon entry of a
Debtor estimated fee of final order approving fee
$40,000 (1) application.
Clerk's Office Unknown Paid in full on Effective Date
Fees
Office of the $3,000 (estimated) Paid in full on Effective Date
U.S. Trustee Fees
TOTAL $43,000 (ESTIMATED)
----------
1. This figure is an estimate. The amount paid will be based on an hourly fee
of $400 and must be approved by the Court.
Court Approval of Fees Required:
The Court must rule on all fees paid to professionals employed by the
estate before the professional will be entitled to receive such fees.
(b) Priority Tax Claims
Priority tax claims include certain unsecured income, employment and other
taxes described by Code Section 507(a)(8). The Bankruptcy Code requires that
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each holder of such a Section 507(a)(8) priority tax claim receive the present
value of such claim in deferred cash payments, over a period not exceeding six
years from the date of the assessment of such tax. The Debtor is not aware of
any priority tax claims.
2. CLASSIFIED CLAIMS AND EQUITY INTERESTS
(a) Classes of Secured Claims
Secured Claims are claims secured by liens on property of the estate. The
Debtor is not aware of any Secured Claims.
(b) Classes of Priority Unsecured Claims
Certain priority claims that are referred to in Code Sections 507(a)(1),
(4), (5), (6), and (7) are required to be placed in classes. The Debtor is not
aware of any claim that would qualify as an unsecured priority claim pursuant to
Sections 507(a)(1), (4), (5), (6), or (7) of the Bankruptcy Code under this
Plan.
(c) Class of General Unsecured Claims
General unsecured claims are unsecured claims not entitled to priority
under Code Section 507(a). The Debtor has identified one class of holders of
general unsecured claims. The following chart identifies this Plan's treatment
of the class containing all of the Debtor's general unsecured creditor claims:
IMPAIRED
CLASS # DESCRIPTION (Y/N) TREATMENT
------- ----------- ----- ---------
1 General Yes In full satisfaction of their
Unsecured respective Allowed Unsecured Claims,
Claims of each Holder of an Allowed Class 1
Creditors Claim shall receive, immediately
following the Effective Date:
Total amount (A) the Holder's PRO RATA share of a
of claims = cash pool of Forty Thousand Dollars
$851,628 ($40,000); and
(estimated) (B) the Holder's PRO RATA share of a
pool of Eighty Thousand (80,000)
Post-Consolidation Shares of Common
Stock in the Reorganized Debtor; and
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(C) the Holder's PRO RATA share of a
pool of Eighty Thousand (80,000)
Shares of Common Stock in each of the
Debtor's Subsidiaries.
(D) the Holder's PRO RATA share of 25%
of gross profits (defined as gross
sales minus the cost of goods sold)
derived from all sales of spices and
related products made by the
Subsidiaries during the three years
following confirmation of the Plan, or
until aggregate distributions to
Creditors made under the Plan (all
cash payments and total value of
Stock) shall equal the total amount of
Creditor Claims, whichever occurs
first.
No fractional shares shall be issued.
All calculations of shares in the
Reorganized Debtor and its
Subsidiaries to be issued to Holders
of Unsecured Claims shall be rounded
up or down to the nearest whole share.
(d) Class of Equity Interest Holders
Equity Interest Holders are the parties who hold ownership interest (i.e.,
equity interest) in the Debtor. In this case the Debtor is a corporation,
therefore entities holding preferred or common stock in the Debtor are equity
interest holders. The following chart identifies the Plan's treatment of all
equity interest holders:
IMPAIRED
CLASS # DESCRIPTION (Y/N) TREATMENT
------- ----------- ----- ---------
2 Equity Interest Yes This class consists of the
Holders Pre-Consolidation Common Stock
(holders of Interests in Debtor. This class holds,
Shares of as of the date hereof, a total of
Debtor's 1,000,000 shares of Debtor's common
Common Stock) stock. Debtor's Common Stock will be
consolidated such that Holders of
Class 2 Equity Interests shall receive
the following in full satisfaction of
all Claims, Debts, Management Fees,
Dividends and Interests:
(A) The Holder's PRO RATA share of a
pool of Five Thousand (5,000)
Post-Consolidation Shares of Common
Stock in the Reorganized Debtor; and
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(B) Dinesh Perera, the principal
shareholder of the Debtor, will
receive 100,000 shares of Common Stock
in each of the Debtor's Subsidiaries
as partial compensation for his
continued management of them.
No fractional shares shall be issued.
All calculations of shares in the
Reorganized Debtor and its
Subsidiaries shall be rounded up or
down to the nearest whole share.
IV. MEANS OF EFFECTUATING THE PLAN
A. FUNDING FOR THE PLAN
The Debtor will file a Motion to borrow funds pursuant to Bankruptcy Code
ss. 364(c) and (f). The Debtor's Motion to borrow funds is an integral part of
this Plan. The Motion calls for authorization for the Debtor to borrow up to
$50,000. These funds will be used to pay the administrative expenses of the
bankruptcy. In return for these funds the Debtor will issue notes which shall be
due and payable on June 30, 2015 and will bear interest at the rate of 6%,
payable annually. The Notes will be issued to no more than ten persons. Anytime
within two years after the Effective Date of the Plan, holders of the Debtor's
Notes may elect to convert such notes to Units in the Debtor and in the Debtor's
Subsidiaries at a ratio of one (1) Unit per five cents ($0.05) of loan
principal. Each such Unit will consist of one (1) share of the Debtor's common
stock and one (1) "A" Warrant allowing the holder to purchase one share of
Debtor's common stock at an exercise price of $3.00, one (1) "B" Warrant
allowing the holder to purchase one share of Debtor's common stock at an
exercise price of $4.00, one (1) "C" Warrant allowing the holder to purchase one
share of Debtor's common stock at an exercise price of $5.00, one (1) "D"
Warrant allowing the holder to purchase one share of Debtor's common stock at an
exercise price of $6.00, and one (1) "E" Warrant allowing the holder to purchase
one share of Debtor's common stock at an exercise price of $7.00. All warrants
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are exercisable at any time during the five year period immediately following
the Effective Date.
Notwithstanding any other provision governing the Warrants, if as of the
date of exercise, the Debtor or one of its Subsidiaries, as the case may be, has
registered its Common Stock under Section 12 of the Securities Exchange Act of
1934, as amended, a Warrant Holder may not exercise Warrants in that company to
the extent that immediately following such exercise the Holder would
beneficially own more than 4.99% of the outstanding Common Stock of the
registered company. For this purpose, a representation of the Holder that
following such exercise it would not beneficially own more than 4.99% of the
outstanding Common Stock of the company shall be conclusive and binding upon the
company.
The exercise price for a Warrant may be reduced, but not increased, by vote
of the Board of Directors of the Corporation. All Warrants shall expire, if not
previously exercised or cancelled, five years after the Effective Date, unless
extended or called by vote of the Board of Directors of the Corporation. If
called, the Directors shall give holders of the Warrants a period of not less
than thirty (30) days following notice of the call during which they may
exercise their Warrants. A holder of Warrants may convert the Warrants, in whole
or in part, to Common Stock without paying the cash exercise price. In that case
the number of shares of Common Stock to be issued will be determined by dividing
(a) the aggregate fair market value, as of the date of conversion, of the shares
of Common Stock of the Company which would be issuable upon exercise of the
Warrants to be converted minus the aggregate Warrant Exercise Price of the
shares of Common Stock of the Company which would be issuable upon exercise of
the Warrants by (b) the said fair market value of one share of the Common Stock
of the Company.
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Assuming the Motion to borrow funds is approved, the Debtor will have
sufficient cash on hand on the Effective Date to make the payments required
under the Plan.
B. PROPOSED FUNDING BY YONJA
Management of Yonja has agreed to provide additional funding, up to a
maximum of $40,000, to supplement the Debtor's cash and to ensure that there
will be sufficient funds on hand at the Effective Date to make the payments
required under the Plan. Yonja earned a net profit of approximately $461,439 in
the year ending December 31, 2009 and will provide the proposed $40,000 funding
from its cash on hand. Because the Debtor will acquire Yonja, effectively
merging Yonja's operations into the Debtor, no repayment of these funds by the
Debtor to Yonja need be made.
C. THE DEBTOR'S BUSINESS OPERATIONS & MANAGEMENT AFTER PLAN CONFIRMATION
After the Effective Date of the Plan, the Reorganized Debtor will continue
its business and manage its affairs without the supervision of the Bankruptcy
Court. The Reorganized Debtor will immediately acquire The Yonja Group, A.S.
(hereafter "Yonja") by issuing to Yonja's owner, Yuksel Pisik, 4,000,000 shares
of the Reorganized Debtor's Common Stock.
The CEO and COO of Yonja, Yuksel Pisik and Okan Torun, will become the
Directors and the CEO and COO respectively of the Reorganized Debtor.
Thereafter, the Reorganized Debtor will be managed by Mr. Pisik and Mr. Torun.
The Board of Directors of the Reorganized Debtor shall have all of the powers
granted to any board of directors by the California codes and other applicable
state or federal laws, and it may act pursuant to any and all powers granted to
it under the California Corporation Code including entering into agreements to
transfer, convey, encumber, use, license and lease any and all of its assets,
issue securities, and/or acquire companies or assets for securities or debt. The
Board of Directors of the Reorganized Debtor may also reincorporate the Debtor
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in another U.S. jurisdiction. Information concerning the background and
qualifications of Mr. Pisik and Mr. Torun is set forth in the Disclosure
Statement.
To implement this Plan, the Board of Directors of the Reorganized Debtor
shall take all steps required by the Code and other state and federal laws and
all steps desirable in furtherance of its business plan and, in order to perform
such implementation in a cost effective manner, the Board of Directors shall
have the authority to vary, alter or revise any of the steps outlined in this
Plan or necessary to its business without shareholder approval so long as such
change does not negatively affect any of the distributions provided for by the
Plan.
After implementing the proposed Plan of Reorganization, the Reorganized
Debtor will have the following share structure: 80,000 Common Shares will be
held, PRO RATA according to amount owed them by the Debtor, by the Class 1
Unsecured Creditors, and 5,000 Common Shares will be held, PRO RATA according to
number of shares they now hold in the Debtor, by the Class 2 Equity Interest
Holders / Shareholders. An additional 4,000,000 Common Shares will be held by
the former owner of Yonja, Yuksel Pisik, paid to him in exchange for his
interests in Yonja. Thus there will be a total of approximately 4,085,000 shares
issued and outstanding in the Reorganized Debtor immediately after the Effective
Date.
In addition, up to 1,000,000 Units, including 1,000,000 Common Shares, will
be held by administrative lenders if these lenders choose to convert their Notes
to Units. In that event, there would be a total of approximately 5,085,000
shares issued and outstanding in the Debtor. Further, there would be 5,000,000
warrants outstanding convertible into an additional 5,000,000 Common Shares.
Conversion of all of these Warrants at the stated exercise price would require
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an investment totaling $25,000,000 and would increase the total number of shares
issued and outstanding to 10,085,000.
All securities issued to creditors (including administrative claimants) and
equity interest holders under the Plan will be issued exempt from any and all
state and federal securities registration requirements pursuant to Section 1145
of the Bankruptcy Code.
D. THE DIVESTITURE AND MANAGEMENT OF THE SUBSIDIARIES AFTER CONFIRMATION
In support of the Debtor's Plan of Reorganization, and in order to enhance
the Debtor's distribution to its Creditors, all of the Debtor's Subsidiaries
will become independent operating companies, owned by the Debtor's creditors and
its President, Dinesh Perera, and, potentially, by its administrative lenders.
The President of each Subsidiary will be Dinesh Perera, the current President of
the Debtor and the Subsidiaries. Information concerning the background and
qualifications of Mr. Perera is set forth in the Disclosure Statement.
The Debtor will distribute Shares and Units in each of its Subsidiaries as
follows: 80,000 Common Shares will be held, PRO RATA according to amount owed
them by the Debtor, by the Class 1 General Unsecured Creditors, and 100,000
Common Shares will be held by Dinesh Perera, the President of each Subsidiary.
Thus there will be a total of 180,000 shares issued and outstanding in each of
the Subsidiaries.
In addition, up to 1,000,000 Units (including 1,000,000 Common Shares) will
be held by administrative lenders in each Subsidiary if these lenders choose to
convert their Notes to Units. In that event, there would be a total of
approximately 1,180,000 shares issued and outstanding in each of the
Subsidiaries. Further, there would be 5,000,000 warrants outstanding convertible
into an additional 5,000,000 Common Shares. Conversion of all of these Warrants
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would require an investment totaling $25,000,000 in each Subsidiary in which the
Warrants were exercised.
Any shares held by the Reorganized Debtor in any of the Subsidiaries
following the above distributions will be cancelled and there will be no further
relationship between or among the Debtor and its former Subsidiaries. The
Debtor's Subsidiaries will emerge from the proceedings as independent companies.
The Directors of the Subsidiaries shall take all steps required or
desirable in reorganizing and revitalizing the Subsidiaries, including
incorporating or reincorporating them in another jurisdiction or under another
name.
E. DISBURSING AGENT AND METHOD OF DISTRIBUTION
The Reorganized Debtor shall act as the Disbursing Agent for the purpose of
making all distributions provided for under the Plan which are required to be
made on or immediately following the Effective Date. This Disbursing Agent shall
serve without bond and shall receive no compensation for distribution services
rendered and expenses incurred pursuant to the Plan. The Reorganized Debtor
shall hold any checks paid to Creditors by the Reorganized Debtor which are
returned as undeliverable for a period of six months after the date the check
was first mailed. Any checks not claimed or cashed after six months will revest
in the Reorganized Debtor.
One or more of the Subsidiaries shall act as the Disbursing Agent for the
purpose of making all quarterly distributions from the gross profits on sales of
spices and related products earned by the Subsidiaries. The Subsidiary shall
hold any checks returned as undeliverable for a period of six months after the
date the check was first mailed. Any checks not claimed or cashed after six
months will be held by the Subsidiary. If funds are still owed to creditors
three years after the Effective Date, funds from checks not previously claimed
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or cashed will be distributed to the remaining creditors. However, if funds are
not owed to creditors three years after the effective date, funds from checks
not previously claimed or cashed will revest in the issuing Subsidiary.
The Reorganized Debtor shall retain the services of a bonded stock
transfer agent to prepare stock certificates and maintain records of stock
ownership in the Reorganized Debtor and in each Subsidiary. Evidence of stock
ownership will be distributed to all Class 1 general unsecured creditors and all
Class 2 equity interest holders, and, if they convert their loans to equity, to
the administrative lenders. All creditors and interest holders will be informed
of the information they must provide to the transfer agent and the procedure
they must follow to obtain their certificates. Any certificates not claimed
after six months will revest in the issuer corporation.
F. RETENTION OF CLAIMS
The following claims shall be retained by the bankruptcy estate
post-confirmation or, if owned by the Debtor's Subsidiaries, shall be vested in
the bankruptcy estate on the Effective Date: (1) all avoidance actions arising
under the Bankruptcy Code or under state law, (2) all claims by the Debtor
and/or its Subsidiaries against officers, directors, or insiders, (3) all
contract, tort or other claims of any kind held by the Debtor and/or its
Subsidiaries against third parties, and (4) all claims for equitable
subordination. Any net proceeds from the prosecution of such claims shall be
deposited into a bank account for the benefit of Unsecured Creditors and shall
be distributed PRO RATA to them.
G. UNITED STATES TRUSTEE QUARTERLY FEES
The Reorganized Debtor shall be responsible for timely payment of fees
incurred pursuant to 28 U.S.C. ss. 1930(a)(6). After confirmation, the
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Reorganized Debtor shall file with the Court and serve on the United States
Trustee a quarterly financial report regarding all income and disbursements,
including all plan payments, for each quarter (or portion thereof) the case
remains open.
H. OTHER PROVISIONS OF THE PLAN
Executory Contracts and Unexpired Leases
(1) Assumptions
The Debtor will not assume any pre-petition executory contracts or
unexpired leases as obligations under this Plan.
(2) Rejections
Every contract not specifically assumed is hereby rejected. The Order
Confirming the Plan shall constitute an Order approving the rejection of the
lease or contract. If you are a party to a contract or lease to be rejected and
you object to the rejection of your contract or lease, you must file and serve
your objection to the Plan within the deadline for objecting to the confirmation
of the Plan. Any such objections not timely filed and served shall be
disallowed.
THE BAR DATE FOR FILING A PROOF OF CLAIM BASED ON A CLAIM ARISING FROM THE
REJECTION OF A LEASE OR CONTRACT HAS NOT YET BEEN SET BY THE COURT. You will be
notified as soon as a Claims Bar Date is set. Any claim based on the rejection
of a contract or lease will be barred if the proof of claim is not timely filed,
unless the Court later orders otherwise.
I. RETENTION OF JURISDICTION
The Court will retain jurisdiction to the extent provided by law.
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V. EFFECT OF CONFIRMATION OF THE PLAN
A. DISCHARGE
This Plan provides that upon confirmation of the Plan, the Debtor shall be
discharged of liability for payment of debts incurred before confirmation of the
Plan to the extent specified in 11 U.S.C. ss. 1141. However, the discharge will
not discharge any liability imposed by the Plan.
B. REVESTING OF PROPERTY IN THE DEBTOR
Except as provided elsewhere in the Plan, the confirmation of the Plan
revests all of the property of the estate in the Debtor.
C. MODIFICATION OF PLAN
The Proponent of the Plan may modify the Plan at any time before
confirmation. However, the Court may require a new disclosure statement and/or
new vote on the Plan.
The Proponent of the Plan may also seek to modify the Plan at any time
after confirmation only if (1) the Plan has not been substantially consummated
and (2) the Court authorizes the proposed modifications after notice and a
hearing.
D. POST-CONFIRMATION QUARTERLY REPORTS
Quarterly after entry of the order confirming the Plan, the Plan Proponent
shall file Quarterly Post-Confirmation Reports with the Court and pay Trustee's
fees in accordance with the United States Trustee's Operating and Reporting
Requirements. The report shall be served on the United States Trustee, the
members of the Official Committee of Creditors (if any), and those parties who
have requested special notice.
E. POST-CONFIRMATION CONVERSION/DISMISSAL
A creditor or party in interest may bring a motion to convert or dismiss
the case under ss. 1112(b), after the Plan is confirmed, if there is a default
in performing the Plan. A default shall be deemed to have occurred if the Debtor
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or any party in interest fails to take any action required of that party under
the Plan or Confirmation Order. If the Court orders the case converted to
Chapter 7 after the Plan is confirmed, then all property that had been property
of the Chapter 11 estate, and that has not been disbursed pursuant to the Plan,
will revest in the Chapter 7, estate. The automatic stay will be reimposed upon
the revested property, but only to the extent that relief from stay was not
previously authorized by the Court during this case.
F. FINAL DECREE
Once the estate has been fully administered as referred to in Bankruptcy
Rule 3022, the Plan Proponent, or such other party as the Court shall designate
in the Plan Confirmation Order, shall file a motion with the Court to obtain a
final decree to close the case.
Dated: October 7, 2010
Spicy Gourmet Organics, Inc.
By: Dinesh Perera
President
Spicy Gourmet Retail, Spicy Gourmet Wholesale, Spicy Gourmet Imports, and Spicy
Gourmet Manufacturing, Co-Proponents
By: Dinesh Perera
Manager
By: Erich Fock
Co-Proponent
SUBMITTED BY:
Daniel C. Masters
Attorney for Spicy Gourmet Organics, Inc.
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