1.
Tuesday, September 18, 2007 Paul M. Singer, Esquire, L.L.M. Joel M. Helmrich, Esquire, MBA Mark M. Gleason, CPA, MBA Salene M. Kraemer, Esquire, MBA, CTP-D Marriott City Center 112 Washington Place Pittsburgh, PA  

2.
<ul><li>Introduction to Liquidating Plans </li></ul><ul><li>CASE STUDY- In re Le-Nature’s, Inc., et. al. ,Chapter 11, Case No. 06-25454 (MBM), U.S. Bankr. W.D. Pa. </li></ul><ul><li>Discussion Questions </li></ul><ul><li>Questions from Audience </li></ul>

3.
<ul><li>Historically, did bankruptcy statutes provide for the liquidation of debtors’ estate? Yes. </li></ul><ul><li>Section 1112(b) Motions to Dismiss or Convert a Case v. Section 1123(b)(4)-Contents of a Plan </li></ul>

4.
<ul><li>substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; </li></ul><ul><li>gross mismanagement of the estate; </li></ul><ul><li>failure to maintain appropriate insurance that poses a risk to the estate or to the public; </li></ul><ul><li>unauthorized use of cash collateral substantially harmful to 1 or more creditors; </li></ul><ul><li>failure to comply with an order of the court; </li></ul><ul><li>unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this Chapter </li></ul><ul><li>. . . </li></ul><ul><li>11 U.S.C. §1112(b)(4) </li></ul>

5.
<ul><li>Inability to propose a feasible plan or carry it out. </li></ul><ul><li>Purpose: “prevent the debtor in possession from gambling on the enterprise at the creditors’ expense where there is no hope of rehabilitation.” </li></ul><ul><li>Lead to per se rule in favor of dismissing all liquidating Chapter 11 plans? </li></ul>

6.
<ul><li>A plan may “provide for the sale of all or substantially all of the property of the estate, and the distribution of the proceeds of such sale among holders of claims or interests.” 11 U.S.C. §1123(b)(4) </li></ul><ul><li>Expressly condones liquidating Chapter 11 cases </li></ul>

8.
<ul><li>Events Leading Up to Bankruptcy </li></ul><ul><li>Pre-Petition Capital and Equity Structure of the Debtors </li></ul><ul><li>Bankruptcy Filing </li></ul><ul><li>Financial Snapshot as of Petition Date </li></ul><ul><li>Operating Provisions of Proposed Plan </li></ul><ul><li>Proposed Claims Treatment </li></ul>

13.
Approximate amount of proofs of claims filed against Debtors’ Estates: Administrative: $2.4 million Secured: $286 million Priority: $23 million General Unsecured: $508 million TOTAL: Over $800 million

15.
 Unclassified: Administrative Claims (paid in full in cash)  Unclassified: Priority Tax Claims (paid in full in cash or in equal annual installments over 5 years)  Unclassified : Fee Claims (paid in full) (estimated at $14.7 million)  Class 1 : Lender’s Secured Claims (Tier 1- Trust Beneficial Interests in a % ratable to other holders of Class 1 Claims)  Class 2 : Other Secured Claims (payment in cash from proceeds of sale of collateral to the extent of the lien or surrender of collateral)  Class 3: Priority Non-Tax Claims (paid in full in cash)  Class 4A: Lender’s Unsecured Claims, Class 4B : General Unsecured Claims, and Class 4C : Unsecured Senior Subordinated Notes Claims ( Tier 2- Trust Beneficial Interests in % ratable to other holders of Class 4A, 4B and 4C Claims)  Class 5: Subordinated Litigation Claims (Tier 3- Trust Beneficial Interests in % ratable to other holders of Class 5 Claims)  Class 6: Interests ( Tier 4- Trust Beneficial Interests in % ratable to other holders of Class 6 Claims)

16.
<ul><li>Hallmarks of feasible Ch. 11 liquidating plan/general structure </li></ul><ul><li>Passing the Section 1129(a)(7) Best Interests Test (liquidation in hypo Ch. 7) </li></ul><ul><li>Advantages to Ch. 11 v. Ch. 7 </li></ul><ul><li>Disadvantages to Ch. 11 process </li></ul><ul><li>Valuation of Distressed Assets by Financial Analyst </li></ul><ul><li>Ways to Liquidate the Assets? Who would conduct? </li></ul><ul><li>Funding litigation of Estate Causes of Action </li></ul><ul><li>Alternative avenues for liquidating assets </li></ul><ul><li>Current Status of Le Nature’s </li></ul>

25.
<ul><li>Alternative Ch. 11 Plan </li></ul><ul><li>Conversion to Ch. 7 liquidation </li></ul><ul><li>Section 363 Sale and then conversion to Ch. 7 liquidation </li></ul><ul><li>Dismissal of Ch. 11 case and liquidation in non-bankruptcy forum </li></ul>

27.
What is the status of the case now?