FiberMark Files New POR and Announces Cost Savings Initiative
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report: June 24, 2005
(Exact
name of registrant as specified in charter)
|
Delaware
|
001-12865
|
82-0429330
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification No.)
|
161
Wellington Road
P.O.
Box 498
Brattleboro,
Vermont 05302
(802)
257-0365
Item
8.01. Other Events and Regulation FD Disclosure
On
June
23, FiberMark filed an Amended Plan of Reorganization, new Disclosure Statement
with respect to its Amended Plan of Reorganization and a motion to request
implementation of a strategic cost reduction program with the U.S. Bankruptcy
Court for the District of Vermont. Theses exhibits shall be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934.
On
June
24, FiberMark issued a press release regarding these filings, attached here
as
Exhibit 99.1, which shall be deemed “filed”for
purposes of Section 18 of the Securities Exchange Act of 1934.
Item
9.01. Financial Statements and Exhibits
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
|
|
| |
FiberMark
|
| |
|
|
|
Date:
June 29, 2005
|
By:
|
/s/
John E. Hanley
|
| |
John
E. Hanley
|
| |
Vice
President and Chief Financial Officer
|
EXHIBIT
INDEX
|
Exhibit
No.
|
|
Description
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
*
Filed herewith
|
|
|
Exhibit
2.1
|
DISTRICT
OF VERMONT
|
|
In
re:
FiberMark,
Inc.,
FiberMark
North America, Inc., and
FiberMark
International Holdings LLC,
Debtors.
|
)
)
)
)
)
)
|
Case
No. 04-10463 cab
Chapter
11
Jointly
Administered
|
[First
Proposed]
DISCLOSURE
STATEMENT WITH RESPECT TO AMENDED JOINT PLAN OF REORGANIZATION UNDER CHAPTER
11,
TITLE 11, UNITED STATES CODE
OF
FIBERMARK, INC., ET AL., DEBTORS
SKADDEN,
ARPS, SLATE, MEAGHER &
FLOM
LLP
Four
Times Square
New
York,
New York 10036-6522
Telephone:
(212) 735-3000
Facsimile:
(212) 735-2000
-
and
-
OBUCHOWSKI
& EMENS-BUTLER
P.O.
Box
60, 1542 Vt. Rt. 107
Bethel,
Vermont 05032
Telephone:
(802) 234-6244
Facsimile:
(802) 234-6245
Dated: June
23,
2005
Co-Counsel for Debtors
THIS
DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT. THE
DEBTORS
WILL
SEPARATELY NOTICE A HEARING TO CONSIDER THE ADEQUACY OF THIS DISCLOSURE
STATEMENT
UNDER
SECTION 1125 OF THE BANKRUPTCY CODE.
THE
DEBTORS RESERVE THE RIGHT TO MODIFY OR SUPPLEMENT THIS DISCLOSURE STATEMENT
AND
THE ACCOMPANYING JOINT PLAN OF REORGANIZATION PRIOR TO AND UP TO THE DATE OF
SUCH HEARING.
DISCLAIMER
THE
INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS PROVIDED FOR PURPOSES
OF
SOLICITING ACCEPTANCES OF THE AMENDED JOINT PLAN OF REORGANIZATION UNDER CHAPTER
11, TITLE 11, UNITED STATES CODE OF FIBERMARK, INC., ET AL., DEBTORS (THE
“PLAN”). THE INFORMATION MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO
DETERMINE HOW TO VOTE ON THE PLAN. NO PERSON MAY GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED
IN
THIS DISCLOSURE STATEMENT, REGARDING THE PLAN OR THE SOLICITATION OF ACCEPTANCES
OF THE PLAN.
ALL
CREDITORS ARE ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE STATEMENT AND
THE
PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. PLAN
SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE QUALIFIED IN
THEIR ENTIRETY BY REFERENCE TO THE PLAN AND THE EXHIBITS ANNEXED TO THE PLAN.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE ONLY AS OF THE
DATE HEREOF, AND THERE CAN BE NO ASSURANCE THAT THE STATEMENTS CONTAINED HEREIN
WILL BE CORRECT AT ANY TIME AFTER THE DATE HEREOF.
THIS
DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE
UNITED STATES BANKRUPTCY CODE AND RULE 3016 OF THE FEDERAL RULES OF BANKRUPTCY
PROCEDURE AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES
LAWS OR OTHER NON-BANKRUPTCY LAW. THIS DISCLOSURE STATEMENT HAS BEEN NEITHER
APPROVED NOR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”),
NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED
HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR
TRANSFERRING SECURITIES OR CLAIMS OF FIBERMARK, INC., FIBERMARK NORTH AMERICA,
INC., AND FIBERMARK INTERNATIONAL HOLDINGS LLC SHOULD EVALUATE THIS DISCLOSURE
STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE
PREPARED.
AS
TO
CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR THREATENED
ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS
AN
ADMISSION OF ANY FACT OR LIABILITY, STIPULATION OR WAIVER, BUT RATHER AS A
STATEMENT MADE IN SETTLEMENT NEGOTIATIONS. THIS DISCLOSURE STATEMENT SHALL
NOT
BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR SHALL IT BE CONSTRUED TO
BE
CONCLUSIVE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN
AS
TO HOLDERS OF CLAIMS AGAINST OR EQUITY INTERESTS IN FIBERMARK, INC., FIBERMARK
NORTH AMERICA, INC., AND FIBERMARK INTERNATIONAL HOLDINGS LLC.
FIBERMARK
FILES ANNUAL, QUARTERLY AND CURRENT REPORTS, PROXY STATEMENTS AND OTHER
INFORMATION WITH THE SEC, WHICH DOCUMENTS ARE AVAILABLE FOR INSPECTION AND
COPYING AT THE PUBLIC REFERENCE ROOM OF THE SEC AND ARE ALSO AVAILABLE FROM
THE
SEC’S WEB SITE AT WWW.SEC.GOV. THE PLAN CONTEMPLATES THAT FROM AND AFTER THE
EFFECTIVE DATE, FIBERMARK WILL CEASE FILING SUCH PUBLIC REPORTS. IN ADDITION,
THE NEW COMMON STOCK OF FIBERMARK AS CONSTITUTED AFTER THE EFFECTIVE DATE WILL
NO LONGER BE QUOTED FOR TRADING ON ANY NATIONAL INTERDEALER QUOTATION SYSTEM
OR
LISTED FOR TRADING ON ANY NATIONAL SECURITIES EXCHANGE, AND AS A CONSEQUENCE
HOLDERS OF THE NEW COMMON STOCK MAY FIND IT DIFFICULT TO EFFECT TRADES IN THE
NEW COMMON STOCK, QUOTES FOR THE NEW COMMON STOCK MAY BE HARD TO OBTAIN, AND
THE
LIQUIDITY OF THE NEW COMMON STOCK MAY BE SEVERELY ADVERSELY EFFECTED.
TABLE
OF CONTENTS
I. INTRODUCTION
II. OVERVIEW
OF THE PLAN
A. General
Structure of the Plan
B. Summary
of Treatment of Claims and Interests under the Plan
III. PLAN
VOTING INSTRUCTIONS AND PROCEDURES
A. Notice
to
Holders of Claims and Interests
B. Voting
Rights
C. Solicitation
Materials
D. Voting
Procedures, Ballots, and Voting Deadline
E.
Special
Notice Concerning Voting
F.
Confirmation
Hearing and Deadline for Objections to Confirmation
IV. GENERAL
INFORMATION CONCERNING THE DEBTORS
A. Overview
of Business Operations
B. Organizational
Structure
C. Corporate
History
D. North
American Operations
G. Management
and Employees
H. Debtors’
Capital Structure
| |
|
J.
Historical Financial Information |
|
K. Events
Leading to Commencement of the Chapter 11 Case
V. CHAPTER
11 CASE
A. Continuation
of Business; Stay of Litigation
B. First
Day
Orders
C. Retention
of Professionals
D. Official
Committees
| |
|
E. Post-Petition and Post-Confirmation Funding
|
|
| |
|
F. Other Material Matters Addressed During the Chapter
11
Case
|
|
G. Plan
Process
H. Appointment
and Findings of Examiner
VI. SUMMARY
OF THE PLAN OF REORGANIZATION
A. Overall
Structure of the Plan
B. Substantive
Consolidation
C. Reorganized
Capital Structure Created by Plan
D. Classification
and Treatment of Claims and Interests
| |
|
E. Reservation
of Rights Regarding Claims
|
|
| |
|
F. Allowed Claims, Distribution Rights and Objections to
Claims
|
|
G. Disposition
of Executory Contracts and Unexpired Leases
H. Revesting
of Assets; Release of Liens
| |
|
I. Post-Effective Date Restructuring Transactions
|
|
| |
|
J. Post-Consummation Corporate Structure, Management and
Operation
|
|
K. Confirmation
and/or Consummation
| |
|
L. Releases, Discharge, Injunctions, Exculpation and
Indemnification
|
|
M. Preservation
of Rights of Action; Resulting Claim Treatment
N. Retention
of Jurisdiction
O. Amendment,
Alteration and Revocation of Plan
| |
|
P. Plan Implementing Documents
|
|
VII. CERTAIN
RISK FACTORS TO BE CONSIDERED
A. General
Considerations
B. Certain
Bankruptcy Considerations
C. Claims
Estimations
D. Conditions
Precedent to Consummation
| |
|
E. Inherent Uncertainty of Financial Projections
|
|
| |
|
F.
Certain Risk Factors Relating to Securities to be Issued Under the
Plan
|
|
G. Competition
H. Raw
Materials
K. Environmental
and Other Regulations
| |
|
L Reliance on Key Personnel
|
|
M. Risks
Related to Foreign Operations
N. Leverage
O. Litigation
Q. Certain
Tax Considerations
VIII. APPLICABILITY
OF FEDERAL AND OTHER SECURITIES LAWS
A. Offer
and
Sale of New Securities: Bankruptcy Code Exemption
B. Subsequent
Transfers of New Securities
IX. CERTAIN
U.S. FEDERAL TAX CONSEQUENCES OF THE PLAN
A. General
B. U.S.
Federal Income Tax Consequences to the Debtors
C. U.S.
Federal Income Tax Consequences to Claim Holders
D. Information
Reporting and Backup Withholding
| |
|
E. Importance of Obtaining Professional Tax
Assistance
|
|
X. FEASIBILITY
OF THE PLAN AND BEST INTERESTS OF CREDITORS
A. Feasibility
of the Plan
B. Acceptance
of the Plan
C. Best
Interests Test
D. Liquidation
Analysis
| |
|
E. Valuation of the Reorganized Debtors
|
|
| |
|
F. Application of the “Best Interests” of Creditors Test to the
Liquidation Analysis and the Valuation
|
|
G. Confirmation
Without Acceptance of All Impaired Classes: The “Cramdown”
Alternative
XI. ALTERNATIVES
TO CONFIRMATION AND CONSUMMATION OF THE PLAN
A. Alternative
Plan(s) of Reorganization
B. Liquidation
under Chapter 7 or Chapter 11
XII. THE
SOLICITATION; VOTING PROCEDURES
A. Parties
in Interest Entitled to Vote
B. Classes
Entitled to Vote to Accept or Reject the Plan
C. Solicitation
Order
D. Waivers
of Defects, Irregularities, Etc.
| |
|
E. Withdrawal of Ballots; Revocation
|
|
| |
|
F. Special Instructions for Holders of Noteholder
Claims
|
|
G. Voting
Rights of Disputed Claimants
H. Further
Information; Additional Copies
TABLE
OF APPENDICES
Appendix
A Amended
Joint Plan of Reorganization Under Chapter 11, Title 11, United States Code
of
FiberMark, Inc., et al., Debtors
Appendix
B Pro
Forma
Financial Projections
Appendix
C Corporate
Structure Chart
Appendix
D Historical
Financial Information
Appendix
E Liquidation
Analysis
DISCLOSURE
STATEMENT WITH RESPECT TO
AMENDED
JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11, TITLE 11,
UNITED
STATES CODE OF FIBERMARK,
INC., ET AL., DEBTORS
The
debtors and debtors-in-possession in the above-referenced chapter 11 case
include publicly-held FiberMark, Inc. (“FiberMark”) and its two wholly-owned
United States subsidiaries, FiberMark North America, Inc. (“FNA”) and FiberMark
International Holdings LLC (“FIH”) (FiberMark, FNA and FIH collectively, the
“Debtors”).
The
Debtors submit this disclosure statement (this “Disclosure Statement”) pursuant
to Section 1125 of Title 11 of the United States Code (the “Bankruptcy Code”),
for use in the solicitation of votes on the Amended Joint Plan of Reorganization
Under Chapter 11, Title 11, United States Code of FiberMark, Inc., et al.,
Debtors, dated ________, 2005, 2004 (the “Plan”). A copy of the Plan is attached
as Appendix A to this Disclosure Statement. All capitalized terms used in this
Disclosure Statement but not otherwise defined herein have the meanings ascribed
to such terms in the Plan.
The
Plan supersedes and replaces the Joint Plan of Reorganization Under Chapter
11,
Title 11, United States Code of FiberMark, Inc., et al., Debtors, dated December
17, 2004, as modified (the “Previous Plan”), which was withdrawn by the Debtors
as a result of intercreditor disputes that rendered the Previous Plan
unconfirmable.
This
Disclosure Statement sets forth certain information regarding the Debtors’
pre-petition operating and financial history, their reasons for seeking
protection and reorganization under Chapter 11, significant events that have
occurred during the Chapter 11 Case and the anticipated organization,
operations, and financing of the Debtors upon their successful emergence from
Chapter 11. This Disclosure Statement also describes certain terms and
provisions of the Plan, certain effects of confirmation of the Plan, certain
risk factors associated with the Plan and the securities to be issued under
the
Plan, and the manner in which distributions will be made under the Plan. In
addition, this Disclosure Statement discusses the confirmation process and
the
voting procedures that holders of Claims entitled to vote under the Plan must
follow for their votes to be counted.
By
order
dated __________, 2005, the Bankruptcy Court has approved this Disclosure
Statement as containing “adequate information” in accordance with Section 1125
of the Bankruptcy Code, to enable a hypothetical, reasonable investor typical
of
holders of Claims against, or Interests in, the Debtors to make an informed
judgment as to whether to accept or reject the Plan; and has authorized its
use
in connection with the solicitation of votes with respect to the Plan.
APPROVAL
OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER, CONSTITUTE A DETERMINATION
BY
THE BANKRUPTCY COURT AS TO THE FAIRNESS OR MERITS OF THE
PLAN.
No
solicitation of votes may be made except pursuant to this Disclosure Statement
and Section 1125 of the Bankruptcy Code. In voting on the Plan, holders of
Claims entitled to vote should not rely on any information relating to the
Debtors and their businesses, other than that contained in this Disclosure
Statement, the Plan, and all appendices or exhibits hereto and
thereto.
Pursuant
to the provisions of the Bankruptcy Code, only classes of claims or interests
that are (i) “impaired” by a plan of reorganization and (ii) entitled to receive
a distribution under such plan are entitled to vote on the plan. In the Debtors’
cases, only Claims in Classes 4, 5, 6, 7, 8, 9, and 10 are impaired by and
entitled to receive a distribution under the Plan, and only the holders of
Claims in those Classes are entitled to vote to accept or reject the Plan.
Claims in Classes 1, 2, 3, and 14 are unimpaired by the Plan, and the holders
thereof are conclusively presumed to have accepted the Plan. Claims or Interests
in Classes 11, 12, 13, and 15, which receive nothing under the Plan, are deemed
to have rejected the Plan and the holders of Claims or Interests in each of
such
Classes are not entitled to vote.
FOR
A
DESCRIPTION OF THE PLAN AND VARIOUS RISKS AND OTHER FACTORS PERTAINING TO THE
PLAN, PLEASE SEE ARTICLE VI OF THIS DISCLOSURE STATEMENT, ENTITLED “SUMMARY OF
THE PLAN OF REORGANIZATION,” AND ARTICLE VII OF THIS DISCLOSURE STATEMENT,
ENTITLED “CERTAIN RISK FACTORS TO BE CONSIDERED.”
THIS
DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE PLAN,
CERTAIN STATUTORY PROVISIONS, CERTAIN DOCUMENTS RELATING TO THE PLAN, CERTAIN
EVENTS THAT HAVE OCCURRED IN THE CHAPTER 11 CASE, AND CERTAIN FINANCIAL
INFORMATION. ALTHOUGH THE DEBTORS BELIEVE THAT ALL SUCH SUMMARIES ARE FAIR
AND
ACCURATE AS OF THE DATE HEREOF, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT
THAT
THEY DO NOT SET FORTH THE ENTIRE TEXT OF UNDERLYING DOCUMENTS AND TO THE EXTENT
THAT THEY MAY CHANGE AS PERMITTED BY THE PLAN AND APPLICABLE LAW. FACTUAL
INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS BEEN PROVIDED BY THE
DEBTORS’ MANAGEMENT, EXCEPT WHERE OTHERWISE SPECIFICALLY NOTED. THE DEBTORS DO
NOT WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED HEREIN, INCLUDING THE
FINANCIAL INFORMATION, IS WITHOUT ANY MATERIAL INACCURACY OR
OMISSION.
NOTHING
CONTAINED HEREIN WILL BE DEEMED TO CONSTITUTE AN ADMISSION OF ANY FACT OR
LIABILITY BY ANY PARTY, BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING INVOLVING
THE DEBTORS OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE ADVICE ON THE TAX OR
OTHER LEGAL EFFECTS OF THE REORGANIZATION AS TO HOLDERS OF ALLOWED CLAIMS OR
INTERESTS. YOU SHOULD CONSULT YOUR PERSONAL COUNSEL OR TAX ADVISOR WITH RESPECT
TO ANY QUESTIONS OR CONCERNS REGARDING TAX, SECURITIES, OR OTHER LEGAL
CONSEQUENCES OF THE PLAN.
CERTAIN
OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS BY ITS NATURE
FORWARD LOOKING AND CONTAINS ESTIMATES, ASSUMPTIONS, AND PROJECTIONS THAT MAY
BE
MATERIALLY DIFFERENT FROM ACTUAL, FUTURE RESULTS. Except with respect to the
pro
forma financial projections set forth in Appendix B annexed hereto (the
“Projections”) and except as otherwise specifically and expressly stated herein,
this Disclosure Statement does not reflect any events that may occur subsequent
to the date hereof and that may have a material impact on the information
contained in this Disclosure Statement. The Debtors do not undertake any
obligation to, and do not intend to, update the Projections; thus, the
Projections will not reflect the impact of any subsequent events not already
accounted for in the assumptions underlying the Projections. Further, the
Debtors do not anticipate that any amendments or supplements to this Disclosure
Statement will be distributed to reflect such occurrences. Accordingly, the
delivery of this Disclosure Statement will not under any circumstance imply
that
the information herein is correct or complete as of any time subsequent to
the
date hereof. Moreover, the Projections are based on assumptions that, although
believed to be reasonable by the Debtors, may differ from actual
results.
THE
DEBTORS BELIEVE THAT THE PLAN WILL ENABLE THE DEBTORS TO SUCCESSFULLY REORGANIZE
AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND THAT ACCEPTANCE OF THE PLAN
IS
IN THE BEST INTERESTS OF THE DEBTORS AND THE HOLDERS OF CLAIMS IN CLASSES 4,
5,
6, 7, 8, 9, AND 10. THE DEBTORS URGE SUCH HOLDERS TO VOTE TO ACCEPT THE
PLAN.
The
following is a brief overview of the material provisions of the Plan and is
qualified in its entirety by reference to the full text of the Plan. For a
more
detailed description of the terms and provisions of the Plan, see Article VI
of
this Disclosure Statement, entitled “Summary of the Plan of
Reorganization.”
The
Plan
provides for the classification and treatment of Claims against and Interests
in
the Debtors, based upon a joint plan structure supported by substantive
consolidation principles. The Plan designates thirteen Classes of Claims and
two
Classes of Interests. These Classes take into account the differing nature
and
priority under the Bankruptcy Code of the various Claims and Interests.
The
Debtors believe that the Plan presents the best means currently available for
their emergence from Chapter 11.
| A. |
General
Structure of the Plan
|
The
Plan
is structured as a joint plan, pursuant to substantive consolidation. Claims
are
treated generally in accordance with the priorities established under the
Bankruptcy Code. Claims that have priority status under the Bankruptcy Code
or
that are secured by valid liens on collateral are to be paid in full or
reinstated as provided in the Plan. Non-priority, unsecured Claims will receive
a Pro Rata distribution of New Common Stock to be created and issued under
the
Plan and Distribution Cash, providing estimated recoveries of approximately
54%
per Claim, based upon certain assumptions described below. Because holders
of
non-priority, unsecured Claims will not be paid in full, the holders of Old
FiberMark Common Stock will receive no distributions under the Plan, and all
shares of Old FiberMark Common Stock will be cancelled.
The
following is an overview of certain material terms of the Plan:
| 1. |
The
Debtors will be reorganized pursuant to the Plan and will continue
in
operation, achieving the objectives of Chapter 11 for the benefit
of their
creditors, customers, suppliers, employees, and
communities.
|
| 2. |
Holders
of Administrative Claims, Priority Tax Claims, and Other Priority
Claims
will be paid in full as required by the Bankruptcy Code, unless otherwise
agreed by the holders of such
claims.
|
| 3. |
The
GECC Credit Facility Claim will be paid in
full.
|
| 4. |
The
GECC Equipment Financing Claim and the Banc One Equipment Financing
Claim
will be substantially reinstated and paid pursuant to their preexisting
terms.
|
| 5. |
The
Coated Paper Sale/Leaseback Claim will be paid in continuing monthly
payments in lieu of the balloon payment required by the governing
documents.
|
| 6. |
Holders
of Lowville Grant Claims who vote in favor of the Plan will have
their
Claims reinstated on certain conditions. If they vote against the
Plan,
their Claims will be treated as Other Secured Claims in Class 8 if
secured
or as General Unsecured Claims in Class 10 if unsecured.
|
| 7. |
The
holders of Noteholder Claims and General Unsecured Claims will share
in a
distribution of (i) 10 million shares of New Common Stock and (ii)
$75
million of Distribution Cash.
|
| 8. |
The
holders of Convenience Claims, which are Claims not exceeding $5,000
in
amount (including any in an amount greater than $5,000 that is reduced
to
$5,000 by an amended Proof of Claim filed on or before the Distribution
Record Date), will be paid in full.
|
| 9. |
The
Reorganized Debtors will retain all Litigation Rights (which include
rights to seek to avoid preferential transfers) and will have authority
to
pursue all Litigation Rights for the benefit of their reorganized
estates.
|
| 10. |
Old
FiberMark Common Stock will be cancelled and no distributions of
any kind
will be made to holders of such Old FiberMark Common
Stock.
|
| 11. |
The
Reorganized Debtors will obtain an Exit Facility to satisfy the DIP
Facility Claim and the German Guaranty Claim, support other payments
required to be made under the Plan, pay transaction costs, and fund
working capital and general corporate purposes of the Reorganized
Debtors
following their emergence.
|
| 12. |
The
Debtors have not included in the Plan any provisions that will require
the
consent of the Creditors Committee in order for the Debtors to confirm
or
effectuate the Plan.
|
| B. |
Summary
of Treatment of Claims and Interests under the
Plan
|
The
table
below summarizes the classification and treatment of the pre-petition Claims
and
Interests under the Plan. Estimated Claim amounts assume a calculation date
of
September 30, 2005, except that Noteholder Claims and General Unsecured Claims
are calculated as of the Petition Date. Estimated percentage recoveries are
also
set forth below for certain Classes of Claims. Estimated percentage recoveries
have been calculated based upon a number of assumptions, including the amount
of
Allowed Claims in each Class and the value ascribed to the New Common Stock
and
the Distribution Cash to be issued under the Plan.
For
certain Classes of Claims, the actual amounts of Allowed Claims could materially
exceed or could be materially less than the estimated amounts shown in the
table
that follows. The Debtors have substantially completed the review and analysis
of all Proofs of Claim filed in the Chapter 11 Case, although as of the date
hereof, to ensure an effective discharge, certain parties have been afforded
the
opportunity to file additional Proofs of Claim. The Debtors do not believe
that
such parties have claims against them, and if such parties file Proofs of Claim,
the Debtors expect that they will object to the claims alleged therein.
Estimated Claim amounts for each Class set forth below are based upon the
Debtors’ review of their books and records and Proofs of Claim filed to date.
With respect to Classes 9 and 10, if the aggregate amount of Allowed General
Unsecured Claims equals $12,402,000, the holders of Allowed Claims in Classes
9
and 10 will receive a distribution having an approximate value equal to 54%
of
such Allowed Claims. If the aggregate amount of Allowed General Unsecured Claims
exceeds $12,402,000, the value of such distributions will be less than that
amount; if the aggregate amount of Allowed General Unsecured Claims is less
than
$12,402,000, the value of such distributions will be more than that amount.
Accordingly, for these reasons, no representation can be or is being made with
respect to whether the estimated percentage recoveries shown in the table below
for Classes 9 and 10 will actually be realized by the holders of Allowed Claims
in those Classes.
The
reorganization value of the Reorganized Debtors is assumed for the purposes
of
the Plan to be between approximately $210 million and $240 million, with a
midpoint value of $225 million. Based upon the reorganization value of the
Debtors' businesses and total net debt of approximately $106.6 million, the
assumed range of equity values for the Reorganized Debtors approximates $103.4
million to $133.4 million, with a midpoint value of $118.4 million. Assuming
a
distribution of 10 million shares upon consummation of the Plan, the imputed
estimate of the range of equity value on a per share basis is $10.34 to $13.34,
with a midpoint value of $11.84.
The
foregoing valuations are based on numerous assumptions including, among other
things, an assumption that the operating results projected for the Reorganized
Debtors will be achieved in all material respects, including revenue growth
and
improvements in operating margins, earnings, and cash flow. The valuation
assumptions also consider, among other matters, (a) market valuation information
concerning certain publicly traded securities of certain other companies that
are considered relevant, (b) certain general economic and industry information
considered relevant to the businesses of the Reorganized Debtors, and (c) such
other investigations and analyses deemed necessary or appropriate.
The
valuation assumptions are not a prediction or reflection of post-Confirmation
trading prices of the New Common Stock. Such securities may trade at
substantially lower or higher prices because of a number of factors, including,
but not limited to, those discussed in Article VII herein. The trading prices
of
securities issued under a plan of reorganization are subject to many
unforeseeable circumstances and therefore cannot be
predicted.
|
Class
Description
|
Treatment
under Plan
|
|
Administrative
Claims
Estimated
Allowed Claims (exclusive of ordinary course operational expenses
and the
DIP Facility Claim and the German Guaranty Claim):
Approximately
$11,906,000
Estimated
DIP Facility Claim:
Approximately
$5,255,000 in
revolving loans
Approximately
$10,493,000 in letters of credit
Estimated
German Guaranty Claim:
Approximately
$6,355,000
|
An
Administrative Claim is a Claim for payment of an administrative
expense
of a kind specified in Section 503(b) or 1114(e)(2) of the Bankruptcy
Code
and entitled to priority pursuant to Section 507(a)(1) of the Bankruptcy
Code, including, but not limited to, (a) the actual, necessary costs
and
expenses incurred after the Petition Date of preserving the Estates
and
operating the businesses of the Debtors, including, without limitation,
wages, salaries, or commissions for services rendered after the
commencement of the Chapter 11 Case, (b) obligations under the Key
Employee Protection Order, (c) Professional Fee Claims, (d) Substantial
Contribution Claims, (e) all fees and charges assessed against the
Estates
under Section 1930 of Title 28 of the United States Code, (f) all
Allowed
Claims for reclamation under Section 546(c)(2)(A) of the Bankruptcy
Code,
(g) Cure payments for executory contracts and unexpired leases that
are
assumed under Section 365 of the Bankruptcy Code, (h) the Claim of
Empire
State Development Corporation pursuant to the Order Under 11 U.S.C.
§
365(a) Authorizing Assumption of Grant Disbursement Agreement with
Empire
State Development Corporation on Negotiated Terms entered on August
24,
2004, (i) the DIP Facility Claim, and (j) the German Guaranty
Claim.
Under
the Plan, except as otherwise provided for therein, and subject to
the
requirements of Sections 12.1 through 12.3 of the Plan, on, or as
soon as
reasonably practicable after, the latest of (i) the Effective Date,
(ii)
the date such Administrative Claim becomes an Allowed Administrative
Claim, or (iii) the date such Administrative Claim becomes payable
pursuant to any agreement between a Debtor and the holder of such
Administrative Claim, the holder of each such Allowed Administrative
Claim
will receive (A) Cash equal to the unpaid portion of such Allowed
Administrative Claim or (B) such different treatment as the applicable
Debtor and such holder agree upon in writing; provided,
however,
that Allowed Administrative Claims with respect to liabilities incurred
by
a Debtor in the ordinary course of business during the Chapter 11
Case
will be paid in the ordinary course of business in accordance with
the
terms and conditions of any agreements relating thereto.
Under
the Plan, the holders of the Allowed DIP Facility Claim will receive,
on
the later of the Effective Date or the date on which such DIP Facility
Claim becomes payable pursuant to any agreement between the Debtors
and
the holders of such DIP Facility Claim (i) Cash equal to the full
amount
of such Allowed DIP Facility Claim or (ii) such different treatment
as the
Debtors and such holders agree upon in writing; provided,
however,
that in respect of any letters of credit issued and undrawn under
the DIP
Facility, unless GECC or an applicable affiliate is a lender under
the
Exit Facility and permits such letters of credit to be rolled over
and
treated as letters of credit issued under the Exit Facility, the
Debtors
will be required to either, with the consent of GECC: (A) cash
collateralize such letters of credit in an amount equal to 103% of
the
undrawn amount of any such letters of credit, (B) return any such
letters
of credit to the applicable fronting bank undrawn and marked “cancelled,”
or (C) provide a “back-to-back” letter of credit to the issuing bank in a
form and issued by an institution reasonably satisfactory to such
issuing
bank, in an amount equal to 103% of the then undrawn amount of such
letters of credit.
Under
the Plan, the holders of the Allowed German Guaranty Claim will receive,
on the later of the Effective Date or the date on which such German
Guaranty Claim becomes payable pursuant to any agreement between
the
Debtors and the holders of such German Guaranty Claim (i) Cash equal
to
the full amount of such Allowed German Guaranty Claim or (ii) such
different treatment as to which the Debtors and such holders agree
upon in
writing.
Administrative
Claims are not classified and are treated as required by the Bankruptcy
Code. The holders of such Claims are not entitled to vote on the
Plan.
Estimated
Percentage Recovery: 100%
|
|
Priority
Tax Claims
Estimated
Allowed Claims:
Approximately
$470,000
|
Priority
Tax Claims are Claims of governmental units for taxes that are entitled
to
priority pursuant to Section 507(a)(8) of the Bankruptcy
Code.
Under
the Plan, each holder of an Allowed Priority Tax Claim will receive,
as
will have been determined by the Debtors in their sole discretion,
either
(i) on, or as soon as reasonably practicable after, the later of
the
Effective Date or the date on which such Claim becomes an Allowed
Claim,
Cash equal to the unpaid portion of such Allowed Priority Tax Claim,
(ii)
such different treatment as the applicable Debtor and such holder
agree
upon in writing, or (iii) deferred Cash payments having a value,
as of the
Effective Date, equal to such Allowed Priority Tax Claim, over a
period
not exceeding six (6) years after the date of assessment of such
Allowed
Priority Tax Claim.
Priority
Tax Claims are not classified and are treated as required by the
Bankruptcy Code. The holders of such Claims are not entitled to vote
on
the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
1, Other Priority Claims
Estimated
Allowed Claims:
Approximately
$0.00
|
Class
1 consists of all Other Priority Claims against the Debtors, which
are
Claims against the Debtors entitled to priority pursuant to Section
507(a)
of the Bankruptcy Code, other than Priority Tax Claims or Administrative
Claims.
The
Plan provides that on, or as soon as reasonably practicable after,
the
latest of (i) the Effective Date, (ii) the date on which such Other
Priority Claim becomes an Allowed Other Priority Claim, or (iii)
the date
on which such Other Priority Claim becomes payable pursuant to any
agreement between the applicable Debtor and the holder of such Other
Priority Claim, each holder of an Allowed Other Priority Claim will
receive, in full satisfaction, settlement, release and discharge
of and in
exchange for such Allowed Other Priority Claim, either (A) Cash equal
to
the unpaid portion of such Allowed Other Priority Claim or (B) such
other
different treatment as the applicable Debtor and such holder agree
upon in
writing.
Other
Priority Claims are Unimpaired. The holders of such Claims are, therefore,
not entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
2, GECC Credit Facility Claim
Estimated
Allowed Claim:
Approximately
$0.00
|
Class
2 consists of the GECC Credit Facility Claim, which is the Claim
existing
under the Credit Agreement dated as of November 12, 2003 (as amended
from
time to time) among FNA, FiberMark Lahnstein GMBH & Co. OHG and
FiberMark Gessner GMBH & Co. OHG as borrowers, certain other credit
parties signatory thereto, General Electric Capital Corporation as
administrative agent, certain lenders signatory thereto, Bayerische
Hypo-
und Vereinsbank AG as fronting lender, and certain other parties
signatory
thereto; and related documents, agreements, and instruments.
Under
the Plan, the holders of the Allowed GECC Credit Facility Claim will
receive, on the later of the Effective Date or the date on which
such GECC
Credit Facility Claim becomes payable pursuant to any agreement between
the Debtors and the holders of such GECC Credit Facility Claim, (i)
Cash
equal to the full amount of such Allowed GECC Credit Facility Claim,
or
(ii) such different treatment as the Debtors and such holders agree
upon
in writing; provided,
however,
that in respect of any letters of credit issued and undrawn under
the
Credit Agreement giving rise to the GECC Credit Facility Claim, unless
GECC or an applicable affiliate is a lender under the Exit Facility
and
permits such letters of credit to be rolled over and treated as letters
of
credit issued under the Exit Facility, the Debtors will be required
to
either, with the consent of GECC: (A) cash collateralize such letters
of
credit in an amount equal to 103% of the undrawn amount of any such
letters of credit, (B) return any such letters of credit to the applicable
fronting bank undrawn and marked “cancelled,” or (C) provide a
“back-to-back” letter of credit to the issuing bank in a form and issued
by an institution reasonably satisfactory to such issuing bank, in
an
amount equal to 103% of the then undrawn amount of such letters of
credit.
The
GECC Credit Facility Claim is Unimpaired. The holder of such Claim
is,
therefore, not entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
3, Convenience Claims
Estimated
Allowed Claims:
Approximately
$811,000
|
Class
3 consists of all Convenience Claims, which are Claims in an amount
equal
to or less than $5,000, including any Claim in an amount greater
than
$5,000 that is reduced to $5,000 by an amended Proof of Claim filed
on or
before the Distribution Record Date, which Claims are not Administrative
Claims, Priority Tax Claims, Other Priority Claims,
GECC Credit Facility Claims,
GECC
Equipment Financing Claims,
Banc One Equipment Financing Claims,
Coated Paper Sale/Leaseback Claims,
Lowville Grant Claims,
Other Secured Claims,
Noteholder Claims,
General Unsecured Claims, Intercompany Claims,
Subordinated Claims,
or
Non-Compensatory Damages Claims.
The
Plan provides that, on, or as soon as reasonably practicable after,
the
later of the Effective Date or the date on which such Claim becomes
an
Allowed Claim, each holder of an Allowed Convenience Claim, will
receive
Cash in an amount equal to the lesser of (i) the Allowed amount of
such
Claim or (ii) $5,000.
Convenience
Claims are Unimpaired. The holders of such Claims are, therefore,
not
entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
4, GECC Equipment Financing Claim
Estimated
Allowed Claim:
Approximately
$993,495 (collateral includes $1 million in an undrawn letter of
credit
that has been included in the Debtors' estimate of the DIP Facility
Claim
in respect of letters of credit)
|
Class
4 consists of the GECC Equipment Financing Claim, which is the Claim
existing under the Master Security Agreement dated as of September
19,
2000 (as amended from time to time) between FiberMark and CIT
Group/Equipment Financing, Inc.; the Schedule of Indebtedness and
Collateral No. 1 dated as of October 25, 2000; and related documents,
agreements, and instruments; all as assigned by CIT Group/Equipment
Financing, Inc. to General Electric Capital Corporation; after application
of adequate protection payments made under the Stipulation Providing
Adequate Protection for Secured Manufacturing Equipment Loan of General
Electric Capital Corporation filed on May 21, 2004, as approved by
order
of the Bankruptcy Court entered on May 28, 2004.
Under
the Plan, the legal, equitable, and contractual rights of the holder
of
the GECC Equipment Financing Claim will be Reinstated in accordance
with
the provisions of Section 1124(2) of the Bankruptcy Code; provided,
however,
that any contractual right that does not pertain to the payment when
due
of principal and interest on the obligation on which such Claim is
based,
including, but not limited to, financial covenant ratios, negative
pledge
covenants, covenants or restrictions on merger or consolidation,
covenants
regarding corporate existence, or covenants prohibiting certain
transactions or actions contemplated by the Plan or conditioning
such
transactions or actions on certain factors, will not be enforceable
as to
any breach that occurred on or prior to the Effective Date or any
breach
determined by reference back to a date preceding the Effective
Date.
The
GECC Equipment Financing Claim is Impaired. The holder of such Claim
is,
therefore, entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
5, Banc One Equipment Financing Claim
Estimated
Allowed Claim:
Approximately
$4,729,000
|
Class
5 consists of the Banc One Equipment Financing Claim, which is the
Claim
of Banc One Corporation existing under the Equipment Financing Agreement
between FiberMark and Jules and Associates, Inc., dated as of December
13,
1999; Schedule 1 thereto dated as of July 5, 2000, Schedule 2 thereto
dated as of September 13, 2000, and Schedule 3 thereto dated as of
December 21, 2000; and related documents, agreements, and instruments;
all
as assigned by Jules and Associates, Inc. to Banc One Corporation;
after
application of adequate protection payments made under the Stipulation
Providing Adequate Protection for Secured Manufacturing Equipment
Loan of
Banc One Leasing Corporation filed on June 25, 2004, as approved
by order
of the Bankruptcy Court entered on July 1, 2004.
The
Plan provides that the legal, equitable, and contractual rights of
the
holder of the Banc One Equipment Financing Claim, including those
relating
to the payment when due of principal and interest on the obligation
on
which such Claim is based and the protection, maintenance, location,
or
insurance of or on the collateral securing such Claim, will be Reinstated
in accordance with the provisions of Section 1124(2) of the Bankruptcy
Code; provided, however, that any contractual right that does not
pertain
to the payment when due of principal and interest or said preservation
of
the collateral, including, but not limited to, contractual rights
pertaining to financial covenant ratios, negative pledge covenants,
covenants or restrictions on merger or consolidation, covenants regarding
corporate existence, or covenants prohibiting certain transactions
or
actions contemplated by the Plan or conditioning such transactions
or
actions on certain factors, will not be enforceable as to any breach
that
occurred on or prior to the Effective Date or any breach determined
by
reference back to a date preceding the Effective Date.
The
Banc One Equipment Financing Claim is Impaired. The holder of such
Claim
is, therefore, entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
6, Coated Paper Sale/Leaseback Claim
Estimated
Allowed Claim:
Approximately
$1,140,000
|
Class
6 consists of the Coated Paper Sale/Leaseback Claim, which is the
Claim
existing under the Project Agreement among FiberMark DSI, Inc. (a
predecessor in interest to FNA), FiberMark, and Coated Paper, LLC
dated as
of October 3, 2002; the Supplemental Agreement between such parties
dated
as of January 29, 2003; and various related documents, agreements,
and
instruments; after application of adequate protection payments made
under
the Stipulation Providing for Post-Petition Adequate Protection or
Real
Property Lease Payments to Coated Paper, LLC filed on June 25, 2004,
as
approved by order of the Bankruptcy Court entered on July 1, 2004,
the
Stipulation Providing for Additional Adequate Protection Payments
to
Coated Paper, LLC Pending Effective Date of Plan filed on February
3,
2005, as approved by order of the Bankruptcy Court entered on February
4,
2005, and the Stipulation Providing for Post-Petition Adequate Protection
or Payment in Lieu of Tax to County of Lewis Industrial Development
Agency
filed on April 19, 2005, as approved by order of the Bankruptcy Court
entered on April 25, 2005.
Under
the Plan, the holder of the Allowed Coated Paper Sale/Leaseback Claim
will
(i) retain the Liens securing such Allowed Claim and (ii) receive
the
remaining amount of such Allowed Claim, with interest at the non-default
contract rate, in monthly Cash payments of the same amount as historically
paid by the Debtors under the documents governing such Allowed Claim,
in
lieu of the final balloon payment otherwise required by such
documents.
The
Coated Paper Sale/Leaseback Claim is Impaired. The holder of such
Claim
is, therefore, entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
7, Lowville Grant Claims
Estimated
Allowed Claims:
Approximately
$0.00 (an estimated $510,000 million in contingent Claims that are
not
expected to become due)
|
Class
7 consists of the Lowville Grant Claims, which are the Claims existing
under the Grant Agreement for CDBG Funds dated as of March 11, 2003
among
FNA as grantee, FiberMark as guarantor, and County of Lewis Industrial
Development Agency as funding agency, providing grant funds of $100,000;
the Grant Agreement dated as of March 11, 2003 between FNA as grantee
and
County of Lewis Industrial Development Agency as funding agency,
providing
grant funds of $250,000; the Grant Agreement for Small Cities CDBG
Funds
dated as of March 11, 2003 among FNA as grantee, FiberMark as guarantor,
and County of Lewis as funding agency, and the associated Security
Agreement dated as of March 11, 2003 between FNA as debtor and County
of
Lewis as secured party, providing grant funds of $750,000; the Grant
Agreement for Empire State Development Funds dated as of October
27, 2003,
between FNA as grantee and County of Lewis Industrial Development
Agency
as funding agency, providing grant funds of $150,000; and the Grant
Agreement for Empire State Development Funds dated as of October
27, 2003,
between FNA as grantee and County of Lewis Industrial Development
Agency
as funding agency, providing grant funds of $250,000.
The
Plan provides that a vote in favor of the Plan by the holder of a
Lowville
Grant Claim will constitute (i) the agreement by such holder that
the
Reorganized Debtors will be obligated to pay such holder’s Claim only if
they fail to maintain requisite levels of employment at their facility
in
Lowville, New York and (ii) the express waiver by such holder of
any other
breach, event of default or other act or omission giving rise to
an
obligation to pay the Claim. Subject to and as modified by such agreement
and waiver, the legal, equitable, and contractual rights of the holder
of
a Lowville Grant Claim voting in favor of the Plan will be Reinstated
in
accordance with the provisions of Section 1124(2) of the Bankruptcy
Code;
provided,
however,
that any contractual right that does not pertain to the payment when
due
of principal and interest on the obligation on which any such Claim
is
based, including, but not limited to, financial covenant ratios,
negative
pledge covenants, covenants or restrictions on merger or consolidation,
covenants regarding corporate existence, or covenants prohibiting
certain
transactions or actions contemplated by the Plan or conditioning
such
transactions or actions on certain factors, will not be enforceable
as to
any breach that occurred on or prior to the Effective Date or any
breach
determined by reference back to a date preceding the Effective
Date.
A
vote against the Plan by the holder of a Lowville Grant Claim will
result
in the treatment of such holder’s Claim as an Other Secured Claim in Class
8 if and to the extent such Claim is a Secured Claim or as a General
Unsecured Claim in Class 10 if and to the extent such Claim is not
a
Secured Claim.
Estimated
Percentage Recovery: Subject to vote.
|
|
Class
8, Other Secured Claims
Estimated
Allowed Claims:
Approximately
$136,000
|
Class
8 consists of Other Secured Claims, which are Secured Claims arising
prior
to the Petition Date against any of the Debtors, other than a GECC
Credit
Facility Claim, a GECC Equipment Financing Claim, a Banc One Equipment
Financing Claim, a Coated Paper Sale/Leaseback Claim. Any Lowville
Grant
Claim that is a Secured Claim will be treated as an Other Secured
Claim if
the holder of such Claim voted against the Plan.
Class
8 contains separate sub-Classes for each Other Secured Claim against
any
of the Debtors. Each sub-Class is deemed to be a separate Class for
all
purposes under the Bankruptcy Code, including for voting
purposes.
The
Plan provides that on the Effective Date, as will have been determined
by
the Debtors in their sole discretion, either (i) the legal, equitable,
and
contractual rights of each holder of an Allowed Other Secured Claim
will
be Reinstated in accordance with the provisions of Section 1124(2)
of the
Bankruptcy Code; provided,
however,
that any contractual right that does not pertain to the payment when
due
of principal and interest on the obligation on which such Claim is
based,
including, but not limited to, financial covenant ratios, negative
pledge
covenants, covenants or restrictions on merger or consolidation,
covenants
regarding corporate existence, or covenants prohibiting certain
transactions or actions contemplated by the Plan or conditioning
such
transactions or actions on certain factors, will not be enforceable
as to
any breach that occurred on or prior to the Effective Date or any
breach
determined by reference back to a date preceding the Effective Date;
(ii)
each holder of an Allowed Other Secured Claim will (A) retain the
Liens
securing such Allowed Other Secured Claim and (B) receive deferred
Cash
payments totaling at least the amount of such Allowed Other Secured
Claim,
of a value, as of the Effective Date, of at least the value of such
holder’s interest in the Estate’s interest in such property; (iii) the
collateral securing such Allowed Other Secured Claim will be surrendered
to the holder of such Allowed Other Secured Claim; or (iv) each holder
of
an Allowed Other Secured Claim will be paid in full on the Effective
Date.
Other
Secured Claims are Impaired. The holders of such Claims are, therefore,
entitled to vote on the Plan.
Estimated
Percentage Recovery: 100%
|
|
Class
9, Noteholder Claims
Estimated
Allowed Claims:
Approximately
$345,629,166.67
|
Class
9 consists of Noteholder Claims, which are Claims arising from or
relating
to the FiberMark Notes, other than any Indenture Trustee
Expenses.
Under
the Plan, each holder of an Allowed Noteholder Claim will receive
on the
Distribution Date, its Pro Rata share (together with all other holders
of
Allowed Noteholder Claims and all holders of Allowed General Unsecured
Claims, with reserves for Disputed General Unsecured Claims to the
extent
required by Section 9.3 of the Plan) of (i) 10 million shares of
the New
Common Stock to be authorized and issued by Reorganized FiberMark
as of
the Effective Date pursuant to the Plan, subject to dilution as set
forth
in Sections 6.5(b) and 9.3(a) of the Plan, and (ii) Distribution
Cash in
the aggregate amount equal to $75 million.
Noteholder
Claims are Impaired. The holders of such Claims are, therefore, entitled
to vote on the Plan.
Estimated
Percentage Recovery: 54%
|
|
Class
10, General Unsecured Claims
Estimated
Allowed Claims:
Approximately
$12,402,000
(The
actual amounts of Allowed Claims for Class 10 could materially exceed
or
could be materially less than the estimated amounts shown
herein).
|
Class
10 consists of General Unsecured Claims, which are Claims in an amount
greater than $5,000 that
are not Administrative Claims, Priority Tax Claims, Other Priority
Claims,
GECC Credit Facility Claims, GECC Equipment Financing Claims,
Banc One Equipment Financing Claims,
Coated Paper Sale/Leaseback Claims,
Lowville
Grant Claims,
Convenience Claims, Other Secured Claims,
Noteholder Claims,
Intercompany Claims,
Subordinated Claims,
or
Non-Compensatory Damages Claims. This definition specifically includes,
without limitation, rejection damages Claims, non-priority employee
Claims, non-priority tax Claims, environmental Claims, indemnification
Claims, trade vendor Claims, customer Claims, escheat Claims, and
litigation Claims.
The
Plan provides that each holder of an Allowed General Unsecured Claim
will
receive on the Distribution Date its Pro Rata share (together with
all
other holders of Allowed General Unsecured Claims and all holders
of
Allowed Noteholder Claims, with reserves for Disputed General Unsecured
Claims to the extent required by Section 9.3 of the Plan) of (i)
10
million shares of the New Common Stock to be authorized and issued
by
Reorganized FiberMark as of the Effective Date pursuant to the Plan,
subject to dilution as set forth in Sections 6.5(b) and 9.3(a) of
the
Plan, and (ii) Distribution Cash in the aggregate principal amount
equal
to $75 million.
General
Unsecured Claims are Impaired. The holders of such Claims are, therefore,
entitled to vote on the Plan.
Estimated
Percentage Recovery: 54%
|
|
Class
11, Intercompany Claims
Estimated
Allowed Claims:
Approximately
$158,176,029.97
|
Class
11 consists of Intercompany Claims, which are Claims arising prior
to the
Petition Date against any of the Debtors by another Debtor. Intercompany
Claims do not include Claims against any of the Debtors by a non-Debtor
subsidiary or affiliate of a Debtor, which Claims will be treated
as
General Unsecured Claims.
Under
the Plan, no holder of an Intercompany Claim will receive or retain
any
property of the Debtors under the Plan on account of such Claim;
provided,
however,
that, if necessary for tax planning purposes, Intercompany Claims
may be
capitalized, satisfied, or preserved either directly or indirectly
or in
whole or part. Any Intercompany Claim, or portion thereof, that is
not so
capitalized, satisfied, or preserved will be discharged as of the
Effective Date.
Holders
of Intercompany Claims are Impaired and will receive no distribution
under
the Plan. The holders of such Claims are, therefore, deemed to have
rejected the Plan and are not entitled to vote on the Plan.
Estimated
Percentage Recovery: 0%
|
|
Class
12, Subordinated Claims
Estimated
Allowed Claims:
Approximately
$0.00
|
Class
12 consists of Subordinated Claims, which are Claims that are subordinated
pursuant to Sections 510(b) or (c) of the Bankruptcy Code, which
will
include any Claim arising from the rescission of a purchase or sale
of any
Old Security, any Claim for damages arising from the purchase or
sale of
an Old Security, or any Claim for reimbursement, contribution, or
indemnification on account of any such Claim.
Under
the Plan, holders of Subordinated Claims will not receive or retain
any
property of the Debtors on account of such Claims. All Subordinated
Claims
will be discharged as of the Effective Date.
Subordinated
Claims are Impaired and will receive no distribution under the Plan.
The
holders of such Claims are, therefore, deemed to have rejected the
Plan
and are not entitled to vote on the Plan.
Estimated
Percentage Recovery: 0%
|
|
Class
13, Non-Compensatory Damages Claims
Estimated
Allowed Claims:
Approximately
$0.00
|
Class
13 consists of Non-Compensatory Damages Claims, which are Claims
against
any of the Debtors for any fine, penalty, or forfeiture, or multiple,
exemplary, or punitive damages, to the extent that such fine, penalty,
forfeiture, or damage is not compensation for actual pecuniary loss
suffered by the holder of such Claim, including any such claim based
upon,
arising from, or relating to any cause of action whatsoever (including,
without limitation, violation of law, personal injury, or wrongful
death,
whether secured or unsecured, liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or
unforeseen, then existing or thereafter arising in law, equity or
otherwise). The term does not include any Claim that might otherwise
constitute a Non-Compensatory Damages Claim but for a Final Order
allowing
such Claim to be an Administrative Claim, DIP Facility Claim, Priority
Tax
Claim, Other Priority Claim, Convenience Claim, GECC Credit Agreement
Claim, Other Secured Claim, General Unsecured Claim, Noteholder Claim,
Intercompany Claim, or Subordinated Claim.
Under
the Plan, the holders of Non-Compensatory Damages Claims will not
receive
or retain any property on account of such Claims. All Non-Compensatory
Damages Claims will be discharged as of the Effective Date.
Non-Compensatory
Damages Claims are Impaired and will receive no distribution under
the
Plan. The holders of such Claims are, therefore, deemed to have rejected
the Plan and are not entitled to vote on the Plan.
Estimated
Percentage Recovery: 0%
|
|
Class
14, Subsidiary Interests
|
Class
14 consists of Subsidiary Interests, which are all of the issued
and
outstanding shares of stock or membership interests of the Subsidiary
Debtors as
of the Petition Date, which stock and interests are owned by
FiberMark.
For
the deemed benefit of the holders of the New Common Stock, FiberMark,
Inc.
will retain its equity interests in FNA and FIH.
Subsidiary
Interests are Unimpaired. The holders of such Interests are, therefore,
not entitled to vote on the Plan.
|
|
Class
15, FiberMark Interests
|
Class
15 consists of FiberMark Interests, which are all equity interests
in
FiberMark, including, without limitation, any preferred stock, the
Old
FiberMark Common Stock, the Old FiberMark Stock Options, together
with any
warrants, conversion rights, rights of first refusal, or other rights,
contractual or otherwise, to acquire or receive any stock or other
equity
ownership interests in FiberMark, and any contracts, subscriptions,
commitments, or agreements pursuant to which a party was or could
have
been entitled to receive shares, securities, or other ownership interests
in FiberMark prior to the Effective Date.
Under
the Plan, all FiberMark Interests of any kind, including, without
limitation, the Old FiberMark Common Stock, the FiberMark Options,
or any
warrants or other agreements to acquire the same (whether or not
arising
under or in connection with any employment agreement), will be cancelled
as of the Effective Date and the holders thereof will not receive
or
retain any property under the Plan on account of such
Interests.
FiberMark
Interests are Impaired and will receive no distribution under the
Plan.
The holders of such Interests are, therefore, deemed to have rejected
the
Plan and are not entitled to vote on the Plan.
Estimated
Percentage Recovery: 0%
|
THE
DEBTORS BELIEVE THAT THE PLAN PROVIDES THE BEST RECOVERIES POSSIBLE FOR HOLDERS
OF CLAIMS AGAINST THE DEBTORS AND THUS STRONGLY RECOMMEND
THAT YOU
VOTE TO ACCEPT
THE
PLAN.
| III. |
PLAN
VOTING INSTRUCTIONS AND
PROCEDURES
|
| A. |
Notice
to Holders of Claims and
Interests
|
Approval
by the Bankruptcy Court of this Disclosure Statement means that the Bankruptcy
Court has found that this Disclosure Statement contains information of a kind
and in sufficient and adequate detail to enable holders of Claims to make an
informed judgment about whether to accept or reject the Plan. THE BANKRUPTCY
COURT’S APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE EITHER A
GUARANTEE OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN
OR
THEREIN OR AN ENDORSEMENT OF THE PLAN BY THE BANKRUPTCY COURT.
IF
THE
PLAN IS APPROVED BY THE REQUISITE VOTE OF HOLDERS OF CLAIMS ENTITLED TO VOTE
AND
IS SUBSEQUENTLY CONFIRMED BY THE BANKRUPTCY COURT, THE PLAN WILL BIND ALL
HOLDERS OF CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS, WHETHER OR NOT THEY
WERE ENTITLED TO VOTE OR DID VOTE ON THE PLAN AND WHETHER OR NOT THEY RECEIVE
OR
RETAIN ANY DISTRIBUTIONS OR PROPERTY UNDER THE PLAN. THUS ALL HOLDERS OF CLAIMS
AGAINST THE DEBTORS ENTITLED TO VOTE ARE ENCOURAGED TO READ THIS DISCLOSURE
STATEMENT AND ITS APPENDICES AND EXHIBITS CAREFULLY AND IN THEIR ENTIRETY BEFORE
DECIDING TO VOTE TO EITHER ACCEPT OR REJECT THE PLAN.
THIS
DISCLOSURE STATEMENT AND THE PLAN ARE THE ONLY DOCUMENTS AUTHORIZED BY THE
BANKRUPTCY COURT TO BE USED IN CONNECTION WITH THE SOLICITATION OF VOTES TO
ACCEPT OR REJECT THE PLAN. No solicitation of votes may be made except after
distribution of this Disclosure Statement, and no person has been authorized
to
distribute any information concerning the Debtors other than the information
contained herein or therein. No such information should be relied upon in making
a determination to vote to accept or reject the Plan.
Pursuant
to the provisions of the Bankruptcy Code, only holders of claims and interests
in classes that are (a) treated as “impaired” by a plan of reorganization and
(b) entitled to receive a distribution under such plan are entitled to vote
on
the plan. In the Chapter 11 Case, under the Plan, only holders of Claims
in
Classes 4, 5, 6, 7, 8, 9, and 10 are entitled to vote on the Plan. Claims and
Interests in other Classes are either Unimpaired and their holders are deemed
to
have accepted the Plan, or they are receiving no distributions under the Plan
and their holders are deemed to have rejected the Plan.
Notwithstanding
the foregoing, only holders of Allowed Claims in the voting Classes are entitled
to vote on the Plan. A Claim which is unliquidated, contingent, or disputed
is
not an Allowed Claim and is, therefore, not entitled to vote, unless and until
the amount is estimated or determined, or the dispute is determined, resolved,
or adjudicated in the Bankruptcy Court or another court of competent
jurisdiction, or pursuant to agreement with the Debtors. However, the Bankruptcy
Court may deem a contingent, unliquidated, or disputed Claim to be allowed
on a
provisional basis, for purposes only of voting on the Plan. If your Claim is
contingent, unliquidated, or disputed, you will receive instructions for seeking
temporary allowance of your Claim for voting purposes and it will be your
responsibility to obtain an order provisionally allowing your
Claim.
Holders
of Allowed Claims in the voting Classes may vote on the Plan only if they are
holders as of __________, 2005, at 5:00 p.m. Eastern Time, the voting record
date established by the Bankruptcy Court (the “Voting Record
Date”).
| C. |
Solicitation
Materials
|
In
soliciting votes for the Plan pursuant to this Disclosure Statement, the
Debtors, through their voting agent Logan & Company, Inc. (the “Voting
Agent” or “Logan”), will send to holders of Claims who are entitled to vote
copies of (a) the Disclosure Statement and Plan, (b) the notice of, among other
things, (i) the date, time, and place of the hearing to consider confirmation
of
the Plan and related matters and (ii) the deadline for filing objections to
confirmation of the Plan (the “Confirmation Hearing Notice”), (c) one or more
ballots (and return envelopes) to be used in voting to accept or to reject
the
Plan, and (d) other materials as authorized by the Bankruptcy
Court.
If
you
are the holder of a Claim who is entitled to vote, but you did not receive
a
ballot, or if your ballot is damaged or illegible, or if you have any questions
concerning voting procedures, you may contact the following:
LOGAN
& COMPANY, INC.
546
VALLEY ROAD
UPPER
MONTCLAIR, NEW JERSEY 07043
TELEPHONE:
(973) 509-3190
ATTENTION:
MARITZA
MARTINEZ
SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP
FOUR
TIMES SQUARE
NEW
YORK,
NEW YORK 10036
TELEPHONE:
212-735-4065
ATTENTION:
LUISA BONACHEA
| D. |
Voting
Procedures, Ballots, and Voting
Deadline
|
After
carefully reviewing the Plan, this Disclosure Statement, and the detailed
instructions accompanying your ballot, you are asked to indicate your acceptance
or rejection of the Plan by voting in favor of or against the Plan on the
accompanying ballot. You should complete and sign your original ballot (copies
will not be accepted) and return it as instructed in the envelope
provided.
Each
ballot has been coded to reflect the Class of Claims it represents. Accordingly,
in voting to accept or reject the Plan, you must use only the coded ballot
or
ballots sent to you with this Disclosure Statement.
With
respect to Noteholder Claims, special voting instructions apply to beneficial
owners, nominees of beneficial owners, and securities clearing agencies. Those
special instructions will accompany the ballot provided to holders of Noteholder
Claims. Those instructions may be different from the general instructions
contained herein. In the event of an inconsistency, the special instructions
that accompany the ballot should be followed.
IN
ORDER
FOR YOUR VOTE TO BE COUNTED, YOUR BALLOT MUST BE PROPERLY COMPLETED AS SET
FORTH
ABOVE AND IN ACCORDANCE WITH THE VOTING INSTRUCTIONS ON THE BALLOT AND
RECEIVED
NO LATER
THAN ____________, 2005, AT 4:00 P.M. EASTERN TIME (THE “VOTING DEADLINE”) BY
THE FOLLOWING:
LOGAN
& COMPANY, INC.
ATTENTION:
FIBERMARK, INC., ET AL.
546
VALLEY ROAD
UPPER
MONTCLAIR, NEW JERSEY 07043
UNLESS
OTHERWISE PROVIDED IN THE INSTRUCTIONS ACCOMPANYING THE BALLOTS, FAXED BALLOTS
WILL NOT BE ACCEPTED. BALLOTS THAT ARE RECEIVED BUT NOT SIGNED WILL NOT BE
COUNTED. BALLOTS THAT ARE SIGNED BUT DO NOT SPECIFY WHETHER THE HOLDER ACCEPTS
OR REJECTS THE PLAN WILL BE COUNTED AS AN ACCEPTANCE. DO NOT RETURN ANY STOCK
CERTIFICATES, DEBT INSTRUMENTS, OR OTHER EVIDENCES OF YOUR CLAIM WITH YOUR
BALLOT.
If
you
have any questions about (a) the procedure for voting your Claim, (b) the packet
of materials that you have received, or (c) the amount of your Claim, or if
you
wish to obtain, at your own expense unless otherwise specifically required
by
Bankruptcy Rule 3017(d), an additional copy of the Plan, this Disclosure
Statement, or any appendices or exhibits to such documents, please
contact:
SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP
FOUR
TIMES SQUARE
NEW
YORK,
NEW YORK 10036
TELEPHONE:
(212) 735-4065
ATTENTION:
LUISA BONACHEA
For
further information and general instruction on voting to accept or reject the
Plan, see Article XII of this Disclosure Statement and the instructions
accompanying your ballot.
THE
DEBTORS URGE ALL HOLDERS OF CLAIMS ENTITLED TO VOTE TO EXERCISE THEIR RIGHT
BY
COMPLETING THEIR BALLOTS AND RETURNING THEM BY THE VOTING DEADLINE.
| E. |
Special
Notice Concerning Voting
|
1. Releases
with Respect to Holders of Claims that Vote to Accept the Plan
| (a) |
Releases
from Holders of Claims
|
Pursuant
to the Plan, each holder of a Claim that affirmatively votes in favor of the
Plan will be deemed to forever release, waive, and discharge all claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of
action, and liabilities whatsoever (other than for fraud, willful misconduct,
or
gross negligence) against the directors, officers, or employees of any of the
Debtors serving during the pendency of the Chapter 11 Case (collectively, the
“Claimholder Releasees”), in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights under the Plan and the
contracts, instruments, releases, indentures, other agreements, or documents
delivered thereunder), whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then existing
or
thereunder arising, in law, equity, or otherwise, that are based in whole or
part on any act, omission, transaction, event, or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan.
Creditors
may have independent claims against one or more of the Claimholder Releasees.
The Debtors have no actual knowledge of any such claims, but cannot warrant
to
creditors that they do not exist. Because a vote in favor of the Plan will
release whatever creditor claims do exist, if any, against Claimholder
Releasees, creditors should consult their own counsel for information and advice
as to whether any such claims exist and the value or merit of any such claims.
If a creditor does not wish to give the releases contemplated under the Plan,
then the creditor should vote to reject the Plan or abstain from voting on
the
Plan. Any party in interest may object to the proposed third party release
provisions. The Debtors have the burden of proof at the Confirmation Hearing
to
satisfy the applicable standards for third party releases.
| (b) |
Releases
in Favor of Holders of Claims
|
The
foregoing third party release is reciprocal. The Plan provides that each of
the
Claimholder Releasees will be deemed to forever release, waive, and discharge
any claims, obligations, suits, judgments, damages, demands, debts, rights,
causes of action, and liabilities whatsoever (other than for fraud, willful
misconduct, or gross negligence) taking place on or prior to the Effective
Date
in any way relating to the Debtors or the Reorganized Debtors, the Chapter
11
Case, or the Plan, that such Claimholder Releasees may hold in their individual
capacities against each holder of a Claim that affirmatively votes in favor
of
the Plan. This provision of the Plan will not constitute, and will not be deemed
to effect, a release by the Debtors or the Reorganized Debtors of any claims,
obligations, suits, judgments, damages, demands, debts, rights, causes of
action, and liabilities held by the Debtors or the Reorganized
Debtors.
| F. |
Confirmation
Hearing and Deadline for Objections to
Confirmation
|
Pursuant
to Section 1128 of the Bankruptcy Code and Bankruptcy Rule 3017(c), the
Bankruptcy Court has scheduled a Confirmation Hearing for __________, 2005,
at
____ _.m. Eastern Time. The Confirmation Hearing may be adjourned from time
to
time by the Bankruptcy Court without further notice except for the announcement
of the adjournment date made at the Confirmation Hearing or at any subsequent
adjourned Confirmation Hearing. Objections to Confirmation of the Plan must
be
made in writing and must specify in detail the name and address of the objector,
all grounds for the objection, and the amount and Class of the Claim. Any such
objection must be filed with the Bankruptcy Court on or before __________,
2005,
at 4:00 p.m. Eastern Time. Objections to Confirmation of the Plan are governed
by Bankruptcy Rule 9014.
| IV. |
GENERAL
INFORMATION CONCERNING THE DEBTORS
|
| A. |
Overview
of Business Operations
|
FiberMark
is the publicly-owned parent of a family of companies (collectively, the
“Company”) organized and operating in the United States under the auspices of
the Debtors and in Europe under the auspices of non-Debtor foreign direct and
indirect subsidiaries. The Company is a leading producer of specialty
fiber-based materials meeting industrial and consumer needs worldwide. Through
its technical capabilities, innovation, and a service orientation, the Company
holds leadership positions in many of its primary markets. Using its versatile
manufacturing capabilities -- comprising papermaking, synthetic/nonwoven
material technology, saturating, coating, and other finishing processes --
the
Company generates products such as filter media; base materials for specialty
tapes, electrical and graphic arts applications, wallcovering, and sandpaper;
and covering materials for office and school supplies, book
production/publishing, printing, and premium packaging.
The
Company manufactures its engineered materials using a wide range of fibers
and
raw materials, including wood pulp, recycled paper, cotton, glass, polyester,
and other synthetic fibers. The Company’s products, sold in roll or sheet form,
range from lighter-weight papers to high-density pressboards, often with high
value-added finishes processes. The Company sells most of its products directly
to customers through its internal sales force. These customers, often called
converters, manufacture components or finished products such as automotive
oil
filters, specialized masking tapes, electrical transformers, books, and
pressboard ring binders. In some markets, the Company sells its materials
through distributors or paper merchants.
As
a
specialty fiber-based materials producer and marketer, the Company manufactures
and converts specialty papers, pressboards, nonwoven materials, and combinations
of various materials, operating in two segments: North American operations
and
German operations, consistent with the internal management structure for the
Company’s business. The North American operations, which include the Debtors and
the Debtors' affiliates in the United Kingdom, France, and Hong Kong, are
focused on publishing and packaging, technical specialties, and office products,
and accounted for 52% of the Company’s consolidated revenue during the year
ended December 31, 2004. The German operations, which include the Debtors’
affiliates in Germany, are focused on the production of technical specialties,
including filter media, masking tape base, wallcovering base, printing
substrates, and abrasive base materials, and accounted for 48% of the Company’s
consolidated revenue during the year ended December 31, 2004.
| B. |
Organizational
Structure
|
The
Company’s corporate structure is reflected in Appendix C attached hereto.
FiberMark’s direct subsidiaries include FNA and FIH, which are Debtors in the
Chapter 11 Case, and FiberMark Red Bridge International Ltd., FiberMark SARL,
Specialty Paperboard (Hong Kong) Ltd., and FiberMark Beteiligungs GmbH, which
are not Debtors in the Chapter 11 Case. FiberMark’s indirect subsidiaries are
owned primarily through FIH and are not Debtors in the Chapter 11 Case. They
include FiberMark Lahnstein GmbH & Co., OHG and FiberMark Gessner GmbH &
Co., OHG, through which the Company’s German operations are
conducted.
The
Company was created in 1989 through a management-led buyout of the Specialty
Paperboard division of Boise Cascade Corporation, resulting in the establishment
of Specialty Paperboard, Inc., the predecessor in interest to FiberMark. The
Company’s initial manufacturing operations were conducted at facilities acquired
in Brattleboro, Vermont; Beaver Falls, New York; and Sheldon Springs, Vermont.
On March 27, 1997, Specialty Paperboard, Inc. changed its name to FiberMark,
Inc.
Since
its
inception, the Company has undertaken a series of acquisitions, divestitures,
and consolidations designed to broaden and deepen its product and market
capabilities, lower its manufacturing costs, lessen its dependence on certain
raw materials, and improve its operational flexibility. Such acquisitions,
divestitures, and consolidations include the following:
| · |
On
January 30, 1991, the Company agreed to sell to Rock-Tenn Company
its
Sheldon Springs, Vermont facility, known as the Missisquoi
mill.
|
| · |
On
June 30, 1994, the Company acquired substantially all of the assets
and
liabilities of the Endura Products division of W.R. Grace & Co., which
was engaged in the manufacture, conversion, saturation, and coating
of
specialty papers. The Company acquired facilities in Quakertown,
Pennsylvania and Owensboro, Kentucky as a result of this
transaction.
|
| · |
On
March 22, 1995, the Company sold the assets of its Lewis Mill located
in
Beaver Falls, New York and its gasket business to Armstrong World
Industries Inc.
|
| · |
On
October 31, 1996, the Company acquired all of the outstanding stock
of CPG
Investors Inc., which was the operator of five paper mills and the
manufacturer of a diverse portfolio of specialty fiber-based products
for
industrial and technical markets. As a result of this transaction,
the
Company acquired facilities in Fitchburg, Massachusetts; Warren Glen,
New
Jersey; Hughesville, New Jersey; Richmond, Virginia; and Rochester,
Michigan.
|
| · |
On
October 31, 1996, the Company acquired all of the outstanding stock
of
Arcon Holdings, which was the operator of a converting facility and
the
manufacturer of colored binding and stripping tapes and edge cover
materials sold primarily into the office products, checkbook, and
book
binding markets. The converting facility, located on leased property
in
Oceanside, New York, was consolidated with other operations of the
Company
during the fourth quarter of 1997.
|
| · |
On
November 1, 1996, the Company sold to Thomas Tape Co., Ltd. assets
previously owned by Arcon Coating Mills, Inc. (“Arcon”) that were used
exclusively in the operation of, or related exclusively to, Arcon's
Thomas
Tape Division. Among the assets sold to Thomas Tape Co., Ltd. was
a
manufacturing site in Springfield, Ohio.
|
| · |
On
November 19, 1997, the Company announced its intention to close its
Owensboro, Kentucky facility and consolidate production demands with
several other of its mills. The Owensboro mill was closed on January
14,
1998.
|
| · |
Effective
January 1, 1998, the Company acquired Steinbeis Gessner GmbH, a leading
producer of specialty fiber-based materials sold into the filtration,
technical specialties, and durable specialties markets, which is
now known
as FiberMark Gessner GmbH & Co., OHG.
|
| · |
On
November 4, 1998, the Company announced plans to cease operations
at the
latex mill in Beaver Falls, New York facility. The Company closed
the
facility on January 29, 1999, and subsequently sold it to LTX Fibre
Corporation on December 13, 2001.
|
| · |
Effective
August 1, 1999, the Company acquired Papierfabrik Lahnstein, GmbH,
a
leading European manufacturer of specialty papers and nonwoven materials
used for wallcoverings, security papers, self-adhesive labels, and
flooring overlays, which is now known as FiberMark Lahnstein GmbH
&
Co., OHG.
|
| · |
On
August 1, 1999, the Company initiated a project to install a new
paper
machine at its Warren Glen, New Jersey
facility.
|
| · |
On
September 1, 2000, the Company entered into an agreement with Ahlstrom
Paper Group to sell certain filter media production technology and
equipment and a portion of the filter media volume manufactured at
the
Richmond, Virginia facility. The Company completed the transfer of
the
remaining volume at the Richmond facility to other facilities and
closed
the Richmond facility in June 2001.
|
| · |
On
April 18, 2001, the Company acquired Rexam DSI, a leading global
manufacturer of specialty decorative covering materials serving the
publishing, stationery, and premium packaging markets, with a focus
on
latex-saturated paper products. As a result of this transaction,
the
Company acquired facilities in Lowville, New York; Brownville, New
York;
West Springfield, Massachusetts; Johnston, Rhode Island; Reading,
Pennsylvania; South Hadley, Massachusetts; and Bolton,
England.
|
| · |
During
the fourth quarter of 2001, the Company ceased operations at its
Fitchburg, Massachusetts facility.
|
| · |
On
September 17, 2001, the Company also sold the balance of it engine
filter
media business and equipment to Ahlstrom Corporation and ceased operations
at its Rochester, Michigan facility in the second quarter of
2002.
|
| · |
On
December 31, 2002, the Company concluded a series of transactions
with
Ahlstrom Corp., pursuant to which it sold to Ahlstrom most of its
North
American industrial filter media business and its German disposable
nonwoven tablecloth business and purchased from Ahlstrom a vacuum
bag
filter media business.
|
| · |
On
June 15, 2004, the Company obtained permission from the Bankruptcy
Court
to continue its efforts to sell the following idle facilities: its
hydroelectric power facility in West Springfield, Massachusetts;
its paper
mill in Rochester, Michigan; and its paper coating/converting facility
in
Johnston, Rhode Island. The three sale transactions have since
closed.
|
| D. |
North
American Operations
|
The
Company’s North American operations consist of seven production sites (four
paper mills and three converting operations) in the northeastern United States,
owned by the Debtors, and one converting operation in the United Kingdom, owned
by non-Debtor FiberMark Red Bridge International Ltd. Additionally, the Company
has a customer service/administrative site in South Hadley, Massachusetts,
and a
technical center in West Springfield, Massachusetts. The Company’s corporate
headquarters and one production site are located in Brattleboro, Vermont.
A
significant portion of the Company’s North American papermaking operations is
used to supply its converting operations with base materials. The remainder
of
the Company’s North American paper machine production and most of its converting
production is sold to customers, typically manufacturers known as converters,
with a small portion sold through agents and distributors. The majority of
the
Company’s North American markets and product lines are mature, serving niche
markets. In some markets, the Company has experienced structural revenue losses
tied to product substitutions, including technology-based products, plastics,
and lower-quality materials.
As
stated
above, the Company’s North American operations are focused on three primary
product families: publishing and packaging, technical specialties, and office
products. A description of each product family follows.
1. Publishing
and Packaging
Publishing
and packaging is the largest product family within the Company’s North American
operations, representing 42% of 2004 North American net sales. This product
group is primarily derived from the Company’s April 2001 acquisition of Rexam
DSI. The Company’s covering materials are predominantly used in the book
publishing and luxury packaging industries. The Company adds multiple coatings
and embossing patterns to impart a full range of decorative treatments to its
latex-saturated decorative covering materials. The Company’s colored saturated
products are sold under a variety of trade names, including Kivar®, Skivertex®,
and Lexotone®, which are well-known worldwide within the Company’s markets,
particularly in publishing. In graphic white saturated grades, the Company
competes in the higher end segments of the book cover and photo/scrapbook album
markets. The Company’s Kivar Performa Type 2 is a recognized, premier brand for
use in textbook covers, and is specified by a majority of state governments
in
the United States. The Company’s United Kingdom converting operation markets a
line of coated cloth materials, specialty papers, nonwoven materials, and
ancillary products to the bookbinding/book publishing, packaging, and security
markets. These products are marketed under the umbrella of the FiberMark Red
Bridge name, and include products such as Arbelave®, Library Buckram, and
Balmoral®.
The
Company has developed some niche markets for its latex-saturated products in
applications such as wallpaper, due to competitive advantages related to
environmental impact, ink receptivity, and durability. The customer base of
the
publishing and packaging product family tends to be quite diverse, consisting
of
leading high-end publishing, printing and packaging companies. The following
chart summarizes the decorative covering materials the Company produces to
serve
these niche markets and typical customer categories:
|
Materials/Products
|
End
Products/Markets
|
Typical
Customers
|
|
Book
Publishing and Premium Packaging Markets
|
|
|
· Colored
saturated paper
•
Lightweight
•
Heavyweight
· Graphic
white saturated paper
· Cloth
covering materials
· Saturated
base
· Bonded
leather
|
· Covering
materials for hardbound books (elementary/high school textbooks,
photo
albums, scrapbooks, and sample books)
· Self-supporting
covers for softbound books
· Premium
packaging coverings (luxury goods and media, such as DVD and CD
sets)
· Menus
|
· Leading
publishers/printers
· Manufacturers/converters
· Specialty
distributors and agents
|
|
Other
Decorative Specialties
|
|
|
· Latex-saturated
base: white and color
|
· Wallcovering
· Binding
materials, jeans labels, and game boards
|
|
The
Company’s direct competitors in the publishing and packaging markets include
Industrial Coatings Group, Inc., Ecological Fibers, Inc., Monadnock Paper Mills,
Inc., Guarro, an Arjo Wiggins subsidiary (division of WORMS & Cie.), and BN
International B.V. These companies compete in different geographic markets
and
specific publishing niches. In both publishing and packaging, the Company
competes with decorative materials including commodity papers (such as colored
kraft), other decorative papers and nonwoven materials, vinyl, vinyl/paper
combinations, coated cloth, bonded leather, and premium materials such as wood,
metal and leather. In the U.S. wallcovering market, the Company competes
primarily with other substrate manufacturers such as Monadnock Paper Mills,
Inc.
and producers of vinyl, paper-based wallcovering, and nonwoven materials.
The
Company manufactures paper-based materials at its facilities in Warren Glen
and
Hughesville, New Jersey; Brownville, New York; and Brattleboro, Vermont. The
Company’s converting operations purchase base paper from these facilities, and
cloth from its United Kingdom converting operation in Bolton, England. The
Company also purchases cloth from third-party sources, particularly for use
by
its United Kingdom converting facility. The Company’s converting facilities in
Lowville, New York; Quakertown, Pennsylvania; Reading, Pennsylvania; and Bolton,
England can latex-saturate, coat, emboss, and apply other finishes to its base
materials to create a wide array of decorative covering materials.
2. Technical
Specialties
Technical
specialties represented 23% of the net sales from the Company’s 2004 North
American operations. The technical specialties product family serves the most
diverse range of markets in the Company’s North American operations with a wide
array of products.
The
Company’s primary products, detailed below, are base materials used in saturated
masking tapes, matboard for picture framing, and electrical insulation materials
for transformers. These materials may be sold in raw paper form or may be
saturated and/or coated.
|
Materials/Products
|
End
Products/Markets
|
Typical
Customers
|
|
Tape
Substrates
|
|
· Base
for masking tape and other pressure sensitive tapes
•
Raw
•
Saturated
|
· Masking
tape (general purposes and painting aid)
•
Automotive OEM and repair
•
Building construction/renovation
•
Carrier and bandoliering materials
•
Medical (first aid; indicator)
|
· Pressure
sensitive (and diversified) tape manufacturers/ converters
· Electronic
components manufacturers
|
|
Electrical/Electronics
|
|
· Insulating
base
· Electronic
component carrier material
|
· Electrical
distribution transformers
· Chips
and other electronic components manufacturing
|
· Manufacturers
of electrical transformer components
· Manufacturers
of chips and other electronic components
|
|
Graphic
Arts/Specialty Printing
|
|
· Archival
quality, acid free paper and boards; cover materials for storing,
presenting information, or materials
|
· Matboard
for picture mounting/framing
· Archival
filing and storage products
|
· Manufacturers
of mounting and framing supplies
· Manufacturers
of conservation storage and presentation supplies
|
|
· Security
paper
|
· Identity
cards/materials and tickets
|
· Specialty
security/ticket manufacturers/printers
|
|
Home/Commercial
|
|
· Abrasive
backing material
|
· Sandpaper:
hand and machine sanding
|
· Coated
abrasives manufacturers
|
|
· Latex-treated
material
|
· Wallboard
joining
|
· Drywall
materials manufacturers
|
|
· Label
base: synthetic and imitation leather
|
· Labels
for seat belts, infant car seats, and jeans
|
· Label
manufacturers/converters
|
|
Commercial/Industrial
|
|
· Wet
strength
|
· Industrial
process
|
· Specialty
distributors
|
|
· Absorbent
materials
|
· Blotter;
humidity indicator, battery fabrication process
|
· Specialty
distributors and manufacturers
|
The
Company’s competitors that serve various technical specialties markets include a
mix of large integrated manufacturers and smaller independent companies, such
as
Arjo Wiggins (division of WORMS & Cie.), International Paper Co., Brownville
Specialty Paper Products Inc., Crocker Technical Papers, Inc., FiberComposites
(division of Ahlstrom Corp.), Kimberly Clark Corp., MeadWestvaco Corp., and
Smurfit Munksjo AB. In some of its niche markets, the Company competes with
various small competitors, typically none of which has a dominant market
position. In many product lines, manufacturers of substitute materials, such
as
polyethylene or vinyl, are also considered competitors.
The
Company manufactures the base technical specialties materials in its Warren
Glen
and Hughesville, New Jersey facilities and at its Brattleboro, Vermont facility.
In addition, the Company purchases some base materials from third-party
suppliers. Specifically, the Company relies on both third-party and internal
resources to supply its converting facility in Quakertown, Pennsylvania. These
base materials are typically saturated, coated, and embossed within the
Company’s facilities and, in some cases, by the Company’s customers.
3. Office
Products
Office
products represented 35% of net sales from the Company’s 2004 North American
operations. The Company’s office products include pressboards, other cover
materials, and binding tapes used by its customers primarily in the
manufacturing of paper-based supplies used in the office, home, or school.
In
addition, a portion of the Company’s cover materials is marketed to the graphic
design community for a variety of promotional applications.
The
major
components of this product family, associated end products/markets, and typical
customers are noted in the following chart:
|
Materials/Products
|
End Products/Markets
|
Typical Customers
|
- Specialty
cover materials (heavyweight and lighter-weight) for products that
present, bind, store, or preserve information
|
- Binding:
data and ring binders and notebooks
-
Filing/active
use: file folders, pressboard folders, and other filing
products
-
Presentation:
document/report covers, folders
-
Diaries,
date books, and planners
|
|
|
|
- Filing
products, checkbooks, and memo pads
|
The
Company’s competitors in the office products market include a mix of large
integrated manufacturers and smaller independent companies, which include
International Paper Co., Brownville Specialty Paper Products Inc., Crocker
Technical Papers, Inc., Fox River Paper Co., MeadWestvaco Corp., and Merrimac
Paper Co., Inc. In addition, the manufacturers of certain substitute materials,
such as polyethylene or vinyl, compete in some of the Company’s office products
markets. The Company’s competitors for binding tapes include Southern Label
Company, Northeast Paper Converting Company, and Kimberly Clark Corp. (a base
materials supplier).
The
Company manufactures the base materials for this product group primarily in
its
Brattleboro, Vermont facility, and, to a lesser extent, in its Warren Glen
and
Hughesville, New Jersey facilities. The Company’s U.S. converting operations may
supply sheeting, embossing, coating, or other finishing steps for these base
materials. The Company’s Quakertown, Pennsylvania converting facility produces
most of its binding tape materials using synthetic nonwoven material (Tyvek®)
purchased from DuPont. The Company coats, colors, and/or saturates this material
for office supplies, books, and related products.
The
Company’s German operations are not involved in the Chapter 11 Case. The German
operations are focused on the production of technical specialties, including
filter media, masking tape base, wallcovering base, printing substrates, and
abrasive base materials. Such operations are highly profitable and provide
significant intercompany support to the Debtors.
The
Company’s German operations consist of FiberMark Gessner, located in Bavaria,
Germany, and FiberMark Lahnstein, located northwest of Frankfurt in
Rhineland-Palatinate, Germany.
1. Technical
Specialties
All
of
the German operations are reported in the technical specialties product family.
Filter media, primarily for automotive/transportation and vacuum bag filtration,
accounts for a significant portion of the Company’s German operations through
FiberMark Gessner. Although the Company markets these products worldwide, the
majority is sold within Europe, with significant business in Asia Pacific,
the
U.S., and, to a lesser degree, Latin America.
The
following chart summarizes the materials produced and marketed worldwide through
the Company’s German operations, associated end products or markets, and the
types of customers.
|
Materials/Products
|
End
Products/Markets
|
Typical
Customers
|
|
Filter
Media for Transportation Filtration (car, truck, heavy-duty equipment,
train, jet, etc.)
|
|
·
Saturated
and unsaturated paper that may be
reinforced with cotton or synthetic fibers
·
Synthetic/nonwoven
meltblown
· Composite
materials
|
·
Liquid
filters:
Fuel,
lube, and hydraulic oil
· Air
filters:
Engine
and vehicle passenger cabin
|
·
Leading
filter manufacturers (sold into/to
OEM,
OES, and
after-markets)
|
|
Filter
Media for Home/Commercial Filtration
|
|
·
Paper
and synthetic: nonwoven meltblown
·
Synthetic
air filter media
|
·
Vacuum
cleaner bags (OEM, OES, and
after-market)
·
Industrial
filtration, ventilation, air-conditioning,
and process air filtration
|
·
Manufacturers/converters
of vacuum cleaners
or
bags
· Producers
of industrial filter element and
filter
sets
|
|
Home/Commercial
|
|
·
Nonwoven
wallcovering base
·
Abrasive
base
·
Printing
substrates: specialty nonwoven/synthetic
content
materials
·
Security
paper
· Overlay
and other flooring materials
|
·
Wallcovering/wallpaper
·
Sandpaper:
hand and machine
·
Graphic
artrs/printing: menus, promotional
items,
maps,
durable documents, and labels
·
Identity:
cards, licenses, tickets,
registrations,
and
stock certificates
·
Laminated
imitation wood veneer flooring
|
·
Wallcovering
manufacturers
·
Coated
abrasives manufacturers
·
Paper
merchants (servicing printing industry)
·
Paper
merchants (servicing printing industry
· Flooring
manufacturers
|
|
Tape
Substrates
|
|
·
Masking
tape base
• Raw
(unsaturated)
• Saturated
·
Other
tape base
|
·
Masking
tape for general purposes and painting:
• Automotive
OEM and repair
• Building
construction/renovation
·
Application tape to transfer vinyl lettering for
signage
|
·
Leading
tape manufacturers, worldwide,
particularly
in Europe and Asia Pacific
·
Self-adhesive
coaters (tape manufacturers)
|
The
Company’s largest competitors in the transportation filtration market are
FiberComposites, a division of Ahlstrom Corp., and Hollingsworth &
Vose/Binzer. The Company's primary competitors in vacuum filter media include
Monadnock Paper Mills, Inc. in the United States and Neu Kaliss Spezialpapier
GmbH and MB Papeleras Especiales S.A. in Europe. The Company’s competitors in
the tape substrate market include integrated manufacturers, such as
Kimberly-Clark Corp., Wausau-Mosinee Paper Corp., Paper Line S.p.A., Ahlstrom
Corp., and MeadWestvaco Corp. The Company also competes with various small
competitors, none of which has a dominant market position. In the tape market,
some of the Company’s customers have the ability to saturate tape base
materials, a service that the Company provides to many of its tape base
customers.
The
Company’s competitors in other technical markets, such as abrasive and nonwoven
wallcovering base, include a mix of large integrated manufacturers and smaller
independent companies, including Arjo Wiggins (division of WORMS & Cie.),
FiberComposites (division of Ahlstrom Corp.), Hollingsworth & Vose,
Kimberly-Clark Corp., MeadWestvaco Corp., and Neu Kaliss Spezialpapier GmbH.
In
some of the Company’s niche markets, it competes with various large, integrated
commodity paper manufacturers who may make less expensive substitute materials.
In the graphic arts market, the Company’s primary competitors are producers of
films or 100% synthetic materials.
The
Company’s German operations consist of three sites: Lahnstein, Germany
(FiberMark Lahnstein); Feldkirchen/Westerham (“Weidach”); and Bruckmühl, Germany
(FiberMark Gessner facilities). The Company manufactures base materials,
including paper, often combining wood pulp sources and non-wood sources such
as
synthetic fibers and synthetic fiber-based materials, and combinations of paper
and nonwoven materials. In addition, the Company’s German facilities have
various finishing capabilities, including saturating, coating, bonding, and
other finishing capabilities. The Company’s filter media business is primarily
produced in its Weidach site. The Bruckmühl site primarily produces specialty
tape substrates, which may be raw, saturated, and/or coated, as well as
latex-treated abrasive base materials used for sandpaper. The Company’s New
Jersey operations supply its German operations with a portion of their vacuum
bag filter media and tape base needs. The Company also purchases a small
percentage of the base materials marketed by its German operations from outside
sources. FiberMark Lahnstein produces and markets its largest single product
line, wallcovering base, as well as printing and coating base materials. The
Company sold its disposable tablecloth business, formerly produced by FiberMark
Lahnstein, to Ahlstrom Corp. in December 2002.
1. Sales,
Marketing and Distribution
The
Company’s customers are primarily converters or manufacturers who rely on its
base materials for making their finished or semi-finished products. The
Company’s engineered materials are sold in roll or sheet form. Most of the
Company’s business is sold directly to customers primarily through its internal
sales force, supplemented by agents or distributors, particularly for
specialized markets or certain geographic markets outside of the United States.
In some markets, such as publishing and packaging and graphic design markets,
the Company’s products are sold through distributors or paper merchants. In
addition, the Company uses merchants or stocking distributors to sell materials
used for certain broad channels such as printers, packaging converters, and
select specialty book publishers. Worldwide direct sales to end users or
converters represented approximately 84% of the Company’s net sales in 2004. The
remaining sales were made through distributors.
Most
of
the Company’s products are widely known in its primary markets, with strong
brand awareness for many of the Company’s branded products. The Company holds a
number of patents, trademarks, and licenses. While intellectual property rights
are material to the Company’s business, the loss of any one of these rights
would not be expected to have a material adverse effect on the Company’s
business, with the exception of FiberMark®.
Many
of
the Company’s customers are well known in their markets, and no single customer
represented more than 5% of its net sales for the year ended December 31,
2004.
2. Raw
Materials
The
Company uses a wide array of raw materials to formulate its products, including
virgin hardwood and softwood pulp, secondary wood fiber from pre-and
post-consumer waste, secondary cotton fiber from the apparel industry, synthetic
fibers, such as nylon, polyester, and fiberglass, synthetic latex, chemicals,
pigments, and dyes. These materials are purchased from numerous suppliers
worldwide.
Wood
pulp
is the Company’s single most significant raw material. The Company does not
produce pulp. Pulp and secondary fiber prices are subject to substantial
cyclical price fluctuations. Approximately 7% of the Company’s revenues are
based on contractual pricing that is indexed to commodity pulp. These customer
contracts provide the Company with some insulation from raw material cost
variability. A smaller portion of our revenues are tied to agreements with
customers to set prices on an annual basis, which may permit pricing changes
only in cases of extreme raw material volatility.
Latex
represents the Company’s second most significant raw material cost. The Company
purchases this material from a number of sources worldwide. The price is
generally less volatile than that of pulp.
The
Company has a long-standing relationship with DuPont, its supplier of Tyvek®,
and has never experienced a disruption in supply. Although the Company is an
approved DuPont converter and believes that it has a good relationship with
DuPont, there can be no assurance that the Company will be able to continually
purchase adequate supplies of Tyvek®. The Company also purchases a significant
quantity of polyester, the majority of which is Dacron®, purchased from DuPont
SA. Any material interruption in the Company’s supply of Tyvek® or Dacron® could
have a material adverse effect on the results of operations and the Company’s
financial condition.
3. Energy
The
Company’s operations, particularly its paper mills, consume a significant amount
of energy. The Company’s natural gas and electricity requirements are supplied
by public utilities and/or qualified suppliers. The Company employs third-party
supply contracts to manage and reduce the commodity and transportation costs
associated with natural gas and electric power. While natural gas accounts
for
the majority of the Company’s fuel needs, the Company also uses fuel oil in some
of its operations. The Company typically purchases fuel oil on the spot market
as needed. In order to address energy issues and opportunities, the Company
has
retained the services of an energy management company. The Company also
regularly evaluates alternative energy and co-generation options.
4. Environmental
Regulation and Compliance
The
Company and its predecessors have invested substantially in pollution control
facilities to comply with environmental laws and regulations. The Company spent
$7 million in 2004, $6.8 million in 2003, and $5.6 million in 2002 for
environmental purposes. While the Company believes its capital expenditures
will
be sufficient to maintain substantial compliance with existing environmental
laws, any failure to comply with present or future environmental laws could
subject the Company to liability or require it to suspend or reduce operations.
In the future, the duty to comply with environmental laws could restrict the
Company’s ability to expand its facilities, obligate the Company to acquire and
operate costly equipment, or otherwise force the Company to incur significant
expenses.
The
Company understands that the United States Environmental Protection Agency
(“EPA”) has named the previous owners of CPG Investors, Inc. (“CPG”) as
potentially responsible parties (“PRPs”) for costs to investigate and clean up
various third-party sites. The Company acquired CPG by merger in 1996. The
Company has no information suggesting that the EPA or any other agency or party
plans to assert that it is a PRP. No Proof of Claim asserting PRP liability
has
been filed by the EPA or any other agency or party in the Chapter 11 Case.
CPG’s
liabilities at those sites arose under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (“CERCLA”), which imposes
liability on broad categories of parties. Courts have interpreted CERCLA to
impose retroactive, strict, and, under certain circumstances, joint and several
liability on parties for costs associated with investigating and cleaning up
facilities. Typically, current owners and operators of a facility, those who
owned or operated a facility when hazardous substances were disposed of there,
as well as those that generated or transported the hazardous substances, may
be
liable under CERCLA as PRPs. In addition, CERCLA imposes liability for the
costs
of evaluating and addressing damage to natural resources.
The
State
of New Jersey required extensive environmental investigation regarding the
release of hazardous substances, materials, and/or wastes at two sites the
Company acquired in 1996 through the CPG merger. Based on the results of those
investigations, remediation may be necessary to address that contamination.
In
December 2002, a subsidiary of the Company and predecessor to FNA, then known
as
FiberMark DSI, Inc. (“DSI”), voluntarily disclosed to the EPA that DSI might
have violated certain federal air pollution control laws. DSI disclosed the
possible violations after performing a voluntary audit of its compliance with
those legal requirements at the DSI facilities in Lowville, New York and
Johnston, Rhode Island. The EPA has not informed the Company as to whether
it
plans to seek penalties for the possible violations and the EPA filed no Proof
of Claim in the Chapter 11 Case with respect to any such penalties.
In
December 2002, DSI also voluntarily disclosed to the New York State Department
of Environmental Conservation (“NYSDEC”) possible violations of state air
pollution control law based on what it found during the voluntary audit
conducted at the Lowville facility. Based on the facts disclosed, the NYSDEC
issued a notice of violation (“NOV”) to DSI on December 18, 2002. The Company
understands that the NYSDEC does not intend to seek a penalty for the possible
violations and in fact the NYSDEC filed no Proof of Claim in the Chapter 11
Case
with respect to such penalties.
The
Company has demanded that the former owner of the Lowville and Johnston
facilities indemnify it under the terms of the purchase agreement for the losses
the Company has incurred and may incur as a result of the disclosures to the
EPA
and the NYSDEC. The former owner has rejected the Company’s claim, and the
Company cannot predict whether its indemnification demand will succeed.
In
December 2003, the City of Fitchburg (“Fitchburg City”) commenced an action
against the Company and one of its subsidiaries in Massachusetts Superior Court.
The complaint seeks monetary damages and injunctive relief under a 1973
agreement between Fitchburg City and a predecessor of the Company relating
primarily to costs associated with a portion of Fitchburg City's wastewater
treatment system. In January 2004, the Company and its subsidiary responded
to
the complaint. Fitchburg City filed a Proof of Claim in the Chapter 11 Case,
to
which the Debtors objected. In June 2005, the Company and Fitchburg City reached
an agreement in principle to resolve Fitchburg City’s Claim. Under the agreement
in principle, Fitchburg City’s claim will be allowed in part as an unsecured
claim in the amount of $225,000 and in part as a secured claim in the amount
of
approximately $[4,000]. Fitchburg City’s secured claim is based upon allegedly
unpaid real estate taxes and water and sewer charges. The agreement in principle
is subject to approval by the Bankruptcy Court.
In
April
2001, the Company acquired paper mill and converting facilities in Johnston,
Rhode Island; West Springfield, Massachusetts; and Brownville, New York. The
former owner of the paper mill and converting facilities maintained
responsibility for addressing known environmental conditions, and as long as
the
Company provided notice within a certain time period, the former owner agreed
to
indemnify the Company for environmental investigation and remediation
obligations for previously unidentified contamination that existed prior to
closing. The Company has advanced several demands, and the former owner has
met
its indemnity obligations to date. Under relevant state and federal
environmental laws, the Company may be a PRP and consequently could be required
to perform remedial actions to address contamination if the former owner
defaults on its obligations. The Company believes that the potential for such
default is remote. No Proofs of Claim were filed in the Chapter 11 Case
asserting any PRP liability.
The
NYSDEC has listed a portion of the Company’s Lowville facility on its Hazardous
Substance Waste Disposal Site Inventory. The listing is based on an assessment
by the NYSDEC of potential impacts associated with activities that occurred
before the Company acquired the facility. In 1997, testing on the listed portion
revealed concentrations below applicable cleanup objectives but also revealed
the presence of contamination elsewhere at the facility above applicable cleanup
objectives. In 1998, cleanup activities at the facility were completed to
remediate likely sources of that contamination. The NYSDEC was informed that
chemicals were present in groundwater in excess of applicable cleanup objectives
and that the source of the contamination may originate from a source offsite,
at
a location other than the facility. The NYSDEC has not asked the Company to
perform additional cleanup activities. The Company cannot predict whether the
NYSDEC will require it to take additional steps in the future, but the Company
does not believe the costs of performing any such activities would have a
material adverse effect on its financial position or results of
operations.
In
April
2003, Georgia-Pacific Corporation (“Georgia-Pacific”) commenced an action in the
United States District Court for the District of New Jersey against the Company
in connection with the Warren Glen and Hughesville mills (the “Georgia-Pacific
Action”). The complaint sought declaratory relief, unspecified monetary damages,
and requested an order of specific performance, all in connection with alleged
rights and obligations arising under a 1991 Asset Purchase Agreement (the “1991
Agreement”). The Company responded to the complaint in May 2003. In October
2003, Georgia-Pacific amended its complaint to include claims for similar relief
allegedly arising from four additional agreements (the “1993 Agreements”). In
December 2003, the Company filed an amended answer with counterclaims against
Georgia-Pacific, based on the agreements at issue. The case relates to
environmental assessment and remediation work required of Georgia-Pacific at
two
mill properties pursuant to state law, and potential payments owed to the
Company under those various agreements. The litigation was stayed upon the
chapter 11 filing. Georgia-Pacific filed a motion for relief from the automatic
stay with the Bankruptcy Court in September 2004. After negotiations, the
Debtors agreed to a settlement with Georgia-Pacific, which the Bankruptcy Court
approved pursuant to an order entered in January 2005. The settlement provides
for, among other things, (a) the withdrawal of Georgia-Pacific's motion to
lift
the automatic stay, (b) Georgia-Pacific's waiver of any claims relating to
the
Warren Glen and Hughesville Mill properties, the 1991 Agreement or the 1993
Agreements for purposes of voting on and recovering distributions under the
Plan, and (c) subject to the occurrence of the Effective Date of the Plan,
the
Debtors' assumption of the 1991 Agreement and the 1993 Agreements, without
the
need to pay any cure costs associated therewith. Pursuant to the settlement,
Georgia-Pacific will retain its right, to the extent that any such right exists,
to assert any claim relating to the Warren Glen and Hughesville Mill properties,
the 1991 Agreement, and/or the 1993 Agreements defensively pursuant to the
doctrines of setoff or recoupment against and to the extent of any claims the
Debtors may assert against Georgia-Pacific arising from the imposition or
recording of deed restrictions on the Warren Glen and Hughesville Mill
properties in accordance with and to the extent provided for in the 1991
Agreement and/or the 1993 Agreements. The Debtors retain any and all rights,
claims, counterclaims, offsets, and defenses with respect to the action with
Georgia-Pacific.
In
May
2005, the New Jersey Department of Environmental Protection (the “NJDEP”) issued
the Company a NOV alleging that its Warren Glen facility had an unpermitted
discharge from a sanitary septic system to the Musconetcong River. The Company
voluntarily notified the NJDEP about the configuration of the sanitary septic
system after learning of it and plugged the pipe through which the alleged
discharge occurred.
Over
the
last several years, certain of the Debtors or their predecessors have been
named
as a defendant in a large number of asbestos lawsuits, including several class
action lawsuits. It is the Debtors’ position that they were named in error, and
the vast majority of such lawsuits have been dismissed on that basis. The
Debtors have never been found liable on any asbestos-related claim. Eleven
Proofs of Claim were filed in the Chapter 11 Case with respect to such lawsuits.
All of such Proofs of Claim have since been disallowed by orders of the
Bankruptcy Court.
Based
upon the Company’s experience, the Company expects that the future cost of
complying with existing environmental laws, and the Company’s liability for
known environmental claims under those laws, will not have a material adverse
effect on the Company’s financial condition or results of operation. However,
new information, changes in environmental laws or how they are interpreted,
or
more vigorous enforcement by regulatory authorities may give rise to additional
expenditures or liabilities that could be material to the Company’s financial
condition and results of operations.
| G. |
Management
and Employees
|
1. Board
of
Directors
FiberMark’s
Board of Directors (the “Board” or the “Board of Directors”) oversees the
Company’s management, reviews its long-term strategic plans, and exercises
direct decision-making authority in key areas.
Set
forth
below is information with respect to the members of FiberMark’s Board serving as
of the date hereof:
| · |
Alex
Kwader
has been chairman of the Board of FiberMark since February 2002,
in
addition to serving as chief executive officer and a director of
FiberMark
since 1991. He also served as president until January 2002. He has
been
employed by the Company and its predecessor, Boise Cascade Corp.
(“BCC”),
since 1970. He served as senior vice president of the Company from
March
1990 to August 1991 and as vice president from the Company’s inception in
June 1989 until March 1990. From 1970 until June 1989, Mr. Kwader
was
employed by BCC in various managerial positions. He was general manager
of
the Pressboard Products Division from 1986 until June 1989. From
1980 to
1985, he served as general manager of the Latex Fiber Products Division
of
BCC. Mr. Kwader holds a bachelor's degree in mechanical engineering
from
the University of Massachusetts and a master's degree from Carnegie
Mellon
University, and attended the Harvard Business School Executive Program.
|
| · |
A.
Duncan Middleton
joined FiberMark and assumed his role as president in January 2002,
and
was elected as a director of FiberMark in February 2002. Prior to
this, he
was senior vice president for Ahlstrom FiberComposites in Windsor
Locks,
Connecticut. He previously served as president and senior vice president
in the nonwoven materials business of its predecessor, the Dexter
Corporation, gaining significant international experience in the
U.S.,
Belgium, Scotland, and Scandinavia. Earlier with Dexter, he held
the
positions of director-business development, director-operations planning,
and financial director-Europe. Mr. Middleton holds a higher national
diploma in business studies from Scottish College of Commerce, and
is
qualified as a Cost and Management Accountant
(CIMA).
|
| · |
Brian
C. Kerester
has been a director of FiberMark since May 1996. Mr. Kerester has
been an
independent consultant since August 2001. He currently serves on
the
Board's audit committee. From March 2000 to June 2001, he was chief
financial officer for Collabria, Inc., a supply chain software company
for
the printing industry. From 1996 through 1999, Mr. Kerester held
various
positions at Distribution Dynamics, Inc., including chief financial
officer and executive vice president of development. From 1988 to
1996,
Mr. Kerester held a variety of positions, including operating affiliate
and partner at McCown De Leeuw & Co., a private equity firm. Mr.
Kerester previously worked with The First Boston Corporation in the
Venture Capital Group from 1984 through 1986 and Bankers Trust Company
in
the World Corporate Department from 1981 to 1984. He holds a bachelor's
degree in economics from the Wharton School, University of Pennsylvania
and a master's degree in business administration from Columbia Business
School.
|
| · |
Glenn
S. McKenzie
has been a director of FiberMark since May 1999, and previously served
as
a director of FiberMark from January 1994 to May 1998. He currently
serves
on the Board’s audit and compensation committees. Since October 1991, Mr.
McKenzie has been president of Alpha Investments, Inc., a management
consulting firm. Mr. McKenzie holds a bachelor's degree in economics
and a
master's degree in business administration from the University of
North
Carolina.
|
| · |
Elmar
B. Schulte
has been a director of FiberMark since May 1998. He currently serves
on
the Board’s audit and compensation committees. Dr. Schulte founded and has
been a managing general partner of Dr. Schulte Vermoegensverwaltungs-KG
since 1981 and is a private investor. He served as senior vice president
of Deutsche Leasing AG, Frankfurt from 1976 to 1980. From 1971 to
1976, he
was employed by Clark Equipment Corporation in various management
positions, including corporate division controller and business manager
for Clark International Marketing SA, Brussels. He currently serves
as
director of KAIROS Real Estate Inc., a land developer based in Montreal,
Quebec. Dr. Schulte received his diploma in business and doctorate
in
economics from the University of Muenster, Germany and a master's
degree
in business administration from the European Institute of Business
Administration (INSEAD), Fontainebleau,
France.
|
| · |
Edward
P. Swain, Jr.
has been a director of FiberMark since February 1998. He currently
serves
on the Board’s governance committee. Mr. Swain served as president of P T
Holdings Corporation from January 1992 to February 2002, having been
president and chief executive officer (“CEO”) of Port Townsend Paper
Corporation from January 1992 until December of 1997 and acting president
and CEO starting in August 1991. Previously, Mr. Swain was a partner
in a
major Seattle law firm, assistant general counsel of BCC, and president
of
a venture capital firm. He currently serves as treasurer, chairman
of the
finance committee and a member of the executive committee of the
board of
trustees of the Museum of Flight in Seattle, Washington. He is also
a
director of eAcceleration, Inc., a software company located in Poulsbo,
Washington. Previous directorships include Orbanco Financial Services
Corporation, Northwest Acceptance Corporation, and The Oregon Bank.
Mr.
Swain received his bachelor's degree from Williams College and a
bachelor
of law degree from Harvard Law School.
|
The
Plan
provides for the appointment of a new Board of Directors, to be comprised of
seven (7) members. All of the initial members of the new Board will be
designated by Silver Point Capital, L.P. Silver Point Capital, L.P. has advised
the Company that it may in its sole discretion permit one (1) of such initial
directors to be designated jointly by AIG Global Investment Corp. and Post
Advisory Group, LLC, provided that such designee is reasonably acceptable to
the
Debtors and Silver Point Capital, L.P. The designations will be announced in
a
filing made with the Bankruptcy Court no later than five (5) days prior to
the
Confirmation Hearing. Upon the failure of Silver Point Capital, L.P. (or, if
applicable, AIG Global Investment Corp. and Post Advisory Group, LLC) to timely
file their respective designations, such party will be deemed to have waived
its
rights to designate, and the Debtors will instead make such designations in
a
filing with the Bankruptcy Court no later than three (3) days prior to the
Confirmation Hearing. The initial directors will serve until the first annual
meeting of stockholders following the first anniversary of the Effective Date
or
until earlier removed or replaced in accordance with the New FiberMark Charter
or the New FiberMark By-laws.
| (b) |
Compensation
of Board Members
|
Under
the
Company’s director compensation policy, applicable to non-employee directors,
the Company pays quarterly fees of $4,000 per director, with committee chairs
receiving an added $625 per quarter. Additionally, each director receives $1,500
per regular board meeting attended or $500 for board meetings attended
telephonically. Directors receive $750 per committee meeting attended, whether
attended in-person or telephonically. All fees are paid on a quarterly basis.
All of the non-employee directors are reimbursed for their travel expenses
associated with their attendance at each Board and committee meeting. The
Debtors anticipate that the new Board of Directors will adopt similar payment
and reimbursement policies, with any changes to be consistent with market
practices for similar companies.
Prior
to
the Petition Date, the Company had in effect a Non-Employee Directors Stock
Option Plan, under which shares of FiberMark’s common stock were reserved for
issuance and options with respect thereto were granted to non-employee
directors. As a result of the Plan in the Chapter 11 Case, however, all stock
and options held by non-employee directors will be cancelled. The Plan provides
for the implementation of a New Equity Incentive Plan providing for
participation in the New Common Stock by members of the new Board of
Directors.
2. Executive
Officers
Set
forth
below is information with respect to the executive officers of the Company
serving as of the date hereof:
| · |
Alex
Kwader has
been chairman of the Board of FiberMark since February 2002, in addition
to serving as chief executive officer and a director of FiberMark
since
1991. He also served as president until January 2002. He has been
employed
by the Company and its predecessor, BCC since 1970. He served as
senior
vice president of the Company from March 1990 to August 1991 and
as vice
president from the Company’s inception in June 1989 until March 1990. From
1970 until June 1989, Mr. Kwader was employed by BCC in various managerial
positions. He was general manager of the Pressboard Products Division
from
1986 until June 1989. From 1980 to 1985, he served as general manager
of
the Latex Fiber Products Division of BCC. Mr. Kwader holds a bachelor's
degree in mechanical engineering from the University of Massachusetts
and
a master's degree from Carnegie Mellon University, and attended the
Harvard Business School Executive Program.
|
| · |
A.
Duncan Middleton
joined FiberMark and assumed his role as president in January 2002,
and
was elected as a director in February 2002. Prior to this, he was
senior
vice president for Ahlstrom FiberComposites in Windsor Locks, Connecticut.
He previously served as president and senior vice president in the
nonwoven materials business of its predecessor, the Dexter Corporation,
gaining significant international experience in the U.S., Belgium,
Scotland, and Scandinavia. Earlier with Dexter, he held the positions
of
director—business development, director—operations planning, and financial
director—Europe. Mr. Middleton holds a higher national diploma in business
studies from Scottish College of Commerce, and is qualified as a
Cost and
Management Accountant (CIMA).
|
| · |
Dr.
Walter M. Haegler
has served as senior vice president and managing director for German
operations since January 2003, and continues to manage FiberMark
Gessner
as he has since the January 1998 acquisition of Steinbeis Gessner
GmbH.
Since May 1999, he also assumed responsibility for filter media worldwide,
and in September 1999, for FiberMark Lahnstein. With Gessner since
1987,
he served as managing director of Steinbeis Gessner from 1990 until
1997,
and as plant manager of the Feldkirchen site from 1987 until 1990.
Before
joining Gessner, Dr. Haegler was research and development and application
technology manager for VP Schickedanz from 1981 to 1987. Dr. Haegler
holds
a master's degree and a doctorate from the University of Erlangen
in
inorganic and analytical chemistry.
|
| · |
John
E. Hanley
has been vice president and chief financial officer of the Company
since
December 2003. He previously served as vice president and corporate
controller, joining the Company in July 2003. Prior to joining FiberMark,
he was vice president of finance and chief financial officer of Amerbelle
Corporation, a privately held textile dye and finishing business.
Earlier,
he was vice president finance and chief financial officer, treasurer,
and
secretary for Axsys Technologies, Inc., a publicly held manufacturer
of
engineered systems for a wide range of industries, including aerospace
and
electronics capital equipment. Before that, he spent 20 years with
Lydall,
Inc., a publicly held specialty paper and fiber-based materials
manufacturer, serving thermal, acoustical, and filtration markets.
He was
Lydall’s vice president of finance, treasurer, and chief financial officer
from 1992 to 2000. Mr. Hanley holds bachelor's and master's degrees
in
business administration from the University of Connecticut and is
a
certified public accountant.
|
| · |
Robert
O. Stein
has served as senior vice president of operations, North American
operations, since August 2002. Most recently, he was vice president
and
general manager for FiberMark DSI (April 2001-August 2002). He served
in
the same capacity for the Company's North America filter media business
(July 1999-August 2002). He joined the Company in November 1997 as
vice
president of business development. Prior to FiberMark, he was with
Tiara
Motorcoach Corp., most recently as its president and chief operating
officer, from 1993 to 1997. Previously, he was manager, corporate
strategy, and acquisitions for Polaroid Corp. Earlier experience
includes
consulting with Monitor Company and engineering and program management
for
General Electric. He holds a bachelor's degree in electrical engineering
from Tufts University and a master's degree in business administration
from the Harvard Business School.
|
| · |
David
R. Kruft
is
serving as senior vice president until his retirement in mid-2005,
managing special projects, particularly in the Company's office products
and tape base businesses, and assisting his successor, the senior
vice
president of sales and marketing, during a transition period. Mr.
Kruft
served as senior vice president of sales and marketing, North American
operations between August 2002 and August 2004. He previously served
as
vice president and general manager, Durable Specialties Division,
since
joining FiberMark in 1996 at the time of the Arcon acquisition. He
held
the position of president of Arcon since 1993, having joined Arcon
in
1990. Employed for over 20 years by Esselte Pendaflex Corporation,
his
most recent role at Esselte was senior vice president and division
head
for the Boorum and Pease office products line. Mr. Kruft holds a
bachelor's degree in mechanical engineering from Hofstra
University.
|
In
support of Mr. Kruft’s retirement transition, James
P. Carolan
joined
FiberMark as a consultant in August 2004, and now serves as senior vice
president of sales and marketing, North American operations. Previously with
Lydall, Inc., of Manchester, Connecticut, he served as president of four
different operating divisions from 1980 until 2003. He also held senior sales
and marketing roles, including vice president of e-commerce for Lydall, vice
president of marketing for Lydall's technical papers division, and a variety
of
marketing roles while at Union Carbide prior to joining Lydall in 1980. He
holds
a bachelor's degree in accounting from Fordham University.
The
Plan
provides that the existing executive officers of FiberMark will serve initially
in the same capacities after the Effective Date for Reorganized FiberMark until
replaced or removed by the new Board of Directors in accordance with the New
FiberMark Charter and New FiberMark By-laws.
3. Executive
Compensation
Historical
information regarding compensation of individuals serving in the Company's
senior executive positions is provided in the Company's Form 10-K for the fiscal
year ended December 31, 2004, which was filed with the Securities and Exchange
Commission (the “SEC”) and which may be accessed on the SEC’s Web site,
www.sec.gov, or on FiberMark's Web site, www.fibermark.com. Salary levels that
were in effect as of December 31, 2004, remain unchanged. Except with respect
to
court-approved payments made pursuant to the Debtors' Key Employee Retention
Plan, the Debtors did not pay any bonuses in 2004. Moreover, the Debtors have
not made and do not intend to make long-term compensation or stock option awards
in 2005. All other compensation for 2005 is expected to be similar to 2004
levels for similar positions. However, following the Effective Date,
compensation will be determined by the New Board and, although the Debtors
anticipate that the New Board will adopt similar compensation levels (with
any
changes to be consistent with market practices for similar companies), there
is
no guarantee that such compensation levels will be adopted.
4. Employees
As
of
March 30, 2005, the Company employed a total of 1,735 employees, of whom 555
were salaried and 1,180 were hourly. Of the total number of employees, 943
were
employed by the Debtors within the United States.
In
the
United States, approximately 72% of the Company’s hourly employees are members
of the Paper, Allied-Industrial, Chemical and Energy Workers International
Union, known as PACE, the International Brotherhood of Electrical Workers,
or
the United Steelworkers of America. Workers at the Company's Warren Glen and
Hughesville sites are subject to two separate collective bargaining agreements.
The Company believes that these collective bargaining agreements contain
customary and standard terms. However, the Company’s hourly employees at the
Company’s facilities in Quakertown, Pennsylvania and Brownville, New York are
not affiliated with any union.
In
Germany, the Company’s employees are represented by the Mining, Chemicals and
Energy Trade Union, Industriegewerkschaft Bergbau, Chemie and Energie (IG BCE).
Approximately 70% of salaried employees and all of the hourly employees are
union eligible but are not necessarily members, as membership is voluntary
and
not disclosed. Employees are represented by a local works council. In the United
Kingdom, hourly employees are members of the Transport General Workers Union.
In
general, the Company believes that it has good relations with its employees
and
their unions.
5. Compensation
and Benefits
The
Company has historically provided a competitive compensation and benefit package
to its executive officers, senior management, and other employees. The package
for union employees is governed by the terms of the applicable collective
bargaining agreement. For non-union employees, the package includes (a) wages,
salaries, holiday and vacation pay, sick leave pay, and other accrued
compensation; (b) severance in the event of termination; (c) various insured
and
self-insured health and welfare and related types of benefits (including,
without limitation, medical, dental, vision, flexible spending accounts,
prescription drugs, life insurance, dependent life and accidental death
insurance, disability insurance, health and safety incentive programs, and
business travel accident insurance); (d) retirement, savings, pension, other
deferred compensation, and related types of benefits; and (e) reimbursement
of
business, travel, educational, and other reimbursable expenses.
The
Company offers retirement benefits to certain employees through a series of
retirement plans, including the following:
| · |
A
defined contribution plan, which is a 401(k) ERISA and IRS-qualified
plan,
covering salaried and non-union hourly employees in the United States.
The
plan permits employee salary deferrals up to 16% of salary, with
the
Company matching 50% of the first 6%. Certain foreign subsidiary
employees
are eligible to participate in similar plans in those
countries.
|
| · |
A
defined benefit plan for certain hourly employees in the United States,
which is an ERISA and IRS-qualified plan. Plan assets are invested
principally in equity securities, government and corporate debt
securities, and other fixed income obligations. The Company annually
contributes at least the minimum amount as required by ERISA. The
defined
benefit plans covering all hourly employees in Germany were established
by
the Company to provide a monthly pension upon retirement. There is
no
legal or governmental obligation to fund these
plans.
|
| · |
A
multi-employer defined benefit plan for hourly employees at the Lowville,
New York facility, which was part of the 2001 Rexam DSI
acquisition.
|
| · |
A
supplemental executive retirement plan (the “SERP”) and a deferred
compensation plan (the “DCP”), which are non-qualified plans. The SERP and
the DCP are governed by a trust agreement and are for the benefit
of a
select group of management, highly compensated employees, and/or
directors
who contribute materially to the continued growth, development, and
business success of the Company. Pension benefits are based upon
final
average compensation and years of service. Benefits earned are subject
to
cliff vesting after fifteen (15) years or more of service. Claims
under
the SERP are in the approximate amount of $5,502,555 and are included
among General Unsecured Claims. The DCP permits eligible participants
to
defer a specified portion of their compensation. The deferred
compensation, together with certain company contributions, earns
a
guaranteed rate of return. Obligations under the DCP are in the
approximate amount of $761,533 and are also included among General
Unsecured Claims. To assist in the funding of the SERP and the DCP,
the
Company purchased corporate-owned life insurance contracts. Proceeds
from
the insurance policies are payable to the Company upon the death
of the
participant. The value associated with the insurance policies was
approximately $3,086,290.13 as of May 31, 2005, although that value
is
subject to claims of creditors. Trust assets also include a small
balance
of Cash to assist in the funding of the SERP and DCP. As of May 31,
2005,
this Cash balance consisted of approximately $74,689.77 in the trust
account, although that amount is subject to claims of creditors.
The Plan
provides that the SERP, DCP, and related trust agreements will terminate
as of the Effective Date.
|
| · |
The
Company provides certain health care and life insurance benefits
upon
retirement to a specific group of employees who formerly worked for
CPG,
which was acquired by the Company in 1996. The Company also provides
certain health care and life insurance benefits upon retirement to
a
specific group of employees who formerly worked for Rexam DSI, which
was
acquired by the Company in 2001.
|
Prior
to
the Petition Date, the Company had in place certain stock option plans, under
which options to acquire FiberMark’s common stock were granted to selected
officers and employees. As a result of the Plan in the Chapter 11 Case, however,
all stock and options held by officers and employees will be cancelled. The
Plan
provides for the implementation of a New Equity Incentive Plan providing for
participation in the New Common Stock by certain members of management and
key
employees who serve after the Effective Date.
| (c) |
Management
Incentive Plan
|
Prior
to
the Petition Date, the Company offered a Management Incentive Plan providing
for
incentive payments to executives and key employees equal to a percentage of
base
salary based upon the Company’s achievement of certain levels of earnings per
share. The Management Incentive Plan utilized a sliding scale so that the
percentage of base salary paid as incentive compensation increased as the
Company’s earnings per share increased. The Management Incentive Plan was
designed to directly align the interests of the executive officers and the
stockholders. No incentives were earned under the Management Incentive Plan
in
2004, 2003, or 2002 and none are expected to be earned for 2005. The Management
Incentive Plan is subject to annual review by the Compensation Committee of
the
Board of Directors. On December 17, 2003, the Company contracted with Stern
Stewart & Co., an outside employee benefit consulting firm, to develop an
EVA® financial management practices and incentive plan to replace the Management
Incentive Plan. As of the date hereof, the replacement plan continues to be
in
development.
Prior
to
the Petition Date, the Company offered a Sales Incentive Plan providing for
incentive payments to sales employees with direct sales responsibilities equal
to a percentage of base salary based upon their achievement of specific sales
objectives. The Sales Incentive Plan is intended to recognize performance in
achieving and surpassing sales volume targets, earnings before interest and
taxes (EBIT) targets, and up to three strategic sales initiatives directly
assigned to a specific sales employee. Incentives were earned under the Sales
Incentive Plan in 2004, 2003, and 2002 and incentives are expected to be earned
for 2005. The Sales Incentive Plan is subject to annual review by senior
management team of the Company. On December 17, 2003, the Company contracted
with Stern Stewart & Co., an outside employee benefit consulting firm, to
develop an EVA® financial management practices and incentive plan to replace the
Sales Incentive Plan. As of the date hereof, the replacement plan continues
to
be in development.
Although
there is no single company-wide severance policy, the Company has in the past
maintained a practice of paying severance to terminated eligible salaried
employees. This practice generally provides for salary continuance, based on
the
eligible employee’s years of service, allotting one week of severance per year
of service (without the imposition of any maximum). In certain cases, a
terminated employee is required to execute a separate agreement and release
in
order to receive a severance payment. Special severance programs are instituted,
in certain cases, in exchange for non-compete agreements. Compensation and
benefits, including severance benefits if provided, are governed by the
applicable collective bargaining agreement for hourly employees represented
by a
union.
Under
the
Company’s severance plan for certain named executive officers, eligible
employees are entitled to a continuation of their base salary for twelve (12)
months, with the exception of Alex Kwader who is entitled to continuation of
his
base salary for 24 months. The severance benefits provided under the
post-petition severance plan, described below, are in lieu of the benefits
under
this severance plan.
| (f) |
Post-petition
Employee Programs
|
By
the
Key Employee Protection Order, entered on August 6, 2004, the Bankruptcy Court
approved the Debtors' Key Employee Retention Plan, Key Employee Severance Plan,
and Discretionary Recognition Plan to incentivize employees to remain with
the
Debtors through the chapter 11 process and ameliorate the effects of the chapter
11 filing on employee morale. The following is a brief summary of the key
elements of the programs, which is qualified by the terms of the actual program
documents.
| · |
Under
the key employee retention program, approximately 49 of the Debtors’ key
employees, if eligible under the terms of the program, will receive
aggregate non-discretionary retention incentive payments ranging
from 20%
to 125% of their respective annual salaries in consideration for
continuing to remain in the Debtors’ employ during the pendency of the
Chapter 11 Case and during the 120 days following the Effective Date.
For
all but the top six eligible participants in the retention program,
the
program provides for the retention incentive payments to be made
in three
parts, each equal to one-third of the aggregate, with the first being
due
as soon as practical after the date of approval by the Bankruptcy
Court,
the second on the Effective Date of the Plan, and the third 120 days
after
the Effective Date of the Plan. For the top six eligible participants
in
the Retention Program, the aggregate amount is payable as follows:
one-fourth on the first payment date, one-fourth on the second payment
date, and the final one-half on the third payment date. Total retention
incentive payments to be made under the Retention Program will not
exceed
$3,279,700.
|
| · |
Under
the key employee severance program, approximately 27 of the Debtors’
eligible key employees are entitled to receive enhanced severance
benefits
during the Chapter 11 Case, with continuing provision for a period
of two
years after the Effective Date, in lieu of any other severance obligations
the Debtors might otherwise owe to such key employees. The severance
program provides that an eligible participant who terminates his
or her
employment for “good reason” (as defined in the severance program) or who
is terminated by the Debtors for any reason other than for “cause” (as
defined in the severance program) is entitled to receive severance
benefits in an aggregate amount ranging from 50% to 200% of the
participant’s annual salary, payable on a pro rata monthly basis. In the
event that a participant in the severance program obtains new employment
while receiving severance payments, the monthly amount of the remaining
severance payments will be reduced by the amount of the participant’s
monthly compensation from such new employment. If, however, such
new
employment is with a competitor of the Debtors, the participant will
lose
any right to severance and be required to repay severance payments
received. Participants in the severance program who terminate their
employment with the Debtors for other than good reason or whose employment
is terminated by the Debtors for cause will not be entitled to receive
any
of the severance benefits. Eligibility is further conditioned upon
a
participant’s execution of a non-solicitation, non-compete,
non-disclosure, and non-disparagement agreement with the Debtors
and their
affiliates and an additional agreement whereby such participant releases
any claims against the Debtors, their successors, assigns, affiliates,
representatives, agents, officers, directors, stockholders, and/or
employees relating to or arising out of such participant’s termination of
employment with the Debtors, including any claim to any severance
payment
under any other plan or agreement with the Debtors. The Debtors estimate
that the approximate theoretical maximum cost of the severance program
is
approximately $4,099,866. However, the Debtors expect that the actual
cost
of the severance program will be far less than the theoretical maximum
amount, depending on the number of qualifying terminations that occur
while the severance program is in
effect.
|
| · |
The
discretionary recognition program applies to salaried and hourly
employees
who are not participants in the key employee retention program and
who are
determined in the sole discretion of the Debtors’ senior management to
have made a significant contribution to the Debtors’ successful
reorganization. The individual amounts and the timing of payments
to be
made under the discretionary recognition program will be determined
by the
Debtors’ senior management. The payments in the aggregate cannot exceed
$300,000.
|
| (g) |
Post-confirmation
Compensation and Benefits
|
After
the
Effective Date, the Debtors intend to continue to provide compensation and
benefits consistent with those historically offered. Under the Plan, except
to
the extent (i) otherwise provided for in the Plan, (ii) previously assumed
or
rejected by an order of the Bankruptcy Court on or before the Confirmation
Date,
(iii) the subject of a pending motion to reject filed by a Debtor on or before
the Confirmation
Date, or (iv) previously terminated, all employee compensation and benefit
programs of the Debtors as set forth on Exhibit D to the Plan, including all
health and welfare plans, pension plans within the meaning of Title IV of the
Employee Retirement Income Security Act of 1974, as amended), and all programs
subject to Sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered into
before or after the Petition Date and not since terminated, will be deemed
to
be, and will be treated as though they are, executory contracts that are assumed
under the Plan. However, the Plan does not modify the existing terms of such
employee compensation and benefit programs, including, without limitation,
the
Debtors’ and the Reorganized Debtors’ rights of termination and amendment
thereunder.
The
Plan
provides that any employee compensation or benefit program that is not listed
on
Exhibit D of the Plan will be deemed to be, and will be treated as though it
is,
an executory contract that is rejected under the Plan, unless such employee
compensation or benefit program is (i) otherwise provided for in the Plan,
(ii)
previously assumed or rejected by an order of the Bankruptcy Court entered
on or
before the Confirmation Date, (iii) the subject of a pending motion to assume
filed by a Debtor on or before the Confirmation Date, or (iv) previously
terminated.
Furthermore,
under the Plan, subject to the rights of the Debtors and the Reorganized Debtors
to terminate or amend as provided for in Section 7.5(a) of the Plan, the
Reorganized Debtors will continue after the Effective Date all of their defined
benefit pension plans covered by Title IV of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), 29 U.S.C. §§ 1301-1461. The Plan
further provides that, as part of the continuation of the defined benefit
pension plans, subject to any such termination or amendment, the Reorganized
Debtors will meet the minimum funding standards under ERISA and the Internal
Revenue Code, pay all insurance premiums owed to the Pension Benefit Guaranty
Corporation (the “PBGC”), and administer and operate the defined benefit pension
plans in accordance with their terms and ERISA. The Plan also provides that
nothing in the Plan is intended to release or discharge any statutory liability
or obligation of the Debtors or the Reorganized Debtors with respect to the
PBGC
or the defined benefit pension plans and that neither the PBGC nor any of the
defined benefit pension plans will be enjoined or precluded from enforcing
such
liability as a result of the Plan.
Moreover,
the Plan provides that the Debtors’ supplemental executive retirement plans,
deferred compensation plans, and related trust and individual agreements will
terminate as of the Effective Date; to the extent such plans and agreements
(and
any separate agreements that may incorporate such plans and agreements) are
considered to be executory contracts, such plans and agreements (and any
separate agreements that may incorporate such plans and agreements) will be
deemed to be rejected pursuant to Section 365 of the Bankruptcy Code under
the
Plan pursuant to the Confirmation Order; and the Claims of all vested
participants in such plans will be calculated as of the Petition Date and
treated as General Unsecured Claims under the Plan.
| H. |
Debtors’
Capital Structure
|
1. Post-petition
Superpriority Secured Obligations
As
part
of the restructuring process under Chapter 11, the Debtors obtained a $30
million debtor-in-possession secured, superpriority revolving credit facility
(the “DIP Facility”) from GECC, which was approved by orders of the Bankruptcy
Court dated April 1, 2004 and April 27, 2004. The DIP Facility is based on
availability from North American assets, including receivables, inventory,
and
fixed assets, which are calculated on the same basis as the pre-petition
facility. Funding for the German operations was provided under a separate $40
million credit agreement that excluded the North American borrowing base (the
“German Facility”). The Debtors were required to guarantee the obligations under
the German Facility. The guarantee was approved as part of the orders of the
Bankruptcy Court approving the DIP Facility.
2. Material
Pre-petition Secured Obligations
The
Debtors’ liabilities include secured obligations in respect of that certain $85
million credit agreement dated November 12, 2003, among, inter alia, the
Debtors, their German affiliates, General Electric Capital Corporation, and
certain lenders thereunder (as amended, the “GECC Credit Facility”). The
Debtors’ obligations under the GECC Credit Facility consist of, among other
things, obligations in respect of revolving loans, letters of credit, and
certain guarantees of borrowings by the German affiliates thereunder. Although
there were no direct borrowings owed by the Debtors under the GECC Credit
Facility as of the Petition Date, the Debtors were liable for amounts owing
in
respect of interest, fees, indemnification, or other charges and costs owing
under such facility. Additionally, the Debtors were contingently liable (a)
for
approximately $8.3 million in outstanding letters of credit issued under the
GECC Credit Facility for their benefit and (b) as guarantors for approximately
$23.4 million in borrowings by, and outstanding letters of credit issued for,
their German affiliates under the GECC Credit Facility. The Debtors do not
expect to be required to pay on their guarantee obligations under the GECC
Credit Facility, as the German affiliates currently have the financial ability
to satisfy their own debt obligations.
| (b) |
Other
Secured Obligations
|
Other
material secured obligations include, without limitation, a loan of
approximately $8,900,000 secured by certain machinery at the Debtors’ facility
in Warren Glen, New Jersey, which is referred to in the Plan as the Banc One
Equipment Financing Claim, and which is estimated to be in the remaining amount
of $4,729,000 as of September 30, 2005; a loan of approximately $1,600,000
secured by certain machinery at the Debtors’ facility in Quakertown,
Pennsylvania, which is referred to in the Plan as the GECC Equipment Financing
Claim, and which is estimated to be in the remaining amount of $993,495 as
of
September 30, 2005; and a sale/leaseback liability of approximately $3,300,000
secured by a building expansion at the Debtors’ facility in Lowville, New York,
which is referred to in the Plan as the Coated Paper Sale/Leaseback Claim,
and
which is estimated to be in the remaining amount of $1,140,000 as of September
30, 2005. A $380,000 secured claim existing as of Petition Date with respect
to
an insurance premium financing arrangement has been satisfied through
post-petition payments. The County of Lewis, New York holds a contingent secured
claim in the original amount of $750,000, secured by a printer at the facility
in Lowville, New York, which is included among the Lowville Grant Claims
provided for in the Plan. The claim is contingent on the maintenance of
employment levels at the Lowville facility.
3. Material
Pre-petition Unsecured Obligations
The
Debtors’ unsecured obligations include two series of publicly-traded senior
unsecured notes, one with a remaining principal amount of approximately $100
million, due October 15, 2006, and the other with a remaining principal amount
of approximately $230 million, due April 15, 2011. Both series of notes were
issued by FiberMark and are guaranteed by FNA and FIH. The obligations with
respect to such notes are referred to in the Plan as the Noteholder
Claims.
| (b) |
Other
Unsecured Obligations
|
Other
unsecured obligations owed by the Debtors include, without limitation, trade
debt, pre-petition liabilities under rejected contracts and leases, rejection
damage claims, certain indemnification claims, certain employee claims, certain
environmental claims, and litigation claims.
4.
Pre-petition Equity
FiberMark’s
authorized capital stock consists of 20 million shares of Common Stock, par
value $.001 per share, 7,066 shares of Series A Junior Participatory Preferred
Stock, par value $.001 per share, and 2 million shares of Preferred Stock,
par
value $.001 per share. FiberMark had 7,066,226 shares of Common Stock
outstanding as of June 17, 2005. Moreover, the Debtors believe that there are,
as of June 17, 2005, approximately 1,083 record
holders and, as of March 11, 2005, approximately 1,402 beneficial
holders of FiberMark Common Stock. No shares of either the Series A Junior
Participatory Preferred Stock or the Preferred Stock had been
issued.
Beginning
on August 8, 2003, FiberMark’s Common Stock traded on the American Stock
Exchange under the ticker symbol “FMK,” having previously traded on the New York
Stock Exchange and the NASDAQ National Market System. On April 13, 2004, after
voluntarily delisting from the American Stock Exchange, FiberMark’s Common Stock
began trading on the OTC Bulletin Board under the ticker symbol “FMKIQ.”
FiberMark has never paid any cash dividends on its Common Stock.
The
Debtors have filed Schedules with the Bankruptcy Court that detail the assets
owned by each of the Debtors. Such assets include real property, cash on hand,
bank accounts and investments, security deposits, insurance policies, stock
interests, accounts receivable, intellectual property, vehicles, office
equipment, furnishings and supplies, machinery, fixtures, equipment and supplies
used in business, inventory, and other items of personal property. The Schedules
provide asset values on a net book basis, which are not reflective of actual
values. The Schedules may be reviewed during business hours in the offices
of
the Clerk of the Bankruptcy Court or the Debtors’ counsel. Information as to the
Debtors’ assets is also available in the balance sheets included in the
financial data attached hereto as Appendix D and in the liquidation analysis
attached hereto as Appendix E.
| J. |
Historical
Financial Information
|
Attached
hereto as Appendix D is selected financial data for FiberMark for the three
months ended March 31, 2005, as reflected in the Form 10-Q filed with the SEC
for such period and for the fiscal year ended December 31, 2004, as reflected
in
the Form 10-K and Form 10-K/A filed with the SEC for such period. The financial
data as of March 31, 2005 has been reviewed by the Company’s outside accountants
but has not been audited. The financial data as of December 31, 2004 has been
reproduced from the audited financial statements included in the Company’s Form
10-K for the fiscal year ended December 31, 2004 but, due to its inclusion
in
this Disclosure Statement, is considered unaudited under applicable accounting
rules. To review the full audited financial statements for the Company for
such
period, please refer to such Form 10-K and Form 10-K/A on file with the SEC,
which may be accessed on the SEC’s Web site,
www.sec.gov, or on FiberMark’s Web site, www.fibermark.com.
In preparing their financial statements, the Company has followed the accounting
directives as set forth in the American Institute of Certified Public
Accountants’ Statement of Position 90-7, “Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code.”
| K. |
Events
Leading to Commencement of the Chapter 11
Case
|
After
its
formation in 1989, the Company engaged in a comprehensive plan to optimize
its
strategic, operational, and financial position, becoming through the process
a
leading independent value-added producer of specialty fiber-based materials.
Within the United States, the Debtors successfully expanded their capabilities
through four acquisitions over a ten-year period, subsequently consolidated
their manufacturing sites to achieve an optimal mix of operations, improved
their organizational efficiency, developed and brought on line state-of-the-art
equipment, implemented aggressive cost reductions, and strengthened their
management team.
Since
2001, however, the Debtors’ operations have suffered the effects of a weak
economy and a prolonged recession in most of their key markets. These
difficulties were exacerbated over the two years preceding the chapter 11 filing
by the burden of acquisition-related debt and a number of operational issues,
including production inefficiencies related to the consolidation of
manufacturing facilities, structural sales declines due to business
divestitures, instances of product obsolescence, and downgrading by customers
to
lower-valued materials.
Although
the Debtors had nearly completed their facility consolidations and had made
substantive productivity improvements, continuing adverse economic, industry,
and other company-specific factors undermined the Debtors’ profitability and
ability to meet their debt obligations. Therefore, after carefully considering
a
variety of alternatives, the Debtors concluded that a chapter 11 filing was
the
best way to ensure their ability to continue operations for the benefit of
customers, vendors, and employees and to preserve the value of their estates
for
the benefit of stakeholders.
The
Debtors' Business Plan contemplates that, upon the Debtors' emergence from
Chapter 11, the business will continue operating two segments, North American
operations and German operations, with the objective of being a leading supplier
of specialty fiber-based materials in its three product families: Publishing
and
Packaging, Technical Specialties and Office Products.
Accordingly,
the Debtors' management team has adopted the following strategies in pursuit
of
these objectives: (a) gain market leadership by excelling at serving existing
and new markets with high value-added products, (b) optimize operations to
gain
competitive advantage in the markets we serve, and (c) broaden our technical
capabilities and ability to use a wide range of raw materials. Included in
Appendix B hereto is a forecast for the Reorganized Debtors for fiscal years
ending December 31, 2005 through December 31, 2009, along with the assumptions
upon which the forecast is based.
The
forecast assumes the implementation of the strategic initiatives that are the
subject of the Debtors’ Motion for Order Under 11 U.S.C. §§ 105(a) and 363(b)
Authorizing (i) Implementation of Strategic Cost Reduction Program and (ii)
Related Relief dated June 23, 2005. The proposed strategic cost reduction
program involves, among other things, in the Debtors’ discretion, the downsizing
of the Debtors’ New Jersey papermaking operations. More specifically, the
strategic cost reduction program contemplates, in the discretion of and on
the
timetable determined by the Debtors, the closure of the Debtors’ papermaking
facility located in Hughesville, New Jersey, and the elimination of one of
the
Debtors’ papermaking machines located in Warren Glen, New Jersey. Additionally,
the program involves the transfer of certain product lines from the New Jersey
plants to other of the Debtors’ papermaking facilities and/or paper machines.
Finally, the program involves the initiation of cost-cutting measures, including
certain reductions in selling, general & administrative costs, designed to
maximize efficiencies realized from the aforementioned downsizing and transfers.
The Debtors’ current intention, subject to business developments, is to
effectuate this restructuring of operations over a period of approximately
three
to six months, commencing upon approval of the motion and concluding during
the
fourth quarter of 2005.
| A. |
Continuation
of Business; Stay of
Litigation
|
As
described above, on March 30, 2004, the Debtors filed petitions for relief
under
Chapter 11 of the Bankruptcy Code. Since the Petition Date, the Debtors have
continued to operate as debtors-in-possession subject to the supervision of
the
Bankruptcy Court and in accordance with the Bankruptcy Code. The Debtors are
authorized to operate their businesses and manage their properties in the
ordinary course, with transactions outside of the ordinary course of business
requiring Bankruptcy Court approval.
An
immediate effect of the filing of the Debtors’ bankruptcy petitions was the
imposition of the automatic stay under the Bankruptcy Code which, with limited
exceptions, enjoins the commencement or continuation of all collection efforts
by Creditors, the enforcement of Liens against property of the Debtors, and
the
continuation of litigation against the Debtors. The relief provides the Debtors
with the “breathing room” necessary to assess and reorganize their businesses
and prevents Creditors from obtaining an unfair recovery advantage while the
reorganization is ongoing.
On
the
first day of the Chapter 11 Case, the Debtors filed several applications and
motions seeking certain relief by virtue of so-called “first day orders.” First
day orders are intended to facilitate the transition between a debtor’s
pre-petition and post-petition business operations by approving certain regular
business practices that may not be specifically authorized under the Bankruptcy
Code or as to which the Bankruptcy Code requires prior approval by the
Bankruptcy Court. The first day orders obtained in the Chapter 11 Case are
typical of orders entered in business reorganization cases across the country.
With certain exceptions, the Bankruptcy Court granted the relief sought by
the
Debtors, first on an interim basis with orders entered on April 1, 2004, and
then, following notice and hearing, on a final basis with orders entered on
April 15, 2004 or April 27, 2004. The “first day orders” authorized, among other
things:
| · |
joint
administration of the Debtors’ bankruptcy
cases;
|
| · |
specific
notice and case management
procedures;
|
| · |
extension
of the deadline for filing schedules and
statements;
|
| · |
appointment
of Logan as claims, noticing, and balloting
agent;
|
| · |
obtaining
secured, superpriority post-petition financing and use of cash
collateral;
|
| · |
continued
use of the existing cash management system and bank accounts, waiver
of
investment and deposit requirements, continuation of intercompany
transactions, and grant of superpriority status to post-petition
intercompany claims;
|
| · |
payment
of pre-petition employee compensation, benefits, expense reimbursements,
and related obligations and continuation of employee programs on
a
post-petition basis;
|
| · |
payment
of pre-petition claims of critical
vendors;
|
| · |
payment
of certain pre-petition shipping and warehousing charges and import
and
export obligations;
|
| · |
payment
of certain pre-petition obligations to foreign
vendors;
|
| · |
payment
of certain pre-petition taxes and
fees;
|
| · |
payment
of certain pre-petition claims of mechanics and
materialmen;
|
| · |
honoring
of certain pre-petition customer obligations and continuation of
customer
programs and practices;
|
| · |
continued
performance and honoring of obligations under consignment
arrangements;
|
| · |
grant
of administrative expense status and payment of obligations arising
from
post-petition delivery of goods, return of goods, and treatment of
valid
reclamation claims; and
|
| · |
extension
of the deadline for providing adequate assurance to utilities and
establishment of procedures for determining requests of utilities
for
adequate assurance.
|
| C. |
Retention
of Professionals
|
The
Debtors are represented in the Chapter 11 Case by Skadden, Arps, Slate, Meagher
& Flom LLP (“Skadden Arps”) and Obuchowski & Emens-Butler as
co-bankruptcy counsel, and Wilmer Cutler Pickering Hale and Dorr LLP (formerly,
Hale and Dorr LLP) as special corporate counsel. The Debtors obtained the
financial advisory and investment banking services of Berenson & Company,
LLC (“Berenson”), the restructuring, accounting, and bankruptcy reorganization
services of Weiser, LLP (“Weiser”), and the auditing, tax, and employee benefit
services of KPMG LLP (“KPMG”). The Debtors have also retained a number of other
professional firms to assist them in the ordinary course of their
businesses.
1. Appointment
of Official Committee of Unsecured Creditors
On
April
7, 2004, the United States Trustee for the District of Vermont (the “U.S.
Trustee”) appointed, pursuant to the Section 1102(a) of the Bankruptcy Code,
certain entities holding general unsecured claims to the Creditors Committee.
The current members of the Creditors Committee are: AIG Global Investment Corp.,
Wilmington Trust Company, Solution Dispersions, Inc., Post Advisory Group,
LLC,
and Silver Point Capital, L.P. The Creditors Committee is represented by the
law
firms of Akin Gump Strauss Hauer & Feld LLP and Ryan Smith & Carbine,
Ltd. The Creditors Committee has retained the financial advisory services of
Chanin Capital Partners LLC (“Chanin”). The expenses of members of the Creditors
Committee, and the fees and expenses of the professionals serving on behalf
of
the Creditors Committee, are entitled to be paid by the Debtors, subject to
approval by the Bankruptcy Court.
On
October 19, 2004, the Bankruptcy Court entered the Order Approving Specified
Information Blocking Procedures and Permitting Trading in Securities of the
Debtors Upon Establishment of a Screening Wall (the “Trading Order”). The
Trading Order provides that members of the Creditors Committee who engage in
the
trading of securities as a regular part of their business are permitted to
trade
in the Debtors' securities provided that such Creditors Committee members adhere
to the information blocking procedures and other requirements specified in
the
Trading Order.
Under
the
Plan, the Creditors Committee will dissolve on the Effective Date and its
members will be released and discharged from all duties and obligations arising
from or related to the Chapter 11 Case. The Plan further provides that
Professionals retained by the Creditors Committee and the members thereof will
not be entitled to compensation or reimbursement of expenses for any services
rendered after the Effective Date, except as may be necessary to file final
requests for payment pursuant to Section 12.1(a) of the Plan.
2. Request
to Appoint Official Committee of Equity Security Holders
Under
the
Bankruptcy Code, the U.S. Trustee may appoint additional committees as it deems
appropriate. On June 23, 2004, a group of stockholders requested that the U.S.
Trustee appoint an official committee of equity security holders. After
carefully considering the request, the U.S. Trustee declined to appoint such
a
committee. In response, the stockholders, on August 9, 2004, filed a motion
with
the Bankruptcy Court requesting an order directing the appointment of an equity
security holders committee. By order dated September 17, 2004, the Bankruptcy
Court declined to grant the motion, having found that the stockholders failed
to
satisfy their burden of proving that an official committee of equity security
holders was necessary.
| E. |
Post-Petition
and Post-Confirmation
Funding
|
1. DIP
Facility
As
part
of the restructuring process under Chapter 11, the $85 million GECC Credit
Facility that was put in place on November 12, 2003, was amended to effectively
split the agreement into two parts. The North American portion was converted
to
a $30 million secured, superpriority, debtor-in-possession revolving credit
facility (the “DIP Facility”) offered by GECC, which was approved by orders of
the Bankruptcy Court dated April 1, 2004 and April 27, 2004. The DIP Facility
is
based on availability from North American assets, including receivables,
inventory, fixed assets, and real property, which are calculated on a similar
basis as the pre-petition facility. Funding for the German operations was
provided under a separate $40 million secured credit agreement (the “German
Facility”) that excluded the North American borrowing base. Under the two credit
agreements, the Company’s pro-forma borrowing base is substantially the same as
the borrowing base under the GECC Credit Facility. Various covenants and
restrictions on the Company’s operations under the GECC Credit Facility continue
to apply under the DIP Facility without material modification, together with
an
additional restriction on the amount of funds that can be transferred from
Germany to support North American operations. The obligations of the DIP
Facility are secured by a security interest on substantially all of the assets
of the Debtors. To replicate the GECC Credit Facility, the Debtors were required
to guarantee the obligations under the German Facility. The guarantee was
approved as part of the orders of the Bankruptcy Court approving the DIP
Facility. The Debtors' guarantee of the obligations under the German Facility
must be satisfied in full as part of the Plan, which will require the
renegotiation of the credit facility in conjunction with the Exit Facility.
The
obligations under the guarantee are also secured by a security interest on
substantially all of the assets of the Debtors.
Both
the
GECC Credit Facility and the German Facility were scheduled to mature on June
30, 2005, subject to extension at the request of the borrower(s) thereto. Prior
to the maturity date, the Debtors entered into an amendment of the GECC Credit
Facility providing for (a) extension of the maturity date from June 30, 2005
to
December 31, 2005, (b) payment of an extension fee of $75,000, (c) provision
of
weekly cash budgets through December 31, 2005, (c) requirement for minimum
borrowing availability of $5 million during the thirteen week period commencing
on July 1, 2005 and for borrowing availability of not less than $5 million
on
July 1, 2005, and (d) expansion of financial covenants to cover through December
31, 2005 and modifications to be less restrictive. The borrowers under the
German Facility contemporaneously entered into a similar amendment of the German
Facility.
2. Plan
Financing
The
Plan
contemplates that the Reorganized Debtors will obtain an Exit Facility, in
the
form of revolving credit, term credit and/or letters of credit as determined
necessary, in order to obtain the funds necessary to repay the DIP Facility
Claim and German Guaranty Claim, make other required payments under the Plan,
and conduct their post-reorganization operations. The Exit Facility is expected
to be secured by substantially all the assets of the Reorganized Debtors,
subject to customary limitations, including limitations on the pledge of stock
of foreign subsidiaries and consistent with the pre-petition security
package.
| F. |
Other
Material Matters Addressed During the Chapter 11
Case
|
In
addition to the first day relief sought in the Chapter 11 Case, the Debtors
have
sought authority with re-spect to a multitude of matters designed to assist
in
the administration of the Chapter 11 Case, to maximize the value of the Debtors’
Estates, and to provide the foundation for the Debtors’ emergence from Chapter
11. Set forth below is a brief summary of certain of the principal motions
the
Debtors have filed during the pendency of the Chapter 11 Case.
1. Post-petition
Retention and Severance Plans
By
motion
dated May 21, 2004, the Debtors sought authorization from the Bankruptcy Court
to implement what they believed to be standard post-petition retention and
severance plans for their key employees, for the purpose of incentivizing
continued employment and combating the negative employee morale and turnover
problems that typically result from the uncertainties and increased burdens
of
an employer’s debtor-in-possession status. The motion was opposed by the
Creditors Committee. The hearing on the motion consumed almost three days of
court time, as both the Debtors and the Creditors Committee presented witnesses,
exhibits, and arguments of counsel in favor of their respective positions.
Prior
to the announcement of a decision, the Bankruptcy Court invited the parties
to
make a final attempt to resolve their differences. As a result, a settlement
in
principle was reached on July 14, 2004 and was ultimately finalized by a
stipulation dated August 4, 2004. On August 6, 2004, the stipulation was
approved by the Bankruptcy Court pursuant to the Key Employee Protection Order.
As a result, the Debtors were authorized to implement retention and severance
plans for their key employees. See Section IV.G.5.f for a description of these
plans.
2. Sale
of
Idle Facilities
As
of the
Petition Date, the Debtors were engaged in efforts to sell three idle
properties, including (a) an idle hydroelectric power facility and related
real
and personal property located in West Springfield, Massachusetts, (b) an idle
paper facility and related real and personal property located in Rochester,
Michigan, and (c) an idle paper facility and related real and personal property
located in Johnston, Rhode Island. Such sales constituted sales outside the
ordinary course of business, necessitating prior approval by the Bankruptcy
Court pursuant to Section 363 of the Bankruptcy Code. Upon the Debtors’ motion
dated May 21, 2004, the Bankruptcy Court approved the proposed sales
transactions by order entered on June 15, 2004. The sale of the facility in
West
Springfield, Massachusetts, was consummated at a sale price of approximately
$650,000, the sale of the facility in Johnston, Rhode Island, was consummated
at
a sale price of approximately $1,350,000, and the sale of the facility at
Rochester, Michigan, was closed at a sale price of approximately
$2,200,000.
As
part
of their motion to sell the three idle properties, the Debtors sought to assume
an agreement with Bruce P. Moore for services in connection with the sale of
the
facilities. As a result of negotiations intended to resolve the objections
and
reservations of the U.S. Trustee and the Creditors Committee with respect to
the
commission payments provided for under the agreement, the Debtors on August
17,
2004 filed an amended motion and application to retain Mr. Moore as a
professional, with provision for the holdback of commission payments pending
the
resolution of certain preferential transfer allegations with respect to a
pre-petition payment received by Mr. Moore. An order granting the amended motion
and application was entered by the Bankruptcy Court on September 13,
2004.
3. Adequate
Protection for Secured Creditors
Under
Section 361 of the Bankruptcy Code, a secured creditor may obtain post-petition
payments as necessary to adequately protect its collateral from a diminution
in
value resulting from the automatic stay or a debtor's continued used of the
collateral. By stipulations entered into with General Electric Capital
Corporation, AFCO Credit Corporation, Banc One Corporation, and Coated Paper,
LLC and approved by the Bankruptcy Court on May 28, 2004, June 10, 2004, July
1,
2004, and July 1, 2004, respectively, the Debtors agreed to provide adequate
protection payments, in the approximate amount of regular monthly debt service
payments, to each of the secured creditors. Supplemental stipulations were
entered into with Coated Paper, LLC and approved by the Bankruptcy Court
pursuant to orders entered on February 4, 2005 and April 25, 2005. Under the
approved stipulations, the payments are interim in nature and without prejudice
to recoupment in the event of a determination that any of the secured creditors
are not entitled to adequate protection. The payments were subsequently made
final as to AFCO Credit Corporation by order dated September 10, 2004, upon
a
motion by the Debtors to confirm the entitlement of AFCO Credit Corporation
to
adequate protection.
4. Extension
of Time to Assume or Reject Unexpired Real Property Leases
Section
365(d)(4) of the Bankruptcy Code allows a debtor an initial 60-day period for
determining whether to assume or reject nonresidential real property leases,
which period may be extended by order of the bankruptcy court. A failure to
assume or reject during the period or to obtain an extension of the period
results in a deemed rejection of nonresidential real property leases. Given
the
size and complexity of the Chapter 11 Case, and the need to delay decisions
as
to leased premises until the structure of their reorganization was determined,
by motion dated April 26, 2004 and subsequent motions dated August 23, 2004
and
November 16, 2004, respectively, the Debtors sought to extend the assumption
or
rejection period first to September 30, 2004, then to December 31, 2004, and
finally through the Confirmation Date. The motions were granted by orders of
the
Bankruptcy Court dated May 12, 2004, September 10, 2004, and December 12, 2004,
respectively.
5. Disposition
of Executory Contracts and Unexpired Leases
Pursuant
to Section 365 of the Bankruptcy Code, the Debtors may choose to assume, assume
and assign, or reject executory contracts and unexpired leases of real and
personal property, subject to approval of the Bankruptcy Court. As a condition
to assumption, or assumption and assignment, unless otherwise agreed by the
non-Debtor party, the Debtors must cure all existing defaults under the contract
or lease, and must provide adequate assurance of future performance of the
contract or lease. If the contract or lease is rejected, any resulting rejection
damages are treated as pre-petition unsecured claims. Generally, and with
certain exceptions, post-petition obligations arising under a contract or lease
must be paid in full in the ordinary course of business. Prior to the
confirmation hearing scheduled on the Previous Plan, the Debtors had either
rejected or assumed all executory contracts and unexpired leases identified
by
them. The assumptions were made conditional on the confirmation and
effectiveness of a plan or reorganization. An additional contract was
subsequently identified for rejection, and a motion to reject was filed on
June
3, 2005, with a requested deadline for filing any rejection damages claim of
July 3, 2005.
6. Pending
Litigation and Automatic Stay
The
nature of the Debtors’ businesses is such that they are from time to time named
as defendants in litigation. As a result of the commencement of the Chapter
11
Case, pursuant to Section 362 of the Bankruptcy Code, all litigation pending
against the Debtors was automatically stayed. As of the date hereof, only one
request - by Georgia-Pacific Corporation - has been made for relief from the
automatic stay. That motion, which was opposed by the Debtors, sought to lift
the automatic stay to permit the litigation described at Section IV.F.4 hereto.
Following a hearing held on October 19, 2004, the Bankruptcy Court denied
Georgia-Pacific's motion subject to further consideration of the motion at
a
hearing to be held on December 14, 2004. The Debtors and Georgia-Pacific
subsequently agreed to the terms of a settlement, which among other things,
provided for the withdrawal of Georgia-Pacific's motion for relief from the
automatic stay. A description of the terms of the settlement can be found at
Section IV.F.4 hereto.
7. Claims
Process
In
Chapter 11, claims against a debtor are established either as a result of being
listed in the debtor’s schedules of liabilities or through assertion by the
creditor in a timely filed proof of claim form. Once established, the claims
are
either allowed or disallowed. If allowed, the claim will be recognized and
treated pursuant to the plan of reorganization. If disallowed, the creditor
will
have no right to obtain any recovery on, or to otherwise enforce, the claim
against the debtor.
| (a) |
Schedules
and Statements
|
On
May
14, 2004, the Debtors filed their schedules of assets and liabilities, schedules
of executory contracts and unexpired leases, and statements of financial affairs
(collectively, the “Schedules”). The Schedules set forth, among other
information, the Claims of known Creditors against each of the Debtors as of
the
Petition Date, based upon the Debtors’ books and records. On June 25, 2004 and
September 17, 2004, the Debtors filed certain amendments to the Schedules.
The
Debtors reserve the right to further amend their Schedules during the remaining
pendency of the Chapter 11 Case.
By
order
dated May 20, 2004, the Bankruptcy Court established July 29, 2004 at 5:00
p.m.
Eastern Time as the Bar Date for filing Proofs of Claim against the Debtors
by
those Creditors required to do so. In compliance with procedures approved by
the
Bankruptcy Court, the Debtors, through Logan, acting as claims agent, provided
timely notice of the Bar Date by mail. In addition, the Debtors published notice
of the Bar Date in The
New York Times
(National Edition), the Brattleboro
Reformer
(covering Brattleboro, Vermont), the Watertown
Daily Times
(covering Brownville, New York; Lowville, New York; and Beaver Falls, New York),
the Express
Times
(covering Hughesville, New Jersey and Warren Glen, New Jersey), The
Morning Call
(covering Quakertown, Pennsylvania), the Reading
Eagle
(covering Reading, Pennsylvania), the Springfield
Union News
(covering South Hadley, Massachusetts and West Springfield, Massachusetts),
the
Sentinel
& Enterprise
(covering Fitchburg, Massachusetts), The
Providence Journal
(covering Johnston, Rhode Island), the Rochester
Clarion
(covering Rochester, Michigan), the Owensboro
Messenger-Inquirer
(covering Owensboro, Kentucky), the Richmond
Times-Dispatch
(covering Richmond, Virginia), and Pulp
& Paper
(an
industry trade publication).
The
Bankruptcy Court's May 20, 2004 order also allows the Debtors to establish,
under certain circumstances, special bar dates with respect to certain
Creditors. Consistent with the terms of, and in compliance with the procedures
outlined in, the order, the Debtors have established special bar dates with
respect to certain Creditors and have, through Logan, acting as claims agent,
provided timely notice of the applicable special bar date to such Creditors.
Recently, the Debtors issued an additional special bar date notice directed
to
certain litigation parties to ensure that any claims that may be asserted
against the Debtors in connection with such litigation, which the Debtors
believe would be without merit in any event, are discharged through the chapter
11 process. The special bar date is July 18, 2005.
| (c) |
Claims
Objection Process
|
Approximately
729 Proofs of Claim have been filed against the Debtors aggregating
approximately $1,296,570,189 (this is a consolidated figure that includes claims
asserted against more than one of the Debtors for the same liability but does
not include claims asserted in unliquidated amounts). The Debtors engaged over
several months in the process of evaluating the Proofs of Claim to determine
whether objections seeking the disallowance of certain asserted Claims should
be
filed. As a result, numerous objections to Proofs of Claim were filed. If the
Debtors do not object to a Proof of Claim by the deadline established in the
Plan, the Claim asserted therein will be deemed Allowed and will be treated
pursuant to the Plan. As appropriate, the Debtors may seek to negotiate and
settle disputes as to Proofs of Claim as an alternative to filing objections
to
the Proofs of Claim.
The
ultimate Allowed amount of Noteholder Claims and General Unsecured Claims will
determine the percentage recovery of holders of Allowed Claims in Classes 9
and
10, both of which share on a Pro Rata basis in the distribution of New Common
Stock and Distribution Cash. The Plan deems Noteholder Claims in Class 9 to
be
Allowed in the aggregate amount of $345,629,166.67, subject to reduction if
so
ordered by the Court pursuant to the findings of the Examiner. Based upon the
review of Claims and the allowance or disallowance of Proofs of Claim to date,
the Debtors believe that General Unsecured Claims in Class 10 are likely to
become Allowed Claims in the approximate aggregate amount of $12,402,000.
However, certain parties continue to have the right for a limited period of
time
to file Proofs of Claim pursuant to a special bar date notice issued by the
Debtors and a pending motion to reject an executory contract. The Debtors do
not
believe that such parties have claims against them, and if such parties file
Proofs of Claims, the Debtors expect that they will object to the claims alleged
therein. Nevertheless, it is possible that the amount of Allowed General
Unsecured Claims could exceed $12,402,000. If so, the estimated percentage
recoveries for holders of Allowed Noteholder Claims in Class 9 and Allowed
General Unsecured Claims in Class 10 could be materially less than as estimated
in this Disclosure Statement.
1. Extension
of Exclusive Periods
Section
1121(b) of the Bankruptcy Code provides for an initial period of 120 days after
the commencement of a Chapter 11 case during which a debtor has the exclusive
right to propose a plan of reorganization (the “Exclusive Proposal Period”). In
addition, Section 1121(c)(3) of the Bankruptcy Code provides that if a debtor
proposes a plan within the Exclusive Proposal Period, it has the remaining
balance of 180 days after the commencement of the Chapter 11 case to solicit
acceptances of such plan (the “Exclusive Solicitation Period”). During the
Exclusive Proposal Period and the Exclusive Solicitation Period, plans may
not
be proposed by any party in interest other than the debtor. Under Section
1121(d) of the Bankruptcy Code, the Exclusive Proposal Period and the Exclusive
Solicitation Period may be extended for cause.
By
motion
dated July 7, 2004, the Debtors sought to extend their initial Exclusive
Proposal Period from July 28, 2004 to November 26, 2004, and their corresponding
initial Exclusive Solicitation Period from September 27, 2004 to January 26,
2005. Following the filing of the motion, the Debtors and the Creditors
Committee entered into a stipulation providing for an extension of the Exclusive
Proposal Period and Exclusive Solicitation Period to November 15, 2004 and
January 15, 2005, respectively, but (a) permitting the Creditors Committee
and
other parties in interest to move to reduce the extended periods, with the
Debtors having the burden in that event of proving that the periods should
not
be reduced, and (b) permitting the Debtors to seek further extensions of the
extended periods only (i) with the consent of the Creditors Committee or (ii)
without the consent of the Creditors Committee if the Creditors Committee has
by
its actions or inactions caused delay in or otherwise frustrated the ability
of
the Debtors to propose a viable plan within the extended periods. The
stipulation was approved by order of the Bankruptcy Court entered August 6,
2004.
The
Debtors initially filed the Previous Plan on November 12, 2004, before the
expiration of the Exclusive Proposal Period. When it became clear that the
intercreditor dispute could delay a consensual confirmation, the Debtors, with
the consent of the Creditors Committee, filed a motion on January 13, 2005,
seeking a further extension of the Exclusive Solicitation Period. An extension
was granted by order of the Bankruptcy Court on January 26, 2005, through
February 15, 2005.
In
conjunction with withdrawing the Previous Plan, the Debtors filed a motion
on
March 21, 2005, requesting either that the Bankruptcy Court reinstate their
exclusive rights or impose case management rules that would preserve estate
resources by controlling the proliferation of competing plans of reorganization.
In response to that motion, the Bankruptcy Court entered an order on April
19,
2005, prohibiting the filing of any plans of reorganization by any parties
through the Examiner’s investigation period, except for a consensual plan filed
by the Debtors with the unanimous support of the Creditors Committee, and
permitting the filing of all plans of reorganization whether or not consensual
after the end of the Examiner’s investigation period and through a final
deadline of August 8, 2005. Although the Bankruptcy Court extended the
Examiner’s investigation period from June 8, 2005 to July 6, 2005, the
Bankruptcy Court by order dated June 2, 2005, lifted the moratorium on filing
nonconsensual plans of reorganization as of June 15, 2005. The final deadline
of
August 8, 2005 remains in place.
2. Pursuit
of Strategic Alternatives
Before
the Debtors decided to pursue the standalone restructuring contemplated by
the
Previous Plan, the Debtors explored other plan alternatives for the purpose
of
gaining certainty that the plan structure ultimately pursued would maximize
value for the benefit of all parties in interest. Specifically, with approval
from their Board of Directors, the Debtors, with the assistance of Berenson,
engaged in a process of exploring the possibility of a sale of all or part
of
their assets, including their German operations. The Debtors believed that
exploring a sale process might result in a transaction that would be favorable
to creditors and other parties in interest. Moreover, the process would assist
the Debtors in determining the value of the Estates for purposes of validating
plan distributions and determining the rights of creditors and stockholders
under the absolute priority rule. Although the Debtors and Berenson conducted
a
thorough sale process and attracted a number of expressions of interest, it
was
not possible for an alternative transaction to be agreed upon by the Creditors
Committee before the expiration of the Exclusive Proposal Period, necessitating
the proposal of a standalone restructuring pursuant to the Previous Plan. In
fact, the Creditors Committee was never enthusiastic about the possibility
of a
sale and from the beginning of the case strongly advocated a standalone plan
based primarily on new equity securities.
After
the
withdrawal of the Previous Plan, certain members of the Creditors Committee,
and
primarily AIG Global Investment Corp. as chairman, began advocating a new sale
process. The Debtors, believing that an expeditious emergence from Chapter
11
was essential to the preservation of their business, declined to commence a
new
sale process and urged the Creditors Committee to engage in negotiations with
respect to a new standalone plan. On June 15, 2005, AIG Global Investment Corp.
filed a motion asking the Bankruptcy Court to order the Debtors to provide
due
diligence materials to prospective purchasers. The Debtors opposed the motion.
A
hearing is scheduled for June 24, 2005.
3. Derailment
of Previous Plan by Intercreditor Dispute
The
Debtors formally commenced the plan process on November 12, 2004, by filing
with
the Bankruptcy Court a first proposed joint plan of reorganization and
accompanying disclosure statement, containing terms that were heavily negotiated
with and approved by the Creditors Committee. On that same date, the Debtors
provided notice to all parties in interest of the disclosure statement hearing
scheduled for December 14, 2004. The Debtors continued to work with the
Creditors Committee in preparation for the disclosure statement hearing. In
response to informal and formal objections to the disclosure statement received
from certain parties in interest and further comments from the Creditors
Committee, the Debtors filed a second and third proposed joint plan of
reorganization and accompanying disclosure statement on December 10, 2004 and
December 14, 2004, respectively, each time with the support of the Creditors
Committee. Following the hearing on the disclosure statement, the Debtors filed
a fourth proposed plan of reorganization and disclosure statement on December
16, 2004, again with the support of the Creditors Committee, further addressing
certain objections raised at the hearing and concerns expressed by the
Bankruptcy Court. Thereafter, by orders dated December 16, 2004, the Bankruptcy
Court approved the disclosure statement and authorized the Debtors to commence
the process of soliciting votes on the plan of reorganization based on the
approved disclosure statement. The Bankruptcy Court also approved the supporting
solicitation letters of the Debtors and the Creditors Committee, to be included
with the disclosure statement. The final plan of reorganization was titled
the
Joint Plan of Reorganization Under Chapter 11, Title 11, United States Code
of
FiberMark, Inc., et al., Debtors, dated December 17, 2004, and is referred
to
herein as the Previous Plan.
The
Debtors commenced the solicitation process on December 24, 2004, and moved
towards confirmation of the Previous Plan with a voting and objection deadline
of January 20, 2005 and a confirmation hearing date of January 27, 2005. In
the
meantime, the Debtors began to prepare the various plan implementing documents
that were due to be filed in advance of the confirmation hearing, working
closely in that regard with the Creditors Committee. In fact, the Creditors
Committee insisted that its counsel take responsibility for the drafting of
certain of the documents, including in particular the certificate of
incorporation and the by-laws for Reorganized FiberMark. In mid-January 2005,
the Debtors were formally notified that there was no consensus among the members
of the Creditors Committee as to the corporate governance provisions to be
included in those implementing documents and that the Creditors Committee had
voted to approve extraordinary provisions desired by AIG Global Investment
Corp.
and Post Advisory Group, LLC, the second and third largest noteholders, and
opposed by Silver Point Capital, L.P., the largest noteholder. All three of
the
noteholders voted against the Previous Plan, with the result that Class 9
containing Noteholder Claims rejected the Previous Plan, requiring resort to
the
cramdown provisions of the Bankruptcy Code. Due to the extraordinary nature
of
the corporate governance provisions approved by the Creditors Committee, the
Debtors determined that the Previous Plan could not be confirmed even in a
cram
down over the objection of Silver Point Capital, L.P. Moreover, because the
Previous Plan, being a consensual plan with the Creditors Committee, contained
provisions requiring the consent of the Creditors Committee to any modification
of the Plan and approval of all implementing documents as a condition to
effectuating the Plan, the Creditors Committee was able to block the Debtors’
emergence from Chapter 11.
The
Debtors and their advisors worked extensively to attempt to save the Previous
Plan, meeting and conferring by telephone with the noteholders in an effort
to
mediate and resolve the intercreditor dispute. They sought and received from
the
Bankruptcy Court several extensions of the confirmation hearing date and
associated deadlines, as they worked to keep the Previous Plan on track. On
more
than one occasion, the noteholders announced that they had reached an agreement,
only to have that agreement subsequently fall apart. Over time, the acrimony
and
allegations of wrongdoing among the noteholders increased to the point that
the
Debtors were forced to conclude that the Previous Plan could never be confirmed
and it would be necessary to file a new plan to emerge from Chapter 11.
Therefore, on March 21, 2005, the Debtors filed a notice of withdrawal of the
Previous Plan.
| H. |
Appointment
and Findings of Examiner
|
In
response to the intercreditor dispute and the escalation in allegations of
wrongdoing among the parties, on April 19, 2005, the Bankruptcy Court ordered
the appointment of an examiner under Section 1104(c) of the Bankruptcy Court
and
directed the U.S. Trustee to appoint an examiner, to be charged with
investigating certain claims trading activity engaged in by Silver Point
Capital, L.P., including its purchase of several claims held by certain of
the
Debtors’ current and former employees and members of management, the
intercreditor dispute, and breaches of fiduciary duty by members of members
of
the Creditors Committee. After obtaining nominations from parties in interest
and interviewing the potential candidates, the U.S. Trustee selected Harvey
R.
Miller (the “Examiner”), a nationally reknowned bankruptcy lawyer and financial
advisor. By order dated April 22, 2005, the Bankruptcy Court approved the
appointment. The Bankruptcy Court imposed a deadline of June 8, 2005, for the
filing of a report by the Examiner. Upon request of the Examiner, the Bankruptcy
Court extended the deadline to July 6, 2005.
| VI. |
SUMMARY
OF THE PLAN OF
REORGANIZATION
|
THIS
SECTION PROVIDES A SUMMARY OF THE STRUCTURE AND IMPLEMENTATION OF THE PLAN
AND
THE CLASSIFICATION AND TREATMENT OF CLAIMS UNDER THE PLAN AND IS QUALIFIED
IN
ITS ENTIRETY BY REFERENCE TO THE PLAN, WHICH ACCOMPANIES THIS DISCLOSURE
STATEMENT, AND TO THE EXHIBITS ATTACHED THERETO.
THE
STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE
PROVISIONS CONTAINED IN THE PLAN AND IN DOCUMENTS REFERRED TO THEREIN. THE
STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE
OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS
REFERRED TO THEREIN, AND REFERENCE IS MADE TO THE PLAN AND TO SUCH DOCUMENTS
FOR
THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND PROVISIONS.
THE
PLAN
ITSELF AND THE DOCUMENTS REFERRED TO THEREIN WILL CONTROL THE TREATMENT OF
CLAIMS AGAINST, AND INTERESTS IN, THE DEBTORS UNDER THE PLAN AND WILL, UPON
THE
EFFECTIVE DATE, BE BINDING UPON HOLDERS OF CLAIMS AGAINST, OR INTERESTS IN,
THE
DEBTORS, THE REORGANIZED DEBTORS, AND OTHER PARTIES IN INTEREST. IN THE EVENT
OF
ANY CONFLICT BETWEEN THIS DISCLOSURE STATEMENT AND THE PLAN OR ANY OTHER
OPERATIVE DOCUMENT, THE TERMS OF THE PLAN AND/OR SUCH OTHER OPERATIVE DOCUMENT
WILL CONTROL.
| A. |
Overall
Structure of the Plan
|
Chapter
11 is the principal business reorganization chapter of the Bankruptcy Code.
Under Chapter 11, a debtor is authorized to reorganize its business for the
benefit of its creditors and shareholders. Upon the filing of a petition for
relief under Chapter 11, Section 362 of the Bankruptcy Code provides for an
automatic stay of substantially all acts and proceedings against the debtor
and
its property, including all attempts to collect claims or enforce liens that
arose prior to the commencement of the Chapter 11 case.
The
consummation of a plan of reorganization is the principal objective of a Chapter
11 case. A plan of reorganization sets forth the means for satisfying claims
against and interests in a debtor. Confirmation of a plan of reorganization
by
the Bankruptcy Court makes the plan binding upon the debtor, any issuer of
securities under the plan, any person acquiring property under the plan, and
any
creditor of or equity security holder in the debtor, whether or not such
creditor or equity security holder (a) is impaired under or has accepted the
plan or (b) receives or retains any property under the plan. Subject to certain
limited exceptions, and other than as provided in the plan itself or the
confirmation order, the confirmation order discharges the debtor from any debt
that arose prior to the date of confirmation of the plan and substitutes for
such debt the obligations specified under the confirmed plan, and terminates
all
rights and interests of equity security holders.
The
terms
of the Debtors’ Plan are based upon, among other things, the Debtors’ assessment
of their ability to achieve the goals of their business plan, make the
distributions contemplated under the Plan, and pay their continuing obligations
in the ordinary course of their businesses. Under the Plan, Claims against
and
Interests in the Debtors are divided into Classes according to their relative
seniority and other criteria.
If
the
Plan is confirmed by the Bankruptcy Court and consummated, (a) the Claims in
certain Classes will be reinstated or modified and receive distributions equal
to the full amount of such Claims, (b) the Claims of certain other Classes
will
be modified and receive distributions constituting a partial recovery on such
Claims, and (c) the Claims and Interests in certain other Classes will receive
no recovery on such Claims or Interests. On the Effective Date and at certain
times thereafter, the Reorganized Debtors will distribute Cash, securities
and
other property in respect of certain Classes of Claims as provided in the Plan.
The Classes of Claims against and Interests in the Debtors created under the
Plan, the treatment of those Classes under the Plan, and the securities and
other property to be distributed under the Plan are described
below.
| B. |
Substantive
Consolidation
|
The
Plan
provides for the substantive consolidation of the Debtors’ assets and
liabilities. Substantive consolidation is an equitable remedy that must be
approved by the Bankruptcy Court. The Plan constitutes a motion for substantive
consolidation of the liabilities and properties of all the Debtors. The
confirmation of the Plan will constitute approval of the motion by the
Bankruptcy Court and the Confirmation Order will contain findings supporting
and
conclusions providing for substantive consolidation on the terms set forth
in
Section 2.2 of the Plan.
Substantive
consolidation of the Debtors is necessary to ensure a fair recovery to
individual creditors of each Debtor. If the Debtors’ estates were not
substantively consolidated, it would be necessary to have three (3) separate
plans of reorganization, with each creditor receiving a distribution from the
Debtor with which the particular creditor did business. Any benefit of requiring
the Debtors to separate assets and liabilities by individual Debtor in order
to
formulate three (3) individual plans of reorganization would be outweighed
by
the costs of doing so. Moreover, requiring the Debtors to separate their assets
and liabilities in such a manner would fail to properly reflect the manner
in
which the Debtors conduct their businesses.
In
the
Debtors’ view, the following facts clearly warrant substantive
consolidation:
| · |
Subsidiary
Debtors are directly owned by the lead Debtor. FiberMark
owns 100% of the stock of FNA and FIH.
|
| ·
|
Officers
and directors of the Subsidiary Debtors are substantially the same.
The
directors and officers of the Subsidiary Debtors are substantially
the
same individuals. Certain of such directors and officers also hold
positions with FiberMark.
|
| · |
Articulated
decisions of the Board of Directors. The
Board of Directors of FiberMark oversees the Debtors’ management, reviews
their long-term strategic plans, and exercises decision-making authority
in key areas, including appointment of independent auditors, review
of the
adequacy of the internal accounting and control procedures of FiberMark
and the Subsidiary Debtors, as well as the review and approval of
compensation arrangements for officers and senior-level employees
of
FiberMark and the Subsidiary
Debtors.
|
| · |
Consolidated
corporate policy. Corporate
policy is created and executed for all the Debtors at the direction
of
FiberMark’s management.
|
| · |
Centralized
cash management system. The
Debtors utilize a fully-integrated, centralized cash management system
that permits them to fund their ongoing operations in the most streamlined
and cost-efficient manner possible.
|
| · |
Debt
guaranteed by Subsidiary Debtors. FiberMark
and the Subsidiary Debtors are obligors or guarantors under a pre-petition
senior secured credit facility. FiberMark is also the obligor under
the
FiberMark Notes, which are guaranteed by the Subsidiary
Debtors.
|
| · |
Loan
documents controlled by consolidated numbers. Financial
covenants contained in loan documents are based on the consolidated
financials of FiberMark and its
subsidiaries.
|
| · |
Consolidated
information. Consolidated
books and records are maintained by FiberMark and its subsidiaries.
FiberMark files consolidated reports with the SEC, prepares consolidated
U.S. federal income tax returns, and provides information on a
consolidated basis to third parties for the purpose of determining
the
Company’s creditworthiness.
|
| · |
No
entity differentiation. The
Debtors do business under the name “FiberMark” and historically have often
failed to use legal entity names in their dealings with customers
and
vendors. Often legal documents appear in the name of the parent company
even though they relate to operations and assets at the subsidiary
level.
|
| · |
Transfer
of German stock interest.
FIH was created within the year preceding the Petition Date. The
only
unsecured Claims against FIH are the Noteholder Claims, which are
also
unsecured Claims against FiberMark and FNA. The primary asset of
FIH is
the stock of the German subsidiaries. In the absence of the creation
of
FIH, the holders of General Unsecured Claims against FiberMark would
have
had an equal claim with the holders of Noteholder Claims to the value
of
the German subsidiaries. Substantive consolidation addresses the
disparity
in creditor rights that resulted from the creation of
FIH.
|
As
a
result of the substantive consolidation of the liabilities and properties of
all
the Debtors, except as otherwise provided in the Plan, (i) the separate Chapter
11 cases of the Debtors will be consolidated into the case of FiberMark as
a
single consolidated case; (ii) all property of the Estate of each Debtor will
be
deemed to be property of the consolidated Estates; (iii) all Claims against
each
Estate will be deemed to be Claims against the consolidated Estates, any Proof
of Claim filed against one or more of the Debtors will be deemed to be a single
Claim filed against the consolidated Estates, and all duplicate Proofs of Claim
for the same Claim filed against more than one Debtor will be deemed expunged;
(iv) no distributions under the Plan will be made on account of Claims based
upon intercompany obligations by and against the Debtors; (v) all Claims based
upon pre-petition unsecured guarantees by one Debtor in favor of any other
of
the Debtors (other than guarantees existing under any assumed executory
contracts or unexpired leases) will be eliminated, and no distributions under
this Plan will be made on account of Claims based upon such guarantees; (vi)
for
purposes of determining the availability of the right of setoff under Section
553 of the Bankruptcy Code, the Debtors will be treated as one consolidated
entity so that, subject to the other provisions of Section 553, pre-petition
debts due to any of the Debtors may be set off against the pre-petition debts
of
any other of the Debtors; and (vii) no distributions under this Plan will be
made on account of any Subsidiary Interests.
Substantive
consolidation will not merge or otherwise affect the separate legal existence
of
each Debtor other than with respect to distribution rights under this Plan;
substantive consolidation will have no effect on valid, enforceable and
unavoidable liens, except for liens that secure a Claim that is eliminated
by
virtue of substantive consolidation and liens against collateral that are
extinguished by virtue of substantive consolidation; and substantive
consolidation will not have the effect of creating a Claim in a class different
from the class in which a Claim would have been placed in the absence of
substantive consolidation.
| C. |
Reorganized
Capital Structure Created by Plan
|
The
Plan
sets forth the capital structure for the Reorganized Debtors upon their
emergence from Chapter 11, which is summarized as follows:
| · |
Exit
Facility.
On the Effective Date, the Reorganized Debtors will obtain new financing,
including revolving credit, term credit and/or letters of credit
as
determined necessary. A new facility (the “New German Facility”) will also
be put in place to replace the existing German Facility. Funds from
the
Exit Facility will be used to refinance the DIP Facility and any
obligations of the Debtors under their guarantee of the German Facility,
support other payments required to be made under the Plan, pay transaction
costs, and fund working capital and general corporate purposes of
the
Reorganized Debtors following the Effective Date. The Exit Facility
is
expected to be secured by substantially all the assets of the Reorganized
Debtors, subject to customary limitations, including limitations
on the
pledge of stock of foreign subsidiaries and consistent with the
pre-petition security package. The Debtors may be required to guarantee
the New German Facility, consistent with the current guarantee of
the
German Facility.
|
| · |
Continuing
obligations.
The obligations underlying the GECC Equipment Financing Claim, the
Banc
One Equipment Financing Claim, and the Coated Paper Sale/Leaseback
Claim
will be continued in accordance with their original terms or on
restructured terms, resulting in secured indebtedness in the aggregate
amount of approximately $6,862,495 (collateral for GECC Equipment
Financing Claim includes $1 million in an undrawn letter of credit
that
has been included in the Debtors' estimate concerning the DIP Facility
Claim in respect of letters of credit). In addition, the contingent
obligations underlying the Lowville Grant Claims will
continue.
|
| · |
FiberMark
equity ownership.
Reorganized FiberMark will (i) authorize on the Effective Date 20
million
shares of New Common Stock; (ii) issue on the Distribution Dates
up to an
aggregate of 10 million shares of New Common Stock for distribution
to
holders of Allowed Noteholder Claims and Allowed General Unsecured
Claims,
including amounts necessary to establish the Common Stock Reserve
for
Disputed General Unsecured Claims; (iii) reserve for issuance the
number
of shares of New Common Stock necessary to provide required distributions
to holders of subsequently Allowed General Unsecured Claims in the
event
the Common Stock Reserve is insufficient to satisfy such distributions;
and (iv) reserve for issuance the number of shares of New Common
Stock
necessary (excluding shares that may be issuable as a result of the
antidilution provisions thereof) to satisfy the required distributions
of
options granted under the New Equity Incentive Plan (excluding shares
that
may be issuable as a result of the antidilution provisions of thereof).
|
| D. |
Classification
and Treatment of Claims and Interests
|
Section
1122 of the Bankruptcy Code provides that a plan of reorganization must classify
the claims and interests of a debtor’s creditors and equity interest holders. In
accordance with Section 1122 of the Bankruptcy Code, the Plan divides Claims
and
Interests into Classes and sets forth the treatment for each Class (other than
Administrative Claims and Priority Tax Claims, which, pursuant to Section
1123(a)(1), do not need to be classified). The Debtors also are required, under
Section 1122 of the Bankruptcy Code, to classify Claims against and Interests
in
the Debtors into Classes that contain Claims and Interests that are
substantially similar to the other Claims and Interests in such
Class.
The
Debtors believe that the Plan has classified all Claims and Interests in
compliance with the provisions of Section 1122 of the Bankruptcy Code and
applicable case law, but it is possible that a holder of a Claim or Interest
may
challenge the Debtors’ classification of Claims and Interests and that the
Bankruptcy Court may find that a different classification is required for the
Plan to be confirmed. In that event, the Debtors intend, to the extent permitted
by the Bankruptcy Code, the Plan, and the Bankruptcy Court, to make such
reasonable modifications of the classifications under the Plan to permit
confirmation and to use the Plan acceptances received for purposes of obtaining
the approval of the reconstituted Class or Classes of which each accepting
holder ultimately is deemed to be a member. Any such reclassification could
adversely affect the Class in which such holder initially was a member, or
any
other Class under the Plan, by changing the composition of such Class and the
vote required of that Class for approval of the Plan.
The
amount of any Impaired Claim that ultimately is allowed by the Bankruptcy Court
may vary from any estimated allowed amount of such Claim and, accordingly,
the
total Claims ultimately allowed by the Bankruptcy Court with respect to each
Impaired Class of Claims may also vary from any estimates contained herein
with
respect to the aggregate Claims in any Impaired Class. Thus, the value of the
property that ultimately will be received by a particular holder of an Allowed
Claim under the Plan may be adversely or favorably affected by the aggregate
amount of Claims ultimately allowed in the applicable Class.
The
classification of Claims and Interests and the nature of distributions to
members of each Class are summarized below. The Debtors believe that the
consideration, if any, provided under the Plan to holders of Claims and
Interests reflects an appropriate resolution of their Claims and Interests,
taking into account the differing nature and priority (including applicable
contractual and statutory subordination) of such Claims and Interests and the
fair value of the Debtors’ assets. In view of the deemed rejection by Classes
11, 12, 13, and 15, however, as set forth below, the Debtors will seek
confirmation of the Plan pursuant to the “cramdown” provisions of the Bankruptcy
Code. Specifically, Section 1129(b) of the Bankruptcy Code permits confirmation
of a Chapter 11 plan in certain circumstances even if the plan has not been
accepted by all impaired classes of claims and interests. See
Section
X.G hereto. Although the Debtors believe that the Plan can be confirmed under
Section 1129(b), there can be no assurance that the Bankruptcy Court will find
that the requirements to do so have been satisfied.
1. Treatment
of Unclassified Claims under the Plan
| (a) |
Administrative
Claims
|
An
Administrative Claim is defined in the Plan as a Claim for payment of an
administrative expense of a kind specified in Section 503(b) or 1114(e)(2)
of
the Bankruptcy Code and entitled to priority pursuant to Section 507(a)(1)
of
the Bankruptcy Code, including, but not limited to, (a) the actual, necessary
costs and expenses incurred after the Petition Date of preserving the Estates
and operating the businesses of the Debtors, including, without limitation,
wages, salaries, or commissions for services rendered after the commencement
of
the Chapter 11 Case, (b) obligations under the Key Employee Protection Order,
(c) Professional Fee Claims, (d) Substantial Contribution Claims, (e) all fees
and charges assessed against the Estates under Section 1930 of Title 28 of
the
United States Code, (f) all Allowed Claims for reclamation under Section
546(c)(2)(A) of the Bankruptcy Code, (g) Cure payments for executory contracts
and unexpired leases that are assumed under Section 365 of the Bankruptcy Code,
(h) the Claim of Empire State Development Corporation pursuant to the Order
Under 11 U.S.C. § 365(a) Authorizing Assumption of Grant Disbursement Agreement
with Empire State Development Corporation on Negotiated Terms entered on August
24, 2004, (i) the DIP Facility Claim, and (j) the German Guaranty Claim.
Under
the
Plan, except as otherwise provided for therein, and subject to the requirements
of Sections 12.1
through 12.3 of the Plan, on, or as soon as reasonably practicable after, the
latest of (i) the Effective Date, (ii) the date such Administrative Claim
becomes an Allowed Administrative Claim, or (iii) the date such Administrative
Claim becomes payable pursuant to any agreement between a Debtor and the holder
of such Administrative Claim, the holder of each such Allowed Administrative
Claim will receive in full satisfaction, settlement, release, and discharge
of
and in exchange for such Allowed Administrative Claim, (A) Cash equal to the
unpaid portion of such Allowed Administrative Claim or (B) such different
treatment as to which the applicable Debtor and such holder agree upon in
writing; provided,
however,
that
Allowed Administrative Claims with respect to liabilities incurred by a Debtor
in the ordinary course of business during the Chapter 11 Case will be paid
in
the ordinary course of business in accordance with the terms and conditions
of
any agreements relating thereto. All fees payable pursuant to Section 1930
of
Title 28 of the United States Code, as determined by the Bankruptcy Court at
the
Confirmation Hearing, will be paid on or before the Effective Date. All such
fees that arise after the Effective Date but before the closing of the Chapter
11 Case will be paid by the Reorganized Debtors.
Pursuant
to the Plan, a DIP Facility Claim is a Claim arising under the Senior Secured,
Superpriority Debtor-in-Possession Credit Agreement dated as of April 1, 2004
(as amended, supplemented, or otherwise modified from time to time) by and
among
FNA as borrower, FiberMark and FIH as guarantors, and GECC as agent for itself
and the lenders party thereto, and related loan and security documents. The
DIP
Facility Claim will be deemed Allowed. The holders of the Allowed DIP Facility
Claim will receive, on the later of the Effective Date or the date on which
such
DIP Facility Claim becomes payable pursuant to any agreement between the Debtors
and the holders of such DIP Facility Claim, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed DIP Facility Claim,
(i) Cash equal to the full amount of such Allowed DIP Facility Claim or (ii)
such different treatment as the Debtors and such holders agree upon in writing;
provided,
however,
that in
respect of any letters of credit issued and undrawn under the DIP Facility,
unless GECC or an applicable affiliate is a lender under the Exit Facility
and
permits such letters of credit to be rolled over and treated as letters of
credit under the Exit Facility, the Debtors will be required to either, with
the
consent of GECC: (A) cash collateralize such letters of credit in an amount
equal to 103% of the undrawn amount of any such letters of credit, (B) return
any such letters of credit to the applicable fronting bank undrawn and marked
“cancelled,” or (C) provide a “back-to-back” letter of credit to the issuing
bank in a form and issued by an institution reasonably satisfactory to such
issuing bank, in an amount equal to 103% of the then undrawn amount of such
letters of credit.
The
German Guaranty Claim is the Claim existing under the Amended and Restated
Guaranty dated as of April 1, 2004 (as amended, supplemented, or otherwise
modified from time to time), among FiberMark, FNA and FIH as guarantors, and
GECC individually and as administrative agent for itself and other lenders,
guaranteeing the obligations under the Amended and Restated Credit Agreement
dated as of April 1, 2004 (as amended, supplemented or otherwise modified from
time to time), among FiberMark Lahnstein GmbH & Co. OHG, FiberMark Gessner
GmbH & Co. OHG as borrowers, the other credit parties thereto, GECC as
administrative agent and European loan agent, Bayerische Hypo- und Vereinsbank
AG as fronting lender, and the other lenders thereto. The German Guaranty Claim
will be deemed Allowed. The holders of the Allowed German Guaranty Claim will
receive, on the later of the Effective Date or the date on which such German
Guaranty Claim becomes payable pursuant to any agreement between the Debtors
and
the holders of such German Guaranty Claim, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed German Guaranty
Claim, (i) Cash equal to the full amount of such Allowed German Guaranty Claim
or (ii) such different treatment as the Debtors and such holders agree upon
in
writing.
The
Debtors have estimated that the amount of Allowed Administrative Claims,
exclusive of ordinary course operational expenses and the DIP Facility Claim
and
the German Guarantee Claim, payable as of and after the Effective Date, will
be
approximately $11,906,000, including Professional Fee Claims, fees payable
under
28 U.S.C. § 1930, reclamation Claims, and Cure costs. The Debtors have estimated
that the DIP Facility Claim will, as of September 30, 2005, consist of
approximately $4,608,000 in respect of revolving loans and approximately
$10,493,000 in letters of credit. The Debtors have further estimate that the
contingent German Guaranty Claim will, as of September 30, 2005, be
approximately $6,355,000.
All
requests for payment of an Administrative Claim (other than as set forth in
Sections 4.1(a), 12.1, and 12.2 of the Plan) must be filed with the Bankruptcy
Court and served on counsel for the Reorganized Debtors no later than forty-five
(45) days after
the
Effective Date. Unless the Reorganized Debtors object to an Administrative
Claim
within sixty (60) days after
receipt, such Administrative Claim will be deemed Allowed in the amount
requested. In the event that the Reorganized Debtors object to an Administrative
Claim, the Bankruptcy Court will determine the Allowed amount of such
Administrative Claim. Notwithstanding the foregoing, no request for payment
of
an Administrative Claim need be filed with respect to an Administrative Claim
which was paid or payable by a Debtor in the ordinary course of
business.
All
final
requests for payment of Professional Fee Claims pursuant to Sections 327, 328,
330, 331, 503(b) or 1103 of the Bankruptcy Code and Substantial Contribution
Claims under Section 503(b)(3), (4), or (5) of the Bankruptcy Code must be
filed
and served on the Reorganized Debtors, their counsel, and other necessary
parties in interest no later than sixty (60) days after the Effective Date,
unless otherwise ordered by the Bankruptcy Court. Objections to such requests
for payment must be filed and served on the Reorganized Debtors, their counsel,
and the requesting Professional or other entity no later than twenty
(20) days (or such longer period as may be allowed by order of the Bankruptcy
Court) after the date on which the applicable request for payment was served.
Each Reorganized Debtor may, without application to or approval by the
Bankruptcy Court, pay reasonable professional fees and expenses in connection
with services rendered to it after the Effective Date.
The
Plan
defines Priority Tax Claims as Claims of governmental units for taxes that
are
entitled to priority pursuant to Section 507(a)(8) of the Bankruptcy
Code.
Such
Claims include Claims of governmental units for taxes owed by the Debtors that
are entitled to a certain priority in payment pursuant to Section 507(a)(8)
of
the Bankruptcy Code. The taxes entitled to priority are (i) taxes on income
or
gross receipts that meet the requirements set forth in Section 507(a)(8)(A)
of
the Bankruptcy Code, (ii) property taxes meeting the requirements of Section
507(a)(8)(B) of the Bankruptcy Code, (iii) taxes that were required to be
collected or withheld by the Debtors and for which the Debtors are liable in
any
capacity as described in Section 507(a)(8)(C) of the Bankruptcy Code, (iv)
employment taxes on wages, salaries, or commissions that are entitled to
priority pursuant to Section 507(a)(3) of the Bankruptcy Code, to the extent
that such taxes also meet the requirements of Section 507(a)(8)(D), (v) excise
taxes of the kind specified in Section 507(a)(8)(E) of the Bankruptcy Code,
(vi)
customs duties arising out of the importation of merchandise that meet the
requirements of Section 507(a)(8)(F) of the Bankruptcy Code, and (vii)
pre-petition penalties relating to any of the foregoing taxes to the extent
such
penalties are in compensation for actual pecuniary loss as provided in Section
507(a)(8)(G) of the Bankruptcy Code.
Under
the
Plan, each holder of an Allowed Priority Tax Claim will receive, in full
satisfaction, settlement, release, and discharge of and in exchange for such
Allowed Priority Tax Claim, as will have been determined by the Debtors in
their
sole discretion, either (i) on, or as soon as reasonably practicable after,
the
later of the Effective Date or the date on which such Claim becomes an Allowed
Claim, Cash equal to the unpaid portion of such Allowed Priority Tax Claim,
(ii)
such different treatment as the applicable Debtor and such holder agree upon
in
writing, or (iii) deferred Cash payments having a value, as of the Effective
Date, equal to such Allowed Priority Tax Claim, over a period not exceeding
six
(6) years after the date of assessment of such Allowed Priority Tax
Claim.
The
Debtors have estimated that the aggregate amount of Priority Tax Claims payable
under the Plan will be approximately $470,000.
2. Treatment
of Classified Claims and Interests under the Plan
| (a) |
Class
1, Other Priority Claims
|
Under
the
Plan, an Other Priority Claim is defined as a Claim against the Debtors entitled
to priority pursuant to Section 507(a) of the Bankruptcy Code, other than a
Priority Tax Claim or an Administrative Claim.
The
Plan
provides that, on, or as soon as reasonably practicable after, the latest of
(i)
the Effective Date, (ii) the date on which such Other Priority Claim becomes
an
Allowed Other Priority Claim, or (iii) the date on which such Other Priority
Claim becomes payable pursuant to any agreement between a Debtor and the holder
of such Other Priority Claim, each holder of an Allowed Other Priority Claim
will receive, in full satisfaction, settlement, release, and discharge of and
in
exchange for such Allowed Other Priority Claim, either (A) Cash equal to the
unpaid portion of such Allowed Other Priority Claim or (B) such other different
treatment as the applicable Debtor and such holder will have agreed upon in
writing.
The
Debtors believe that all Other Priority Claims have been previously paid
pursuant to order of the Bankruptcy Court. A number of Proofs of Claim were
filed by parties alleging priority status for Claims that have not been paid.
The Claims of such parties are classified in Class 1, although as of the date
hereof the Debtors believe that all such Proofs of Claim have been disallowed
or
reclassified.
| (b) |
Class
2, GECC Credit Facility Claim
|
The
GECC
Credit Facility Claim is the Claim existing under the Credit Agreement dated
as
of November 12, 2003 (as amended from time to time) among FNA, FiberMark
Lahnstein GMBH & Co. OHG, and FiberMark Gessner GMBH & Co. OHG as
borrowers, certain other credit parties signatory thereto, General Electric
Capital Corporation as administrative agent, certain lenders signatory thereto,
Bayerische Hypo- und Vereinsbank AG as fronting lender, and certain other
parties signatory thereto; and related documents, agreements, and
instruments.
The
Plan
provides that the holders of the Allowed GECC Credit Facility Claim will
receive, on the later of the Effective Date or the date on which such GECC
Credit Facility Claim becomes payable pursuant to any agreement between the
Debtors and the holders of such GECC Credit Facility Claim, in full
satisfaction, settlement, release, and discharge of and in exchange for such
Allowed GECC Credit Facility Claim, (i) Cash equal to the full amount of such
Allowed GECC Credit Facility Claim or (ii) such different treatment as the
Debtors and such holders agree upon in writing; provided,
however,
that in
respect of any letters of credit issued and undrawn under the Credit Agreement
giving rise to the GECC Credit Facility Claim, unless GECC or an applicable
affiliate is a lender under the Exit Facility and permits such letters of credit
to be rolled over and treated as letters of credit under the Exit Facility,
the
Debtors will be required to either, with the consent of GECC: (A) cash
collateralize such letters of credit in an amount equal to 103% of the undrawn
amount of any such letters of credit, (B) return any such letters of credit
to
the applicable fronting bank undrawn and marked “cancelled,” or (C) provide a
“back-to-back” letter of credit to the issuing bank in a form and issued by an
institution reasonably satisfactory to such issuing bank, in an amount equal
to
103% of the then undrawn amount of such letters of credit.
As
of the
Petition Date, the GECC Credit Facility Claim consisted of (a) $0 in respect
of
revolving loans, (b) at least $8,021,385 in letters of credit, plus (c) amounts
owing in respect of other financial accommodations to or for the benefit of
FNA.
The letters of credit were rolled over into the DIP Facility.
| (c) |
Class
3, Convenience Claims
|
The
Plan
defines a Convenience Claim as a Claim in an amount equal to or less than
$5,000, including any Claim in an amount greater than $5,000 that is reduced
to
$5,000 by an amended Proof of Claim filed on or before the Distribution Record
Date, which Claim is not an Administrative Claim, a Priority Tax Claim, an
Other
Priority Claim, a GECC Credit Facility Claim, a GECC Equipment Financing Claim,
a Banc One Equipment Financing Claim, a Coated Paper Sale/Leaseback Claim,
a
Lowville Grant Claim, an Other Secured Claim, a Noteholder Claim, a General
Unsecured Claim, an Intercompany Claim, a Subordinated Claim, or a
Non-Compensatory Damages Claim.
Section
1122(b) of the Bankruptcy Code allows a plan of reorganization to designate,
for
administrative convenience, a separate class of claims consisting of unsecured
claims that are less than a specified amount, as approved by the court as
reasonable and necessary. Class 3 of the Plan, containing Convenience Claims,
is
intended to serve this purpose. It will allow the Debtors to achieve
administrative efficiencies and will obviate the need for costly solicitation
of
small Claim holders and later costly distribution of stock interests to small
Claim holders. The Debtors selected $5,000 as
the
amount most likely to achieve the intended efficiencies and cost savings. The
selected amount is intended to ensure that Reorganized FiberMark is a private
company, which will enable its to save on the reporting and other costs of
complying with the laws and regulations governing public companies.
The
Plan
provides that, on, or as soon as reasonably practicable after, the later of
the
Effective Date or the date on which such Claim becomes an Allowed Claim, each
holder of an Allowed Convenience Claim, will receive, in full satisfaction,
settlement, release, and discharge of and in exchange for such Convenience
Claim, Cash in an amount equal to the lesser of (i) the Allowed amount of such
Claim or (ii) $5,000.
The
Debtors estimate that Allowed Convenience Claims will be in the approximate
aggregate amount of $811,000.
| (d) |
Class
4, GECC Equipment Financing Claim
|
Under
the
Plan, the GECC Equipment Financing Claim is the Claim existing under the Master
Security Agreement dated as of September 19, 2000 (as amended from time to
time)
between FiberMark and CIT Group/Equipment Financing, Inc.; the Schedule of
Indebtedness and Collateral No. 1 dated as of October 25, 2000; and related
documents, agreements, and instruments; all as assigned by CIT Group/Equipment
Financing, Inc. to General Electric Capital Corporation; after application
of
adequate protection payments made under the Stipulation Providing Adequate
Protection for Secured Manufacturing Equipment Loan of General Electric Capital
Corporation filed on May 21, 2004, as approved by order of the Bankruptcy Court
entered on May 28, 2004.
The
GECC
Equipment Financing Claim is Impaired. The Plan provides that the legal,
equitable, and contractual rights of the holder of the GECC Equipment Financing
Claim will be Reinstated in accordance with the provisions of Section 1124(2)
of
the Bankruptcy Code; provided,
however,
that
any contractual right that does not pertain to the payment when due of principal
and interest on the obligation on which such Claim is based, including, but
not
limited to, financial covenant ratios, negative pledge covenants, covenants
or
restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
will not be enforceable as to any breach that occurred on or prior to the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date.
As
used
in the Plan, Reinstated means (a) leaving unaltered the legal, equitable, and
contractual rights to which the holder of a Claim is entitled so as to leave
such Claim unimpaired in accordance with Section 1124 of the Bankruptcy Code,
or
(b) notwithstanding any contractual provision or applicable law that entitles
the holder of such Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, (i) curing any such default that occurred
before or after the Petition Date, other than a default of a kind specified
in
Section 365(b)(2) of the Bankruptcy Code, (ii) reinstating the maturity of
such
Claim as such maturity existed before such default, (iii) compensating the
holder of such Claim for any damages incurred as a result of any reasonable
reliance by such holder on such contractual provision or such applicable law,
and (iv) not otherwise altering the legal, equitable, or contractual rights
to
which the holder of such Claim is entitled.
As
of the
Petition Date, the GECC Equipment Financing Claim was in the amount of
$1,574,429. That amount will be reduced to approximately $993,495 (collateral
includes $1 million in an undrawn letter of credit that has been included in
the
Debtors' estimate concerning the DIP Facility Claim in respect of letters of
credit) as of September 30, 2005 through payments made under the above-mentioned
Stipulation Providing Adequate Protection for Secured Manufacturing Equipment
Loan of General Electric Capital Corporation.
| (e) |
Class
5, Banc One Equipment Financing
Claim
|
Under
the
Plan, the Banc One Equipment Financing Claim is defined as the Claim of Banc
One
Corporation existing under the Equipment Financing Agreement between FiberMark
and Jules and Associates, Inc., dated as of December 13, 1999; Schedule 1
thereto dated as of July 5, 2000, Schedule 2 thereto dated as of September
13,
2000, and Schedule 3 thereto dated as of December 21, 2000; and related
documents, agreements, and instruments; all as assigned by Jules and Associates,
Inc. to Banc One Corporation; after application of adequate protection payments
made under the Stipulation Providing Adequate Protection for Secured
Manufacturing Equipment Loan of Banc One Leasing Corporation filed on June
25,
2004, as approved by order of the Bankruptcy Court entered on July 1,
2004.
The
Banc
One Equipment Financing Claim is Impaired. The Plan provides that the legal,
equitable, and contractual rights of the holder of the Banc One Equipment
Financing Claim, including those relating to the payment when due of principal
and interest on the obligation on which such Claim is based and the protection,
maintenance, location, or insurance of or on the collateral securing such Claim,
will be Reinstated in accordance with the provisions of Section 1124(2) of
the
Bankruptcy Code; provided, however, that any contractual right that does not
pertain to the payment when due of principal and interest or said preservation
of the collateral, including, but not limited to, contractual rights pertaining
to financial covenant ratios, negative pledge covenants, covenants or
restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
will not be enforceable as to any breach that occurred on or prior to the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date.
As
used
in the Plan, Reinstated means (a) leaving unaltered the legal, equitable, and
contractual rights to which the holder of a Claim is entitled so as to leave
such Claim unimpaired in accordance with Section 1124 of the Bankruptcy Code,
or
(b) notwithstanding any contractual provision or applicable law that entitles
the holder of such Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, (i) curing any such default that occurred
before or after the Petition Date, other than a default of a kind specified
in
Section 365(b)(2) of the Bankruptcy Code, (ii) reinstating the maturity of
such
Claim as such maturity existed before such default, (iii) compensating the
holder of such Claim for any damages incurred as a result of any reasonable
reliance by such holder on such contractual provision or such applicable law,
and (iv) not otherwise altering the legal, equitable, or contractual rights
to
which the holder of such Claim is entitled.
As
of the
Petition Date, the Banc One Equipment Financing Claim was in the amount of
$8,609,375. That amount will be reduced to approximately $4,729,000 as of
September 30, 2005, through payments made under the above-mentioned Stipulation
Providing Adequate Protection for Secured Manufacturing Equipment Loan of Banc
One Leasing Corporation.
| (f) |
Class
6, Coated Paper Sale/Leaseback
Claim
|
The
Coated Paper Sale/Leaseback Claim is the Claim existing under the Project
Agreement among FiberMark DSI, Inc. (a predecessor in interest to FNA),
FiberMark, and Coated Paper, LLC dated as of October 3, 2002; the Supplemental
Agreement between such parties dated as of January 29, 2003; and various related
documents, agreements, and instruments; after application of adequate protection
payments made under the Stipulation Providing for Post-Petition Adequate
Protection or Real Property Lease Payments to Coated Paper, LLC filed on June
25, 2004, as approved by order of the Bankruptcy Court entered on July 1, 2004,
the Stipulation Providing for Additional Adequate Protection Payments to Coated
Paper, LLC Pending Effective Date of Plan filed on February 3, 2005, as approved
by order of the Bankruptcy Court entered on February 4, 2005, and the
Stipulation Providing for Post-Petition Adequate Protection or Payment in Lieu
of Tax to County of Lewis Industrial Development Agency filed on April 19,
2005,
as approved by order of the Bankruptcy Court entered on April 25,
2005.
The
Coated Paper Sale/Leaseback Claim is Impaired. The Plan provides that the holder
of the Allowed Coated Paper Sale/Leaseback Claim will (i) retain the Liens
securing such Allowed Claim and (ii) receive the remaining amount of such
Allowed Claim, with interest at the non-default contract rate, in monthly Cash
payments of the same amount as historically paid by the Debtors under the
documents governing such Allowed Claim, in lieu of the final balloon payment
otherwise required by such documents.
As
of the
Petition Date, the Coated Paper Sale/Leaseback Claim was in the amount of
$3,040,000. That amount will be reduced to approximately $1,140,000 as of
September 30, 2005, through payments made under the above-mentioned
Stipulations.
| (g) |
Class
7, Lowville Grant Claims
|
The
Plan
defines the Lowville Grant Claims as the Claims existing under the Grant
Agreement for CDBG Funds dated as of March 11, 2003 among FNA as grantee,
FiberMark as guarantor, and County of Lewis Industrial Development Agency as
funding agency, providing grant funds of $100,000; the Grant Agreement dated
as
of March 11, 2003 between FNA as grantee and County of Lewis Industrial
Development Agency as funding agency, providing grant funds of $250,000; the
Grant Agreement for Small Cities CDBG Funds dated as of March 11, 2003 among
FNA
as grantee, FiberMark as guarantor, and County of Lewis as funding agency,
and
the associated Security Agreement dated as of March 11, 2003 between FNA as
debtor and County of Lewis as secured party, providing grant funds of $750,000;
the Grant Agreement for Empire State Development Funds dated as of October
27,
2003, between FNA as grantee and County of Lewis Industrial Development Agency
as funding agency, providing grant funds of $150,000; and the Grant Agreement
for Empire State Development Funds dated as of October 27, 2003, between FNA
as
grantee and County of Lewis Industrial Development Agency as funding agency,
providing grant funds of $250,000.
The
Claims are contingent, arising only in the event that the Debtors fail to
fulfill their obligations under the grant agreements. Such obligations generally
consist of maintaining operations at the Debtors’ Lowville, New York, facility
at a level that will insure the employment of a specific number of employees
on
specific measuring dates. The Debtors believe that they will fulfill their
obligations under the grant agreements, with the result that the Lowville Grant
Claims will not become payable.
The
Lowville Grant Claims are Impaired. The Plan provides that a vote in favor
of
the Plan by the holder of a Lowville Grant Claim will constitute (i) the
agreement by such holder that the Reorganized Debtors will be obligated to
pay
such holder’s Claim only if they fail to maintain requisite levels of employment
at their facility in Lowville, New York, and (ii) the express waiver by such
holder of any other breach, event of default or other act or omission giving
rise to an obligation to pay the Claim. Subject to and as modified by such
agreement and waiver, the legal, equitable, and contractual rights of the holder
of a Lowville Grant Claim voting in favor of the Plan will be Reinstated in
accordance with the provisions of Section 1124(2) of the Bankruptcy Code;
provided,
however,
that any
contractual right that does not pertain to the payment when due of principal
and
interest on the obligation on which any such Claim is based, including, but
not
limited to, financial covenant ratios, negative pledge covenants, covenants
or
restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
will not be enforceable as to any breach that occurred on or prior to the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date.
As
used
in the Plan, Reinstated means (a) leaving unaltered the legal, equitable, and
contractual rights to which the holder of a Claim is entitled so as to leave
such Claim unimpaired in accordance with Section 1124 of the Bankruptcy Code,
or
(b) notwithstanding any contractual provision or applicable law that entitles
the holder of such Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, (i) curing any such default that occurred
before or after the Petition Date, other than a default of a kind specified
in
Section 365(b)(2) of the Bankruptcy Code, (ii) reinstating the maturity of
such
Claim as such maturity existed before such default, (iii) compensating the
holder of such Claim for any damages incurred as a result of any reasonable
reliance by such holder on such contractual provision or such applicable law,
and (iv) not otherwise altering the legal, equitable, or contractual rights
to
which the holder of such Claim is entitled.
A
vote
against the Plan by the holder of a Lowville Grant Claim will result in the
treatment of such holder’s Claim as an Other Secured Claim in Class 8 if and to
the extent such Claim is a Secured Claim or as a General Unsecured Claim in
Class 10 if and to the extent such Claim is not a Secured Claim.
Each
holder of a Claim in Class 7 that affirmatively votes in favor of the Plan
will
be deemed to forever release, waive, and discharge all claims, obligations,
suits, judgments, damages, demands, debts, rights, causes of action, and
liabilities whatsoever (other than for fraud, willful misconduct, or gross
negligence) against the directors, officers, or employees of any of the Debtors
serving during the pendency of the Chapter 11 Case (collectively, the
“Claimholder Releasees”), in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights under the Plan and the
contracts, instruments, releases, indentures, other agreements, or documents
delivered thereunder), whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then existing
or
thereunder arising, in law, equity, or otherwise, that are based in whole or
part on any act, omission, transaction, event, or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan.
The
Debtors estimate that the Lowville Grant Claims are in the current amount of
$510,000. They
are
contingent Claims and are not expected to become due.
| (h) |
Class
8, Other Secured Claims
|
An
Other
Secured Claim is a Secured Claim arising prior to the Petition Date against
any
of the Debtors, other than a GECC Credit Facility Claim, a GECC Equipment
Financing Claim, a Banc One Equipment Financing Claim, a Coated Paper
Sale/Leaseback Claim. Any Lowville Grant Claim that is a Secured Claim will
be
treated as an Other Secured Claim if the holder of such Claim voted against
the
Plan. Each Other Secured Claim is deemed to be a separate sub-class in Class
8
and has all of the rights associated with separate class treatment.
The
Plan
provides for alternative treatments of each Other Secured Claim, as will have
been determined by the Debtors in their sole discretion, depending upon the
nature and amount of the Other Secured Claim, as follows:
| · |
First,
the Debtors may elect, in their sole discretion, that the legal,
equitable, and contractual rights of any holder of an Allowed Other
Secured Claim be Reinstated. Reinstated means (a) leaving unaltered
the
legal, equitable and contractual rights to which the holder of a
Claim is
entitled so as to leave such Claim unimpaired in accordance with
Section
1124 of the Bankruptcy Code, or (b) notwithstanding any contractual
provision or applicable law that entitles the holder of such Claim
to
demand or receive accelerated payment of such Claim after the occurrence
of a default, (i) curing any such default that occurred before or
after
the Petition Date, other than a default of a kind specified in Section
365(b)(2) of the Bankruptcy Code, (ii) reinstating the maturity of
such
Claim as such maturity existed before such default, (iii) compensating
the
holder of such Claim for any damages incurred as a result of any
reasonable reliance by such holder on such contractual provision
or such
applicable law, and (iv) not otherwise altering the legal, equitable
or
contractual rights to which the holder of such Claim is entitled;
provided,
however,
that any contractual right that does not pertain to the payment when
due
of principal and interest on the obligation on which such Claim is
based,
including, but not limited to, financial covenant ratios, negative
pledge
covenants, covenants or restrictions on merger or consolidation,
covenants
regarding corporate existence, or covenants prohibiting certain
transactions or actions contemplated by the Plan or conditioning
such
transactions or actions on certain factors, will not be enforceable
as to
any breach that occurred on or prior to the Effective Date or any
breach
determined by reference back to a date preceding the Effective
Date
|
| · |
Second,
the Debtors may elect, in their sole discretion, that any holder
of an
Allowed Other Secured Claim retain the Liens securing such Allowed
Other
Secured Claim and receive deferred Cash payments totaling at least
the
amount of such Allowed Other Secured Claim, of a value, as of the
Effective Date, of at least the value of such holder’s interest in the
Estate’s interest in such property.
|
| · |
Third,
the Debtors may elect, in their sole discretion, that the collateral
securing any Allowed Other Secured Claim be surrendered to the holder
of
such Allowed Other Secured Claim.
|
| · |
Fourth,
the Debtors may elect, in their sole discretion, that any holder
of an
Allowed Other Secured Claim be paid in full on the Effective
Date.
|
The
failure to object to any Other Secured Claim in the Chapter 11 Case will be
without prejudice to the Debtors’ or the Reorganized Debtors’ right to contest
or otherwise defend against such Claim in the appropriate forum when and if
such
Claim is sought to be enforced by the holder of such Other Secured Claim.
Notwithstanding Section 1141(c) or any other provision of the Bankruptcy Code,
all pre-petition Liens on property of any Debtor held with respect to an Other
Secured Claim will survive the Effective Date and continue in accordance with
the contractual terms of the underlying agreements governing such Claim until
such Allowed Claim is paid in full. Nothing in the Plan will preclude the
Debtors or the Reorganized Debtors from challenging the validity of any alleged
Lien on any asset of a Debtor or the value of the property that secures any
alleged Lien.
Each
holder of a Claim in Class 8 that affirmatively votes in favor of the Plan
will
be deemed to forever release, waive, and discharge all claims, obligations,
suits, judgments, damages, demands, debts, rights, causes of action, and
liabilities whatsoever (other than for fraud, willful misconduct, or gross
negligence) against the directors, officers, or employees of any of the Debtors
serving during the pendency of the Chapter 11 Case (collectively, the
“Claimholder Releasees”), in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights under the Plan and the
contracts, instruments, releases, indentures, other agreements, or documents
delivered thereunder), whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then existing
or
thereunder arising, in law, equity, or otherwise, that are based in whole or
part on any act, omission, transaction, event, or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan.
The
Debtors estimate that they have Other Secured Claims in an aggregate amount
of
$136,000.
| (i) |
Class
9, Noteholder Claims
|
A
Noteholder Claim is any Claim arising from or relating to the FiberMark Notes,
other than any Indenture Trustee Expenses. The FiberMark Notes consist of the
9-3/8% Senior Notes due 2006 in the aggregate principal amount of $100 million
and the 10-3/4% Senior Notes due 2011 in the aggregate principal amount of
$230
million, each issued by FiberMark and guaranteed by FNA and FIH.
The
Plan
provides that the Noteholder Claims will be deemed Allowed in an aggregate
amount not to exceed $345,629,166.67 for all purposes of the Plan and the
Chapter 11 Case, subject to reduction if so ordered by the Court pursuant to
the
findings of the Examiner. Each holder of an Allowed Noteholder Claim, in full
satisfaction, settlement, release, discharge of, in exchange for, and on account
of such Allowed Noteholder Claim, will receive on the Distribution Date, its
Pro
Rata share (together with all other holders of Allowed Noteholder Claims and
all
holders of Allowed General Unsecured Claims, with reserves for Disputed General
Unsecured Claims to the extent required by Section 9.3 of the Plan)
of:
· 10
million shares of the New Common Stock to be authorized and issued by
Reorganized FiberMark as of the Effective Date pursuant to the Plan, subject
to
dilution as set forth in Sections 6.5(b) and 9.3(a) of the Plan (see Appendix
F
attached hereto for a description of the New Common Stock); and
· $75
million in Distribution Cash.
All
such
distributions will be subject to the Indenture Trustee Charging Lien to the
extent of any Indenture Trustee Expenses that are not paid pursuant to Section
12.1(c) of the Plan. The Indenture Trustee Expenses are not expected to exceed
$350,000.
Distributions
to holders of Noteholder Claims are conditioned on (a) the holding of the Claim
as of the Distribution Record Date pursuant to Section 8.7 of the Plan and
(b)
the making of appropriate withholding tax and reporting arrangements as provided
in Section 8.8 of the Plan.
Each
holder of a Claim in Class 9 that affirmatively votes in favor of the Plan
will
be deemed to forever release, waive, and discharge all claims, obligations,
suits, judgments, damages, demands, debts, rights, causes of action, and
liabilities whatsoever (other than for fraud, willful misconduct, or gross
negligence) against the directors, officers, or employees of any of the Debtors
serving during the pendency of the Chapter 11 Case (collectively, the
“Claimholder Releasees”), in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights under the Plan and the
contracts, instruments, releases, indentures, other agreements, or documents
delivered thereunder), whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then existing
or
thereunder arising, in law, equity, or otherwise, that are based in whole or
part on any act, omission, transaction, event, or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan.
| (j) |
Class
10, General Unsecured Claims
|
A
General
Unsecured Claim is any Claim in an amount greater than $5,000 that is not an
Administrative Claim, a Priority Tax Claim, an Other Priority Claim,
a GECC
Credit Facility Claim,
a
GECC
Equipment Financing Claim,
a Banc
One
Equipment Financing Claim,
a Coated
Paper Sale/Leaseback Claim,
a
Convenience Claim, an Other Secured Claim,
a Noteholder
Claim,
an
Intercompany Claim,
a Subordinated
Claim,
or
a Non-Compensatory
Damages Claim. This definition specifically includes, without limitation,
rejection damages Claims, non-priority employee Claims, non-priority tax Claims,
environmental Claims, indemnification Claims, trade vendor Claims, customer
Claims, escheat Claims, and litigation Claims. A Lowville Grant Claim that
is
not a Secured Claim will be treated as a General Unsecured Claim if the holder
of such Claim votes against the Plan.
Under
the
Plan, each holder of an Allowed General Unsecured Claim, in full satisfaction,
settlement, release, discharge of, in exchange for, and on account of such
Allowed General Unsecured Claim, will receive on the Distribution Date its
Pro
Rata share (together with all other holders of Allowed General Unsecured Claims
and all holders of Allowed Noteholder Claims, with reserves for Disputed General
Unsecured Claims to the extent required by Section 9.3 of the Plan)
of:
· 10
million shares of the New Common Stock to be authorized and issued by
Reorganized FiberMark as of the Effective Date pursuant to the Plan, subject
to
dilution as set forth in Sections 6.5(b) and 9.3(a) of the Plan (see Appendix
F
attached hereto for a description of the New Common Stock); and
· $75
million in Distribution Cash.
Distributions
to holders of Allowed General Unsecured Claims are conditioned on (a) the
holding of the Claim as of the Distribution Record Date to the extent required
by Section 8.7 of the Plan and (b) the making of appropriate withholding tax
and
reporting arrangements as provided in Section 8.8 of the Plan.
Each
holder of a Claim in Class 10 that affirmatively votes in favor of the Plan
will
be deemed to forever release, waive, and discharge all claims, obligations,
suits, judgments, damages, demands, debts, rights, causes of action, and
liabilities whatsoever (other than for fraud, willful misconduct, or gross
negligence) against the directors, officers, or employees of any of the Debtors
serving during the pendency of the Chapter 11 Case (collectively, the
“Claimholder Releasees”), in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights under the Plan and the
contracts, instruments, releases, indentures, other agreements, or documents
delivered thereunder), whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then existing
or
thereunder arising, in law, equity, or otherwise, that are based in whole or
part on any act, omission, transaction, event, or other occurrence taking place
on or prior to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan.
| (k) |
Class
11, Intercompany Claims
|
Under
the
Plan, an Intercompany Claim is any Claim arising prior to the Petition Date
against any of the Debtors by another Debtor. The term “Intercompany Claim” does
not include Claims against any of the Debtors by a non-Debtor subsidiary or
affiliate of a Debtor, which Claims will be treated as General Unsecured Claims.
The
Plan
provides that no holder of an Intercompany Claim will receive or retain any
property under the Plan on account of such Claim; provided,
however,
that, if
necessary for tax planning purposes, Intercompany Claims may be capitalized,
satisfied, or preserved either directly or indirectly or in whole or part.
Any
Intercompany Claim, or portion thereof, that is not so capitalized, satisfied,
or preserved will be discharged as of the Effective Date.
| (l) |
Class
12, Subordinated Claims
|
A
Subordinated Claim is a Claim against any of the Debtors that is subordinated
pursuant to Section 510(b) or 510(c) of the Bankruptcy Code, which will include
any Claim arising from the rescission of a purchase or sale of any Old Security,
any Claim for damages arising from the purchase or sale of an Old Security,
or
any Claim for reimbursement, contribution, or indemnification on account of
any
such Claim.
Under
the
Plan, the holders of Subordinated Claims will not receive or retain any property
of the Debtors under the Plan on account of such Claims. All Subordinated Claims
will be discharged as of the Effective Date.
| (m) |
Class
13, Non-Compensatory Damages Claims
|
Under
the
Plan, a Non-Compensatory Damages Claim is any Claim against any of the Debtors
for any fine, penalty, or forfeiture, or multiple, exemplary, or punitive
damages, to the extent that such fine, penalty, forfeiture, or damage is not
compensation for actual pecuniary loss suffered by the holder of such Claim,
including any such claim based upon, arising from, or relating to any cause
of
action whatsoever (including, without limitation, violation of law, personal
injury, or wrongful death, whether secured or unsecured, liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereafter arising in law, equity
or
otherwise); provided,
however, that
such
term will not include any Claim that might otherwise constitute a
Non-Compensatory Damages Claim but for a Final Order allowing such Claim to
be
an Administrative Claim, Priority Tax Claim, Other Priority Claim, Convenience
Claim, Other Secured Claim, General Unsecured Claim, or Subordinated
Claim.
According
to the Plan, the holders of Non-Compensatory Damages Claims will not receive
or
retain any property under the Plan on account of such Claims. All
Non-Compensatory Damages Claims will be discharged as of the Effective Date.
| (n) |
Class
14, Subsidiary Interests
|
Under
the
Plan, Subsidiary Interests consist of all of the issued and outstanding shares
of stock or membership interests of the Subsidiary Debtors, FNA and FIH, as
of
the Petition Date, which stock and interests are owned by
FiberMark.
For
the
deemed benefit of the holders of the New Common Stock, FiberMark (as
reorganized) will retain its equity interests in FNA and FIH, subject to any
applicable restrictions arising under the Exit Facility.
| (o) |
Class
15, FiberMark Interests
|
FiberMark
Interests consist of all equity interests in FiberMark, including, without
limitation, any preferred stock, the Old FiberMark Common Stock, the Old
FiberMark Stock Options, together with any warrants, conversion rights, rights
of first refusal, or other rights, contractual or otherwise, to acquire or
receive any stock or other equity ownership interests in FiberMark, and any
contracts, subscriptions, commitments, or agreements pursuant to which a party
was or could have been entitled to receive shares, securities, or other
ownership interests in FiberMark prior to the Effective Date.
Under
the
Plan, all FiberMark Interests of any kind, including, without limitation, the
Old FiberMark Common Stock, the Old FiberMark Stock Options, or any warrants
or
other agreements to acquire the same (whether or not arising under or in
connection with any employment agreement), will be cancelled as of the Effective
Date and the holders thereof will not receive or retain any property under
the
Plan on account of such Interests.
| E. |
Reservation
of Rights Regarding Claims
|
Except
as
otherwise explicitly provided in the Plan, nothing will affect the Debtors’ or
the Reorganized Debtors’ rights and defenses, both legal and equitable, with
respect to any Claims, including, but not limited to, all rights with respect
to
legal and equitable defenses to alleged rights of setoff or
recoupment.
| F. |
Allowed
Claims, Distribution Rights and Objections to
Claims
|
1. Allowance
Requirement
Only
holders of Allowed Claims are entitled to receive distributions under the Plan.
An Allowed Administrative Claim is all or any portion of an Administrative
Claim
that has been allowed, or adjudicated in favor of the holder by estimation
or
liquidation, by a Final Order, that was incurred by the Debtors in the ordinary
course of business during the Chapter 11 Case and as to which there is no
dispute as to the Debtors’ liability, or that has become allowed by failure to
object pursuant to Section 9.1 of
the
Plan. An Allowed Claim (other than an Administrative Claim) is such Claim or
any
portion thereof (a) that has been allowed, or adjudicated in favor of the holder
by estimation or liquidation, by a Final Order, or (b) as to which (i) no Proof
of Claim has been filed with the Bankruptcy Court and (ii) the liquidated and
noncontingent amount of which is included in the Schedules (any Claim identified
in the Schedules as contingent for administrative purposes only, which is not
otherwise contingent in nature, will not be considered contingent), other than
a
Claim that is included in the Schedules at zero, in an unknown amount, or as
Disputed, or (c) for which a Proof of Claim in a liquidated amount has been
timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, any
Final Order of the Bankruptcy Court, or other applicable bankruptcy law, and
as
to which either (i) no objection to its allowance has been filed within the
periods of limitation fixed by the Plan, the Bankruptcy Code, or any order
of
the Bankruptcy Court, or (ii) any objection to its allowance has been settled,
withdrawn, or denied by a Final Order, or (d) that is expressly allowed in
a
liquidated amount in the Plan.
2. Date
of
Distribution
All
Distributions to holders of Allowed Claims as of the applicable Distribution
Date will be made on or as soon as practicable after the applicable Distribution
Date.
For
any
Claim that is an Allowed Claim on the Effective Date, the Distribution Date
is
the Effective Date or as soon as practicable after the Effective Date but not
later than the first (1st) Business Day that is twenty (20) days after the
Effective Date. For any Claim that is not an Allowed Claim on the Effective
Date, the Distribution Date is fifteen (15) days after the last day of the
month
during which the Claim becomes an Allowed Claim; provided,
however,
a later
date may be established by order of the Bankruptcy Court upon motion of the
Debtors, the Reorganized Debtors or any other party. As to a Noteholder Claim
or
a General Unsecured Claim that is entitled to subsequent distributions from
the
Common Stock Reserve or the Cash Reserve under Section 9.3 of the Plan, the
Distribution Date is also the additional date or dates provided in Section
9.3
of the Plan.
3. Making
of
Distributions
The
Debtors will, in their sole discretion, on or before the Effective Date,
designate the Person to serve as the Disbursing Agent under the Plan on mutually
agreeable terms and conditions. Distributions to holders of Allowed Claims
will
be made by the Disbursing Agent (a) at the addresses set forth on the Proofs
of
Claim filed by such holders (or at the last known addresses of such holders
if
no Proof of Claim is filed or if the Debtors or the Reorganized Debtors have
been notified of a change of address), (b) at the addresses set forth in any
written notices of address changes delivered to the Debtors, the Reorganized
Debtors, or the Disbursing Agent after the date of any related Proof of Claim,
(c) at the addresses reflected in the Schedules if no Proof of Claim has been
filed and the Debtors, the Reorganized Debtors, or the Disbursing Agent have
not
received a written notice of a change of address, (d) in the case of a GECC
Credit Agreement Claim, to GECC, or (e) in the case of the holder of a
Noteholder Claim, to the Indenture Trustee or as directed by the Indenture
Trustee. The Indenture Trustee will make distributions on account of the
Noteholder Claims in accordance with the terms of the Indenture.
If
any
holder’s distribution is returned as undeliverable, no further distributions to
such holder will be made unless and until the Disbursing Agent is notified
of
such holder’s then current address, at which time all missed distributions will
be made to such holder without interest. Unless otherwise agreed by the
Reorganized Debtors and the Disbursing Agent, amounts in respect of
undeliverable distributions made by the Disbursing Agent will be returned to
the
Reorganized Debtors until such distributions are claimed.
All
claims for undeliverable distributions must be made on or before the second
(2nd)
anniversary of the Distribution Date, after which date all unclaimed property
will revert to the Reorganized Debtors free of any restrictions thereon and
the
claims of any holder or successor to such holder with respect to such property
will be discharged and forever barred, notwithstanding any federal or state
escheat laws to the contrary. In the event of a timely claim for an unclaimed
distribution, the Reorganized Debtors will deliver the applicable unclaimed
property to the Disbursing Agent for distribution pursuant to the Plan. Nothing
contained in the Plan will require any Debtor, any Reorganized Debtor, any
Disbursing Agent, or any Indenture Trustee to attempt to locate any holder
of an
Allowed Claim.
4. Reserves
for Disputed General Unsecured Claims; Distributions on Account Thereof
No
payments or distributions will be made on account of a Disputed Claim or, if
less than the entire Claim is a Disputed Claim, the portion of a Claim that
is
Disputed, until such Claim becomes an Allowed Claim. A Disputed Claim is any
Claim, other than a Claim that has been Allowed pursuant to the Plan or a Final
Order of the Bankruptcy Court: (a) if no Proof of Claim has been filed or deemed
to have been filed by the applicable Bar Date, that has been or hereafter is
listed on the Schedules as unliquidated, contingent, or disputed; (b) if a
Proof
of Claim has been filed or deemed to have been filed by the applicable Bar
Date,
as to which a Debtor has timely filed an objection or request for estimation
in
accordance with the Plan, the Bankruptcy Code, the Bankruptcy Rules, and any
orders of the Bankruptcy Court, or which is otherwise disputed by a Debtor
in
accordance with applicable law, which objection, request for estimation, or
dispute has not been withdrawn or determined by a Final Order; (c) for which
a
Proof of Claim was required to be filed by the Bankruptcy Code, the Bankruptcy
Rules, or an order of the Bankruptcy Court, but as to which a Proof of Claim
was
not timely or properly filed; (d) for damages based upon the rejection by a
Debtor of an executory contract or unexpired lease under Section 365 of the
Bankruptcy Code and as to which the applicable Bar Date has not passed; (e)
that
is disputed in accordance with the provisions of the Plan; or (f) if not
otherwise Allowed, as to which the applicable Claims Objection Deadline has
not
expired.
The
Disbursing Agent will, on the applicable Distribution Dates, make distributions
on account of any Disputed Claim that has become an Allowed Claim. Such
distributions will be made pursuant to the provisions of the Plan governing
the
applicable Class. Such distributions will be based upon the cumulative
distributions that would have been made to the holder of such Claim under the
Plan if the Disputed Claim had been an Allowed Claim on the Effective Date
in
the amount ultimately Allowed.
On
the
Effective Date, the Debtors will (a) determine the amount of the New Common
Stock reasonably calculated to be sufficient to provide distributions to
Disputed General Unsecured Claims that are expected to become Allowed Claims
and
(b) direct the Disbursing Agent to establish the Common Stock Reserve with
the
requisite amount of New Common Stock. In the event that the amount of New Common
Stock in the Common Stock Reserve proves to be insufficient to satisfy all
Disputed General Unsecured Claims that subsequently become Allowed Claims,
the
Reorganized Debtors will issue additional shares of New Common Stock as
necessary to ensure that all holders of Allowed General Unsecured Claims and
Allowed Noteholder Claims ultimately receive the same Pro Rata distribution
of
New Common Stock.
On
the
Effective Date, the Debtors will (a) determine the amount of Distribution Cash
reasonably calculated to be sufficient to provide Cash payments to Disputed
General Unsecured Claims that are expected to become Allowed Claims and (ii)
direct the Disbursing Agent to establish the Cash Reserve with the requisite
amount of Cash to cover distributions.
Except
with respect to the Cash Reserve for Disputed General Unsecured Claims, no
reserve will be required with respect to Cash payments that may be required
to
be made by the Debtors. The Debtors will transfer funds to the Disbursing Agent
from time to time as necessary to satisfy any such Cash payments.
With
respect to the shares of New Common Stock held in the Common Stock Reserve
on
account of Disputed General Unsecured Claims, not later than the one hundred
twentieth (120th)
day
following the applicable Distribution Date and not less frequently than every
one hundred twentieth (120th)
day
thereafter, the Disbursing Agent, as directed by the Reorganized Debtors, will
calculate the amount, if any, by which the number of such shares exceeds the
number that would be allocable to any of the remaining Disputed Claims that
are
expected to become Allowed Claims. Except with respect to the final
distribution, in the event the Disbursing Agent determines, as directed by
the
Reorganized Debtors, that an excess exists that would result in distributions
in
the aggregate of at least 10,000 shares of New Common Stock, such excess will
be
promptly distributed or allocated on a Pro Rata basis in accordance with
Sections 4.3(f) and 4.3(g) of the Plan to holders of Allowed Noteholder Claims
and Allowed General Unsecured Claims. With respect to the final distribution,
all remaining shares in the Common Stock Reserve will be promptly distributed
or
allocated on a Pro Rata basis in accordance with Sections 4.3(f) and 4.3(g)
of
the Plan to holders of Allowed Noteholder Claims and Allowed General Unsecured
Claims unless the number of shares is de minimis and the cost of the
distribution, as determined by the Reorganized Debtors, would exceed the value
of the remaining shares. Any shares of New Common Stock that are not distributed
will be cancelled.
With
respect to Distribution Cash held in the Cash Reserve on account of Disputed
General Unsecured Claims, not later than the one hundred twentieth (120th)
day
following the Distribution Date and not less frequently than every one hundred
twentieth (120th) day thereafter, the Disbursing Agent, as directed by the
Reorganized Debtors, will calculate the amount, if any, by which such Cash
exceeds the amount that would be allocable to any of the remaining Disputed
Claims that are expected to become Allowed Claims. Except with respect to the
final distribution, in the event the Disbursing Agent determines that an excess
exists that would result in distributions in the aggregate of at least $100,000,
such excess will be promptly distributed or allocated on a Pro Rata basis in
accordance with Section 4.3(g) to holders of Allowed General Unsecured Claims.
With respect to the final distribution, the remaining amount of Cash in the
Cash
Reserve will be promptly distributed or allocated on a Pro Rata basis in
accordance with Section 4.3(g) to the holders of Allowed General Unsecured
Claims unless such remaining amount is de minimis and the cost of the
distribution would exceed such remaining amount. Any of the Cash that is not
distributed will be returned to the Reorganized Debtors.
After
the
Effective Date, if Reorganized FiberMark consummates an Organic Change, then
the
successor or acquiring entity will assume Reorganized FiberMark's obligations
regarding payment of Disputed Claims and will adjust the reserves and payouts
for potential payment of Disputed Claims such that the reserves and payouts
consist of the consideration, if any, that would have been paid with respect
to
the remaining New Common Stock and Distribution Cash reserved for Disputed
Claims had such New Common Stock and Distribution Cash been outstanding
immediately prior to the consummation of the Organic Change. The Plan defines
Organic Change as any transaction or series of transactions pursuant to which
Reorganized FiberMark reorganizes its capital, consolidates or merges with
or
into another Person or enters into a business combination with another Person
(in the case of a consolidation, merger or business combination, where
Reorganized FiberMark is not the surviving Person), or sells, transfers or
otherwise disposes of all or substantially all of its property, assets, or
business to another Person.
No
reserve will be required with respect to payments or other distributions to
be
made under the Plan to any Claim that is not a Noteholder Claim or a General
Unsecured Claim.
5. Objection
Procedures
All
objections to Claims must be filed and served on the holders of such Claims
by
the Claims Objection Deadline. Under the Plan, the Claims Objection Deadline
is
defined as the last day for filing objections to Claims, which day will be
the
latest of (a) sixty (60) days after the Effective Date, (b) thirty (30) days
after the applicable Proof of Claim or request for payment of an Administrative
Claim is filed, (c) thirty (30) days after entry of a Final Order reinstating
any Claim previously disallowed under Section 502(j) of the Bankruptcy Code,
or
(d) such other later date as is established by order of the Bankruptcy Court
upon motion of the Reorganized Debtors or any other party. If an objection
has
not been filed to a Proof of Claim or a scheduled Claim by the Claims Objection
Deadline, the Claim to which the Proof of Claim or scheduled Claim relates
will
be treated as an Allowed Claim if such Claim has not been allowed earlier.
6. Estimation
of Contingent or Unliquidated Claims
The
Debtors may, at any time, request that the Bankruptcy Court estimate any
contingent or unliquidated Claim pursuant to Section 502(c) of the Bankruptcy
Code, regardless of whether such Debtor has previously objected to such Claim
or
whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy
Court will retain jurisdiction to estimate any Claim at any time during
litigation concerning any objection to any Claim, including during the pendency
of any appeal relating to any such objection. In the event the Bankruptcy Court
so estimates any contingent or unliquidated Claim, that estimated amount will
constitute either the Allowed amount of such Claim or a maximum limitation
on
such Claim, as determined by the Bankruptcy Court, as applicable. If the
estimated amount constitutes a maximum limitation on such Claim, the Debtors
may
elect to pursue any supplemental proceedings to object to any ultimate payment
on such Claim. All of the aforementioned Claims objection, estimation, and
resolution procedures are cumulative and are not necessarily exclusive of one
another. Claims may be estimated and thereafter resolved by any permitted
mechanisms.
| G. |
Disposition
of Executory Contracts and Unexpired Leases
|
1. Executory
Contracts and Unexpired Leases Deemed Assumed
The
Plan
provides for the deemed assumption of all executory contracts or unexpired
leases that have not been otherwise disposed of. Specifically, each Debtor
will
be deemed to have assumed, as of the Effective Date, each executory contract
and
unexpired lease to which it is a party unless such contract or lease
(a)
was
previously assumed or rejected upon motion by a Final Order, (b) previously
expired or terminated pursuant to its own terms, or (c) is the subject of any
pending motion, including to assume, to assume on modified terms, to reject,
or
to make any other disposition filed by a Debtor on or before the Confirmation
Date. The Confirmation Order will constitute an order of the Bankruptcy Court
under Section 365(a) of the Bankruptcy Code approving the executory contract
and
unexpired lease assumptions described above, as of the Effective
Date.
Under
the
Plan, each executory contract and unexpired lease that is assumed and relates
to
the use, ability to acquire, or occupancy of real property will include (i)
all
modifications, amendments, supplements, restatements, or other agreements made
directly or indirectly by any agreement, instrument, or other document that
in
any manner affects such executory contract or unexpired lease and (ii) all
executory contracts or unexpired leases appurtenant to the premises, including
all easements, licenses, permits, rights, privileges, immunities, options,
rights of first refusal, powers, uses, reciprocal easement agreements, vaults,
tunnel or bridge agreements or franchises, and any other interests in real
estate or rights in rem related to such premises, unless any of the foregoing
agreements has been rejected pursuant to an order of the Bankruptcy Court.
2. Cure
with
Respect to Assumed Executory Contracts and Unexpired Leases
Any
monetary amounts by which each executory contract and unexpired lease to be
assumed pursuant to the Plan is in default will be satisfied, under Section
365(b)(1) of the Bankruptcy Code, at the option of the Debtor party to each
such
contract or lease or the assignee of such Debtor party assuming such contract
or
lease, by Cure. If there is a dispute regarding (a) the nature or amount of
any
Cure, (b) the ability of any Reorganized Debtor or any assignee to provide
“adequate assurance of future performance” (within the meaning of Section 365 of
the Bankruptcy Code) under the contract or lease to be assumed, or (c) any
other matter pertaining to assumption, Cure will occur following the entry
of a
Final Order resolving the dispute and approving the assumption or assumption
and
assignment, as the case may be; provided
however,
that
the Reorganized Debtors will be authorized to reject any executory contract
or
unexpired lease to the extent the Reorganized Debtors, in the exercise of their
sound business judgment, conclude that the amount of the Cure obligation, as
determined by such Final Order, renders assumption of such executory contract
or
unexpired lease unfavorable to the Reorganized Debtors.
3. Rejected
Executory Contracts and Unexpired Leases
The
Debtors reserve the right, at any time prior to the Effective Date, except
as
otherwise specifically provided in the Plan, to seek to reject any executory
contract or unexpired lease to which any Debtor is a party and to file a motion
requesting authorization for the rejection of any such executory contract or
unexpired lease. Any executory contracts or unexpired leases that expire by
their terms prior to the Effective Date are deemed to be rejected, unless
previously assumed or otherwise disposed of by the Debtors.
4. Rejection
Damages
Bar
Date
If
the
rejection by a Debtor, pursuant to the Plan or otherwise, of an executory
contract or unexpired lease results in a Claim, then such Claim will be forever
barred and will not be enforceable against any Debtor or Reorganized Debtor
or
the properties of any of them unless a Proof of Claim is filed with the clerk
of
the Bankruptcy Court and served upon counsel to the Reorganized Debtors within
thirty (30) days after entry of the order authorizing the rejection of such
executory contract or unexpired lease.
5. Compensation
and Benefit Programs
The
Plan
specifically provides for the rejection of any and all stock based incentive
plans and stock ownership plans of the Debtors entered into before the Petition
Date.
The
Plan
further provides that except to the extent (a) otherwise provided for in the
Plan, (b) previously assumed or rejected by an order of the Bankruptcy Court
entered on or before the Confirmation Date, (c) the subject of a pending motion
to reject filed by a Debtor on or before the Confirmation
Date, or (d) previously terminated, all employee compensation and benefit
programs of the Debtors as set forth on Exhibit D of the Plan, including all
health and welfare plans, pension plans within the meaning of Title IV of the
Employee Retirement Income Security Act of 1974, as amended), and all programs
subject to Sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered into
before or after the Petition Date and not since terminated, will be deemed
to
be, and will be treated as though they are, executory contracts that are assumed
under the Plan. However, the Plan does not modify the existing terms of such
employee compensation and benefit programs, including, without limitation,
the
Debtors’ and the Reorganized Debtors’ rights of termination and amendment
thereunder. With a new Board of Directors, the Reorganized Debtors may elect
to
exercise such rights of termination and amendment.
Furthermore,
the Key Employee Protection Order is incorporated into the Plan by reference.
All rights, claims, interests, entitlements, and obligations of the Debtors
under the Key Employee Protection Order and under the Key Employee Retention
Plan, the Key Employee Severance Plan, and the Discretionary Recognition Plan
authorized thereby will continue in full force and effect after the Effective
Date as rights, claims, interests, entitlements, and obligations of the
Reorganized Debtors.
Moreover,
the Plan provides that the Debtors’ supplemental executive retirement plans,
deferred compensation plans, and related trust and individual agreements will
terminate as of the Effective Date. To the extent such plans and agreements
(and
any separate agreements that may incorporate such plans and agreements) are
considered to be executory contracts, such plans and agreements (and any
separate agreements that may incorporate such plans and agreements) will be
deemed to be rejected pursuant to Section 365 of the Bankruptcy Code under
the
Plan pursuant to the Confirmation Order. The Claims of all vested participants
in such plans will be treated as General Unsecured Claims under the
Plan.
The
Plan
provides that any employee compensation or benefit program that is not listed
on
Exhibit D of the Plan will be deemed to be, and will be treated as though it
is,
an executory contract that is rejected under the Plan, unless such employee
compensation or benefit program is (i) otherwise provided for in the Plan,
(ii)
previously assumed or rejected by an order of the Bankruptcy Court entered
on or
before the Confirmation Date, (iii) the subject of a pending motion to assume
filed by a Debtor on or before the Confirmation Date, or (iv) previously
terminated.
6. Indemnification
Obligations
The
Plan
provides that Indemnification Obligations owed to those of the Debtors’
directors, officers, and employees serving on and after the Petition Date will
be deemed to be, and will be treated as though they are executory contracts
that
are assumed pursuant to Section 365 of the Bankruptcy Code under the Plan,
and
such Indemnification Obligations (subject to any defenses thereto) will survive
the Effective Date of the Plan and remain unaffected thereby, irrespective
of
whether indemnification is owed in connection with a pre-Petition Date or
post-Petition Date occurrence. All other Indemnification Obligations owed to
any
person who was a director, officer, or employee of the Debtor prior to the
Petition Date will be deemed to be, and will be treated as though they are,
executory contracts that are rejected pursuant to Section 365 of the Bankruptcy
Code under the Plan pursuant to the Confirmation Order (unless earlier rejected
by Final Order).
Indemnification
Obligations owed to any Professionals pursuant to Sections 327 or 328 of the
Bankruptcy Code and order of the Bankruptcy Court, whether such Indemnification
Obligations relate to the period before or after the Petition Date, will be
deemed to be, and will be treated as though they are, executory contracts that
are assumed pursuant to Section 365 of the Bankruptcy Code under the Plan.
7. Extension
of Time to Assume or Reject
To
protect the Debtors from an inadvertent deemed assumption of a contract or
lease
that the Debtors do not consider to be executory or unexpired, the Plan provides
that, notwithstanding anything set forth in Article VII of the Plan, in the
event of a dispute as to whether a contract is executory or a lease is
unexpired, the right of the Reorganized Debtors to move to assume or reject
such
contract or lease will be extended until the date that is thirty (30) days
after
entry of a Final Order by the Bankruptcy Court determining that the contract
is
executory or the lease is unexpired. The deemed assumption provided for in
Section 7.1(a) of the Plan will not apply to any such contract or lease, and
any
such contract or lease will be assumed or rejected only upon motion of the
Reorganized Debtors following the Bankruptcy Court's determination that the
contract is executory or the lease is unexpired.
| H. |
Revesting
of Assets; Release of
Liens
|
Except
as
otherwise provided in the Plan, the property of each Debtor’s Estate, together
with any property of each Debtor that is not property of its Estate and that
is
not specifically disposed of or abandoned pursuant to the Plan, will revest
in
the applicable Debtor on the Effective Date. Thereafter, each Reorganized Debtor
may operate its business and may use, acquire, and dispose of such property
free
of any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the
Bankruptcy Court. As of the Effective Date, all such property of each
Reorganized Debtor will be free and clear of all Claims and Interests, except
as
specifically provided in the Plan or the Confirmation Order.
| I. |
Post-Effective
Date Restructuring
Transactions
|
Under
the
Plan, on, as of, or after the Effective Date, with the consent of the New Board
or the Board of Directors of the Subsidiary Debtors, as applicable, each of
the
Reorganized Debtors may enter into such transactions and may take such actions
as may be necessary or appropriate, in accordance with any applicable state
law,
to effect a corporate or operational restructuring of their respective
businesses, to otherwise simplify the overall corporate or operational structure
of the Reorganized Debtors, to achieve corporate or operational efficiencies,
or
to otherwise improve financial results; provided, however, that such
transactions or actions are not otherwise inconsistent with the Plan, the
distributions to be made under the Plan, the New FiberMark Charter, the New
FiberMark By-laws, the Registration Rights Agreement, or the Exit Facility.
Such
transactions or actions may include such mergers, consolidations,
restructurings, dispositions, liquidations, closures, or dissolutions, as may
be
determined by the Reorganized Debtors to be necessary or appropriate. Without
limiting the generality of the foregoing, FiberMark is specifically authorized
to make a capital contribution of its ownership interests in Specialty
Paperboard (Hong Kong) Ltd. and FiberMark SARL to FIH.
| J. |
Post-Consummation
Corporate Structure, Management and Operation
|
1. Continued
Corporate Existence
The
Plan
provides that the Reorganized Debtors will continue to exist after the Effective
Date as separate corporate entities, in accordance with the applicable laws
in
the respective jurisdictions in which they are incorporated and pursuant to
their respective certificates or articles of incorporation, memorandum of
association, articles of association, and by-laws, as applicable, in effect
prior to the Effective Date, except to the extent such certificates or articles
of incorporation, memorandum of association, articles of association, and
by-laws are amended pursuant to the Plan.
2. Post-Consummation
Governance Documents
The
certificate or articles of incorporation, memorandum of association, articles
of
association, and by-laws of each Debtor, as applicable, will be amended as
necessary to satisfy the provisions of the Plan and the Bankruptcy Code and
will
include, among other things, pursuant to Section 1123(a)(6) of the Bankruptcy
Code, a provision prohibiting the issuance of non-voting equity securities,
but
only to the extent required by Section 1123(a)(6) of the Bankruptcy Code. The
New FiberMark Charter and the New FiberMark By-laws shall be substantially
in
the forms attached to the Plan as Exhibit A and Exhibit B, respectively. The
rights of the holders of the New Common Stock will be governed by the New
FiberMark Charter, the New FiberMark By-laws, and (to the extent they are
parties to) the Registration Rights Agreement, the general terms of which are
summarized below:
| (a) |
New
FiberMark Charter
|
The
general terms of the New FiberMark Charter will include the following:
| · |
Generally
standard provisions under Delaware law - i.e.: no cumulative voting,
no
staggered board, no tag-along or drag-along rights, no right of
participation in financings or other transactions for minority
shareholders or others, amendments to charter generally permitted
by vote
of a majority of shares;
|
| · |
No
restrictions on transfer except for those designed to keep number
of
stockholders below level requiring registration under '34
Act;
|
| · |
Special
provisions relating to transactions with affiliates:
|
--
the
Company shall not, and shall not permit any Subsidiary to, (a) merge with or
into or consolidate with any Affiliate, (b) sell, assign, transfer or otherwise
dispose of all or substantially all of its assets to any Affiliate, (c) sell,
assign, transfer or otherwise dispose of, to an Affiliate, assets having a
fair
market value in excess of $25 million, or (d) sell, assign, transfer or
otherwise dispose of, to an Affiliate, any property, plant or equipment used
principally in the Company's United States-based operations and having a fair
market value in excess of $5 million, without, in any such case, first obtaining
the approval of the holders of a majority of Disinterested Shares, provided,
however, that, no such approval shall be required for transactions between
the
Corporation and any of its wholly owned subsidiaries or among wholly owned
subsidiaries of the Corporation;
--
the
Company shall not, and shall not permit any Subsidiary to, enter into any
transaction with or for the benefit of any Affiliate which transaction has
a
value, determined in good faith by the Board, in excess of $5 million, unless
the material terms and conditions of such transaction (a) have been fully
disclosed to the Board and (b) have been approved by a majority of the
Disinterested Directors. For the avoidance of doubt, any transaction with or
for
the benefit of any Affiliate having a value, determined as set forth in the
immediately preceding sentence, of $5 million or less, shall not be subject
to
the approval procedures set forth in the immediately preceding sentence and
shall require only such approvals as shall normally be required under the
Corporation's ordinary course procedures applicable to a transaction of that
value;
--
Special provisions relating to transactions with affiliates would require
supermajority vote to amend (66-2/3% of outstanding shares) and (ii) information
reporting would require supermajority vote to amend (75% of outstanding shares);
and
| · |
Reorganized
FiberMark will provide to stockholders (i) annual audited financial
statements within 90 days of the end of the fiscal year, and (ii)
unaudited quarterly financial statements within 45 days of the end
of each
of the first three fiscal quarters of the year, such reports to be
generally compliant with SEC requirements but without requiring a
narrative discussion as would otherwise be required in SEC reports,
and
without requiring provisions specifically required under the
Sarbanes-Oxley Act.
|
| (b) |
New
FiberMark By-laws
|
The
New
FiberMark By-laws will contain standard provisions under Delaware law. They
will
not include special notice or special voting requirements or provisions relating
to advance notice to get agenda items considered at the annual meeting.
| (c) |
Registration
Rights Agreement
|
The
Registration Rights Agreement will permit the holder of a specified percentage
of shares, having a specified expected value in the market, to cause Reorganized
FiberMark to register those shares (effectively forcing Reorganized FiberMark
to
go public) if it has not made a public offering within 2 years of the Effective
Date, with the number of required shares and the correlative market value
declining over time. There would also be unlimited "piggy-back" registrations,
with the number of shares subject to cutback under certain
circumstances.
3. Cancellation
of Old Securities and Agreements
On
the
Effective Date, except as otherwise provided for in the Plan, (a) the Old
Securities, including, without limitation, the FiberMark Notes, the FiberMark
Interests, and any other note, bond, or indenture evidencing or creating any
indebtedness or obligation of any Debtor will be deemed extinguished, cancelled,
and of no further force or effect, and (b) the obligations of the Debtors (and
Reorganized Debtors) under any agreements, indentures, or certificates of
designations governing the Old Securities and any other note, bond, or indenture
evidencing or creating any indebtedness or obligation of any Debtor with respect
to the Old Securities will be discharged in each case without further act or
action under any applicable agreement, law, regulation, order, or rule and
without any action on the part of the Bankruptcy Court or any Person;
provided,
however,
that the
FiberMark Notes and the Indentures will continue in effect solely for the
purposes of (i) allowing holders of the FiberMark Notes to receive the
distributions provided for Noteholder Claims hereunder, (ii) allowing the
Disbursing Agent or the Indenture Trustee, as the case may be, to make
distributions on account of the Noteholder Claims, and (iii) preserving the
rights of the Indenture Trustee with respect to the Indenture Trustee Expenses,
including, without limitation, the Indenture Trustee Charging Lien and any
indemnification rights provided by the Indentures.
Subsequent
to the performance by the Indenture Trustee or its agents of any duties that
are
required under this Plan, the Confirmation Order and/or under the terms of
the
Indentures, the Indenture Trustee and its agents will be relieved of, and
released from, all obligations associated with the FiberMark Notes arising
under
the Indentures or under other applicable agreements or law and the Indentures
will be deemed to be discharged.
4. Officers
and Directors of Reorganized Debtors
The
Plan
provides that the existing senior officers of FiberMark will serve initially
in
the same capacities after the Effective Date for Reorganized FiberMark until
replaced or removed in accordance with the New FiberMark Charter and New
FiberMark By-laws.
Under
the
Plan, the initial New Board will be comprised of seven (7) directors. All of
the
directors taking office on the Effective Date will be designated by Silver
Point
Capital, L.P. Silver Point Capital, L.P. has advised the Company that it may
in
its sole discretion permit one (1) of such initial directors to be designated
jointly by AIG Global Investment Corp. and Post Advisory Group, LLC, provided
that such designee is reasonably acceptable to the Debtors and Silver Point
Capital, L.P. The designations will be announced in a filing made with the
Bankruptcy Court no later than five (5) days prior to the Confirmation Hearing.
Upon the failure of Silver Point Capital, L.P. (or, if applicable, AIG Global
Investment Corp. and Post Advisory Group, LLC) to timely file their respective
designations, such party will be deemed to have waived its rights to designate,
and the Debtors will instead make such designations in a filing with the
Bankruptcy Court no later than three (3) days prior to the Confirmation Hearing.
The initial directors will serve until the first annual meeting of stockholders
following the first anniversary of the Effective Date or until earlier removed
or replaced in accordance with the New FiberMark Charter or the New FiberMark
By-laws.
The
existing directors and senior officers of the Subsidiary Debtors will continue
to serve in their same respective capacities after the Effective Date for the
Reorganized Subsidiary Debtors, until replaced or removed in accordance with
the
certificate or articles of incorporation, memorandum of association, articles
of
association, and by-laws of such entities.
5. Equity
Incentive Plan;
Further
Participation in Incentive Plans
On
the
Effective Date, Reorganized FiberMark will be authorized and directed, subject
to all requisite shareholder approvals, to establish and implement the New
Equity Incentive Plan on or before the 6-month anniversary of the Effective
Date
for up to 10% of the total amount of New Common Stock issued on the Effective
Date. Awards granted thereunder may be in the form of options, stock, restricted
stock, and other forms of equity grants. The New Equity Incentive Plan will
be
promulgated by the New Board for the benefit of such members of management,
employees, and directors of Reorganized FiberMark and any of its subsidiaries
as
are designated by the New Board, in its sole and absolute discretion, on such
terms as to timing of issuance, manner and timing of vesting, duration,
individual entitlement and all other terms, as such terms are determined by
the
New Board in its sole and absolute discretion. The New Equity Incentive Plan
may
be amended or modified from time to time by the New Board. No members of
management, employees, and directors of Reorganized FiberMark and its
subsidiaries who are entitled to receive awards pursuant to the New Equity
Incentive Plan will be obligated to participate in such plan.
Except
as
provided in Section 7.5(c) of the Plan, any pre-existing understandings, either
oral or written, between the Debtors and any member of management or any
employee as to entitlement to participate in any pre-existing equity or other
incentive plan of any kind will be null and void as of the Effective Date and
will not be binding on Reorganized FiberMark with respect to the New Equity
Incentive Plan or any other incentive plan implemented after the Effective
Date.
All decisions as to entitlement to participate after the Effective Date in
any
incentive plan will be within the sole and absolute discretion of the New Board.
6. Funding
of Reorganized Debtors
Under
the
Plan, the Reorganized Debtors will obtain an Exit Facility, in the form of
revolving credit, term credit and/or letters of credit as determined necessary,
in order to obtain the funds necessary to repay the DIP Facility Claim and
German Guaranty Claim, make other required payments under the Plan, and conduct
their post-reorganization operations. The Exit Facility is expected to be
secured by substantially all the assets of the Reorganized Debtors, subject
to
customary limitations on the pledge of stock of foreign subsidiaries and
consistent with the pre-petition security package.
The
Confirmation Order will (i) approve the Exit Facility substantially in
accordance with the commitment letter to be filed with the Bankruptcy Court
in
advance of the Confirmation Hearing and (ii) authorize the Debtors to execute
such other documents as the Exit Facility lenders or participants may reasonably
require.
On
the
Effective Date, the Exit Facility, together with new promissory notes and
guarantees evidencing obligations of the Reorganized Debtors thereunder, and
all
other documents, instruments, mortgages, and agreements to be entered into,
delivered, or confirmed thereunder on the Effective Date, will become effective.
All obligations under the Exit Facility and related documents will be repaid
as
set forth in the Exit Facility and related documents.
In
connection with obtaining the Exit Facility, the Plan provides that the Debtors
will be permitted to participate as a guarantor and pledgor in any
contemporaneous financing obtained by the Debtors’ foreign subsidiaries. In
addition, the Debtors will be permitted to continue to obtain funding from
their
foreign subsidiaries, in the form of intercompany loans, dividends,
repatriation, or other form of transfer, to the extent available and permitted
under applicable law.
7. Exemption
from Certain Transfer Taxes
Pursuant
to Section 1146(c) of the Bankruptcy Code, any transfers from a Debtor to a
Reorganized Debtor or any other Person pursuant to the Plan in the United
States, including any Liens granted by a Debtor or a Reorganized Debtor to
secure the Exit Facility, will not be taxed under any law imposing a stamp
tax,
real estate transfer tax, sales or use tax, or other similar tax. Such exemption
specifically applies, without limitation, to all documents necessary to evidence
and implement the provisions of and the distributions to be made under the
Plan,
including the New FiberMark Charter, the New FiberMark By-laws, the Registration
Rights Agreement, and the documents reflecting the Exit Facility.
8. Exemption
from Registration
FiberMark
files annual, quarterly and current reports, proxy statements and other
information with the SEC, which documents are available for inspection and
copying at the public reference room of the SEC and are also available from
the
SEC’s Web site at www.sec.gov. The Plan contemplates that from and after the
Effective Date, or as soon thereafter as Reorganized FiberMark practically
is
able to make the appropriate filings with the SEC, Reorganized FiberMark
will cease filing such public reports. In addition, from and after the Effective
Date, the New Common Stock will no longer be quoted for trading on any national
interdealer quotation system or listed for trading on any national securities
exchange, and as a consequence holders of the New Common Stock may find it
difficult to effect trades in the New Common Stock, price quotes for the New
Common Stock may be hard to obtain, and the liquidity of the New Common Stock
may be severely adversely effected. In addition, the provisions of the New
FiberMark Charter will impose various restrictions on the right of holders
of
the New Common Stock if the effect of any such sale, assignment, transfer or
other disposition would be to require Reorganized FiberMark to continue or
resume filing public reports with the SEC. Other than as so restricted, the
New
Common Stock may be resold without registration under the Securities Act or
other federal securities laws pursuant to an exemption provided by Section
4(1)
of the Securities Act, unless the holder is an “underwriter” (see discussion
below) with respect to such securities, as that term is defined under the
Bankruptcy Code. In addition, such securities generally may be resold without
registration under state securities or “blue sky” laws pursuant to various
exemptions provided by the respective laws of the several states. However,
recipients of securities issued under the Plan are advised to consult with
their
own legal advisors as to the availability of any such exemption from
registration under state law in any given instance and as to any applicable
requirements or conditions to such availability.
9. Corporate
Action
On
the
Effective Date, the adoption and filing of the New FiberMark Charter and New
FiberMark By-laws, the appointment of directors and officers of Reorganized
FiberMark, the adoption of the Registration Rights Agreement, and all actions
contemplated by the Plan will be authorized and approved in all respects
pursuant to the Plan. All matters provided for in the Plan involving the
corporate structure of the Debtors or Reorganized Debtors and any corporate
action required by the Debtors or Reorganized Debtors in connection with the
Plan will be deemed to have occurred and will be in effect, without any
requirement of further action by the stockholders or directors of the Debtors
or
Reorganized Debtors. On the Effective Date, the appropriate officers or
directors of the Reorganized Debtors will be authorized and directed to issue,
execute, and deliver the agreements, documents, securities, and instruments
contemplated by the Plan in the name of and on behalf of the Reorganized Debtors
without the need for any required approvals, authorizations, or consents, except
for express consents required under this Plan.
| K. |
Confirmation
and/or Consummation
|
Described
below are certain important considerations under the Bankruptcy Code in
connection with confirmation of the Plan.
1. Requirements
for Confirmation of the Plan
Before
the Plan can be confirmed, the Bankruptcy Court must determine at the hearing
on
confirmation of the Plan (the “Confirmation Hearing”) that the following
requirements for confirmation, set forth in Section 1129 of the Bankruptcy
Code,
have been satisfied:
| · |
The
Plan complies with the applicable provisions of the Bankruptcy
Code.
|
| · |
The
Debtors have complied with the applicable provisions of the Bankruptcy
Code.
|
| · |
The
Plan has been proposed in good faith and not by any means forbidden
by
law.
|
| · |
Any
payment made or promised by the Debtors or by a Person issuing securities
or acquiring property under the Plan for services or for costs and
expenses in, or in connection with, the Chapter 11 Case, or in connection
with the Plan and incident to the Chapter 11 Case, has been disclosed
to
the Bankruptcy Court, and any such payment made before confirmation
of the
Plan is reasonable, or if such payment is to be fixed after confirmation
of the Plan, such payment is subject to the approval of the Bankruptcy
Court as reasonable.
|
| · |
The
Debtors have disclosed (i) the identity and affiliations of (x) any
individual proposed to serve, after confirmation of the Plan, as
a
director, officer, or voting trustee of the Reorganized Debtors,
(y) any
affiliate of the Debtors participating in a joint plan with the Debtors,
or (z) any successor to the Debtors under the Plan (and the appointment
to, or continuance in, such office of such individual(s) is consistent
with the interests of Claim and Interest holders and with public
policy),
and (ii) the identity of any insider that will be employed or retained
by
the Debtors and the nature of any compensation for such
insider.
|
| · |
With
respect to each Class of Claims or Interests, each Impaired Claim
and
Impaired Interest holder either has accepted the Plan or will receive
or
retain under the Plan, on account of the Claims or Interests held
by such
holder, property of a value, as of the Effective Date, that is not
less
than the amount that such holder would receive or retain if the Debtors
were liquidated on such date under Chapter 7 of the Bankruptcy Code.
See
Section X.D hereto.
|
| · |
The
Plan provides that Administrative Claims and Priority Claims other
than
Priority Tax Claims will be paid in full on the Effective Date and
that
Priority Tax Claims will receive on account of such Claims deferred
cash
payments, over a period not exceeding six (6) years after the date
of
assessment of such Claims, of a value, as of the Effective Date,
equal to
the Allowed Amount of such Claims, except to the extent that the
holder of
any such Claim has agreed to a different treatment. See
Section VI.D.1
hereto.
|
| · |
If
a Class of Claims is Impaired under the Plan, at least one Class
of
Impaired Claims has accepted the Plan, determined without including
any
acceptance of the Plan by insiders holding Claims in such
Class.
|
| · |
Confirmation
of the Plan is not likely to be followed by the liquidation, or the
need
for further financial reorganization, of the Debtors or any successor
to
the Debtors under the Plan, unless such liquidation or reorganization
is
proposed in the Plan. See
Section X.A hereto.
|
| · |
The
Plan provides for the continuation after the Effective Date of all
retiree
benefits, if any, at the level established pursuant to Section
1114(e)(1)(B) or 1114(g) of the Bankruptcy Code at any time prior
to
confirmation of the Plan, for the duration of the period the Debtors
have
obligated themselves to provide such
benefits.
|
The
Debtors believe that, upon receipt of the votes required to confirm the Plan,
the Plan will satisfy all the statutory requirements of Chapter 11 of the
Bankruptcy Code, that the Debtors have complied or will have complied with
all
of the requirements of Chapter 11, and that the Plan has been proposed and
submitted to the Bankruptcy Court in good faith.
2. Conditions
to Confirmation Date and Effective Date
The
Plan
specifies conditions precedent to the Confirmation Date and the Effective Date.
Each of the specified conditions must be satisfied or waived in whole or in
part
by the Debtors without any notice to parties-in-interest or the Bankruptcy
Court
and without a hearing; provided,
however
that
such waiver will not be effective with respect to certain conditions without
the
consent of GECC and/or the lender or the agent for the lenders under the Exit
Facility, as the case may be.
The
conditions precedent to the occurrence of the Confirmation Date, which is the
date of entry by the clerk of the Bankruptcy Court of the Confirmation Order,
are that: (a) an order finding that the Disclosure Statement contains adequate
information pursuant to Section 1125 of the Bankruptcy Code will have been
entered; and (b) the proposed Confirmation Order will be in form and substance
reasonably satisfactory to the Debtors, GECC as the lender under the DIP
Facility, and the lender or the agent for the lenders under the Exit
Facility.
The
conditions that must be satisfied on or prior to the Effective
Date, which is the Business
Day upon which all conditions to the consummation of the Plan have been
satisfied or waived, and is the date on which the Plan becomes effective, are
that: (a) the Confirmation Order will have been entered in form and substance
reasonably satisfactory to the Debtors, GECC as the lender under the DIP
Facility, and the lender or the agent for the lenders under the Exit Facility,
and will, among other things: (i) provide that the Debtors and the Reorganized
Debtors are authorized and directed to take all actions necessary or appropriate
to enter into, implement, and consummate the contracts, instruments, releases,
leases, indentures and other agreements or documents created in connection
with
the Plan; (ii) approve the Exit Facility; (iii) authorize the issuance of the
New Common Stock; and (iv) provide that notwithstanding Bankruptcy Rule 3020(e),
the Confirmation Order will be immediately effective, subject to the terms
and
conditions of the Plan; (b) the Confirmation Order will not then be stayed,
vacated, or reversed; (c) the documents evidencing the Exit Facility will be
in
form and substance reasonably acceptable to the Debtors and the lender or the
agent for the lenders under the Exit Facility, and, to the extent any of such
documents contemplates execution by one or more persons, any such document
will
have been executed and delivered by the respective parties thereto, and all
conditions precedent to the effectiveness of each such document will have been
satisfied or waived; (d) the Reorganized Debtors will have arranged for credit
availability under the Exit Facility in amount, form, and substance acceptable
to the Debtors, GECC, and the lender or the agent for the lenders under the
Exit
Facility; (e) the Debtors will have determined that the number of record holders
of New Common Stock as of the Effective Date will be less than 300; (f) all
material authorizations, consents, and regulatory approvals required, if any,
in
connection with consummation of the Plan will have been obtained; and (g) all
material actions, documents, and agreements necessary to implement the Plan
will
have been effected or executed.
| L. |
Releases,
Discharge, Injunctions, Exculpation
and Indemnification
|
1. Releases
by Debtors in Favor of Third Parties
The
Plan
provides for certain releases to be granted by the Debtors in favor of: any
of
the other Debtors and any of the Debtors’ non-Debtor subsidiaries; the
directors, officers, and employees of any of the Debtors or any of the Debtors’
non-Debtor subsidiaries serving during the pendency of the Chapter 11 Case;
any
Professionals of the Debtors; GECC and its advisors; and the Indenture Trustee
and its advisors. Specifically, as
of the
Effective Date, the Debtors, the Reorganized Debtors, and any person seeking
to
exercise the rights of the Debtors’ estate, including, without limitation, any
successor to the Debtors and any estate representative appointed or selected
pursuant to Section 1123(b)(3) of the Bankruptcy Code, will be deemed to forever
release, waive, and discharge all claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action (including claims or causes
of
action arising under Chapter 5 of the Bankruptcy Code), and liabilities
whatsoever (other than for fraud, willful misconduct, or gross negligence)
in
connection with or related to the Debtors, the Chapter 11 Case, or the Plan
(other than the rights of the Debtors and the Reorganized Debtors to enforce
the
Plan and the contracts, instruments, releases, indentures, and other agreements
or documents delivered thereunder), whether liquidated or unliquidated, fixed
or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen,
then
existing or thereafter arising, in law, equity, or otherwise, that are based
in
whole or part on any act, omission, transaction, event, or other occurrence
taking place on or prior to the Effective Date in any way relating to the
Debtors, the Reorganized Debtors, the Chapter 11 Case, or the Plan, and that
may
be asserted by or on behalf of the Debtors, the Estates, or the Reorganized
Debtors against (a) any of the other Debtors and any of the Debtors' non-Debtor
subsidiaries, (b) any of the directors, officers, or employees of any of the
Debtors or any of the Debtors’ non-Debtor subsidiaries serving during the
pendency of the Chapter 11 Case, (c) any Professionals of the Debtors, (d)
GECC
and its advisors, and (e) the Indenture Trustee and its advisors; provided,
however,
that
nothing in Section 12.9(a) of the Plan will be deemed to prohibit the Debtors
or
the Reorganized Debtors from asserting and enforcing any claims, obligations,
suits, judgments, demands, debts, rights, causes of action or liabilities they
may have against any employee (other than any director or officer) that is
based
upon an alleged breach of a confidentiality, noncompete or any other contractual
or fiduciary obligation owed to the Debtors or the Reorganized Debtors.
The
Debtors do not believe that there are any valid claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action, and liabilities
that they hold against any of their directors, officers, and employees, against
any of their subsidiaries, or against GECC or the Indenture
Trustee.
As
to the
Debtors’ directors, officers, and employees, the consideration for such release
is the service rendered by such individuals during the pendency of the Chapter
11 Case and the need for their continued dedication after the Effective Date
to
fully consummate a successful reorganization. The Reorganized Debtors will
be
hampered in their consummation efforts if their directors, officers, and
employees are subject to claims and potential litigation that will distract
their attention from operational and other business matters. None of such
individuals are currently the target of any actual claim or litigation, and
the
Debtors are not aware of any credible theory on which they might pursue claims
and litigation against such individuals.
Under
applicable law, the Debtors will have the burden at the Confirmation Hearing
of
justifying the releases proposed to be given by the Debtors. The Bankruptcy
Court will determine whether the Debtors have met their burden or not, and
any
party desiring to do so may object to some or all of the releases proposed
to be
granted.
2. Releases
by Creditors of Claims Against Third Parties
In
furtherance of the release provisions of the Plan, as of the Effective Date,
each holder of a Claim that affirmatively votes in favor of the Plan will be
deemed to forever release, waive, and discharge all claims, obligations, suits,
judgments, damages, demands, debts, rights, causes of action, and liabilities
whatsoever (other than for fraud, willful misconduct, or gross negligence)
against the directors, officers, or employees of any of the Debtors serving
during the pendency of the Chapter 11 Case (collectively, the “Claimholder
Releasees”), in connection with or related to the Debtors, the Chapter 11 Case,
or the Plan (other than the rights under the Plan and the contracts,
instruments, releases, indentures and other agreements or documents delivered
thereunder), whether liquidated or unliquidated, fixed or contingent, matured
or
unmatured, known or unknown, foreseen or unforeseen, then existing or thereunder
arising, in law, equity, or otherwise, that are based in whole or part on any
act, omission, transaction, event, or other occurrence taking place on or prior
to the Effective Date in any way relating to the Debtors or the Reorganized
Debtors, the Chapter 11 Case, or the Plan.
The
Plan
provides that each of the Claimholder Releasees will be deemed to forever
release, waive, and discharge any claims, obligations, suits, judgments,
damages, demands, debts, rights, causes of action, and liabilities whatsoever
(other than for fraud, willful misconduct, or gross negligence) taking place
on
or prior to the Effective Date in any way relating to the Debtors or the
Reorganized Debtors, the Chapter 11 Case, or the Plan, that such Claimholder
Releasees may hold in their individual capacities against each holder of a
Claim
that affirmatively votes in favor of the Plan. This provision of the Plan will
not constitute, and will not be deemed to effect, a release by the Debtors
or
the Reorganized Debtors of any claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, and liabilities held by the Debtors
or
the Reorganized Debtors.
Creditors
may have independent claims against one or more of the Claimholder Releasees.
The Debtors have no actual knowledge of any such claims, but cannot warrant
to
creditors that they do not exist. Since a vote in favor of the Plan will release
whatever creditor claims do exist, if any, against Claimholder Releasees,
creditors should consult their own counsel for information and advice as to
whether any such claims exist and the value or merit of any such claims. If
a
creditor does not wish to give the releases contemplated under the Plan, then
the creditor should vote to reject the Plan.
3. Discharge
and Discharge Injunction
Confirmation
of the Plan effects a discharge of all Claims against the Debtors. As set forth
in the Plan, except as otherwise provided therein or in the Confirmation Order,
all consideration distributed under the Plan will be in exchange for, and in
complete satisfaction, settlement, discharge, and release of, all Claims of
any
nature whatsoever against the Debtors or any of their assets or properties
and,
regardless of whether any property is abandoned by order of the Bankruptcy
Court, retained, or distributed pursuant to the Plan on account of such Claims,
upon the Effective Date, the Debtors, and each of them, will (a) be deemed
discharged and released under Section 1141(d)(1)(A) of the Bankruptcy Code
from
any and all Claims, including, but not limited to, demands and liabilities
that
arose before the Effective Date, and all debts of the kind specified in Section
502 of the Bankruptcy Code, whether or not (i) a Proof of Claim based upon
such
debt is filed or deemed filed under Section 501 of the Bankruptcy Code, (ii)
a
Claim based upon such debt is Allowed under Section 502 of the Bankruptcy Code,
(iii) a Claim based upon such Debt is or has been disallowed by order of the
Bankruptcy Court, or (iv) the holder of a Claim based upon such debt accepted
the Plan, and (b) terminate all FiberMark Interests.
Under
the
Plan, as of the Effective Date, except as provided in the Plan or the
Confirmation Order, all Persons will be precluded from asserting against the
Debtors or the Reorganized Debtors, any other or further claims, debts, rights,
causes of action, claims for relief, liabilities, or equity interests relating
to the Debtors based upon any act, omission, transaction, occurrence, or other
activity of any nature that occurred prior to the Effective Date. In accordance
with the foregoing, except as provided in the Plan or the Confirmation Order,
the Confirmation Order will be a judicial determination of discharge of all
such
Claims and other debts and liabilities against the Debtors and termination
of
all FiberMark Interests, pursuant to Sections 524 and 1141 of the Bankruptcy
Code, and such discharge will void any judgment obtained against the Debtors
at
any time, to the extent that such judgment relates to a discharged Claim or
terminated Interest.
In
furtherance of the discharge of Claims and the termination of Interests, the
Plan provides that, except as provided in the Plan or the Confirmation Order,
as
of the Effective Date, all Persons that have held, currently hold, may hold,
or
allege that they hold, a Claim or other debt or liability that is discharged
or
an Interest or other right of an equity security holder that is terminated
pursuant to the terms of the Plan are permanently enjoined from taking any
of
the following actions against the Debtors, the Reorganized Debtors, and their
respective subsidiaries or their property on account of any such discharged
Claims, debts, or liabilities or terminated Interests or rights: (a) commencing
or continuing, in any manner or in any place, any action or other proceeding;
(b) enforcing, attaching, collecting, or recovering in any manner any judgment,
award, decree, or order; (c) creating, perfecting, or enforcing any Lien or
encumbrance; (d) asserting a setoff, right of subrogation, or recoupment of
any
kind against any debt, liability, or obligation due to the Debtors or the
Reorganized Debtors; or (e) commencing or continuing any action, in each such
case in any manner, in any place, or against any Person that does not comply
with or is inconsistent with the provisions of the Plan.
The
Plan
further provides that as of the Effective Date, all Persons that have held,
currently hold, or may hold, a Claim, obligation, suit, judgment, damage,
demand, debt, right, cause of action, or liability that is released pursuant
to
Section 12.8, 12.9, or 12.12 of the Plan are permanently enjoined from taking
any of the following actions on account of such released Claims, obligations,
suits, judgments, damages, demands, debts, rights, causes of action, or
liabilities or terminated Interests or rights: (a) commencing or continuing,
in
any manner or in any place, any action or other proceeding; (b) enforcing,
attaching, collecting, or recovering in any manner any judgment, award, decree,
or order; (c) creating, perfecting, or enforcing any Lien or encumbrance; (d)
asserting a setoff against any debt, liability, or obligation due to any
released Person; or (e) commencing or continuing any action, in any manner,
in
any place, or against any Person that does not comply with or is inconsistent
with the provisions of the Plan.
Moreover,
the Plan provides that without limiting the effect of the provisions of Section
12.11 of the Plan upon any Person, by accepting distributions pursuant to the
Plan, each holder of an Allowed Claim receiving distributions pursuant to the
Plan will be deemed to have specifically consented to the injunctions set forth
in Section 12.11 of the Plan.
The
Plan
also provides that without limiting the generality of the provisions of Sections
12.10 and 12.11 of the Plan, if any Person has held, currently holds, may hold,
or alleges that s/he/it holds a Claim, and such Person either did not timely
file a Proof of Claim with respect such Claim or filed a Proof of Claim that
is
or was disallowed by order of the Bankruptcy Court, then such Person is
permanently enjoined from taking any of the following actions on account of
such
Claim or on account of any acts, omissions, transactions, occurrences, or other
activities upon which such Claim is or may be based: (a) commencing or
continuing, in any manner or in any place, any action or other proceeding;
(b)
enforcing, attaching, collecting, or recovering in any manner any judgment,
award, decree, or order; (c) creating, perfecting, or enforcing any Lien or
encumbrance; (d) asserting a setoff, right of subrogation, or recoupment of
any
kind against any debt, liability, or obligation due to the Debtors or the
Reorganized Debtors; or (e) commencing or continuing any action, in each such
case in any manner, in any place, or against any Person that does not comply
with or is inconsistent with the provisions of the Plan.
4. Exculpation
Relating to Chapter 11 Case
The
Plan
contains standard exculpation provisions applicable to the key parties in
interest with respect to their conduct in the Chapter 11 Case. Specifically,
the
Plan provides that none of the Debtors, the Reorganized Debtors or their
respective subsidiaries, GECC, the Indenture Trustee, or any of their respective
present or former members, officers, directors, employees, advisors,
Professionals, and agents, will have or incur any liability to any holder of
a
Claim or an Interest, or any other party in interest, or any of their respective
agents, employees, representatives, advisors, attorneys, or affiliates, or
any
of their successors or assigns, for any act or omission in connection with,
relating to, or arising out of, the Chapter 11 Case, the formulation,
negotiation, or implementation of the Plan, the solicitation of acceptances
of
the Plan, the pursuit of Confirmation of the Plan, the Confirmation of the
Plan,
the consummation of the Plan, or the administration of the Plan or the property
to be distributed under the Plan, except for acts or omissions which are the
result of fraud, gross negligence, or willful misconduct or willful violation
of
federal or state securities laws or the Internal Revenue Code, and in all
respects will be entitled to reasonably rely upon the advice of counsel with
respect to their duties and responsibilities under the Plan.
Moreover,
the Plan provides that no holder of a Claim or an Interest, no other party
in
interest, none of their respective agents, employees, representatives, advisors,
attorneys, or affiliates, and none of their respective successors or assigns
will have any right of action against any Debtor, any Reorganized Debtor, any
of
its subsidiaries, GECC, the Indenture Trustee, or any of their respective
present or former members, officers, directors, employees, advisors,
Professionals, and agents, for any act or omission in connection with, relating
to, or arising out of, the Chapter 11 Case, the formulation, negotiation, or
implementation of the Plan, solicitation of acceptances of the Plan, the pursuit
of Confirmation of the Plan, the Confirmation of the Plan, the consummation
of
the Plan, or the administration of the Plan or the property to be distributed
under the Plan, except for acts or omissions which are the result of fraud,
willful misconduct, or willful violation of federal or state securities laws
or
the Internal Revenue Code.
5. Post-Effective
Date Indemnifications
The
Plan
requires that the certificate of incorporation, memorandum of association,
articles of association, and by-laws, as applicable, of Reorganized
FiberMark and
each
Reorganized Subsidiary Debtor contain provisions which (a) eliminate the
personal liability of the Debtors' directors and officers, officers, and key
employees (as identified for purposes of the Key Employee Protection Order,
along with James P. Carolan) serving on and after the Effective Date and the
Reorganized Debtors' directors, officers, and key employees (as identified
by
the Chief Executive Officer of the Reorganized Debtors in conjunction with
the
New Board) serving on and after the Effective Date for monetary damages
resulting from breaches of their fiduciary duties (other than for willful
misconduct or gross negligence) and (b) require such Reorganized Debtor, subject
to appropriate procedures, to indemnify those of the Debtors’ directors,
officers, and other key employees (as identified by the Chief Executive Officer
of the Reorganized Debtors in conjunction with the New Board) serving
immediately prior to, on, or after the Effective Date for all claims and actions
(other than for willful misconduct or gross negligence), including, without
limitation, for pre-Effective Date acts and occurrences.
In
addition, the Plan requires that on or as of the Effective Date, the Reorganized
Debtors enter into separate written agreements providing for the indemnification
of each Person who is a director, officer, or key employee (as identified by
the
Chief Executive Officer of the Reorganized Debtors in conjunction with the
New
Board) of
such
Reorganized Debtor as of the Effective Date.
| M. |
Preservation
of Rights
of Action;
Resulting Claim Treatment
|
Litigation
Rights consist of claims, rights of action, suits, or proceedings, whether
in
law or in equity, whether known or unknown, that the Debtors or their Estates
may hold against any Person. The Plan provides that except as otherwise provided
in the Plan or the Confirmation Order, or in any contract, instrument, release,
indenture, or other agreement entered into in connection with the Plan, in
accordance with Section 1123(b) of the Bankruptcy Code, on the Effective Date,
each Debtor or Reorganized Debtor will retain all of the respective Litigation
Rights that such Debtor or Reorganized Debtor may hold against any Person.
Each
Debtor or Reorganized Debtor will retain and may enforce, sue on, settle, or
compromise (or decline to do any of the foregoing) all such Litigation Rights.
Each Debtor or Reorganized Debtor or their respective successor(s) may pursue
such retained Litigation Rights, as appropriate, in accordance with the best
interests of the Reorganized Debtors or their successor(s) who hold such rights
in accordance with applicable law and consistent with the terms of the
Plan.
If,
as a
result of the pursuit of any Litigation Rights, a Claim would arise from a
recovery pursuant to Section 550 of the Bankruptcy Code after distributions
under the Plan have commenced, making it impracticable to treat the Claim in
accordance with the applicable provisions of Article IV of the Plan, the
Reorganized Debtors will be permitted to reduce the recovery by an amount that
reflects the value of the treatment that would have been accorded to the Claim,
thereby effectively treating the Claim through the reduction.
Litigation
Rights include potential preferential transfer avoidance or other bankruptcy
causes of action. For example, a number of creditors received payments within
the 90 day or one-year periods prior to the Petition Date that may be considered
to be preferential payments under Section 547 of the Bankruptcy Code. As an
example, a former member of the Debtors' management team, Bruce Moore, retired
prior to the Petition Date and received a lump sum distribution from the
Debtors' supplemental executive retirement plan. Certain parties have alleged
that such distribution constitutes a preferential transfer. In consideration
of
this outstanding issue, by order entered on September 13, 2004, the Bankruptcy
Court approved an agreement by Mr. Moore to escrow certain post-petition
commission amounts earned under a consulting agreement, in order to satisfy
any
preferential transfer judgment that may be obtained against him. The Debtors
understand that Mr. Moore disputes, in its entirety, the characterization of
the
distribution as a preferential transfer, that Mr. Moore asserts that the
payments were made in the ordinary course of business, and that he intends
to
defend vigorously any avoidance action that may be brought against him. The
Reorganized Debtors will determine whether or not to pursue any or all
preference payments, including the lump sum payment received by Mr. Moore,
based
upon the best interests of the reorganized estates. All creditors and other
parties who received potentially preferential payments are advised that such
payments are subject to possible avoidance in proceedings to be commenced by
the
Reorganized Debtors.
Litigation
Rights also include non-bankruptcy claims, rights of action, suits, or
proceedings that arise in the ordinary course of the Debtors’ businesses. The
Debtors currently hold certain claims or rights of action against a number
of
parties. For example, currently pending are trademark infringement lawsuits
against Brownville Specialty and Merrimac Paper Co., which the Debtors or
Reorganized Debtors intend to continue to prosecute, unless settled on terms
acceptable to them. The Debtors also have claims against certain parties that
may ripen into litigation. A number of parties are past due in their payment
obligations to the Debtors. Certain of the past due amounts relate to pending
setoffs or executory contract and unexpired lease disposition issues, which
may
be resolved prior to the Effective Date.
The
Debtors and the Reorganized Debtors reserve the right to pursue, settle, or
otherwise not pursue any pending or potential claims, rights of action, suits,
or proceedings against any of the parties described herein. Neither the listing
nor the failure to list any party herein will prejudice the Debtors’ or
Reorganized Debtors’ rights to pursue any claims, rights of action, suits, or
proceedings that have arisen or may arise in the future in the ordinary course
of the Debtors’ or Reorganized Debtors’ businesses.
| N. |
Retention
of Jurisdiction
|
Under
Sections 105(a) and 1142 of the Bankruptcy Code, and notwithstanding entry
of
the Confirmation Order and occurrence of the Effective Date, and except as
otherwise ordered by the Bankruptcy Court, the Plan provides that the Bankruptcy
Court will retain exclusive jurisdiction over all matters arising out of, and
related to, the Chapter 11 Case and the Plan to the fullest extent permitted
by
law, including, among other things, jurisdiction to:
| · |
allow,
disallow, determine, liquidate, classify, estimate, or establish
the
priority or secured or unsecured status of any Claim or Interest
not
otherwise Allowed under the Plan (other than personal injury or wrongful
death Claims, unless agreed by the holder), including the resolution
of
any request for payment of any Administrative Claim and the resolution
of
any objections to the allowance or priority of Claims or Interests;
|
| · |
hear
and determine all applications for compensation and reimbursement
of
expenses of Professionals under the Plan or under Sections 327, 328,
330,
331, 503(b), 1103, or 1129(a)(4) of the Bankruptcy Code; provided,
however,
that from and after the Effective Date, the payment of the fees and
expenses of the retained Professionals of the Reorganized Debtors
will be
made in the ordinary course of business and will not be subject to
the
approval of the Bankruptcy Court;
|
| · |
hear
and determine all matters with respect to the assumption or rejection
of
any executory contract or unexpired lease to which a Debtor is a
party or
with respect to which a Debtor may be liable, including, if necessary,
the
nature or amount of any required Cure or the liquidation or allowance
of
any Claims arising therefrom;
|
| · |
effectuate
performance of and payments under the provisions of the Plan;
|
| · |
hear
and determine any and all adversary proceedings, motions, applications,
and contested or litigated matters arising out of, under, or related
to
the Chapter 11 Case or the Litigation Rights;
|
| · |
enter
such orders as may be necessary or appropriate to execute, implement,
or
consummate the provisions of the Plan and all contracts, instruments,
releases, and other agreements or documents created in connection
with the
Plan, this Disclosure Statement, or the Confirmation Order;
|
| · |
hear
and determine disputes arising in connection with the interpretation,
implementation, consummation, or enforcement of the Plan, including
disputes arising under agreements, documents, or instruments executed
in
connection with the Plan; provided,
however, that
any dispute arising under or in connection with the New FiberMark
Charter,
the New FiberMark By-laws, the Registration Rights Agreement, and
the Exit
Facility will be dealt with in accordance with the provisions of
the
applicable document;
|
| · |
consider
any modifications of the Plan, cure any defect or omission, or reconcile
any inconsistency in any order of the Bankruptcy Court, including,
without
limitation, the Confirmation Order;
|
| · |
issue
injunctions, enter and implement other orders, or take such other
actions
as may be necessary or appropriate to restrain interference by any
entity
with the implementation, consummation, or enforcement of the Plan
or the
Confirmation Order;
|
| · |
enter
and implement such orders as may be necessary or appropriate if the
Confirmation Order is for any reason reversed, stayed, revoked, modified,
or vacated;
|
| · |
hear
and determine any matters arising in connection with or relating
to the
Plan, this Disclosure Statement, the Confirmation Order, or any contract,
instrument, release, or other agreement or document created in connection
with the Plan, this Disclosure Statement, or the Confirmation Order;
|
| · |
enforce
all orders, judgments, injunctions, releases, exculpations,
indemnifications, and rulings entered in connection with the Chapter
11
Case;
|
| · |
except
as otherwise limited, recover all assets of the Debtors and property
of
the Estates, wherever located;
|
| · |
hear
and determine matters concerning state, local, and federal taxes
in
accordance with Sections 346, 505, and 1146 of the Bankruptcy Code;
|
| · |
hear
and determine all disputes involving the existence, nature, or scope
of
the Debtors’ discharge;
|
| · |
hear
and determine such other matters as may be provided in the Confirmation
Order or as may be authorized under, or not inconsistent with, provisions
of the Bankruptcy Code;
|
| · |
hear
and determine any matters arising under the Key Employee Protection
Order,
the Key Employee Retention Plan, the Key Employee Severance Plan,
and the
Discretionary Recognition Plan, including, without limitation, any
dispute
relating to the existence of “Good Reason” under such plans; and
|
| · |
enter
a final decree closing the Chapter 11 Case.
|
If
the
Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction
or is otherwise without jurisdiction over any matter arising in, arising under,
or related to the Chapter 11 Case, including the matters set forth in Section
11.1 of the Plan, the provisions of Article XI of the Plan will have no effect
upon and will not control, prohibit, or limit the exercise of jurisdiction
by
any other court having jurisdiction with respect to such matter.
| O. |
Amendment,
Alteration and Revocation of
Plan
|
The
Debtors may alter, amend, or modify the Plan under Section 1127(a) of the
Bankruptcy Code at any time prior to the Confirmation Date. After the
Confirmation Date and prior to substantial consummation of the Plan, as defined
in Section 1101(2) of the Bankruptcy Code, the Debtors may, under Section
1127(b) of the Bankruptcy Code, institute proceedings in the Bankruptcy Court
to
remedy any defect or omission or reconcile any inconsistencies in the Plan
or
the Confirmation Order; provided,
however,
that
prior notice of such proceedings will be served in accordance with the
Bankruptcy Rules or order of the Bankruptcy Court.
If,
prior
to Confirmation, any term or provision of the Plan is held by the Bankruptcy
Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the
request of any Debtor, will have the power to alter and interpret such term
or
provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to be
invalid, void or unenforceable, and such term or provision will then be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration or interpretation, the remainder of the terms and provisions of
the
Plan will remain in full force and effect and will in no way be affected,
impaired, or invalidated by such holding, alteration, or interpretation. The
Confirmation Order will constitute a judicial determination and will provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.
The
Debtors reserve the right to revoke or withdraw the Plan at any time prior
to
the Confirmation Date and to file subsequent plans of reorganization. If the
Debtors revoke or withdraw the Plan, or if Confirmation or the Effective Date
does not occur, then (a) the Plan will be null and void in all respects, (b)
any
settlement or compromise embodied in the Plan (including the fixing or limiting
to an amount certain for any Claim or Class of Claims), assumption or rejection
of executory contracts or leases effected by the Plan, and any document or
agreement executed pursuant to the Plan will be deemed null and void, and (c)
nothing contained in the Plan, and no acts taken in preparation for consummation
of the Plan, will (i) constitute or be deemed to constitute a waiver or release
of any Claims by or against, or any Interests in, any Debtor or any other
Person, (ii) prejudice in any manner the rights of any Debtor or any Person
in
any further proceedings involving a Debtor, or (iii) constitute an admission
of
any sort by any Debtor or any other Person.
| P. |
Plan
Implementing Documents
|
The
documents necessary to implement the Plan include the following:
| · |
the
New FiberMark Charter;
|
| · |
the
New FiberMark By-laws;
|
| · |
the
Registration Rights Agreement; and
|
| · |
the
documents evidencing the Exit Facility to be obtained by the Reorganized
Debtors.
|
The
proposed forms for the New Charter, the New By-laws, and the Registration Rights
Agreement are attached as exhibits to the Plan. Commitment letters with respect
to the Exit Facility will be filed in advance of the Confirmation Hearing.
| VII. |
CERTAIN
RISK FACTORS TO BE
CONSIDERED
|
The
holders of Claims in Classes 4, 5, 6, 7, 8, 9, and 10 should
read and carefully consider the following factors, as well as the other
information set forth in this Disclosure Statement (and the documents delivered
together herewith and/or incorporated by reference herein), before deciding
whether to vote to accept or reject the Plan. These risk factors should not,
however, be regarded as constituting the only risks associated with the Plan
and
its implementation.
| A. |
General
Considerations
|
The
Plan
sets forth the means for satisfying the Claims against each of the Debtors.
Certain Claims and Interests receive no distributions pursuant to the Plan.
Nevertheless, reorganization of the Debtors’ businesses and operations under the
proposed Plan avoids the potentially adverse impact of a liquidation on the
Debtors’ customers, suppliers, employees, communities, and other stakeholders.
| B. |
Certain
Bankruptcy Considerations
|
Even
if
all voting Impaired Classes vote in favor of the Plan, and if with respect
to
any Impaired Class deemed to have rejected the Plan the requirements for
“cramdown” are met, the Bankruptcy Court, which, as a court of equity, may
exercise substantial discretion, may choose not to confirm the Plan. Section
1129 of the Bankruptcy Code requires, among other things, a showing that
confirmation of the Plan will not be followed by liquidation or the need for
further financial reorganization of the Debtors, see
Section
X.A hereto, and that the value of distributions to dissenting holders of Claims
and Interests will not be less than the value such holders would receive if
the
Debtors were liquidated under Chapter 7 of the Bankruptcy Code. See
Section
X.D hereto. Although the Debtors believe that the Plan will meet such tests,
there can be no assurance that the Bankruptcy Court will reach the same
conclusion. See Appendix E annexed hereto for a liquidation analysis of the
Debtors.
If
the
Plan is not confirmed by the Court, it is unclear whether a restructuring of
the
Debtors could be implemented and what distributions holders of Claims or
Interests ultimately would receive with respect to their Claims or Interests.
If
a liquidation or protracted reorganization were to occur, there is a significant
risk that the value of the Debtors’ enterprise would be substantially eroded to
the detriment of all stakeholders.
The
Debtors’ future results are dependent upon the successful confirmation and
implementation of a plan of reorganization. Failure to obtain this approval
in a
timely manner could adversely affect the Debtors’ operating results, as the
Debtors’ ability to obtain financing to fund their operations and their
relations with customers and suppliers may be harmed by protracted bankruptcy
proceedings. Furthermore, the Debtors cannot predict the ultimate amount of
all
settlement terms for their liabilities that will be subject to a plan of
reorganization. Once a plan of reorganization is approved and implemented,
the
Debtors’ operating results may be adversely affected by the possible reluctance
of prospective lenders, customers, and suppliers to do business with a company
that recently emerged from bankruptcy proceedings.
The
Debtors reserve the right to object to the amount or classification of any
Claim
or Interest except any such Claim or Interest that is deemed Allowed under
the
Plan or except as otherwise provided in the Plan. There can be no assurance
that
any estimated Claim amounts set forth in this Disclosure Statement are correct.
The actual Allowed amount of Claims likely will differ in some respect from
the
estimates. The estimated amounts are subject to certain risks, uncertainties,
and assumptions. Should one or more of these risks or uncertainties materialize,
or should the underlying assumptions prove incorrect, the actual Allowed amount
of Claims may vary from those estimated herein.
| D. |
Conditions
Precedent to Consummation
|
The
Plan
provides for certain conditions that must be satisfied (or waived) prior to
confirmation of the Plan and for certain other conditions that must be satisfied
(or waived) prior to the Effective Date. As of the date of this Disclosure
Statement, there can be no assurance that any or all of the conditions in the
Plan will be satisfied (or waived). Accordingly, even if the Plan is confirmed
by the Bankruptcy Court, there can be no assurance that the Plan will be
consummated and the restructuring completed.
| E. |
Inherent
Uncertainty of Financial
Projections
|
The
Projections set forth in Appendix B hereto cover the operations of the
Reorganized Debtors through fiscal year 2008. These Projections are based on
numerous assumptions that are an integral part of the Projections, including
confirmation and consummation of the Plan in accordance with its terms;
realization of the operating strategy of the Reorganized Debtors; industry
performance; no material adverse changes in applicable legislation or
regulations, or the administration thereof, including environmental legislation
or regulations, exchange rates, or generally accepted accounting principles;
general business and economic conditions; competition; retention of key
management and other key employees; expected investment returns on pension
assets; adequate financing; absence of material contingent or unliquidated
litigation, indemnity, or other claims; and other matters, many of which will
be
beyond the control of the Reorganized Debtors and some or all of which may
not
materialize.
To
the
extent that the assumptions inherent in the Projections are based upon future
business decisions and objectives, they are subject to change. In addition,
although they are presented with numerical specificity and are based on
assumptions considered reasonable by the Debtors, the assumptions and estimates
underlying the Projections are subject to significant business, economic, and
competitive uncertainties and contingencies, many of which will be beyond the
control of the Reorganized Debtors. Accordingly, the Projections are only
estimates and are necessarily speculative in nature. It can be expected that
some or all of the assumptions in the Projections will not be realized and
that
actual results will vary from the Projections, which variations may be material
and are likely to increase over time. In light of the foregoing, readers are
cautioned not to place undue reliance on the Projections. The projected
financial information contained herein should not be regarded as a
representation or warranty by the Debtors, the Debtors’ advisors, or any other
Person that the Projections can or will be achieved.
| F. |
Certain
Risk Factors Relating to Securities to be Issued Under the
Plan
|
1. No
Current Public Market for Securities
The
New
Common Stock to be issued pursuant to the Plan are securities for which there
is
currently no trading market and no assurance can be given that such a trading
market will develop following the Effective Date or, if the trading market
for
such securities develops, no assurance can be given as to the liquidity of
such
a trading market. If a market were to develop, the New Common Stock could trade
at prices lower than the estimated value set forth in this Disclosure Statement.
The trading prices of such securities will depend on many factors, including
factors beyond Reorganized FiberMark’s control. Furthermore, the liquidity of,
and trading market for, the New Common Stock may be adversely affected by price
declines and volatility in the markets for similar securities, as well as by
changes in Reorganized FiberMark’s financial condition or results of operations.
In
addition, while FiberMark currently files annual, quarterly and current reports,
proxy statements, and other information with the SEC, the Plan contemplates
that, from and after the Effective Date, or as soon thereafter as Reorganized
FiberMark practically is able to make the appropriate filings with the SEC,
Reorganized FiberMark will cease filing such public reports and the New Common
Stock will not be quoted for trading on any national interdealer quotation
system or listed for trading on any national securities exchange. Although
Reorganized FiberMark will be obligated, under the terms of the New FiberMark
Charter, to continue to provide certain financial and other information to
stockholders, such information will not be as extensive as that required by
companies that file public reports with the SEC. As a consequence, holders
of
the New Common Stock may find it difficult to effect trades in the New Common
Stock, current information about Reorganized FiberMark
and price quotes for the New Common Stock may be hard to obtain, and the
liquidity of the New Common Stock may be severely adversely effected.
Holders
of Claims who receive New Common Stock and who are deemed to be “underwriters”
as defined in Section 1145(b) of the Bankruptcy Code, or who are otherwise
deemed to be “affiliates” or “control persons” of Reorganized FiberMark within
the meaning of the Securities Act, will be unable to transfer or sell shares
of
New Common Stock freely after the Effective Date, except pursuant to an
available exemption from registration under the Securities Act and under
equivalent state securities or “blue sky” laws or pursuant to an effective
registration of such shares under the Securities Act. Reorganized FiberMark
does
not intend to file a registration statement covering the New Common
Stock.
2. Potential
Dilution Caused by Options or Warrants
If
options or warrants to purchase the New Common Stock are exercised, or other
equity interests are granted under the New Equity Incentive Plan, or the Board
of Reorganized FiberMark issues equity securities in the future, including
as
the result of the need to issue additional shares due to a shortfall in the
Common Stock Reserve, such equity interests will dilute the ownership percentage
represented by the New Common Stock authorized for distribution under the Plan.
If any of the options or warrants issued under the Plan are exercised, the
resulting issuance of New Common Stock will dilute the ownership percentage
represented by the New Common Stock distributed under the Plan.
In
the
future, additional equity financings or other share issuances by Reorganized
FiberMark could adversely affect the market price of the New Common Stock.
Sales
by existing holders of a large number of shares of the New Common Stock in
the
public market, or the perception that additional sales could occur, could cause
the market price of the New Common Stock to decline. If additional shares of
New
Common Stock are issued, as will be permitted by Reorganized FiberMark’s
charter, such equity interests will dilute the ownership percentage represented
by the New Common Stock distributed under the Plan.
3. Dividends
Because
all of the Debtors' cash flows will be used in the foreseeable future to either
make payments under the Exit Facility, or for working capital purposes, the
Debtors do not anticipate that cash dividends or other distributions will be
paid with respect to the New Common Stock in the foreseeable future. In
addition, restrictive covenants in certain debt instruments to which Reorganized
FiberMark will be a party, including the Exit Facility, may limit the ability
of
Reorganized FiberMark to pay dividends.
4. Change
of Control
The
New
FiberMark Charter and New FiberMark By-laws may contain, and the Delaware
General Corporation Law contains, provisions that may have the effect of
delaying, deterring, or preventing a change in control of Reorganized
FiberMark.
5. Significant
Holder
If
the
transactions contemplated by the Plan are consummated, the holders of the
FiberMark Notes will receive all or substantially all of the New Common Stock.
Based upon their understanding of current holdings of FiberMark Notes, the
Debtors expect that Silver Point Capital, L.P. will be issued more than 50%
of
the New Common Stock to be distributed under the Plan and, accordingly, it
will
have the ability to elect a majority of the members of the New Board and may
have the ability to control the outcome of matters presented to a vote of the
holders of the New Common Stock.
6. Section
16 Liability
While
Reorganized FiberMark intends to terminate its public reporting obligations
under the federal securities laws as soon as practicable on or after the
Effective Date, Reorganized FiberMark will nonetheless remain subject to the
federal securities laws for a period of approximately ninety (90) days after
such filing. As a result, during such ninety (90) day period Reorganized
FiberMark will continue to be subject to Section 12(g) of the Securities Act
and
accordingly, the holders of the New Common Stock will continue to be subject
to
the reporting and short-swing profit recapture rules under Section 16 of the
Securities Act until the public reporting obligations are effectively
terminated.
7. Restrictions
on Transfer
The
New
Common Stock will be distributed pursuant to the Plan without registration
under
the Securities Act and without qualification or registration under state
securities laws, pursuant to exemptions from such registration and qualification
contained in section 1145 of the Bankruptcy Code. These Bankruptcy Code
exemptions apply only to the distribution of such securities under the Plan
and
not to any subsequent sale, exchange, transfer or other disposition of such
securities or any interest therein by Persons who constitute “underwriters” or
“issuers”, as such terms are defined pursuant to section 1145 of the Bankruptcy
Code, and each such subsequent sale, exchange, transfer or other disposition
would require registration under the Securities Act or state securities laws
unless another exemption from registration were available.
Holders
of New Common Stock who are deemed to be “underwriters” as defined in section
1145(b) of the Bankruptcy Code, including holders who are deemed to be
“affiliates” or “control persons” within the meaning of the Securities Act, will
be unable to transfer or to sell their securities freely except pursuant to
(i)
“ordinary trading transactions” by a holder that is not an “issuer” within the
meaning of section 1145(b), (ii) an effective registration of such securities
under the Securities Act and under equivalent state securities or “blue sky”
laws or (iii) pursuant to the provisions of Rule 144 under the Securities Act
or
another available exemption from registration requirements.
The
Plan
provides that Reorganized FiberMark will enter into a registration rights
agreement with each holder of more than 10% of the New Common Stock to be issued
under the Plan. The registration rights agreement will provide for, among other
things, unlimited “piggyback” registration rights and certain demand
registration rights. The Plan further provides that Reorganized FiberMark will
undertake to deliver information required by Rule 144A of the Securities
Exchange Act of 1934. All registration obligations of Reorganized FiberMark
will
be with respect to the New Common Stock only.
The
shares of New Common Stock will be subject to certain transfer restrictions
set
forth in the New FiberMark Charter. The transfer restrictions will (x) until
January 1, 2006, prohibit a holder of New Common Stock from transferring any
shares to any Person not already holding shares of New Common Stock if, after
giving effect to such transfer, the New Common Stock would be held of record
by
275 or more Persons, and (y) after January 1, 2006, prohibit a holder of New
Common Stock from transferring any shares to any Person not already holding
shares of New Common Stock if, after giving effect to such transfer the New
Common Stock would be held of record by 450 or more Persons.
Like
the
Debtors, the Reorganized Debtors will face intense competition, which could
harm
their financial condition and results of operations. Principal competitors
include a small number of paper and specialty paper manufacturers. Additionally,
the Reorganized Debtors will compete with producers of nonwoven materials,
vinyl, plastic, and other substitute materials and technologies. Some of these
competitive options may be lower priced, lower quality, or offer other
advantages. Consequently, short-term or structural declines in sales may result.
Some of these producers have substantially greater resources than will the
Reorganized Debtors. Further concentration of competitors through mergers and
acquisitions may increase their competitive advantage. In addition, some
customers have the internal ability to process some or all of the materials
they
buy, and have in the past elected to do so. To the extent customers elect to
do
so in the future, the Reorganized Debtors’ business could suffer. Industry and
market-specific capacity levels can also affect competitive behavior and
adversely impact pricing levels. Increased concentration of buying power in
certain large direct or indirect customers can have similar effects.
The
Debtors’ principal raw materials, hardwood and softwood pulp and secondary fiber
and latex, are cyclical in both price and supply. The cyclical nature of pulp
pricing presents a potential risk to the Reorganized Debtors’ gross profit
margins because they may not be able to pass along price increases to customers.
The Reorganized Debtors may also be unable to purchase pulp in sufficient
quantities, or at acceptable prices, to meet their production requirements
during times of tight supply.
In
addition, DuPont is the sole source of Tyvek®, a critical component in the
Debtors’ binding tapes. A significant price increase or any material limitation
or interruption in the Reorganized Debtors’ supply of key raw materials,
including pulp, Tyvek®, or latex, particularly if they are unable to pass those
increases through to customers, could harm their financial condition, results
of
operations, and competitive position.
The
markets for the Debtors’ products are variable and are influenced to a
significant degree by the global economic activity and fluctuations in customer
demand and inventory levels. Downturns in global economic conditions and
decreased demand for specialty fiber-based materials could have a material
adverse effect on the Reorganized Debtors’ financial condition and results of
operations. Efforts to find new high growth, high margin product lines to offset
the effects of market shrinkage or slow growth in mature markets may not
succeed. Achieving further market share gains in markets where the Debtors
already have strong market positions may be difficult.
Historically,
the Debtors’ business has been mildly seasonal, with the second half of each
year typically having a lower level of net sales and operating income. This
seasonality has been the result of summer manufacturing shutdowns and the impact
of year-end holidays.
| K. |
Environmental
and Other Regulations
|
The
Debtors’ operations and properties are subject to a wide variety of foreign,
federal, state, and local laws and regulations, including those governing the
use, storage, handling, generation, treatment, emission, release, discharge,
and
disposal of various materials, substances, and wastes, the remediation of
contaminated soil and groundwater, and the health and safety of employees.
Such
regulations can restrict the Reorganized Debtors’ operations, and expose them to
claims and other liabilities with respect to environmental protection,
remediation, and health and safety matters. The Reorganized Debtors could incur,
and have historically incurred, material costs or other liabilities in
connection with such regulations or claims. In addition, future events, such
as
new information, changes in environmental or health and safety laws or
regulations or their interpretation, and more vigorous enforcement policies
of
regulatory agencies, may result in significant additional expenditures,
liabilities, or restrictions that could harm the financial condition, results
of
operations, and competitive position of the Reorganized Debtors.
| L. |
Reliance
on Key Personnel
|
1. Reliance
on Key Personnel
The
Debtors operate a business that is highly dependent on skilled employees. A
loss
of a significant number of key managers or skilled employees could have a
material adverse effect on the Reorganized Debtors and may threaten their
ability to survive as going concerns.
The
Debtors’ successful transition through the restructuring process is dependent in
part on their ability to retain and motivate their key employees. There can
be
no assurance that the Debtors will be able to retain and employ qualified
management and technical personnel. The Debtors obtained Bankruptcy Court
authorization to implement new retention and severance plans designed to retain
certain of their key employees. To date, the plans have had their intended
effect, but there is no guarantee that their effectiveness will continue or
that
the post-restructuring environment will not introduce new risks to employee
retention. See
Section
V.F.1 hereto.
Future
compensation and benefits will be determined by the Debtors’ new Board of
Directors, which may elect to exercise any existing rights of termination and/or
amendment under employee compensation or benefit plans. Any reduction in
compensation or benefits and/or other action by the Debtors' new Board of
Directors that has the effect of decreasing the competitiveness of compensation
offered to employees may increase the possibility that employees, including
the
key employees, will seek other employment. Employee departures could have a
significant negative impact upon the Debtors' business and, in turn, lead to
a
reduction in the value of the New Common Stock.
2. Labor
Unions
A
large
proportion of the Debtors’ workforce is represented by labor unions. In
addition, the Debtors may from time to time experience union organizing
activities in currently non-union facilities. Disputes with the current labor
organizations or new union organizing activities may result in work slowdowns
or
stoppages or higher labor costs. A work slowdown or stoppage in any one of
the
Debtors’ facilities could slow or halt production at that facility and at any
other facility which depends on that facility for its material. As a result,
meeting scheduled delivery times for customers could be difficult or impossible,
which, in turn, could result in loss of business.
| M. |
Risks
Related to Foreign
Operations
|
The
Debtors’ international business relationships and exports to foreign markets
will make the Reorganized Debtors subject to a number of special risks such
as:
currency exchange rate fluctuations; foreign economic conditions; trade
barriers; exchange controls; national and regional labor strikes; political
risks and risks of increases in duties; taxes; governmental royalties; and
changes in laws and policies governing operations of foreign-based companies.
The occurrence of any one or a combination of these factors may increase the
costs of the Reorganized Debtors or have other negative effects.
The
Debtors believe that they will emerge from Chapter 11 with a reasonable level
of
debt that can be effectively serviced. However, they may find that they are
over
leveraged, which could have significant negative consequences,
including:
| 14. |
it
may become more difficult for the Reorganized Debtors to satisfy
their
obligations with respect to all of their
indebtedness;
|
| 15. |
the
Reorganized Debtors may be vulnerable to a downturn in the industries
in
which they operate or a downturn in the economy in
general;
|
| 16. |
the
Reorganized Debtors may be required to dedicate a substantial portion
of
their cash flow from operations to fund working capital, capital
expenditures, and other general corporate
requirements;
|
| 17. |
the
Reorganized Debtors may be limited in their flexibility to plan for,
or
react to, changes in their businesses and the industry in which they
operate;
|
| 18. |
the
Reorganized Debtors may be placed at a competitive disadvantage compared
to their competitors that have less debt;
and
|
| 19. |
the
ability of the Reorganized Debtors to borrow additional funds may
be
limited.
|
The
covenants in the Exit Facility may also restrict the Reorganized Debtors’
flexibility. Such covenants may place restrictions on the ability of the
Reorganized Debtors to incur indebtedness; pay dividends and make other
restricted payments or investments; sell assets; make capital expenditures;
engage in certain mergers and acquisitions; and refinance existing
indebtedness.
Additionally,
there may be factors beyond the control of the Reorganized Debtors that could
impact their ability to meet debt service requirements. The ability of the
Reorganized Debtors to meet debt service requirements will depend on their
future performance, which, in turn, will depend on conditions in the global
markets for their products, the global economy generally, and other factors
that
are beyond their control. The Debtors can provide no assurance that the
businesses of the Reorganized Debtors will generate sufficient cash flow from
operations or that future borrowings will be available in amounts sufficient
to
enable the Reorganized Debtors to pay their indebtedness or to fund their other
liquidity needs. Moreover, the Reorganized Debtors may need to refinance all
or
a portion of their indebtedness on or before maturity. The Debtors cannot make
assurances that the Reorganized Debtors will be able to refinance any of their
indebtedness on commercially reasonable terms or at all. If the Reorganized
Debtors are unable to make scheduled debt payments or comply with the other
provisions of their debt instruments, their various lenders will be permitted
under certain circumstances to accelerate the maturity of the indebtedness
owing
to them and exercise other remedies provided for in those instruments and under
applicable law.
The
Reorganized Debtors will be subject to various claims and legal actions arising
in the ordinary course of their businesses. The Debtors are not able to predict
the nature and extent of any such claims and actions and cannot guarantee that
the ultimate resolution of such claims and actions will not have a material
adverse effect on the Reorganized Debtors.
Adverse
publicity or news coverage relating to the Reorganized Debtors, in connection
with the Chapter 11 Case, may negatively impact the Debtors’ efforts to
establish and promote name recognition and a positive image after the Effective
Date.
| Q. |
Certain
Tax Considerations
|
There
are
a number of income tax considerations, risks, and uncertainties associated
with
consummation of the Plan. Interested parties should read carefully the
discussions set forth in Article IX regarding certain U.S. federal income tax
consequences of the transactions proposed by the Plan to the Debtors and the
Reorganized Debtors and to holders of Claims who are entitled to vote to accept
or reject the Plan.
| VIII. |
APPLICABILITY
OF FEDERAL AND OTHER SECURITIES
LAWS
|
The
Debtors believe that, subject to certain exceptions described below, various
provisions of the Securities Act, the Bankruptcy Code, and state securities
laws
exempt from federal and state securities registration requirements (a) the
offer
and the sale of such securities pursuant to the Plan and (b) subsequent
transfers of such securities.
| A. |
Offer
and Sale of New Securities: Bankruptcy Code
Exemption
|
Holders
of Allowed Noteholder Claims and Allowed General Unsecured Claims will receive
shares of New Common Stock pursuant to the Plan. Section 1145(a)(1) of the
Bankruptcy Code exempts the offer or sale of securities under a plan of
reorganization from registration under Section 5 of the Securities Act and
state
laws if three principal requirements are satisfied: (1) the securities must
be
issued “under a plan” of reorganization by the debtor or its successor under a
plan or by an affiliate participating in a joint plan of reorganization with
the
debtor; (2) the recipients of the securities must hold a pre-petition or
administrative expense claim against the debtor or an interest in the debtor;
and (3) the securities must be issued entirely in exchange for the recipient’s
claim against or interest in the debtor, or “principally” in such exchange and
“partly” for cash or property. In reliance upon this exemption, the Debtors
believe that the offer and sale of the New Common Stock under the Plan will
be
exempt from registration under the Securities Act and state securities laws.
In
addition, the Debtors will seek to obtain, as part of the Confirmation Order,
a
provision confirming such exemption
FiberMark
files annual, quarterly and current reports, proxy statements and other
information with the SEC, which documents are available for inspection and
copying at the public reference room of the SEC and are also available from
the
SEC’s Web site at www.sec.gov. The Plan contemplates that from and after the
Effective Date, or as soon as practicable thereafter, Reorganized FiberMark
will cease filing such public reports. In addition, from and after the Effective
Date, the New Common Stock will no longer be quoted for trading on any national
interdealer quotation system or listed for trading on any national securities
exchange, and as a consequence holders of the New Common Stock may find it
difficult to effect trades in the New Common Stock, price quotes for the New
Common Stock may be hard to obtain, and the liquidity of the New Common Stock
may be severely adversely effected. In addition, the provisions of the New
FiberMark Charter will impose various restrictions on the right of holders
of
the New Common Stock to sell, assign, transfer or otherwise dispose of share
of
New Common Stock. Other than as so restricted, the New Common Stock may be
resold without registration under the Securities Act or other federal securities
laws pursuant to an exemption provided by Section 4(1) of the Securities Act,
unless the holder is an “underwriter” (see discussion below) with respect to
such securities, as that term is defined under the Bankruptcy Code. In addition,
such securities generally may be resold without registration under state
securities or “blue sky” laws pursuant to various exemptions provided by the
respective laws of the several states. However, recipients of securities issued
under the Plan are advised to consult with their own legal advisors as to the
availability of any such exemption from registration under state law in any
given instance and as to any applicable requirements or conditions to such
availability.
| B. |
Subsequent
Transfers of New Securities
|
Section
1145(b) of the Bankruptcy Code defines the term “underwriter” for purposes of
the Securities Act as one who, except with respect to “ordinary trading
transactions” of an entity that is not an “issuer,” (1) purchases a claim
against, interest in, or claim for an administrative expense in the case
concerning, the debtor, if such purchase is with a view to distributing any
security received in exchange for such a claim or interest; (2) offers to sell
securities offered or sold under a plan for the holders of such securities;
(3)
offers to buy securities offered or sold under the plan from the holders of
such
securities, if the offer to buy is: (a) with a view to distribution of such
securities and (b) under an agreement made in connection with the plan, with
the
consummation of the plan, or with the offer or sale of securities under the
plan; or (4) is an “issuer” with respect to the securities, as the term “issuer”
is defined in Section 2(11) of the Securities Act.
The
term
“issuer” is defined in Section 2(4) of the Securities Act. However, the
reference contained in Section 1145(b)(1)(D) of the Bankruptcy Code to Section
2(11) of the Securities Act purports to include as statutory underwriters all
persons who, directly or indirectly, through one or more intermediaries,
control, are controlled by, or are under common control with, an issuer of
securities. “Control” (as such term is defined in Rule 405 of Regulation C under
the Securities Act) means the possession, direct or indirect, of the power
to
direct or cause the direction of the policies of a person, whether through
the
ownership of voting securities, by contract, or otherwise. Accordingly, an
officer or director of a reorganized debtor (or its successor) under a plan
of
reorganization may be deemed to be a “control person,” particularly if such
management position is coupled with the ownership of a significant percentage
of
the debtor’s (or successor’s) voting securities. Moreover, the legislative
history of Section 1145 of the Bankruptcy Code suggests that a creditor who
owns
at least 10% of the securities of a reorganized debtor may be presumed to be
a
“control person.”
To
the
extent that persons deemed to be “underwriters” receive New Common Stock
pursuant to the Plan, resales by such persons would not be exempted by Section
1145 of the Bankruptcy Code from registration under the Securities Act or other
applicable law. Such persons would not be permitted to resell such New Common
Stock unless such securities were registered under the Securities Act or an
exemption from such registration requirements were available. Entities deemed
to
be statutory underwriters for purposes of Section 1145 of the Bankruptcy Code
may, however, be able, at a future time and under certain conditions, to sell
securities without registration pursuant to the resale provisions of Rule 144
and Rule 144A under the Securities Act.
There
can
be no assurance that an active market for any of the securities to be
distributed under the Plan will develop and no assurance can be given as to
the
prices at which they might be traded.
Under
the
Registration Rights Agreement, certain holders of New Common Stock as of the
Effective Date will be entitled, under certain circumstances, to require
Reorganized FiberMark to register the resale of their New Common Stock under
the
Securities Act.
Pursuant
to the Plan, certificates evidencing shares of New Common Stock received by
a
holder of 10% of the New Common Stock will bear a legend substantially in the
form below:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE
OR
OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE
TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.
Whether
or not any particular person would be deemed to be an “underwriter” with respect
to the New Common Stock to be issued pursuant to the Plan, or an “affiliate” of
Reorganized FiberMark, would depend upon various facts and circumstances
applicable to that person. Accordingly, the Debtors express no view as to
whether any such person would be such an “underwriter” or
“affiliate.”Persons
who receive New Common Stock under the Plan are urged to consult their own
legal
advisor with respect to the restrictions applicable under Rule 144 and the
circumstances under which shares may be sold in reliance upon such
Rule.
THE
FOREGOING SUMMARY DISCUSSION IS GENERAL IN NATURE AND HAS BEEN INCLUDED IN
THIS
DISCLOSURE STATEMENT SOLELY FOR INFORMATIONAL PURPOSES. THE DEBTORS MAKE NO
REPRESENTATIONS CONCERNING, AND DO NOT HEREBY PROVIDE, ANY OPINIONS OR ADVICE
WITH RESPECT TO THE NEW COMMON STOCK OR THE BANKRUPTCY MATTERS DESCRIBED HEREIN.
IN LIGHT OF THE UNCERTAINTY CONCERNING THE AVAILABILITY OF EXEMPTIONS FROM
THE
RELEVANT PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS, THE DEBTORS ENCOURAGE
EACH CREDITOR AND PARTY-IN-INTEREST TO CONSIDER CAREFULLY AND CONSULT WITH
ITS
OWN LEGAL ADVISORS WITH RESPECT TO ALL SUCH MATTERS. BECAUSE OF THE COMPLEX,
SUBJECTIVE NATURE OF THE QUESTION OF WHETHER A PARTICULAR HOLDER MAY BE AN
UNDERWRITER, THE DEBTORS MAKE NO REPRESENTATION CONCERNING THE ABILITY OF A
PERSON TO DISPOSE OF THE NEW COMMON STOCK.
| IX. |
CERTAIN
U.S. FEDERAL TAX CONSEQUENCES OF THE
PLAN
|
The
following discussion summarizes certain anticipated U.S. federal income tax
consequences of the Plan to the Debtors and certain holders of claims that
are
entitled to vote to accept or reject the Plan. This summary is provided for
information purposes only and is based on the Internal Revenue Code of 1986,
as
amended (the “Tax Code”), Treasury regulations promulgated thereunder, judicial
authorities, and current administrative rulings and practice, all as in effect
as of the date hereof and all of which are subject to change, possibly with
retroactive effect, that could adversely affect the U.S. federal income tax
consequences described below.
This
summary does not address all aspects of U.S. federal income taxation that may
be
relevant to a particular holder of a Claim in light of its particular facts
and
circumstances or to certain types of holders of Claims subject to special
treatment under the Tax Code (for example, non-U.S. taxpayers, financial
institutions, broker-dealers, life insurance companies, tax-exempt
organizations, persons holding a Claim as part of a hedging, integrated,
constructive sale or straddle transaction and those holding claims through
a
partnership or other passthrough entity). In addition, this summary does not
discuss any aspects of state, local, or non-U.S. taxation and does not address
the U.S. federal income tax consequences to holders of Claims that are
unimpaired under the Plan or holders of Claims that are not entitled to receive
or retain any property under the Plan.
A
substantial amount of time may elapse between the date of this Disclosure
Statement and the receipt of a final distribution under the Plan. Events
occurring after the date of this Disclosure Statement, such as additional tax
legislation, court decisions, or administrative changes, could affect the U.S.
federal income tax consequences of the Plan and the transactions contemplated
thereunder. No ruling will be sought from the Internal Revenue Service (the
“IRS”) with respect to any of the tax aspects of the Plan, and no opinion of
counsel has been or will be obtained by the debtors with respect thereto.
TO
ENSURE
COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, EACH HOLDER IS HEREBY NOTIFIED
THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS DISCLOSURE STATEMENT
IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY
ANY
HOLDER FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON A HOLDER
UNDER THE TAX CODE; (B) SUCH DISCUSSION IS INCLUDED HEREBY BY THE DEBTORS IN
CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR
230)
BY THE DEBTORS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) EACH
HOLDER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISOR.
| B. |
U.S.
Federal Income Tax Consequences to the
Debtors
|
1. Cancellation
of Indebtedness Income
Under
the
Tax Code, a U.S. taxpayer generally must include in gross income the amount
of
any indebtedness that is cancelled during the taxable year (“COD”). COD income
generally equals the difference between the principal amount of the indebtedness
discharged and the sum of (i) the amount of cash and (ii) the fair market value
of any other property transferred in satisfaction of such discharged
indebtedness by the debtor. COD income also includes any interest that has
been
previously accrued and deducted but remains unpaid at the time the indebtedness
is discharged. It is likely that the Debtors will realize a significant amount
of COD income upon the exchange of New Common Stock and Distribution Cash in
satisfaction of the Impaired Claims pursuant to the Plan.
The
Debtors will not be required to include such COD income in gross income,
however, because the indebtedness will be discharged while the Debtors are
under
the jurisdiction of a court in a Title 11 case. Instead, the Debtors will be
required to reduce certain tax attributes (e.g., net operating losses (“NOLs”),
capital loss carryovers, general business credit carryovers, foreign tax credit
carryovers and tax basis in property (collectively, “Tax Attributes”)) by the
amount of the COD income realized. To the extent that the amount of COD income
realized by the Debtors exceeds the Tax Attributes available for reduction,
the
remaining COD income will have no effect for U.S. federal income tax purposes.
The Debtors are permitted to elect to reduce the basis of their depreciable
property prior to any reduction of NOLs or other tax attributes; however, they
have not yet determined whether to make such election. The reduction in Tax
Attributes will occur on the first day of the taxable year following the
realization of such COD income.
2. Utilization
of NOLs and Net Unrealized Built-in Losses
The
Debtors estimate that the consolidated group of which the Debtors are members
for U. S. federal income tax purposes had consolidated NOL carryforwards of
approximately $120 million as of the taxable year ending December 31, 2004,
and
anticipate having consolidated NOL carryforwards of approximately $135 million
as of the end of the taxable year ending December 31, 2005. It should be noted
that these amounts are estimates. The amount of NOLs available to the Debtors
is
based on factual and legal issues with respect to which there can be no
certainty. Moreover, a substantial portion of the Debtors' consolidated NOL
carryovers will likely be eliminated as a result of the reduction of Tax
Attributes described above in Section IX.B.1. Additionally, as described below,
the Debtors' ability to utilize any NOL carryovers not so eliminated will likely
be limited in the taxable years after the Effective Date. The Debtors' ability
to utilize certain other Tax Attributes, including foreign tax credit
carryforwards, remaining after the Effective Date also will likely be limited.
In
general, when a corporation (or an affiliated group) undergoes an “ownership
change,” which the Debtors will undergo as a result of the consummation of the
Plan, Section 382 of the Tax Code (“Section 382”) limits the corporation's
ability to utilize its NOL carryovers. Although corporations that undergo an
ownership change in connection with a bankruptcy proceeding are not subject
to
Section 382 of the Tax Code under certain circumstances (the “Bankruptcy
Exception”), the Debtors believe that they will not be eligible for, or even if
eligible, will choose to elect out of, the Bankruptcy Exception. Thus, to the
extent that the Debtors have any NOL carryovers that are not eliminated as
a
result of the reduction of Tax Attributes described above in Section IX.B.1,
the
Debtors' ability to utilize such NOLs will be limited under Section 382
following the Effective Date. Section 382 generally places an annual limitation
on a corporation's use of NOLs equal to the product of the value of the stock
of
the loss corporation, determined in the manner described below, and the
applicable “long-term tax-exempt rate” (currently 4.37% for ownership changes
occurring in June, 2005) (the “Annual Section 382 Limitation”), which limitation
may be increased by the amount of certain “built-in gains” recognized during the
five years following the ownership change. Although not free from doubt, the
Debtors expect to have a net unrealized built-in gain at the Effective Date,
in
which case the Annual Section 382 Limitation would be increased to the extent
that any such built-in gains are recognized during such five year period. The
aggregate increase in the Annual Section 382 Limitation resulting from the
recognition of such built-in gains generally is limited to the amount of the
Debtors’ net unrealized built-in gain on the Effective Date. For purposes of
determining the Debtors' Annual Section 382 Limitation, the value of the stock
of FiberMark generally will be calculated by reference to the lesser of (i)
the
value of FiberMark's stock immediately after the Effective Date or (ii) the
value of the Debtors' assets (determined without regard to liabilities)
immediately before the Effective Date. The Debtors' ability to utilize NOLs
may
be further limited under other Tax Code provisions such as the alternative
minimum tax provisions.
| C. |
U.S.
Federal Income Tax Consequences to Claim
Holders
|
1. Accrued
But Unpaid Interest
FiberMark
intends to take the position that no portion of the consideration distributed
to
holders of Claims is allocable to accrued but unpaid interest, and the remainder
of this discussion assumes that this will be the case. However, the manner
in
which amounts paid in respect of Claims should be allocated as between interest
and principal is unclear under present law, and it is possible that the IRS
could take a different view. If an amount paid with respect to Claims is
required to be allocated to accrued but unpaid interest, such portion would
be
taxable to the holder as interest income, except to the extent that the holder
previously had included such interest in its gross income.
2. Holders
of GECC Equipment Financing Claim and Banc One Equipment Financing Claim
(Classes 4 and 5)
The
consummation of the Plan generally should not be a taxable event for a holder
of
a Class 4 or 5 Claim whose legal, equitable, and contractual rights are
Reinstated pursuant to the Plan. This conclusion assumes that any particular
Class 4 or 5 Claim covenant that is deemed unenforceable pursuant to the Plan
would be considered a “customary accounting or financial covenant” for U.S.
federal income tax purposes, which the Debtors believe is likely based upon
the
limited information available at this time.
3. Coated
Paper Sale/Leaseback Claim Holder (Class 6)
The
U.S.
federal income tax treatment of the holder of the Coated Paper Sale/Leaseback
Claim upon receipt of the deferred Cash payment under the Plan will depend
on a
number of facts and circumstances including, but not limited to: (i) such
holder's method of accounting; (ii) whether such holder is eligible to report
any gain from such deferred Cash payments under the installment method; (iii)
amounts previously included in income by such holder in respect of such Claim;
and (iv) any bad debt deductions previously claimed by such holder with respect
to the Coated Paper Sale/Leaseback Claim. The Coated Paper Sale/Leaseback Claim
holder should consult its tax advisor regarding the specific U.S. federal income
consequences to it as a result of its receipt of deferred Cash pursuant to
the
Plan.
4. Holders
of Lowville Grant Claims (Class 7)
The
consummation of the Plan generally should not be a taxable event for a holder
of
a Lowville Grant Claim who votes in favor of the Plan and whose legal,
equitable, and contractual rights are Reinstated pursuant to the Plan. This
conclusion assumes that any particular Lowville Grant Claim covenant that is
deemed unenforceable pursuant to the Plan would be considered a “customary
accounting or financial covenant” for U.S. federal income tax purposes, which
the Debtors believe is likely based upon the limited information available
at
this time. The consequences to any Lowville Grant Claim holder who votes against
the Plan are described below in Section IX.C.5, if secured, and in Section
IX.C.7, if unsecured.
5. Holders
of Other Secured Claims (Class 8)
A
holder
of an Other Secured Claim who receives the collateral securing such Claim or
who
receives Cash with respect to such Claim pursuant to the Plan generally will
be
required to recognize gain or loss for U.S. federal income tax purposes equal
to
the difference between the fair market value of the collateral or the amount
of
Cash, as the case may be, received in exchange therefor and such holder’s
adjusted tax basis in the Claim. A holder of an Other Secured Claim who receives
deferred Cash payments and realizes gain thereon may be eligible to report
gain
from such Cash payments under the installment method, which generally will
result in the recognition of gain as deferred Cash payments are received, unless
such holder affirmatively elects out of the installment method. A portion of
the
Cash received will be characterized as interest income. Additionally, holders
reporting under the installment method may be subject to an interest charge
with
respect to their deferred tax liability. A holder of an Other Secured Claim
who
receives deferred Cash payments and recognizes loss thereon likely should
recognize loss on the Effective Date equal to the difference between such
holder’s adjusted tax basis in such Claim and the issue price (in the case of a
cash basis taxpayer) or the principal amount (in the case of an accrual basis
taxpayer) of the deferred Cash payments. Holders of Other Secured Claims who
receive deferred Cash payments should consult their tax advisors regarding
the
application of the installment method, the determination of the amount of gain
or loss to be recognized, and the imputed interest rules.
The
consummation of the Plan generally should not be a taxable event for a holder
of
an Other Secured Claim whose legal, equitable, and contractual rights are
Reinstated pursuant to the Plan. This conclusion assumes that any particular
Other Secured Claim covenant that is deemed unenforceable pursuant to the Plan
would be considered a “customary accounting or financial covenant” for U.S.
federal income tax purposes, which the Debtors believe is likely based upon
the
limited information available at this time.
6. Holders
of Noteholder Claims (Class 9)
The
Debtors believe that the exchange of FiberMark Notes for New Common Stock and
Distribution Cash should constitute a “recapitalization” for U.S. federal income
tax purposes. Accordingly, a holder of Noteholder Claims who surrenders its
FiberMark Notes for New Common Stock and Distribution Cash pursuant to the
Plan
should recognize
gain, but not loss, with respect to each Note surrendered in an amount equal
to
the lesser of (x) the amount of gain realized (i.e.,
the
excess of the fair market value on the Effective Date of the New Common Stock
and the amount of Distribution Cash received by such holder in exchange for
its
FiberMark Notes, over the adjusted tax basis of such Notes) and (y) the amount
of Distribution Cash received by such holder in the exchange.
Any
gain
recognized by a holder of a Noteholder Claim who surrenders its FiberMark Notes
pursuant to the Plan generally should be treated as capital gain, except as
provided in the "Market Discount" section below. Such a holder's aggregate
tax
basis in the New Common Stock received pursuant to the Plan should be the same
as the tax basis of such holder's FiberMark Notes surrendered, decreased by
the
amount of Distribution Cash received and increased by any gain recognized.
A
holder's holding period in the New Common Stock received pursuant to the Plan
should include such holder's holding period in the FiberMark Notes surrendered
in exchange therefor.
The
foregoing discussion assumes that the FiberMark Notes would be treated as
“securities” for U.S. federal income tax purposes. The term “security” is not
defined in the Tax Code or in the Treasury regulations issued thereunder and
has
not been clearly defined by judicial decisions. The determination of whether
a
particular debt instrument constitutes a “security” depends on an overall
evaluation of the nature of the debt instrument. One of the most significant
factors considered in determining whether a particular debt instrument is a
security is its term. In general, debt instruments issued with a maturity at
issuance of five years or less (e.g., trade debt and revolving credit
obligations) do not constitute securities, whereas debt instruments with a
maturity of ten years or more constitute securities. Among other things, the
FiberMark Notes provide for a term of ten years, and FiberMark intends to take
the position that the FiberMark Notes constitute “securities” for U.S. federal
income tax purposes.
Notwithstanding
the foregoing, if the FiberMark Notes do not constitute “securities” for U.S.
federal income tax purposes, the exchange of FiberMark Notes for New Common
Stock and Distribution Cash would be treated as fully taxable to holders. In
such an event, a holder of Noteholder Claims would generally recognize gain
or
loss in an amount equal to the difference between (i) the fair market value
on
the Effective Date of the New Common Stock and the amount of Distribution Cash
received pursuant to the Plan and (ii) such holder's adjusted tax basis in
its
surrendered FiberMark Notes.
If
the
FiberMark Notes do not constitute “securities” for U.S. federal income tax
purposes, any gain or loss recognized generally should be treated as capital
gain or loss, except as provided in the "Market Discount" section below. The
tax
basis of an exchanging holder of a Noteholder Claim in the New Common Stock
received pursuant to the Plan would equal the fair market value of the New
Common Stock on the Effective Date. Any gain or loss recognized by such holder
would be long-term gain or loss if the holder's holding period for its FiberMark
Notes was more than one year on the Effective Date. The holding period for
New
Common Stock received pursuant to the Plan would begin on the day after the
Effective Date.
Market
Discount.
If a
holder of a Noteholder Claim purchased a FiberMark Note at a price less than
the
FiberMark Note's principal amount, such difference would constitute “market
discount” for U.S. federal income tax purposes, unless such difference were less
than the statutory de
minimis amount.
Assuming that the FiberMark Notes qualify as “securities” for U.S. federal
income tax purposes, gain recognized by a holder upon the exchange of such
holder’s Noteholder Claim for New Common Stock and Distribution Cash generally
should be treated as ordinary income to such holder to the extent of any accrued
market discount (unless such holder has elected to include market discount
in
income as it accrues). The amount of any remaining accrued market discount
not
recognized in the exchange should carry over to such holder’s New Common Stock.
Any gain recognized by such holder on a subsequent taxable disposition of the
New Common Stock would be treated as ordinary income to the extent of any such
remaining accrued but unrecognized market discount.
If
the
FiberMark Notes do not qualify as “securities” for U.S. federal income tax
purposes, gain recognized by a holder on the exchange of FiberMark Notes for
New
Common Stock and Distribution Cash pursuant to the Plan generally would be
treated as ordinary income to the extent of any market discount that accrued
between the date of purchase of the FiberMark Notes by such holder and the
Effective Date (unless the holder has elected to include market discount in
income as it accrues).
7. General
Unsecured Claims (Class 10)
In
general, the receipt of New Common Stock and Distribution Cash in respect of
General Unsecured Claims pursuant to the Plan should be treated as a taxable
exchange for U.S. federal income tax purposes. Accordingly, a holder of General
Unsecured Claims should recognize gain or loss for U.S. federal income tax
purposes in an amount equal to the difference, if any, between (i) the fair
market value on the Effective Date of the New Common Stock and the Distribution
Cash received, and (ii) the holder's adjusted tax basis in its General Unsecured
Claims. Any such recognized gain or loss generally will be ordinary if the
holder is a trade creditor and capital gain or loss if the holder holds such
Claim as a capital asset for U.S. federal income tax purposes and will be
long-term capital gain or loss if the holder's holding period for such claim
exceeds one year as of the Effective Date.
A
holder's tax basis in the New Common Stock received in respect of its General
Unsecured Claims generally should equal the fair market value of such New Common
Stock on the Effective Date. The holding period for the New Common Stock should
begin on the day after the Effective Date.
Any
gain
recognized by a holder upon a subsequent taxable disposition of New Common
Stock
should be treated as ordinary income to the extent of any bad debt deductions
claimed with respect to such General Unsecured Claims and any ordinary loss
incurred upon the receipt of the New Common Stock and Distribution Cash in
satisfaction of such Claim, less any income (other than interest income)
recognized by the holder upon satisfaction of such Claim.
| D. |
Information
Reporting and Backup
Withholding
|
Certain
payments, including certain payments of Claims pursuant to the Plan, payments
of
interest on the FiberMark Notes, payments of dividends, if any, on the New
Common Stock and the proceeds from the sale or other taxable disposition of
the
New Common Stock, may be subject to information reporting to the IRS. Moreover,
such reportable payments may be subject to backup withholding unless the
taxpayer: (i) comes within certain exempt categories (which generally include
corporations) or (ii) provides a correct taxpayer identification number and
otherwise complies with applicable backup withholding provisions. In addition,
Treasury regulations generally require disclosure by a taxpayer on its U.S.
federal income tax return of certain types of transactions in which the taxpayer
participated, including, among other types of transactions, the following:
(i)
certain transactions that result in the taxpayer’s claiming a loss in excess of
specified thresholds; and (ii) certain transactions in which the taxpayer’s
book-tax differences exceed a specified threshold in any tax year. Holders
are
urged to consult their tax advisors regarding these regulations and whether
the
transactions contemplated by the Plan would be subject to these regulations
and
require disclosure on the holders’ tax returns.
| E. |
Importance
of Obtaining Professional Tax
Assistance
|
THE
FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE PLAN AND IS NOT A SUBSTITUTE FOR CAREFUL TAX
PLANNING WITH A TAX PROFESSIONAL. THE ABOVE DISCUSSION IS FOR INFORMATION
PURPOSES ONLY AND IS NOT TAX ADVICE. THE TAX CONSEQUENCES ARE IN MANY CASES
UNCERTAIN AND MAY VARY DEPENDING ON A HOLDER'S INDIVIDUAL CIRCUMSTANCES.
ACCORDINGLY, HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE U.S.
FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX CONSEQUENCES OF THE
PLAN.
| X. |
FEASIBILITY
OF THE PLAN AND BEST INTERESTS OF
CREDITORS
|
| A. |
Feasibility
of the Plan
|
In
connection with confirmation of the Plan, the Bankruptcy Court will be required
to determine that the Plan is feasible pursuant to Section 1129(a)(11) of the
Bankruptcy Code, which means that the confirmation of the Plan is not likely
to
be followed by the liquidation or the need for further financial reorganization
of the Debtors.
To
support their belief in the feasibility of the Plan, the Debtors have relied
upon the Projections, which are annexed to this Disclosure Statement as Appendix
B.
The
Projections indicate that the Reorganized Debtors should have sufficient cash
flow to pay and service their debt obligations and to fund their operations.
Accordingly, the Debtors believe that the Plan complies with the financial
feasibility standard of Section 1129(a)(11) of the Bankruptcy Code.
The
Projections are based upon numerous assumptions that are an integral part of
the
Projections, including, without limitation, confirmation and consummation of
the
Plan in accordance with its terms; realization of the Debtors’ operating
strategy for the Reorganized Debtors; industry performance; no material adverse
changes in applicable legislation or regulations, or the administration thereof,
including environmental legislation or regulations, exchange rates, or generally
accepted accounting principles; general business and economic conditions;
competition; adequate financing; absence of material contingent or unliquidated
litigation, indemnity or other claims; and other matters, many of which will
be
beyond the control of the Reorganized Debtors and some or all of which may
not
materialize. To the extent that the assumptions inherent in the Projections
are
based upon future business decisions and objectives, they are subject to change.
The Projections were not prepared in accordance with standards for projections
promulgated by the American Institute of Certified Public Accountants or with
a
view to compliance with published guidelines of the SEC regarding projections
or
forecasts. The Projections have not been audited, reviewed, or compiled by
the
Debtors’ independent public accountants. In addition, although they are
presented with numerical specificity and the assumptions on which they are
based
are considered reasonable by the Debtors, the assumptions and estimates
underlying the Projections are subject to significant business, economic, and
competitive uncertainties and contingencies, many of which will be beyond the
control of the Reorganized Debtors. Accordingly, the Projections are only an
estimate that are necessarily speculative in nature. It can be expected that
some or all of the assumptions in the Projections will not be realized and
that
actual results will vary from the Projections, which variations may be material
and are likely to increase over time. The Projections should therefore not
be
regarded as a representation by the Debtors or any other Person that the results
set forth in the Projections will be achieved. Neither the Debtors' independent
public accountants, nor any other independent accountants or financial advisors,
have compiled, examined, or performed any procedures with respect to the
projected consolidated financial information contained herein, nor have they
expressed any opinion or any other form of assurance on such information or
its
achievability, and assume no responsibility for, and disclaim any association
with, the projected financial information. In light of the foregoing, readers
are cautioned not to place undue reliance on the Projections. The projected
financial information contained herein should not be regarded as a
representation or warranty by the Debtors, the Debtors’ advisors, or any other
Person that the Projections can or will be achieved. The Projections should
be
read together with the information in Article VII of this Disclosure Statement
entitled “Certain Factors to be Considered,” which sets forth important factors
that could cause actual results to differ from those in the Projections.
FiberMark
is subject to the informational requirements of the Exchange Act, and in
accordance therewith files periodic reports and other information with the
SEC
relating to its businesses, financial statements, and other matters. Such
filings do not and will not include projected financial information. The Debtors
do not intend to update or otherwise revise the Projections, including any
revisions to reflect events or circumstances existing or arising after the
date
of this Disclosure Statement or to reflect the occurrence of unanticipated
events, even if any or all of the underlying assumptions do not come to
fruition. Furthermore, the Debtors do not intend to update or revise the
Projections to reflect changes in general economic or industry
conditions.
SAFE
HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
This Disclosure Statement and the Projections contained herein include
“forward-looking statements” within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements
of
historical fact included in this Disclosure Statement are forward-looking
statements, including, without limitation, financial projections, the
statements, and the underlying assumptions, regarding the timing of, completion
of, and scope of the current restructuring, the Plan, bank financing, debt
and
equity market conditions, the cyclicality of the Debtors’ industry, current and
future industry conditions, the potential effects of such matters on the
Debtors’ business strategy, results of operations or financial position, the
adequacy of the Debtors’ liquidity, and the market sensitivity of the Debtors’
financial instruments. The forward-looking statements are based upon current
information and expectations. Estimates, forecasts, and other statements
contained in or implied by the forward-looking statements speak only as of
the
date on which they are made, are not guarantees of future performance, and
involve certain risks, uncertainties, and assumptions that are difficult to
evaluate and predict. Although the Debtors believe that the expectations
reflected in the forward-looking statements are reasonable, parties are
cautioned that any such forward-looking statements are not guarantees of future
performance, and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements.
Certain important factors that could cause actual results to differ materially
from the Debtors’ expectations or what is expressed, implied, or forecasted by
or in the forward-looking statements include developments in the Chapter 11
Case, adverse developments in the timing or results of the Debtors’ business
plan (including the time line to emerge from Chapter 11), the timing and extent
of changes in commodity prices and global economic conditions, industry
production capacity and operating rates, the supply-demand balance for the
Debtors’ products, competitive products and pricing pressures, the Debtors’
ability to obtain raw materials at acceptable prices, in a timely manner and
on
acceptable terms, federal and state regulatory developments, the Debtors’
financial leverage, motions filed or actions taken in connection with the
bankruptcy proceedings, the availability of skilled personnel, the Debtors’
ability to attract or retain high quality employees, and operating hazards
attendant to the industry. Additional factors that could cause actual results
to
differ materially from the Projections or what is expressed, implied, or
forecasted by or in the forward-looking statements are stated herein in
cautionary statements made in conjunction with the forward-looking statements
or
are included elsewhere in this Disclosure Statement.
| B. |
Acceptance
of the Plan
|
As
a
condition to Confirmation, the Bankruptcy Code requires that each Class of
Impaired Claims vote to accept the Plan, except under certain
circumstances.
Section
1126(c) of the Bankruptcy Code defines acceptance of a plan by a class of
impaired claims as acceptance by holders of at least two-thirds (²¤3)
in
dollar amount and more than one-half (½) in number of claims in that class, but
for that purpose counts only those who actually vote to accept or to reject
the
Plan. Thus, holders of Claims in each of Classes 4, 5, 6, 7, 8, 9, and 10 will
have voted to accept the Plan only if two-thirds (²¤3)
in
amount and a majority in number of the Claims actually voting in each Class
cast
their ballots in favor of acceptance. Holders of Claims who fail to vote are
not
counted as either accepting or rejecting a plan.
As
noted
above, even if a plan is accepted by each class of claims and interests, the
Bankruptcy Code requires a bankruptcy court to determine that the plan is in
the
best interests of all holders of claims or interests that are impaired by the
plan and that have not accepted the plan. The “best interests” test, as set
forth in Section 1129(a)(7) of the Bankruptcy Code, requires a bankruptcy court
to find either that all members of an impaired class of claims or interests
have
accepted the plan or that the plan will provide a member who has not accepted
the plan with a recovery of property of a value, as of the effective date of
the
plan, that is not less than the amount that such holder would recover if the
debtor were liquidated under Chapter 7 of the Bankruptcy Code.
To
calculate the probable distribution to holders of each impaired class of claims
and interests if the debtor were liquidated under Chapter 7, a bankruptcy court
must first determine the aggregate dollar amount that would be generated from
the debtor’s assets if its Chapter 11 case were converted to a Chapter 7 case
under the Bankruptcy Code. This “liquidation value” would consist primarily of
the proceeds from a forced sale of the debtor’s assets by a Chapter 7
trustee.
The
amount of liquidation value available to unsecured creditors would be reduced
by, first, the claims of secured creditors to the extent of the value of their
collateral and, second, by the costs and expenses of liquidation, as well as
by
other administrative expenses and costs of both the Chapter 7 case and the
Chapter 11 case. Costs of liquidation under Chapter 7 of the Bankruptcy Code
would include the compensation of a trustee, as well as of counsel and other
professionals retained by the trustee, asset disposition expenses, all unpaid
expenses incurred by the debtors in its Chapter 11 case (such as compensation
of
attorneys, financial advisors, and accountants) that are allowed in the Chapter
7 cases, litigation costs, and claims arising from the operations of the debtor
during the pendency of the Chapter 11 case. The liquidation itself would trigger
certain priority payments that otherwise would be due in the ordinary course
of
business. Those priority claims would be paid in full from the liquidation
proceeds before the balance would be made available to pay general unsecured
claims or to make any distribution in respect of equity security interests.
The
liquidation would also prompt the rejection of a large number of executory
contracts and unexpired leases and thereby significantly enlarge the total
pool
of unsecured claims by reason of resulting rejection damages
claims.
Once
the
bankruptcy court ascertains the recoveries in liquidation of secured creditors
and priority claimants, it must determine the probable distribution to general
unsecured creditors and equity security holders from the remaining available
proceeds in liquidation. If such probable distribution has a value greater
than
the distributions to be received by such creditors and equity security holders
under the plan, then the plan is not in the best interests of creditors and
equity security holders.
For
purposes of the Best Interest Test, in order to determine the amount of
liquidation value available to Creditors, the Debtors, with the assistance
of
their restructuring accountants, Weiser, prepared a liquidation analysis,
annexed hereto as Appendix E (the “Liquidation Analysis”), which concludes that
in a Chapter 7 liquidation, holders of pre-petition unsecured Claims would
receive less of a recovery than the recovery they would receive under the Plan.
This conclusion is premised upon the assumptions set forth in Appendix E, which
the Debtors and Weiser believe are reasonable.
Notwithstanding
the foregoing, the Debtors believe that any liquidation analysis with respect
to
the Debtors is inherently speculative. The liquidation analysis for the Debtors
necessarily contains estimates of the net proceeds that would be received from
a
forced sale of assets and/or business units, as well as the amount of Claims
that would ultimately become Allowed Claims. Claims estimates are based solely
upon the Debtors’ incomplete review of the Claims filed and the Debtors’ books
and records. No order or finding has been entered by the Bankruptcy Court
estimating or otherwise fixing the amount of Claims at the projected amounts
of
Allowed Claims set forth in the liquidation analysis. In preparing the
liquidation analysis, the Debtors have projected an amount of Allowed Claims
that represents their best estimate of the Chapter 7 liquidation dividend to
holders of Allowed Claims. The estimate of the amount of Allowed Claims set
forth in the liquidation analysis should not be relied on for any other purpose,
including, without limitation, any determination of the value of any
distribution to be made on account of Allowed Claims under the
Plan.
| E. |
Valuation
of the Reorganized Debtors
|
The
reorganization value of the Reorganized Debtors is assumed for the purposes
of
the Plan to be between approximately $210 million and $240 million, with a
midpoint value of $225 million. Based upon the reorganization value of the
Debtors' businesses and total net debt of approximately $106.6 million, the
assumed range of equity values for the Reorganized Debtors approximates $103.4
million to $133.4 million, with a midpoint value of $118.4 million. Assuming
a
distribution of 10 million shares upon consummation of the Plan, the imputed
estimate of the range of equity value on a per share basis is $10.34 to $13.34,
with a midpoint value of $11.84.
The
foregoing valuations are based on a number of measured assumptions, including
a
successful reorganization of the Debtors’ business and finances in a timely
manner, the achievement of the forecasts reflected in the Projections, the
availability of certain tax attributes, the outcome of certain expectations
regarding market conditions, and the Plan becoming effective in accordance
with
its terms. The estimates of value represent hypothetical reorganization values
of the Reorganized Debtors as the continuing operator of their businesses and
assets and do not purport to reflect or constitute appraisals, liquidation
values, or estimates of the actual market value that may be realized through
the
sale of any assets or securities to be issued pursuant to the Plan, which may
be
significantly different than the amounts set forth herein. The value of
operating businesses such as the Debtors’ businesses is subject to uncertainties
and contingencies that are difficult to predict, and will fluctuate with changes
in factors affecting the financial condition and prospects of such
businesses.
| F. |
Application
of the “Best Interests” of Creditors Test to the Liquidation Analysis and
the Valuation
|
It
is
impossible to determine with any specificity the value each holder of
a Noteholder
Claim or General Unsecured Claim will receive as a percentage of its Allowed
Claim. The difficulty in estimating the value of recoveries for such holders
is
due to, among other things, the lack of any public market for the New
Common Stock.
Notwithstanding
the difficulty in quantifying recoveries with precision, the Debtors believe
that the financial disclosures and projections contained herein imply a greater
or equal recovery to holders of Claims in Impaired Classes than the recovery
available in a Chapter 7 liquidation. Accordingly, the Debtors believe that
the
“best interests” test of Section 1129 of the Bankruptcy Code is satisfied.
| G. |
Confirmation
Without Acceptance of All Impaired Classes: The “Cramdown”
Alternative
|
In
view
of the deemed rejection by holders of Classes 11, 12, 13, and 15, the Debtors
will seek confirmation of the Plan pursuant to the “cramdown” provisions of the
Bankruptcy Code. The Debtors further reserve the right to seek confirmation
of
the Plan with respect to the Claims in Classes 4, 5, 6, 7, 8, 9, and 10 in
the
event the holders of such Claims vote to reject the Plan. Specifically, Section
1129(b) of the Bankruptcy Code provides that a plan can be confirmed even if
the
plan is not accepted by all impaired classes, as long as at least one impaired
class of claims has accepted it. The Bankruptcy Court may confirm a plan at
the
request of the debtors if the plan “does not discriminate unfairly” and is “fair
and equitable” as to each impaired class that has not accepted the plan. A plan
does not discriminate unfairly within the meaning of the Bankruptcy Code if
a
dissenting class is treated equally with respect to other classes of equal
rank.
The
Debtors believe the Plan does not discriminate unfairly with respect to the
Claims and Interests in Classes 11, 12, 13, and 15. Such Classes include Claims
or Interests that are subordinated to other Claims under Section 510(b) or
(c)
of the Bankruptcy Code or Section 726(a)(2)(C), (a)(3), (a)(4), or (a)(5) of
the
Bankruptcy Code as incorporated into Section 1129(a)(7) of the Bankruptcy Code,
or are otherwise not entitled to payment under the absolute priority rule until
all other Creditors have been paid in full. Thus, because all holders of Claims
and Interests in Classes 11, 12, 13, and 15 are similarly treated, there is
no
unfair discrimination with respect to such holders or Claims and Interests.
A
plan is
fair and equitable as to a class of unsecured claims that rejects a plan if
the
plan provides (a) for each holder of a claim included in the rejecting class
to
receive or retain on account of that claim property that has a value, as of
the
effective date of the plan, equal to the allowed amount of such claim or (b)
that the holder of any claim or interest that is junior to the claims of such
class will not receive or retain on account of such junior claim or interest
any
property at all.
A
plan is
fair and equitable as to a class of equity interests that rejects a plan if
the
plan provides (a) that each holder of an interest included in the rejecting
class receive or retain on account of that interest property that has a value,
as of the effective date of the plan, equal to the greatest of the allowed
amount of any fixed liquidation preference to which such holder is entitled,
any
fixed redemption price to which such holder is entitled or the value of such
interest or (b) that the holder of any interest that is junior to the interests
of such class will not receive or retain under the plan on account of such
junior interest any property at all.
The
Debtors believe that they will meet the “fair and equitable” requirements of
Section 1129(b) of the Bankruptcy Code with respect to holders of Claims in
Classes 11, 12, and 13 and holders of Interests in Class 15 in that no holders
of junior claims or interests will receive distributions under the Plan.
As
to
Classes 4, 5, 6, 7, 8, 9, and 10 in the event it becomes necessary to “cramdown”
the Plan over the rejection of any such Classes, the Debtors will demonstrate
at
the Confirmation Hearing that the Plan does not discriminate unfairly and is
fair and equitable with respect to such Classes. The fair and equitable test
set
forth above for unsecured claims applies to Classes 9 and 10. The fair and
equitable test for secured claims, which is applicable to Classes 4, 5, 6,
and
8, is that the plan provides (a) that the holders of secured claims retain
the
liens in the property securing such claims to the extent of the allowed amount
of such claims, and that the holders of such claims receive on account of such
claims deferred cash payments totaling at least the allowed amount of such
claims, of a value, as of the effective date of the plan, of at least the value
of such holders’ interest in the estate’s interest in such property; (b) for the
sale of any property subject to the liens securing such claims, free and clear
of such liens, with the liens attaching the proceeds of such sale, and such
liened proceeds being treated either pursuant to (a) or (c); or (c) for the
realization by such holders of the indubitable equivalent of such claims. The
treatment proposed for Classes 4, 5, 6, and 8 satisfies the fair and equitable
test and can be crammed down, if necessary.
| XI. |
ALTERNATIVES
TO CONFIRMATION AND CONSUMMATION OF THE
PLAN
|
The
Debtors believe that the Plan affords holders of Claims in Classes 4, 5, 6,
7,
8, 9, and 10 the potential for the greatest realization on the Debtors’ assets
and, therefore, is in the best interests of such holders. If, however, the
requisite acceptances are not received or the Plan is not confirmed and
consummated, the theoretical alternatives include (a) formulation of an
alternative plan or plans of reorganization or (b) liquidation of the Debtors
under Chapter 7 or Chapter 11 of the Bankruptcy Code.
| A. |
Alternative
Plan(s) of Reorganization
|
If
the
requisite acceptances are not received or if the Plan is not confirmed, the
Debtors or any other party in interest could attempt to formulate and propose
a
different plan or plans of reorganization. Such a plan or plans might involve
either a reorganization and continuation of the Debtors’ businesses or an
orderly liquidation of assets.
The
Debtors believe that the Plan enables Creditors to realize the greatest possible
value under the circumstances and has the greatest chance to be confirmed and
consummated. Moreover, the Debtors strongly believe that any further delay
in
their emergence from Chapter 11 will be prejudicial to their businesses and
the
potential recoveries of creditors.
| B. |
Liquidation
under Chapter 7 or Chapter
11
|
If
no
plan is confirmed, the Debtors’ cases may be converted to cases under Chapter 7
of the Bankruptcy Code, pursuant to which a trustee would be elected or
appointed to liquidate the Debtors’ assets for distribution in accordance with
the priorities established by the Bankruptcy Code. It is impossible to predict
precisely how the proceeds of the liquidation would be distributed to the
respective holders of Claims against or Interests in the Debtors.
The
Debtors believe that in a liquidation under Chapter 7, additional administrative
expenses involved in the appointment of a trustee or trustees and attorneys,
accountants, and other professionals to assist such trustees would cause a
substantial diminution in the value of the Debtors’ Estates. The assets
available for distribution to Creditors would be reduced by such additional
expenses and by Claims, some of which would be entitled to priority, arising
by
reason of the liquidation and from the rejection of leases and other executory
contracts in connection with the cessation of operations and the failure to
realize the greater going concern value of the Debtors’ assets. More
importantly, as set forth in Appendix E, conversion to a Chapter 7 liquidation
would likely result in the immediate cessation of the Debtors’ businesses, as
most Chapter 7 trustees are disinclined to continue operations.
The
Debtors could also be liquidated pursuant to the provisions of a Chapter 11
plan
of reorganization. In a liquidation under Chapter 11, the Debtors’ assets could
theoretically be sold in an orderly fashion over a more extended period of
time
than in a liquidation under Chapter 7, thus resulting in a potentially greater
recovery. Conversely, to the extent the Debtors’ businesses incur operating
losses, the Debtors efforts to liquidate their assets over a longer period
of
time could theoretically result in a lower net distribution to Creditors than
they would receive through a Chapter 7 liquidation. Nevertheless, because there
would be no need to appoint a Chapter 7 trustee and to hire new professionals,
a
Chapter 11 liquidation might be less costly than a Chapter 7 liquidation and
thus provide larger net distributions to Creditors than in a Chapter 7
liquidation. Any recovery in a Chapter 11 liquidation, while potentially greater
than in a Chapter 7 liquidation, would also be highly uncertain.
Although
preferable to a Chapter 7 liquidation, the Debtors believe that any alternative
liquidation under Chapter 11 is a much less attractive alternative to Creditors
than the Plan because of the greater return anticipated by the
Plan.
| XII. |
THE
SOLICITATION; VOTING
PROCEDURES
|
| A. |
Parties
in Interest Entitled to
Vote
|
In
general, a holder of a claim or interest may vote to accept or to reject a
plan
if (a) the claim or interest is “allowed,” which means generally that no party
in interest has objected to such claim or interest and (b) the claim or interest
is “impaired” by the plan.
Under
Section 1124 of the Bankruptcy Code, a class of claims or interests is deemed
to
be “impaired” under a plan unless (a) the plan leaves unaltered the legal,
equitable, and contractual rights to which such claim or interest entitles
the
holder thereof or (b) notwithstanding any legal right to an accelerated payment
of such claim or interest, the plan cures all existing defaults (other than
defaults resulting from the occurrence of events of bankruptcy) and reinstates
the maturity of such claim or interest as it existed before the
default.
If,
however, the holder of an impaired claim or interest will not receive or retain
any distribution under the plan on account of such claim or interest, the
Bankruptcy Code deems such holder to have rejected the plan and, accordingly,
holders of such claims and interests do not actually vote on the plan. If a
claim or interest is not impaired by the plan, the Bankruptcy Code deems the
holder of such claim or interest to have accepted the plan and, accordingly,
holders of such claims and interests are not entitled to vote on the
plan.
| B. |
Classes
Entitled to Vote to Accept or Reject the
Plan
|
Holders
of Claims in Classes 4, 5, 6, 7, 8, 9, and 10 are entitled to vote to accept
or
reject the Plan. By operation of law, each unimpaired Class of Claims is deemed
to have accepted the Plan and each impaired Class of Claims or Interests that
will receive nothing under the Plan is deemed to have rejected the Plan and,
therefore, the holders of Claims or Interests in such Classes are not entitled
to vote to accept or reject the Plan. Consequently, Classes 1, 2, 3, and 14
are
deemed to have accepted the Plan and Classes 11, 12, 13, and 15 are deemed
to
have rejected the Plan; and, therefore, none of the holders of Claims or
Interests in such Classes are entitled to vote to accept or reject the
Plan.
On
________, 2005, the Bankruptcy Court entered an order that, among other things,
determines the dates, procedures, and forms applicable to the process of
soliciting votes on the Plan and establishes certain procedures with respect
to
the tabulation of such votes (the “Solicitation Order”). Parties in interest may
obtain a copy of the Solicitation Order by making written request to the
Debtors’ counsel or may access a copy on the Debtors’ Web site at
www.fibermark.com.
| D. |
Waivers
of Defects, Irregularities,
Etc.
|
Unless
otherwise directed by the Bankruptcy Court, all questions as to the validity,
form, eligibility (including time of receipt), acceptance, and revocation or
withdrawal of ballots will be determined by the Voting Agent and the Debtors
in
their sole discretion, which determination will be final and binding. As
indicated below under “Withdrawal of Ballots; Revocation,” effective withdrawals
of ballots must be delivered to the Voting Agent prior to the Voting Deadline.
The Debtors reserve the absolute right to contest the validity of any such
withdrawal. The Debtors also reserve the right to reject any and all ballots
not
in proper form, the acceptance of which would, in the opinion of the Debtors
or
their counsel, be unlawful. The Debtors further reserve the right to waive
any
defects or irregularities or conditions of delivery as to any particular ballot.
The interpretation (including the ballot and the respective instructions
thereto) by the Debtors, unless otherwise directed by the Bankruptcy Court,
will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with deliveries of ballots must be cured within
such time as the Debtors (or the Bankruptcy Court) determine. Neither the
Debtors nor any other Person will be under any duty to provide notification
of
defects or irregularities with respect to deliveries of ballots nor will any
of
them incur any liabilities for failure to provide such notification. Unless
otherwise directed by the Bankruptcy Court, delivery of such ballots will not
be
deemed to have been made until such irregularities have been cured or waived.
Ballots previously furnished (and as to which any irregularities have not
theretofore been cured or waived) will be invalidated.
| E. |
Withdrawal
of Ballots; Revocation
|
Any
party
who has delivered a valid ballot for the acceptance or rejection of the Plan
may
withdraw such acceptance or rejection by delivering a written notice of
withdrawal to the Voting Agent at any time prior to the Voting Deadline. To
be
valid, a notice of withdrawal must (a) contain the description of the Claim(s)
to which it relates and the aggregate principal amount represented by such
Claim(s), (b) be signed by the withdrawing party in the same manner as the
ballot being withdrawn, (c) contain a certification that the withdrawing party
owns the Claim(s) and possesses the right to withdraw the vote sought to be
withdrawn, and (d) be received by the Voting Agent in a timely manner at Logan
& Company, Inc., Attention: FiberMark, Inc., et al., 546 Valley Road, Upper
Montclair, New Jersey 07043. The Debtors intend to consult with the Voting
Agent
to determine whether any withdrawals of ballots were received and whether the
requisite acceptances of the Plan have been received. As stated above, the
Debtors expressly reserve the absolute right to contest the validity of any
such
withdrawals of ballots.
Unless
otherwise directed by the Bankruptcy Court, a purported notice of withdrawal
of
ballots which is not received in a timely manner by the Voting Agent will not
be
effective to withdraw a previously cast ballot.
Any
party
who has previously submitted to the Voting Agent prior to the Voting Deadline
a
properly completed ballot may revoke such ballot and change his or its vote
by
submitting to the Voting Agent prior to the Voting Deadline a subsequent
properly completed ballot for acceptance or rejection of the Plan. In the case
where more than one timely, properly, completed ballot is received, only the
ballot which bears the latest date will be counted for purposes of determining
whether the requisite acceptances have been received.
| F. |
Special
Instructions for Holders
of Noteholder Claims
|
If
you
are the holder of any Noteholder Claim, or if you are acting on behalf of the
holder of any of such Claims, please carefully review the special instructions
that accompany your ballot. The special instructions may not be consistent
with
the general instructions contained herein. In the event of an inconsistency,
the
special instructions that accompany your ballot should be followed.
| G. |
Voting
Rights of Disputed
Claimants
|
Holders
of Disputed Claims in Classes 4, 5, 6, 7, 8, 9, and 10 whose
Claims are (a) asserted as wholly unliquidated or wholly contingent in Proofs
of
Claim filed prior to the Voting Record Date or are based upon a pending lawsuit
as to which no judgment has been issued or (b) whose Claims are asserted in
Proofs of Claim as to which an objection to the entirety of the Claim is pending
as of the Voting Record Date (collectively, the “Disputed Claimants”) are not
permitted to vote on the Plan except as provided in the Solicitation Order.
Pursuant to the procedures outlined in the Solicitation Order, Disputed
Claimants may obtain a ballot for voting on the Plan only by filing a motion
under Bankruptcy Rule 3018(a) seeking to have their Claims temporarily allowed
for voting purposes (a “Rule 3018 Motion”). Any such Rule 3018 Motion must be
filed with the Bankruptcy Court and served upon the Debtors’ counsel and the
Voting Agent by no later than __________, 2005, at 4:00 p.m. Eastern
Time
(the “Rule 3018 Motion Deadline”). Any party timely filing and serving a Rule
3018 Motion will be provided a ballot and be permitted to cast a provisional
vote to accept or reject the Plan. If and to the extent that the Debtors and
such party are unable to resolve the issues raised by the Rule 3018 Motion
prior
to the __________, 2005, Voting Deadline established by the Bankruptcy Court,
then at the Confirmation Hearing the Bankruptcy Court will determine whether
the
provisional ballot should be counted as a vote on the Plan. Nothing herein
affects the Debtors’ right to object to any Proof of Claim after the Voting
Record Date. With respect to any such objection, the Debtors may request that
any vote cast by the holder of the Claim subject to the objection be disallowed
and not counted in determining whether the requirements of Section 1126(c)
of
the Bankruptcy Code have been met.
| H. |
Further
Information; Additional
Copies
|
If
you
have any questions or require further information about the voting procedures
for voting your Claim or about the packet of material you received, or if you
wish to obtain an additional copy of the Plan, this Disclosure Statement, or
any
exhibits or appendices to such documents (at your own expense, unless otherwise
specifically required by Bankruptcy Rule 3017(d) or the Solicitation Order),
please contact the Voting Agent at:
LOGAN
& COMPANY, INC.
546
VALLEY ROAD
UPPER
MONTCLAIR, NEW JERSEY 07043
ATTENTION:
MARITZA
MARTINEZ
TELEPHONE:
(973) 509-3190
RECOMMENDATION
AND CONCLUSION
For
all
of the reasons set forth in this Disclosure Statement, the Debtors believe
that
confirmation and consummation of the Plan is preferable to all other
alternatives. Consequently, the Debtors urge all holders of Claims in Classes
4,
5, 6, 7, 8, 9, and 10 to vote to ACCEPT the Plan, and to complete and return
their ballots so that they will be RECEIVED on or before 4:00 p.m. Eastern
Time on the Voting Deadline.
Dated:
June 23, 2005 FIBERMARK,
INC.
FIBERMARK
NORTH AMERICA, INC.
FIBERMARK
INTERNATIONAL HOLDINGS LLC
|
|
|
| |
By: |
/s/ Alex
Kwader |
| |
Alex Kwader |
| |
Chairman
of the Board and Chief Executive Officer |
D.
J.
Baker
Rosalie
Walker Gray
Adam
S.
Ravin
David
M.
Turetsky
SKADDEN,
ARPS, SLATE, MEAGHER
&
FLOM LLP
Four
Times Square
New
York,
New York 10036-6522
Telephone:
(212) 735-3000
Facsimile:
(212) 735-2000
Raymond
J. Obuchowski (Bar ID 000502389)
Jennifer
Emens-Butler (Bar ID 000845663)
OBUCHOWSKI
& EMENS-BUTLER
P.O.
Box
60, 1542 Vt. Rt. 107
Bethel,
Vermont 05032
Telephone:
(802) 234-6244
Facsimile:
(802) 234-6245
Co-Counsel
for Debtors
APPENDIX
B
PRO
FORMA FINANCIAL PROJECTIONS
APPENDIX
C
CORPORATE
STRUCTURE CHART
APPENDIX
D
HISTORICAL
FINANCIAL INFORMATION
EXCERPT
FROM FORM 10-Q FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION
FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2005
CONSISTING
OF PAGES 3 TO 24
(The
financial data as of March 31, 2005 has been reviewed by
the
Company’s
outside accountants but has not been audited.)
EXCERPT
FROM 10-K/A
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2004,
CONSISTING
OF PAGES 30 TO 82
(The
financial data as of December 31, 2004 has been reproduced from the audited
financial statements included in the Company’s Form 10-K/A for the fiscal year
ended December 31, 2004 but, due to its inclusion in this Disclosure Statement,
is considered unaudited under applicable accounting rules. To review the
full
audited financial statements for the Company for such period, please refer
to
such Form 10-K and Form 10-K/A on file with the Securities and Exchange
Commission (“SEC”), which may be accessed through the SEC’s Web
site,
www.sec.gov.)
APPENDIX
E
LIQUIDATION
ANALYSIS
Exhibit
2.2
|
DISTRICT
OF VERMONT
|
|
In
re:
FiberMark,
Inc.,
FiberMark
North America, Inc., and
FiberMark
International Holdings LLC,
Debtors.
|
)
)
)
)
)
)
|
Case
No. 04-10463-cab
Chapter
11
Jointly
Administered
|
[First
Proposed]
AMENDED
JOINT
PLAN OF REORGANIZATION
UNDER
CHAPTER 11, TITLE 11, UNITED STATES CODE
OF
FIBERMARK, INC., ET AL., DEBTORS
SKADDEN,
ARPS, SLATE, MEAGHER &
FLOM
LLP
Four
Times Square
New
York,
New York 10036-6522
Telephone:
(212) 735-3000
Fax:
(212) 735-2000
-
and
-
OBUCHOWSKI
& EMENS-BUTLER
P.O.
Box
60, 1542 Vt. Rt. 107
Bethel,
Vermont 05032
Telephone:
(802) 234-6244
Facsimile:
(802) 234-6245
Dated: June
23,
2005
Co-Counsel for Debtors
THE
DISCLOSURE STATEMENT WITH RESPECT TO THIS JOINT PLAN OF REORGANIZATION
HAS NOT
BEEN
APPROVED
BY THE BANKRUPTCY COURT. THE DEBTORS WILL SEPARATELY NOTICE A HEARING
TO
CONSIDER
THE ADEQUACY OF THE DISCLOSURE STATEMENT UNDER SECTION 1125 OF THE
BANKRUPTCY
CODE.
THE
DEBTORS RESERVE THE RIGHT TO MODIFY OR SUPPLEMENT THIS JOINT PLAN
OF
REORGANIZATION AND THE ACCOMPANYING DISCLOSURE STATEMENT PRIOR TO AND
UP TO
THE
DATE
OF
SUCH HEARING.
TABLE
OF CONTENTS
|
1.1
|
“Administrative
Claim”
|
|
|
1.3
|
“Banc
One Equipment Financing Claim”
|
|
|
1.13
|
“Claims
Objection Deadline”
|
|
|
1.15
|
“Coated
Paper Sale/Leaseback Claim”
|
|
|
1.16
|
“Common
Stock Reserve”
|
|
|
1.19
|
“Confirmation
Hearing”
|
|
|
1.20
|
“Confirmation
Order”
|
|
|
1.23
|
“Creditors
Committee”
|
|
|
1.27
|
“DIP
Facility Claim”
|
|
|
1.29
|
“Disclosure
Statement”
|
|
|
1.33
|
“Distribution
Record Date”
|
|
|
1.40
|
“FiberMark
Interests”
|
|
|
1.45
|
“GECC
Credit Facility Claim”
|
|
|
1.46
|
“GECC
Equipment Financing Claim”
|
|
|
1.47
|
“General
Unsecured Claims”
|
|
|
1.48
|
“German
Guaranty Claim”
|
|
|
1.50
|
“Indemnification
Obligation”
|
|
|
1.53
|
“Indenture
Trustee Charging Lien”
|
|
|
1.54
|
“Indenture
Trustee Expenses”
|
|
|
1.55
|
“Intercompany
Claim”
|
|
|
1.57
|
“Key
Employee Protection Order”
|
|
|
1.60
|
“Lowville
Grant Claims”
|
|
|
1.63
|
“New
Equity Incentive Plan”
|
|
|
1.64
|
“New
FiberMark Charter”
|
|
|
1.65
|
“New
FiberMark By-laws”
|
|
|
1.66
|
“Non-Compensatory
Damages Claim”
|
|
|
1.68
|
“Old
FiberMark Common Stock”
|
|
|
1.69
|
“Old
FiberMark Stock Options”
|
|
|
1.72
|
“Other
Priority Claim”
|
|
|
1.73
|
“Other
Secured Claim”
|
|
|
1.77
|
“Priority
Tax Claim”
|
|
|
1.79
|
“Professional
Fee Claim”
|
|
|
1.82
|
“Registration
Rights Agreement”
|
|
|
1.84
|
“Reorganized
Debtor(s)”
|
|
|
1.85
|
“Reorganized
FiberMark”
|
|
|
1.86
|
“Reorganized
Subsidiary Debtor(s)”
|
|
|
1.89
|
“Subordinated
Claim”
|
|
|
1.90
|
“Subsidiary
Debtors”
|
|
|
1.91
|
“Subsidiary
Interests”
|
|
|
1.92
|
“Substantial
Contribution Claim”
|
|
|
1.95
|
“Voting
Record Date”
|
|
|
ARTICLE
II
SUBSTANTIVE CONSOLIDATION
|
|
|
2.1
|
Request
for Substantive Consolidation
|
|
|
2.2
|
Effect
of Substantive Consolidation
|
|
|
ARTICLE
III
CLASSIFICATION OF CLAIMS AND INTERESTS
|
|
|
ARTICLE
IV
TREATMENT OF CLAIMS AND INTERESTS
|
|
|
4.2
|
Unimpaired
Classes of Claims
|
|
|
4.3
|
Impaired
Classes of Claims
|
|
|
4.5
|
Reservation
of Rights Regarding Claims
|
|
|
ARTICLE
V
ACCEPTANCE OR REJECTION OF THE PLAN
|
|
|
5.1
|
Impaired
Classes of Claims and Interests Entitled to Vote
|
|
|
5.2
|
Acceptance
by an Impaired Class
|
|
|
5.3
|
Presumed
Acceptances by Unimpaired Classes
|
|
|
5.4
|
Classes
Deemed to Reject Plan
|
|
|
5.5
|
Confirmation
Pursuant to Section 1129(b) of the Bankruptcy Code
|
|
|
ARTICLE
VI
MEANS FOR IMPLEMENTATION OF THE PLAN
|
|
|
6.1
|
Continued
Corporate Existence
|
|
|
6.2
|
Certificates
of Incorporation and By-laws
|
|
|
6.4
|
Cancellation
of Old Securities and Agreements
|
|
|
6.5
|
Authorization
and Issuance of New Common Stock
|
|
|
6.6
|
New
Equity Incentive Plan; Further Participation in Incentive
Plans
|
|
|
6.7
|
Directors
of Reorganized Debtors
|
|
|
6.8
|
Officers
of Reorganized Debtors
|
|
|
6.9
|
Revesting
of Assets; Releases of Liens
|
|
|
6.10
|
Post-Effective
Date Restructuring Transactions
|
|
|
6.11
|
Indemnification
of Debtors’ Directors, Officers, and Employees
|
|
|
6.12
|
Preservation
of Rights of Action; Resulting Claim Treatment
|
|
|
6.13
|
Effectuating
Documents; Further Transactions
|
|
|
6.14
|
Exemption
From Certain Transfer Taxes
|
|
|
ARTICLE
VII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
|
|
|
7.1
|
Assumed
Executory Contracts and Unexpired Leases
|
|
|
7.2
|
Payments
Related to Assumption of Executory Contracts and Unexpired
Leases
|
|
|
7.3
|
Rejected
Executory Contracts and Unexpired Leases
|
|
|
7.4
|
Rejection
Damages Bar Date
|
|
|
7.5
|
Compensation
and Benefit Programs
|
|
|
7.6
|
Certain
Indemnification Obligations
|
|
|
7.7
|
Extension
of Time to Assume or Reject
|
|
|
7.8
|
Claims
Arising From Assumption or Rejection
|
|
|
ARTICLE
VIII
PROVISIONS GOVERNING DISTRIBUTIONS
|
|
|
8.1
|
Distributions
for Claims Allowed as of Effective Date
|
|
|
8.3
|
Designation;
Distributions by Disbursing Agent
|
|
|
8.4
|
Means
of Cash Payment
|
|
|
8.5
|
Calculation
of Distribution Amounts of New Common Stock
|
|
|
8.6
|
Delivery
of Distributions
|
|
|
8.7
|
Application
of Distribution Record Date
|
|
|
8.8
|
Withholding
and Reporting Requirements
|
|
|
8.11
|
No
Distribution in Excess of Allowed Amount of Claim
|
|
|
8.12
|
Allocation
of Distributions
|
|
|
ARTICLE
IX
PROCEDURES FOR RESOLVING DISPUTED, CONTINGENT, AND UNLIQUIDATED
CLAIMS AND
DISTRIBUTIONS WITH RESPECT THERETO
|
|
|
9.1
|
Prosecution
of Objections to Claims
|
|
|
9.2
|
Treatment
of Disputed Claims
|
|
|
9.3
|
Provisions
for Disputed General Unsecured Claims
|
|
|
ARTICLE
X
CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THE
PLAN
|
|
|
10.1
|
Conditions
to Confirmation
|
|
|
10.2
|
Conditions
to Effective Date
|
|
|
10.3
|
Waiver
of Conditions
|
|
|
ARTICLE
XI
RETENTION OF JURISDICTION
|
|
|
11.1
|
Scope
of Retention of Jurisdiction
|
|
|
11.2
|
Failure
of the Bankruptcy Court to Exercise Jurisdiction
|
|
|
ARTICLE
XII
MISCELLANEOUS PROVISIONS
|
|
|
12.1
|
Professional
Fee Claims; Indenture Trustee Expenses
|
|
|
12.2
|
Administrative
Claims
|
|
|
12.3
|
Payment
of Statutory Fees
|
|
|
12.4
|
Modifications
and Amendments
|
|
|
12.5
|
Severability
of Plan Provisions
|
|
|
12.6
|
Successors
and Assigns and Binding Effect
|
|
|
12.7
|
Compromises
and Settlements
|
|
|
12.8
|
Releases
and Satisfaction of Subordination Rights
|
|
|
12.9
|
Releases
and Related Matters
|
|
|
12.10
|
Discharge
of the Debtors
|
|
|
12.12
|
Exculpation
and Limitation of Liability
|
|
|
12.13
|
Term
of Injunctions or Stays
|
|
|
12.14
|
Revocation,
Withdrawal, or Non-Consummation
|
|
|
12.16
|
Dissolution
of Creditors Committee
|
|
|
12.17
|
Computation
of Time
|
|
EXHIBITS
A
New
FiberMark Charter
B
New
FiberMark By-laws
C
Registration Rights Agreement
D
Section
7.5(a) Benefits
AMENDED
JOINT
PLAN OF REORGANIZATION
UNDER
CHAPTER 11, TITLE 11, UNITED STATES CODE
OF
FIBERMARK, INC., ET AL., DEBTORS
INTRODUCTION
FiberMark,
Inc., FiberMark North America, Inc., and FiberMark International Holdings
LLC
(the “Debtors”) hereby propose this joint plan of reorganization (the “Plan”)
for the resolution of their outstanding Claims (as defined herein) and
Interests
(as defined herein). Reference is made to the Disclosure Statement (as
defined
herein) distributed contemporaneously herewith for a discussion of the
Debtors’
history, businesses, properties, results of operations, projections for
future
operations and risk factors, and a summary and analysis of the Plan and
certain
related matters, including distributions to be made under the Plan. The
Debtors
are the proponents of the Plan within the meaning of Section 1129 of
the
Bankruptcy Code (as defined herein).
All
holders of Claims who are entitled to vote on the Plan are encouraged
to read
the Plan and the Disclosure Statement in their entirety before voting
to accept
or reject the Plan. Subject to certain restrictions and requirements
set forth
in Section 1127 of the Bankruptcy Code, Rule 3019 of the Bankruptcy Rules
(as
defined herein), and Article XII of the Plan, the Debtors reserve the
right to
alter, amend, modify, revoke, or withdraw the Plan prior to its substantial
consummation.
For
purposes of the Plan, except as expressly provided or unless the context
otherwise requires, all capitalized terms used in the Plan and not otherwise
defined in the Plan shall have the meanings ascribed to them in Article
I of the
Plan. Any capitalized term used in the Plan that is not defined herein,
but is
defined in the Bankruptcy Code or the Bankruptcy Rules, shall have the
meaning
ascribed to that term in the Bankruptcy Code or the Bankruptcy Rules.
Whenever
the context requires, such terms shall include the plural as well as
the
singular number, the masculine gender shall include the feminine, and
the
feminine gender shall include the masculine.
ARTICLE
I
DEFINITIONS
For
purposes of the Plan, (a) any reference in the Plan to a contract, instrument,
release, indenture, or other agreement or document being in a particular
form or
on particular terms and conditions means that such document shall be
substantially in such form or substantially on such terms and conditions,
(b)
any reference in the Plan to an existing document or exhibit means such
document
or exhibit as it may be amended, modified, or supplemented from time
to time,
(c) unless otherwise specified, all references in the Plan to sections,
articles, schedules, and exhibits are references to sections, articles,
schedules, and exhibits of or to the Plan, (d) the words “herein,”“hereof,” and
“hereto” refer to the Plan in its entirety rather than to a particular portion
of the Plan, (e) 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, and (f) the rules of construction set
forth in
Section 102 of the Bankruptcy Code and in the Bankruptcy Rules shall
apply.
| 1.1 |
“Administrative
Claim”
|
means
a Claim for payment of an administrative expense of a kind
specified in Section 503(b) or 1114(e)(2) of the Bankruptcy Code and
entitled to
priority pursuant to Section 507(a)(1) of the Bankruptcy Code, including,
but
not limited to, (a) the actual, necessary costs and expenses incurred
after the
Petition Date of preserving the Estates and operating the businesses
of the
Debtors, including, without limitation, wages, salaries, or commissions
for
services rendered after the commencement of the Chapter 11 Case, (b)
obligations
under the Key Employee Protection Order, (c) Professional Fee Claims,
(d)
Substantial Contribution Claims, (e) all fees and charges assessed
against the
Estates under Section 1930 of Title 28 of the United States Code, (f)
all
Allowed Claims for reclamation under Section 546(c)(2)(A) of the Bankruptcy
Code, (g) Cure payments for executory contracts and unexpired leases
that are
assumed under Section 365 of the Bankruptcy Code, (h) the Claim of
Empire State
Development Corporation pursuant to the Order Under 11 U.S.C. § 365(a)
Authorizing Assumption of Grant Disbursement Agreement with Empire
State
Development Corporation on Negotiated Terms entered on August 24, 2004,
(i) the
DIP Facility Claim, and (j) the German Guaranty Claim.
means,
(a) when used with respect to an Administrative Claim, all or any portion
of an
Administrative Claim that has been allowed, or adjudicated in favor of
the
holder by estimation or liquidation, by a Final Order, that was incurred
by the
Debtors in the ordinary course of business during the Chapter 11 Case
and as to
which there is no dispute as to the Debtors' liability, or that has become
allowed by failure to object pursuant to Section 9.1 of
the
Plan; (b) when used with respect to a Claim other than an Administrative
Claim,
such Claim or any portion thereof (i) that has been allowed, or adjudicated
in
favor of the holder by estimation or liquidation, by a Final Order, or
(ii) as
to which (x) no Proof of Claim has been filed with the Bankruptcy Court
and (y)
the liquidated and noncontingent amount of which is included in the Schedules
(any Claim identified in the Schedules as contingent for administrative
purposes
only, which is not otherwise contingent in nature, shall not be considered
contingent), other than a Claim that is included in the Schedules at
zero, in an
unknown amount, or as Disputed, or (iii) for which a Proof of Claim in
a
liquidated amount has been timely filed with the Bankruptcy Court pursuant
to
the Bankruptcy Code, any Final Order of the Bankruptcy Court, or other
applicable bankruptcy law, and as to which either (x) no objection to
its
allowance has been filed within the periods of limitation fixed by the
Plan, the
Bankruptcy Code, or any order of the Bankruptcy Court, or (y) any objection
to
its allowance has been settled or withdrawn, or has been denied by a
Final
Order, or (iv) that is expressly allowed in a liquidated amount in the
Plan.
| 1.3 |
“Banc
One Equipment Financing Claim”
|
means
the
Claim of Banc One Corporation existing under the Equipment Financing
Agreement
between FiberMark and Jules and Associates, Inc., dated as of December
13, 1999;
Schedule 1 thereto dated as of July 5, 2000, Schedule 2 thereto dated
as of
September 13, 2000, and Schedule 3 thereto dated as of December 21, 2000;
and
related documents, agreements, and instruments; all as assigned by Jules
and
Associates, Inc. to Banc One Corporation; after application of adequate
protection payments made under the Stipulation Providing Adequate Protection
for
Secured Manufacturing Equipment Loan of Banc One Leasing Corporation
filed on
June 25, 2004, as approved by order of the Bankruptcy Court entered on
July 1,
2004.
means
the
Bankruptcy Reform Act of 1978, as codified in title 11 of the United
States
Code, 11 U.S.C. §§ 101-1330, as now in effect or hereafter amended.
means
the
United States Bankruptcy Court for the District of Vermont or such other
court
as may have jurisdiction over the Chapter 11 Case or any aspect
thereof.
means
the
Federal Rules of Bankruptcy Procedure.
means
the
date(s) designated by the Bankruptcy Court as the last date(s) for filing
Proofs
of Claim against the Debtors.
means
any
day, excluding Saturdays, Sundays, or “legal holidays” (as defined in Rule
9006(a) of the Bankruptcy Rules), on which commercial banks are open
for
business in New York, New York.
means
legal tender of the United States or equivalents thereof.
means
the
reserve of Distribution Cash established and maintained by the Disbursing
Agent
on account of Disputed General Unsecured Claims.
means
the
jointly administered Chapter 11 cases of the Debtors.
means
(a)
the right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured, or (b) the right
to an
equitable remedy 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, unmatured, disputed, undisputed,
secured,
or unsecured.
| 1.13 |
“Claims
Objection Deadline”
|
means
the
last day for filing objections to Claims, which day shall be the latest
of (a)
sixty (60) days after the Effective Date, (b) thirty (30) days after
the
applicable Proof of Claim or request for payment of an Administrative
Claim is
filed, (c) thirty (30) days after entry of a Final Order reinstating
any Claim
previously disallowed under Section 502(j) of the Bankruptcy Code, or
(d) such
other later date as is established by order of the Bankruptcy Court upon
motion
of the Reorganized Debtors or any other party.
means
a
category of holders of Claims or Interests, as described in Article III
of the
Plan.
| 1.15 |
“Coated
Paper Sale/Leaseback Claim”
|
means
the
Claim existing under the Project Agreement among FiberMark DSI, Inc.
(a
predecessor in interest to FNA), FiberMark and Coated Paper, LLC dated
as of
October 3, 2002; the Supplemental Agreement between such parties dated
as of
January 29, 2003; and various related documents, agreements, and instruments;
after application of adequate protection payments made under the Stipulation
Providing for Post-Petition Adequate Protection or Real Property Lease
Payments
to Coated Paper, LLC filed on June 25, 2004, as approved by order of
the
Bankruptcy Court entered on July 1, 2004, the Stipulation Providing for
Additional Adequate Protection Payments to Coated Paper, LLC Pending
Effective
Date of Plan filed on February 3, 2005, as approved by order of the Bankruptcy
Court entered on February 4, 2005, and the Stipulation Providing for
Post-Petition Adequate Protection or Payment in Lieu of Tax to County
of Lewis
Industrial Development Agency filed on April 19, 2005, as approved by
order of
the Bankruptcy Court entered on April 25, 2005.
| 1.16 |
“Common
Stock Reserve”
|
means
the
reserve of New Common Stock established and maintained by the Disbursing
Agent
on account of Disputed General Unsecured Claims.
means
approval of the Plan by the Bankruptcy Court pursuant to Section 1129
of the
Bankruptcy Code.
means
the
date of entry by the clerk of the Bankruptcy Court of the Confirmation
Order.
| 1.19 |
“Confirmation
Hearing”
|
means
the
hearing to consider Confirmation of the Plan under Section 1128 of the
Bankruptcy Code.
| 1.20 |
“Confirmation
Order”
|
means
the
order entered by the Bankruptcy Court confirming the Plan.
means
a
Claim in an amount equal to or less than $5,000, including any Claim
in an
amount greater than $5,000 that is reduced to $5,000 by an amended Proof
of
Claim filed on or before the Distribution Record Date, which Claim is
not an
Administrative Claim, a Priority Tax Claim, an Other Priority Claim,
a GECC
Credit Facility Claim,
a
GECC
Equipment Financing Claim,
a Banc
One
Equipment Financing Claim,
a Coated
Paper Sale/Leaseback Claim,
a
Lowville Grant Claim,
an Other
Secured Claim,
a Noteholder
Claim,
a
General Unsecured Claim, an Intercompany Claim,
a Subordinated
Claim,
or
a Non-Compensatory
Damages Claim.
means
any
Person who holds a Claim against any of the Debtors.
| 1.23 |
“Creditors
Committee”
|
means
the
Official Committee of Unsecured Creditors appointed pursuant to Section
1102(a)
of the Bankruptcy Code in the Chapter 11 Case, as reconstituted from
time to
time.
means
with respect to the assumption of an executory contract or unexpired
lease
pursuant to Section 365(b) of the Bankruptcy Code, (a) the distribution
of Cash,
or the distribution of such other property as may be agreed upon by the
parties
or ordered by the Bankruptcy Court, in an amount equal to all unpaid
monetary
obligations, without interest, or such other amount as may be agreed
upon by the
parties under an executory contract or unexpired lease, to the extent
such
obligations are enforceable under the Bankruptcy Code and applicable
bankruptcy
law or (b) the taking of such other actions as may be agreed upon by
the parties
or ordered by the Bankruptcy Court.
means,
individually, FiberMark, FNA, or FIH, and collectively, FiberMark, FNA,
and FIH,
including in their capacity as debtors-in-possession pursuant to Sections
1107
and 1108 of the Bankruptcy Code.
means
the
Senior Secured, Superpriority Debtor-in-Possession Credit Agreement dated
as of
April 1, 2004 (as amended, supplemented or otherwise modified from time
to time)
by and among FNA as borrower, FiberMark and FIH as guarantors, and GECC
as agent
for itself and the lenders party thereto; and related loan and security
documents.
| 1.27 |
“DIP
Facility Claim”
|
means
the
Claim existing under the DIP Facility.
means
Reorganized FiberMark or any Person designated by the Debtors in their
discretion on or before the Effective Date to serve as disbursing agent
under
the Plan.
| 1.29 |
“Disclosure
Statement”
|
means
the
Disclosure Statement with Respect to Joint Plan of Reorganization Under
Chapter
11, Title 11, United States Code of FiberMark, Inc., et al., Debtors
dated
December 17, 2004, and the Supplemental Disclosure Statement with Respect
to
Amended Joint Plan of Reorganization Under Chapter 11, Title 11, United
States
Code of FiberMark, Inc., et al., Debtors, as amended, supplemented, or
modified
from time to time, and that is prepared, approved and distributed in
accordance
with Section 1125 of the Bankruptcy Code and Rule 3018 of the Bankruptcy
Rules.
means,
with respect to any Claim, other than a Claim that has been Allowed pursuant
to
the Plan or a Final Order of the Bankruptcy Court, a Claim:
(a) if
no
Proof of Claim has been filed or deemed to have been filed by the applicable
Bar
Date, that has been or hereafter is listed on the Schedules as unliquidated,
contingent (unless identified in the Schedules as contingent for administrative
purposes only and not otherwise contingent in nature), or disputed;
(b) if
a
Proof of Claim has been filed or deemed to have been filed by the applicable
Bar
Date, as to which a Debtor has timely filed an objection or request for
estimation in accordance with the Plan, the Bankruptcy Code, the Bankruptcy
Rules, and any orders of the Bankruptcy Court, or which is otherwise
disputed by
a Debtor in accordance with applicable law, which objection, request
for
estimation, or dispute has not been withdrawn or determined by a Final
Order;
(c) for
which
a Proof of Claim was required to be filed by the Bankruptcy Code, the
Bankruptcy
Rules, or an order of the Bankruptcy Court, but as to which a Proof of
Claim was
not timely or properly filed;
(d) for
damages based upon the rejection by a Debtor of an executory contract
or
unexpired lease under Section 365 of the Bankruptcy Code and as to which
the
applicable Bar Date has not passed;
(e) that
is
disputed in accordance with the provisions of the Plan; or
(f) if
not
otherwise Allowed, as to which the applicable Claims Objection Deadline
has not
expired.
means
Cash in the amount of $75 million, to be distributed on a Pro Rata basis
to
holders of Allowed Noteholder Claims and Allowed General Unsecured Claims
pursuant to Sections 4.3(f) and 4.3(g) of the Plan.
means
(a)
for any Claim that is an Allowed Claim on the Effective Date, the Effective
Date
or as soon as practicable after the Effective Date but not later than
the first
(1st)
Business Day that is twenty (20) days after the Effective Date or (b)
for any
Claim that is not an Allowed Claim on the Effective Date, fifteen (15)
days
after the last day of the month during which the Claim becomes an Allowed
Claim;
provided,
however,
a later
date may be established by order of the Bankruptcy Court upon motion
of the
Debtors, the Reorganized Debtors or any other party. As to a Noteholder
Claim or
a General Unsecured Claim that is entitled to subsequent distributions
from the
Common Stock Reserve or the Cash Reserve under Section 9.3(a) and 9.3(b)
of the
Plan, such term also means the additional date or dates provided in Section
9.3(c) of the Plan.
| 1.33 |
“Distribution
Record Date”
|
means
the
record date for determining entitlement to receive distributions under
the Plan
on account of Allowed Claims, which date shall be the third (3rd)
Business Day after the Confirmation Date at 5:00 p.m. prevailing Eastern
time.
means
the
Business Day upon which all conditions to the consummation of the Plan
as set
forth in Section 10.2 of the Plan have been satisfied or waived as provided
in
Section 10.3 of the Plan, and is the date on which the Plan becomes effective.
means,
individually, the estate of each Debtor in the Chapter 11 Case and,
collectively, the estates of all Debtors in the Chapter 11 Case, created
pursuant to Section 541 of the Bankruptcy Code.
means
Harvey R. Miller, the examiner appointed by the Bankruptcy Court pursuant
to
Section 1104(c) of the Bankruptcy Code by orders entered on April 19,
2005 and
April 22, 2005.
means
the
agreements and related documents and instruments evidencing the new financing
to
be obtained by the Reorganized Debtors as of the Effective Date, including
revolving credit, term credit and/or letters of credit as determined
necessary,
to satisfy the DIP Facility Claim and the German Guaranty Claim, support
other
payments required to be made under the Plan, pay transaction costs, and
fund
working capital and general corporate purposes of the Reorganized Debtors
following the Effective Date.
means
FiberMark, Inc., a Delaware corporation, which is the parent company
of FNA and
FIH and which, along with FNA and FIH, is a Debtor herein.
means
the
9-3/8% Senior Notes due 2006 in the aggregate principal amount of $100,000,000
and the 10-3/4% Senior Notes due 2011 in the aggregate principal amount
of
$230,000,000, each issued by FiberMark and guaranteed by FNA and FIH.
| 1.40 |
“FiberMark
Interests”
|
means,
collectively, all equity interests in FiberMark, including, without limitation,
any preferred stock, the Old FiberMark Common Stock, the Old FiberMark
Stock
Options, together with any warrants, conversion rights, rights of first
refusal,
or other rights, contractual or otherwise, to acquire or receive any
stock or
other equity ownership interests in FiberMark, and any contracts, subscriptions,
commitments, or agreements pursuant to which a party was or could have
been
entitled to receive shares, securities, or other ownership interests
in
FiberMark prior to the Effective Date.
means
FiberMark International Holdings LLC, a Delaware limited liability company,
which is a subsidiary of FiberMark and which, along with FiberMark and
FNA, is a
Debtor in the Chapter 11 Case.
means
an
order or judgment of the Bankruptcy Court, or other court of competent
jurisdiction, as entered on the docket in the Chapter 11 Case, or the
docket of
any such other court, the operation or effect of which has not been stayed,
reversed, or amended, and as to which order or judgment (or any revision,
modification, or amendment thereof) the time to appeal or seek review
or
rehearing or leave to appeal has expired and as to which no appeal or
petition
for review or rehearing was filed or, if filed, remains pending.
means
FiberMark North America, Inc., a Delaware corporation, which is a subsidiary
of
FiberMark and which, along with FiberMark and FIH, is a Debtor in the
Chapter 11
Case.
means
General Electric Capital Corporation as the administrative agent and
a lender
with respect to the GECC Credit Facility Claim and as agent and a lender
with
respect to the DIP Facility Claim.
| 1.45 |
“GECC
Credit Facility Claim”
|
means
the
Claim existing under the Credit Agreement dated as of November 12, 2003
(as
amended from time to time) among FNA, FiberMark Lahnstein GMBH & Co. OHG and
FiberMark Gessner GMBH & Co. OHG as borrowers, certain other credit parties
signatory thereto, General Electric Capital Corporation as administrative
agent,
certain lenders signatory thereto, Bayerische Hypo- und Vereinsbank AG
as
fronting lender and certain other parties signatory thereto; and related
documents, agreements, and instruments.
| 1.46 |
“GECC
Equipment Financing Claim”
|
means
the
Claim existing under the Master Security Agreement dated as of September
19,
2000 (as amended from time to time) between FiberMark and CIT Group/Equipment
Financing, Inc.; the Schedule of Indebtedness and Collateral No. 1 dated
as of
October 25, 2000; and related documents, agreements, and instruments;
all as
assigned by CIT Group/Equipment Financing, Inc. to General Electric Capital
Corporation; after application of adequate protection payments made under
the
Stipulation Providing Adequate Protection for Secured Manufacturing Equipment
Loan of General Electric Capital Corporation filed on May 21, 2004, as
approved
by order of the Bankruptcy Court entered on May 28, 2004.
| 1.47 |
“General
Unsecured Claims”
|
means
a
Claim in an amount greater than $5,000 that is not an Administrative
Claim, a
Priority Tax Claim, an Other Priority Claim,
a GECC
Credit Facility Claim,
a
GECC
Equipment Financing Claim,
a Banc
One
Equipment Financing Claim,
a Coated
Paper Sale/Leaseback Claim,
a
Convenience Claim, an Other Secured Claim,
a Noteholder
Claim,
an
Intercompany Claim,
a Subordinated
Claim,
or
a Non-Compensatory
Damages Claim. Any Lowville Grant Claim that is not a Secured Claim shall
be
treated as a General Unsecured Claim only if the holder of such Claim
votes
against the Plan. This definition specifically includes, without limitation,
rejection damages Claims, non-priority employee Claims, non-priority
tax Claims,
environmental Claims, indemnification Claims, trade vendor Claims, customer
Claims, escheat Claims, and litigation Claims.
| 1.48 |
“German
Guaranty Claim”
|
means
the
Claim existing under the Amended and Restated Guaranty dated as of April
1, 2004
(as amended, supplemented, or otherwise modified from time to time),
among
FiberMark, FNA and FIH as guarantors and GECC individually and as administrative
agent for itself and other lenders, guaranteeing the obligations under
the
Amended and Restated Credit Agreement dated as of April 1, 2004 (as amended,
supplemented, or otherwise modified from time to time), among FiberMark
Lahnstein GmbH & Co. OHG, FiberMark Gessner GmbH & Co. OHG as borrowers,
the other credit parties thereto, GECC as administrative agent and European
loan
agent, Bayerische Hypo- und Vereinsbank AG as front lender, and the other
lenders thereto.
means,
with respect to any Claim or Interest, that such Claim or Interest is
impaired
within the meaning of Section 1124 of the Bankruptcy Code.
| 1.50 |
“Indemnification
Obligation”
|
means
any
obligation of any of the Debtors to indemnify, reimburse, or provide
contribution pursuant to by-laws, articles or certificate of incorporation,
contract, or otherwise.
means
that certain Indenture dated as of October 15, 1996 (as amended, supplemented,
or otherwise modified) between FiberMark, as issuer, and the Subsidiary
Debtors,
as guarantors, and the Indenture Trustee, which Indenture governs all
obligations arising under or in connection with the 9-3/8% Senior Notes
due
2006, and that certain Indenture dated as of April 18, 2001 (as amended,
supplemented, or otherwise modified) between FiberMark, as issuer, and
the
Subsidiary Debtors, as guarantors, and the Indenture Trustee, which Indenture
governs all obligations arising under or in connection with the 10-3/4%
Senior
Notes due 2011.
means
Wilmington Trust Company, as Trustee, or
its
successor, in either case in its capacity as indenture trustee for the
FiberMark
Notes.
| 1.53 |
“Indenture
Trustee Charging Lien”
|
means
any
Lien or other priority in payment or right available to the Indenture
Trustee
pursuant to the Indentures or under any other applicable law for the
payment of
the Indenture Trustee Expenses.
| 1.54 |
“Indenture
Trustee Expenses”
|
means
any
reasonable, unpaid fees of the Indenture Trustee, and reasonable, unpaid
out-of-pocket costs and expenses, including reasonable fees and expenses
of
counsel, incurred by the Indenture Trustee through the Effective Date,
except
any such costs and expenses as may be attributable to the Indenture Trustee's
negligence or willful misconduct.
| 1.55 |
“Intercompany
Claim”
|
means
any
Claim arising prior to the Petition Date against any of the Debtors by
another
Debtor. The term does not include Claims against any of the Debtors by
a
non-Debtor subsidiary or affiliate of a Debtor, which Claims shall be
treated as
General Unsecured Claims.
means
the
legal, equitable, contractual, or other rights of any Person (a) with
respect to
FiberMark Interests, (b) with respect to Subsidiary Interests, or (c)
to acquire
or receive either of the foregoing.
| 1.57 |
“Key
Employee Protection Order”
|
means
the
Order Under 11 U.S.C. §§ 105(a) and 363(b)(1) Authorizing Implementation of Key
Employee Retention and Severance Plans entered on August 6, 2004, which
approved
the Debtors’ Key Employee Retention Plan, Key Employee Severance Plan, and
Discretionary Recognition Plan.
means
a
charge against or interest in property to secure payment of a debt or
performance of an obligation.
means
the
claims, rights of action, suits, or proceedings, whether in law or in
equity,
whether known or unknown, that the Debtors or their Estates may hold
against any
Person, which are to be retained by the Reorganized Debtors pursuant
to Section 6.12 of the Plan, including, without limitation, claims or
causes of
action arising under or pursuant to Chapter 5 of the Bankruptcy
Code.
| 1.60 |
“Lowville
Grant Claims”
|
means
the
Claims existing under the Grant Agreement for CDBG Funds dated as of
March 11,
2003 among FNA as grantee, FiberMark as guarantor, and County of Lewis
Industrial Development Agency as funding agency, providing grant funds
of
$100,000; the Grant Agreement dated as of March 11, 2003 between FNA
as grantee
and County of Lewis Industrial Development Agency as funding agency,
providing
grant funds of $250,000; the Grant Agreement for Small Cities CDBG Funds
dated
as of March 11, 2003 among FNA as grantee, FiberMark as guarantor, and
County of
Lewis as funding agency, and the associated Security Agreement dated
as of March
11, 2003 between FNA as debtor and County of Lewis as secured party,
providing
grant funds of $750,000; the Grant Agreement for Empire State Development
Funds
dated as of October 27, 2003, between FNA as grantee and County of Lewis
Industrial Development Agency as funding agency, providing grant funds
of
$150,000; and the Grant Agreement for Empire State Development Funds
dated as of
October 27, 2003, between FNA as grantee and County of Lewis Industrial
Development Agency as funding agency, providing grant funds of $250,000.
means
the
Board of Directors of Reorganized FiberMark, to be constituted as of
the
Effective Date pursuant to Section 6.7(a) of the Plan.
means
the
new common shares, par value $0.001 per share, of Reorganized FiberMark
to be
authorized and/or issued under Section 6.5 of the Plan as of the Effective
Date,
with terms substantially as set forth in the New FiberMark Charter and
the New
FiberMark By-laws.
| 1.63 |
“New
Equity Incentive Plan”
|
means
the
new management and directors equity incentive plan to be adopted by the
New
Board pursuant to Section 6.6 of the Plan.
| 1.64 |
“New
FiberMark Charter”
|
means
the
certificate of incorporation of Reorganized FiberMark, which shall be
substantially in the form attached hereto as Exhibit A.
| 1.65 |
“New
FiberMark By-laws”
|
means
the
by-laws of Reorganized FiberMark, which shall be substantially in the
form
attached hereto as Exhibit B.
| 1.66 |
“Non-Compensatory
Damages Claim”
|
means
any
Claim against any of the Debtors for any fine, penalty, or forfeiture,
or
multiple, exemplary, or punitive damages, to the extent that such fine,
penalty,
forfeiture, or damage is not compensation for actual pecuniary loss suffered
by
the holder of such Claim, including any such claim based upon, arising
from, or
relating to any cause of action whatsoever (including, without limitation,
violation of law, personal injury, or wrongful death, whether secured
or
unsecured, liquidated or unliquidated, fixed or contingent, matured or
unmatured, known or unknown, foreseen or unforeseen, then existing or
thereafter
arising in law, equity or otherwise); provided,
however, that
such
term shall not include any Claim that might otherwise constitute a
Non-Compensatory Damages Claim but for a Final Order allowing such Claim
to be
an Administrative Claim, Priority Tax Claim, Other Priority Claim, Convenience
Claim, Other Secured Claim, General Unsecured Claim, or Subordinated
Claim.
means
any
Claim arising from or relating to the FiberMark Notes, other than any
Indenture
Trustee Expenses.
| 1.68 |
“Old
FiberMark Common Stock”
|
means,
the shares of the common stock, par value $0.001 per share, of
FiberMark issued
and outstanding as of the Petition Date.
| 1.69 |
“Old
FiberMark Stock Options”
|
means
the
stock options issued by FiberMark and outstanding as of the Petition
Date that
give
the holders of such options the right to purchase Old FiberMark Common
Stock.
means,
collectively, the FiberMark Interests, specifically including the
Old FiberMark
Common Stock and the Old FiberMark Stock Options, and the FiberMark Notes.
means
any
transaction or series of transactions pursuant to which Reorganized FiberMark
reorganizes its capital, consolidates or merges with or into another
Person or
enters into a business combination with another Person (in the case of
a
consolidation, merger or business combination, where Reorganized FiberMark
is
not the surviving Person), or sells, transfers, or otherwise disposes
of all or
substantially all of its property, assets, or business to another
Person.
| 1.72 |
“Other
Priority Claim”
|
means
a
Claim against the Debtors entitled to priority pursuant to Section 507(a)
of the
Bankruptcy Code, other than a Priority Tax Claim or an Administrative
Claim.
| 1.73 |
“Other
Secured Claim”
|
means
a
Secured Claim arising prior to the Petition Date against any of the Debtors,
other than a GECC Credit Facility Claim, a GECC Equipment Financing Claim,
a
Banc One Equipment Financing Claim, or a Coated Paper Sale/Leaseback
Claim. Any
Lowville Grant Claim that is a Secured Claim shall be treated as an Other
Secured Claim only if the holder of such Claim votes against the Plan.
means
any
individual, firm, partnership, corporation, trust, association, company,
limited
liability company, joint stock company, joint venture, governmental unit,
or
other entity or enterprise.
means
March 30, 2004, the date on which the Debtors filed their petitions for
relief
commencing the cases that are being administered as the Chapter 11
Case.
means
this Amended Joint Plan of Reorganization Under Chapter 11, Title 11,
United
States Code of FiberMark, Inc., et al., Debtors, all exhibits annexed
hereto or
referenced herein, as the same may be amended, modified, or supplemented
from
time to time.
| 1.77 |
“Priority
Tax Claim”
|
means
a
Claim that is entitled to priority pursuant to Section 507(a)(8) of the
Bankruptcy Code.
means
any
professional employed in the Chapter 11 Case pursuant to Section 327
or 1103 of
the Bankruptcy Code, and any professional seeking compensation or reimbursement
of expenses in connection with the Chapter 11 Case pursuant to Section
503(b) of
the Bankruptcy Code.
| 1.79 |
“Professional
Fee Claim”
|
means
a
Claim of a Professional for compensation or reimbursement of costs and
expenses
relating to services rendered after the Petition Date and prior to and
including
the Effective Date.
means
a
Proof of Claim filed with the Bankruptcy Court in connection with the
Chapter 11
Case.
means,
at
any time, the proportion that the amount of a Claim in a particular Class
or
Classes (or portions thereof, as applicable) bears to the aggregate amount
of
all Claims (including Disputed Claims) in such Class or Classes, unless
the Plan
provides otherwise.
| 1.82 |
“Registration
Rights Agreement”
|
means
the
registration rights agreement applicable to the New Common Stock, which
shall be
substantially in the form attached hereto as Exhibit C.
means
(a)
leaving unaltered the legal, equitable, and contractual rights to which
the
holder of a Claim is entitled so as to leave such Claim unimpaired in
accordance
with Section 1124 of the Bankruptcy Code, or (b) notwithstanding any
contractual
provision or applicable law that entitles the holder of such Claim to
demand or
receive accelerated payment of such Claim after the occurrence of a default,
(i)
curing any such default that occurred before or after the Petition Date,
other
than a default of a kind specified in Section 365(b)(2) of the Bankruptcy
Code,
(ii) reinstating the maturity of such Claim as such maturity existed
before such
default, (iii) compensating the holder of such Claim for any damages
incurred as
a result of any reasonable reliance by such holder on such contractual
provision
or such applicable law, and (iv) not otherwise altering the legal, equitable,
or
contractual rights to which the holder of such Claim is entitled.
| 1.84 |
“Reorganized
Debtor(s)”
|
means,
individually, any reorganized Debtor or its successor and, collectively,
all
reorganized Debtors or their successors, on or after the Effective
Date.
| 1.85 |
“Reorganized
FiberMark”
|
means
reorganized FiberMark or its successor, on and after the Effective
Date.
| 1.86 |
“Reorganized
Subsidiary Debtor(s)”
|
means,
individually, a reorganized Subsidiary Debtor or
its
successor and, collectively, both reorganized Subsidiary Debtors or their
successors, on or after the Effective Date.
means
the
schedules of assets and liabilities, schedules of executory contracts
and
unexpired leases, and the statements of financial affairs filed in the
Bankruptcy Court by the Debtors, as amended or supplemented from time
to time in
accordance with Rule 1009 of the Bankruptcy Rules or orders of the Bankruptcy
Court.
means
a
Claim that is secured by a Lien which is not subject to avoidance under
the
Bankruptcy Code or otherwise invalid under the Bankruptcy Code or applicable
state law, on property in which an Estate has an interest, or a Claim
that is
subject to setoff under Section 553 of the Bankruptcy Code; to the extent
of the
value of the holder’s interest in the Estate’s interest in such property or to
the extent of the amount subject to setoff, as applicable; as determined
by a
Final Order pursuant to Section 506(a) of the Bankruptcy Code, or in
the case of
setoff, pursuant to Section 553 of the Bankruptcy Code, or in either
case as
otherwise agreed upon in writing by the Debtors or the Reorganized Debtors
and
the holder of such Claim.
| 1.89 |
“Subordinated
Claim”
|
means
any
Claim against any of the Debtors that is subordinated pursuant to Section
510(b)
or 510(c) of the Bankruptcy Code, which shall include any Claim arising
from the
rescission of a purchase or sale of any Old Security, any Claim for damages
arising from the purchase or sale of an Old Security, or any Claim for
reimbursement, contribution, or indemnification on account of any such
Claim.
| 1.90 |
“Subsidiary
Debtors”
|
means,
collectively, FNA and FIH, each of which is a Debtor in the Chapter 11
Case.
| 1.91 |
“Subsidiary
Interests”
|
means,
collectively, all of the issued and outstanding shares of stock or membership
interests of the Subsidiary Debtors, as
of the
Petition Date, which stock and interests are owned by FiberMark.
| 1.92 |
“Substantial
Contribution Claim”
|
means
a
claim for compensation or reimbursement of costs and expenses relating
to
services rendered in making a substantial contribution in the Chapter
11 Case
pursuant to Section 503(b)(3), (4), or (5) of the Bankruptcy Code.
means,
with respect to any Claim, that such Claim is not impaired within the
meaning of
Section 1124 of the Bankruptcy Code.
means
the
deadline established by the Bankruptcy Court by which the holders of
Claims in
Classes that are entitled to vote on the Plan must submit the ballot
indicating
each such holder’s vote on the Plan.
| 1.95 |
“Voting
Record Date”
|
means
the
date established by the Bankruptcy Court for determining the holders
of Claims
entitled to vote on the Plan.
ARTICLE
II
SUBSTANTIVE
CONSOLIDATION
| 2.1 |
Request
for Substantive Consolidation
|
This
Plan
constitutes a motion for substantive consolidation of the liabilities
and
properties of the Debtors, the confirmation of the Plan shall constitute
approval of the motion by the Bankruptcy Court, and the Confirmation
Order shall
contain findings supporting and conclusions providing for substantive
consolidation on the terms set forth in Section 2.2 of this Plan.
| 2.2 |
Effect
of Substantive Consolidation
|
(a) As
a
result of the substantive consolidation of the liabilities and properties
of the
Debtors, except as otherwise provided in the Plan, (i) the separate Chapter
11
cases of the Debtors shall be consolidated into the case of FiberMark
as a
single consolidated case; (ii) all property of the Estate of each Debtor
shall
be deemed to be property of the consolidated Estates; (iii) all Claims
against
each Estate shall be deemed to be Claims against the consolidated Estates,
any
Proof of Claim filed against one or more of the Debtors shall be deemed
to be a
single claim filed against the consolidated Estates, and all duplicate
Proofs of
Claim for the same claim filed against more than one Debtor shall be
deemed
expunged; (iv) no distributions under this Plan shall be made on account
of
Intercompany Claims; (v) all Claims based upon pre-petition unsecured
guarantees
by one Debtor in favor of any other of the Debtors (other than guarantees
existing under any assumed executory contracts or unexpired leases) shall
be
eliminated, and no distributions under this Plan shall be made on account
of
Claims based upon such guarantees; (vi) for purposes of determining the
availability of the right of setoff under Section 553 of the Bankruptcy
Code,
the Debtors shall be treated as one consolidated entity so that, subject
to the
other provisions of Section 553, pre-petition debts due to any of the
Debtors
may be set off against the pre-petition debts of any other of the Debtors;
and
(vii) no distributions under this Plan shall be made on account of any
Subsidiary Interests.
(b) Substantive
consolidation shall not merge or otherwise affect the separate legal
existence
of each Debtor, other than with respect to distribution rights under
this Plan;
substantive consolidation shall have no effect on valid, enforceable
and
unavoidable liens, except for liens that secure a Claim that is eliminated
by
virtue of substantive consolidation and liens against collateral that
are
extinguished by virtue of substantive consolidation; and substantive
consolidation shall not have the effect of creating a Claim in a class
different
from the class in which a Claim would have been placed in the absence
of
substantive consolidation. Substantive consolidation shall not affect
the
obligation of each of the Debtors or the Reorganized Debtors, pursuant
to
Section 1930 of Title 28 of the United States Code, to pay quarterly
fees to the
Office of the United States Trustee until such time as a particular Chapter
11
case is closed, dismissed or converted.
ARTICLE
III
CLASSIFICATION
OF CLAIMS AND INTERESTS
(a) In
accordance with Section 1123(a)(1) of the Bankruptcy Code, Administrative
Claims
and Priority Tax Claims have not been classified, and the respective
treatment
of such unclassified claims is set forth in Section 4.1 of the
Plan.
(b) A
Claim
or Interest is placed in a particular Class only to the extent that the
Claim or
Interest falls within the description of that Class and such Claim or
Interest
has not been paid, released, or otherwise settled prior to the Effective
Date. A
Claim or Interest may be and is classified in other Classes to the extent
that
any portion of the Claim or Interest falls within the description of
such other
Classes.
Class
1: Other Priority Claims
Class
1
consists of all Other Priority Claims.
Class
2: GECC Credit Facility Claim
Class
2
consists of the GECC Credit Facility Claim.
Class
3: Convenience Claims
Class
3
consists of all Convenience Claims.
Class
4: GECC Equipment Financing Claim
Class
4
consists of the GECC Equipment Financing Claim.
Class
5: Banc One Equipment Financing Claim
Class
5
consists of the Banc One Equipment Financing Claim.
Class
6: Coated Paper Sale/Leaseback Claim
Class
6
consists of the Coated Paper Sale/Leaseback Claim.
Class
7: Lowville Grant Claims
Class
7
consists of the Lowville Grant Claims.
Class
8: Other Secured Claims
Class
8
consists of separate sub-Classes for each Other Secured Claim against
any of the
Debtors. Each sub-Class is deemed to be a separate Class for all purposes
under
the Bankruptcy Code, including for voting purposes.
Class
9: Noteholder Claims
Class
9
consists of all Noteholder claims.
Class
10: General Unsecured Claims
Class
10
consists of all General Unsecured Claims.
Class
11: Intercompany Claims
Class
11
consists of all Intercompany Claims.
Class
12: Subordinated Claims
Class
12
consists of all Subordinated Claims.
Class
13: Non-Compensatory Damages Claims
Class
13
consists of all Non-Compensatory Damages Claims.
Class
14: Subsidiary Interests
Class
14
consists of all Subsidiary Interests.
Class
15: FiberMark Interests
Class
15
consists of all FiberMark Interests.
ARTICLE
IV
TREATMENT
OF CLAIMS AND INTERESTS
(a) Administrative
Claims
With
respect to each Allowed Administrative Claim, except as otherwise provided
for
herein, and subject to the requirements of Sections 12.1
through 12.3 of the Plan, on, or as soon as reasonably practicable after,
the
latest of (i) the Effective Date, (ii) the date such Administrative Claim
becomes an Allowed Administrative Claim, or (iii) the date such Administrative
Claim becomes payable pursuant to any agreement between a Debtor and
the holder
of such Administrative Claim, the holder of each such Allowed Administrative
Claim shall receive in full satisfaction, settlement, release, and discharge
of
and in exchange for such Allowed Administrative Claim, (A) Cash equal
to the
unpaid portion of such Allowed Administrative Claim or (B) such different
treatment as to which the applicable Debtor and such holder shall have
agreed
upon in writing; provided,
however,
that
Allowed Administrative Claims with respect to liabilities incurred by
a Debtor
in the ordinary course of business during the Chapter 11 Case shall be
paid in
the ordinary course of business in accordance with the terms and conditions
of
any agreements relating thereto.
The
DIP
Facility Claim shall be deemed Allowed in its entirety for all purposes
of the
Plan and the Chapter 11 Case. The holders of the Allowed DIP Facility
Claim
shall receive, on the later of the Effective Date or the date on which
such DIP
Facility Claim becomes payable pursuant to any agreement between the
Debtors and
the holders of such DIP Facility Claim, in full satisfaction, settlement,
release, and discharge of and in exchange for such Allowed DIP Facility
Claim,
(i) Cash equal to the full amount of such Allowed DIP Facility Claim,
or (ii)
such different treatment as to which the Debtors and such holders shall
have
agreed upon in writing; provided,
however,
that in
respect of any letters of credit issued and undrawn under the DIP Facility,
unless GECC or an applicable affiliate is a lender under the Exit Facility
and
permits such letters of credit to be rolled over and treated as letters
of
credit issued under the Exit Facility, the Debtors shall be required
to either,
with the consent of GECC: (A) cash collateralize such letters of credit
in an
amount equal to 103% of the undrawn amount of any such letters of credit,
(B)
return any such letters of credit to the applicable fronting bank undrawn
and
marked “cancelled,” or (C) provide a “back-to-back” letter of credit to the
issuing bank in a form and issued by an institution reasonably satisfactory
to
such issuing bank, in an amount equal to 103% of the then undrawn amount
of such
letters of credit.
The
German Guaranty Claim shall be deemed Allowed in its entirety for all
purposes
of the Plan and the Chapter 11 Case. The holders of the Allowed German
Guaranty
Claim shall receive, on the later of the Effective Date or the date on
which
such German Guaranty Claim becomes payable pursuant to any agreement
between the
Debtors and the holders of such German Guaranty Claim, in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed
German
Guaranty Claim, (i) Cash equal to the full amount of such Allowed German
Guaranty Claim, or (ii) such different treatment as to which the Debtors
and
such holders shall have agreed upon in writing.
(b) Priority
Tax Claims
Each
holder of an Allowed Priority Tax Claim shall receive, in full satisfaction,
settlement, release, and discharge of and in exchange for such Allowed
Priority
Tax Claim, as shall have been determined by the Debtors in their sole
discretion, either (i) on, or as soon as reasonably practicable after,
the later
of the Effective Date or the date on which such Claim becomes an Allowed
Claim,
Cash equal to the unpaid portion of such Allowed Priority Tax Claim,
(ii) such
different treatment as to which the applicable Debtor and such holder
shall have
agreed upon in writing, or (iii) deferred Cash payments having a value,
as of
the Effective Date, equal to such Allowed Priority Tax Claim, over a
period not
exceeding six (6) years after the date of assessment of such Allowed
Priority
Tax Claim.
| 4.2 |
Unimpaired
Classes of Claims
|
(a) Class
1: Other Priority Claims
On,
or as
soon as reasonably practicable after, the latest of (i) the Effective
Date, (ii)
the date on which such Other Priority Claim becomes an Allowed Other
Priority
Claim, or (iii) the date on which such Allowed Other Priority Claim becomes
payable pursuant to any agreement between a Debtor and the holder of
such Other
Priority Claim, each holder of an Allowed Other Priority Claim shall
receive, in
full satisfaction, settlement, release, and discharge of and in exchange
for
such Allowed Other Priority Claim, either (A) Cash equal to the unpaid
portion
of such Allowed Other Priority Claim or (B) such different treatment
as to which
the applicable Debtor and such holder shall have agreed upon in
writing.
(b) Class
2: GECC Credit Facility Claim
The
holders of the Allowed GECC Credit Facility Claim shall receive, on the
later of
the Effective Date or the date on which such GECC Credit Facility Claim
becomes
payable pursuant to any agreement between the Debtors and the holders
of such
GECC Credit Facility Claim, in full satisfaction, settlement, release,
and
discharge of and in exchange for such Allowed GECC Credit Facility Claim,
(i)
Cash equal to the full amount of such Allowed GECC Credit Facility Claim,
or
(ii) such different treatment as to which the Debtors and such holders
shall
have agreed upon in writing; provided,
however,
that in
respect of any letters of credit issued and undrawn under the Credit
Agreement
giving rise to the GECC Credit Facility Claim, unless GECC or an applicable
affiliate is a lender under the Exit Facility and permits such letters
of credit
to be rolled over and treated as letters of credit issued under the Exit
Facility, the Debtors shall be required to either, with the consent of
GECC: (A)
cash collateralize such letters of credit in an amount equal to 103%
of the
undrawn amount of any such letters of credit, (B) return any such letters
of
credit to the applicable fronting bank undrawn and marked “cancelled,” or (C)
provide a “back-to-back” letter of credit to the issuing bank in a form and
issued by an institution reasonably satisfactory to such issuing bank,
in an
amount equal to 103% of the then undrawn amount of such letters of credit.
(c) Class
3: Convenience Claims
On,
or as
soon as reasonably practicable after, the later of the Effective Date
or the
date on which such Claim becomes an Allowed Claim, each holder of an
Allowed
Convenience Claim, shall receive, in full satisfaction, settlement, release,
and
discharge of and in exchange for such Convenience Claim, Cash in an amount
equal
to the lesser of (i) the Allowed amount of such Claim or (ii)
$5,000.
| 4.3 |
Impaired
Classes of Claims
|
| (a) |
Class
4: GECC Equipment Financing
Claim
|
The
legal, equitable, and contractual rights of the holder of the GECC Equipment
Financing Claim shall be Reinstated in accordance with the provisions
of Section
1124(2) of the Bankruptcy Code, provided,
however,
that
any contractual right that does not pertain to the payment when due of
principal
and interest on the obligation on which such Claim is based, including,
but not
limited to, financial covenant ratios, negative pledge covenants, covenants
or
restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
shall not be enforceable as to any breach that occurred on or prior to
the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date.
| (b) |
Class
5: Banc One Equipment Financing
Claim
|
The
legal, equitable, and contractual rights of the holder of the Banc One
Equipment
Financing Claim, including those relating to the payment when due of
principal
and interest on the obligation on which such Claim is based and the protection,
maintenance, location, or insurance of or on the collateral securing
such Claim,
shall be Reinstated in accordance with the provisions of Section 1124(2)
of the
Bankruptcy Code; provided, however, that any contractual right that does
not
pertain to the payment when due of principal and interest or said preservation
of the collateral, including, but not limited to, contractual rights
pertaining
to financial covenant ratios, negative pledge covenants, covenants or
restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
shall not be enforceable as to any breach that occurred on or prior to
the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date.
| (c) |
Class
6: Coated Paper Sale/Leaseback
Claim
|
The
holder of the Allowed Coated Paper Sale/Leaseback Claim shall (i) retain
the
Liens securing such Allowed Claim and (ii) receive the remaining amount
of such
Allowed Claim, with interest at the non-default contract rate, in monthly
Cash
payments of the same amount as historically paid by the Debtors under
the
documents governing such Allowed Claim, in lieu of the final balloon
payment
otherwise required by such documents.
| (d) |
Class
7: Lowville Grant Claims
|
A
vote in
favor of the Plan by the holder of a Lowville Grant Claim shall constitute
(i)
the agreement by such holder that the Reorganized Debtors shall be obligated
to
pay such holder’s Claim only if they fail to maintain requisite levels of
employment at their facility in Lowville, New York and (ii) the express
waiver
by such holder of any other breach, event of default or other act or
omission
giving rise to an obligation to pay the Claim. Subject to and as modified
by
such agreement and waiver, the legal, equitable, and contractual rights
of the
holder of a Lowville Grant Claim voting in favor of the Plan shall be
Reinstated
in accordance with the provisions of Section 1124(2) of the Bankruptcy
Code,
provided,
however,
that
any contractual right that does not pertain to the payment when due of
principal
and interest on the obligation on which any such Claim is based, including,
but
not limited to, financial covenant ratios, negative pledge covenants,
covenants
or restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
shall not be enforceable as to any breach that occurred on or prior to
the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date.
A
vote
against the Plan by the holder of a Lowville Grant Claim shall result
in the
treatment of such holder’s Claim as an Other Secured Claim in Class 8 if and to
the extent such Claim is a Secured Claim or as a General Unsecured Claim
in
Class 10 if and to the extent such Claim is not a Secured Claim.
| (e) |
Class
8: Other Secured Claims
|
On
the
Effective Date, as shall have been determined by the Debtors in their
sole
discretion, either (i) the legal, equitable, and contractual rights of
each
holder of an Allowed Other Secured Claim shall be Reinstated in accordance
with
the provisions of Section 1124(2) of the Bankruptcy Code, provided,
however,
that
any contractual right that does not pertain to the payment when due of
principal
and interest on the obligation on which such Claim is based, including,
but not
limited to, financial covenant ratios, negative pledge covenants, covenants
or
restrictions on merger or consolidation, covenants regarding corporate
existence, or covenants prohibiting certain transactions or actions contemplated
by the Plan or conditioning such transactions or actions on certain factors,
shall not be enforceable as to any breach that occurred on or prior to
the
Effective Date or any breach determined by reference back to a date preceding
the Effective Date; (ii) each holder of an Allowed Other Secured Claim
shall (A)
retain the Liens securing such Allowed Other Secured Claim and (B) receive
deferred Cash payments totaling at least the amount of such Allowed Other
Secured Claim, of a value, as of the Effective Date, of at least the
value of
such holder’s interest in the Estate’s interest in such property; (iii) the
collateral securing such Allowed Other Secured Claim shall be surrendered
to the
holder of such Allowed Other Secured Claim; or (iv) each holder of an
Allowed
Other Secured Claim shall be paid in full on the Effective Date. The
failure to
object to any Other Secured Claim in the Chapter 11 Case shall be without
prejudice to the Debtors’ or the Reorganized Debtors’ right to contest or
otherwise defend against such Claim in the appropriate forum when and
if such
Claim is sought to be enforced by the holder of such Other Secured Claim.
Notwithstanding
Section 1141(c) or any other provision of the Bankruptcy Code, all pre-petition
Liens on property of any Debtor held with respect to an Other Secured
Claim
shall survive the Effective Date and continue in accordance with the
contractual
terms of the underlying agreements governing such Claim until such Allowed
Claim
is paid in full. Nothing in this Section 4.3(e) or elsewhere in the Plan
shall
preclude the Debtors or the Reorganized Debtors from challenging the
validity of
any alleged Lien on any asset of a Debtor or the value of the property
that
secures any alleged Lien.
| (f) |
Class
9: Noteholder Claims
|
The
Noteholder Claims shall be deemed Allowed in an aggregate amount not
to exceed
$345,629,166.67 for all purposes of the Plan and the Chapter 11 Case,
subject to
reduction if so ordered by the Court pursuant to the findings of the
Examiner.
Each holder of an Allowed Noteholder Claim, in full satisfaction, settlement,
release, discharge of, in exchange for, and on account of such Allowed
Noteholder Claim, shall receive on the Distribution Date its Pro Rata
share
(together with all other holders of Allowed Noteholder Claims and all
holders of
Allowed General Unsecured Claims, with reserves for Disputed General
Unsecured
Claims to the extent required by Section 9.3 of the Plan) of (i) 10,000,000
shares of the New Common Stock to be authorized and issued by Reorganized
FiberMark as of the Effective Date pursuant to the Plan, subject to dilution
as
set forth in Sections 6.5(b) and 9.3(a) of the Plan, and (ii) $75 million
in
Distribution Cash; provided,
however,
that
all such distributions shall be subject to the Indenture Trustee Charging
Lien
to the extent of any Indenture Trustee Expenses that are not paid pursuant
to
Section 12.1(c) of the Plan.
| (g) |
Class
10: General Unsecured
Claims
|
Each
holder of an Allowed General Unsecured Claim, in full satisfaction, settlement,
release, discharge of, in exchange for, and on account of such Allowed
General
Unsecured Claim, shall receive on the Distribution Date its Pro Rata
share
(together with all other holders of Allowed General Unsecured Claims
and all
holders of Allowed Noteholder Claims, with reserves for Disputed General
Unsecured Claims to the extent required by Section 9.3 of the Plan) of
(i)
10,000,000 shares of the New Common Stock to be authorized and issued
by
Reorganized FiberMark as of the Effective Date pursuant to the Plan,
subject to
dilution as set forth in Sections 6.5(b) and 9.3(a) of the Plan, and
(ii) $75
million in Distribution Cash.
| (h) |
Class
11: Intercompany Claims
|
No
holder
of an Intercompany Claim shall receive or retain any property under the
Plan on
account of such Claim; provided,
however,
if
necessary for tax planning purposes, Intercompany Claims may be capitalized,
satisfied, or preserved either directly or indirectly or in whole or
part. Any
Intercompany Claim, or portion thereof, that is not so capitalized, satisfied
or
preserved shall be discharged as of the Effective Date.
| (i) |
Class
12: Subordinated Claims
|
The
holders of Subordinated Claims shall not receive or retain any property
under
the Plan on account of such Claims. All Subordinated Claims shall be
discharged
as of the Effective Date.
| (j) |
Class
13: Non-Compensatory Damages
Claims
|
The
holders of Non-Compensatory Damages Claims shall not receive or retain
any
property under the Plan on account of such Claims. All Non-Compensatory
Damages
Claims shall be discharged as of the Effective Date.
| (a) |
Class
14: Subsidiary Interests
|
For
the
deemed benefit of the holders of the New Common Stock, FiberMark shall
retain
its equity interests in FNA and FIH, subject to any applicable restrictions
arising under the Exit Facility.
| (b) |
Class
15: FiberMark Interests
|
All
FiberMark Interests of any kind, including, without limitation, the Old
FiberMark Common Stock, the Old FiberMark Stock Options or any warrants
or other
agreements to acquire the same (whether or not arising under or in connection
with any employment agreement), shall be cancelled as of the Effective
Date and
the holders thereof shall not receive or retain any property under the
Plan on
account of such Interests.
| 4.5 |
Reservation
of Rights Regarding Claims
|
Except
as
otherwise explicitly provided in the Plan, nothing shall affect the Debtors’ or
the Reorganized Debtors’ rights and defenses, both legal and equitable, with
respect to any Claims, including, but not limited to, all rights with
respect to
legal and equitable defenses to alleged rights of setoff or recoupment.
ARTICLE
V
ACCEPTANCE
OR REJECTION OF THE PLAN
| 5.1 |
Impaired
Classes of Claims and Interests Entitled to
Vote
|
Holders
of Claims and Interests in each Impaired Class of Claims or Interests
are
entitled to vote as a Class to accept or reject the Plan, other than
Classes
that are deemed to reject the Plan as provided in Section 5.4 of the
Plan.
Accordingly, the votes of holders of Claims in Classes 4, 5, 6, 7, 8,
9, and 10
shall be solicited with respect to the Plan.
| 5.2 |
Acceptance
by an Impaired Class
|
In
accordance with Section 1126(c) of the Bankruptcy Code, and except as
provided
in Section 1126(e) of the Bankruptcy Code, an Impaired Class of Claims
shall
have accepted the Plan if the Plan is accepted by the holders of at least
two-thirds (2/3) in dollar amount and more than one-half (½) in number of the
Allowed Claims of such Class that have timely and properly voted to accept
or
reject the Plan.
| 5.3 |
Presumed
Acceptances by Unimpaired Classes
|
Classes
1, 2, 3, and 14 are Unimpaired under the Plan. Under Section 1126(f)
of the
Bankruptcy Code, holders of such Unimpaired Claims are conclusively presumed
to
have accepted the Plan, and the votes of such Unimpaired Claim holders
shall not
be solicited.
| 5.4 |
Classes
Deemed to Reject Plan
|
Holders
of Claims and Interests in Classes 11,
12,
13, and 15 are not entitled to receive or retain any property under the
Plan.
Under Section 1126(g) of the Bankruptcy Code, such holders are deemed
to have
rejected the Plan, and the votes of such holders shall not be solicited.
| 5.5 |
Confirmation
Pursuant to Section 1129(b) of the Bankruptcy
Code
|
To
the
extent that any Impaired Class rejects the Plan or is deemed to have
rejected
the Plan, the Debtors shall request Confirmation of the Plan, as it may
be
modified from time to time, under Section 1129(b) of the Bankruptcy Code.
The
Debtors reserve the right to alter, amend, modify, revoke, or withdraw
the Plan
or any exhibit, including to amend or modify it to satisfy the requirements
of
Section 1129(b) of the Bankruptcy Code, if necessary.
ARTICLE
VI
MEANS
FOR IMPLEMENTATION OF THE PLAN
| 6.1 |
Continued
Corporate Existence
|
The
Reorganized Debtors shall continue to exist after the Effective Date
as separate
legal entities, in accordance with the applicable laws in the respective
jurisdictions in which they are incorporated and pursuant to the New
FiberMark
Charter and New FiberMark By-laws in the case of Reorganized FiberMark,
and
pursuant to the respective certificates or articles of incorporation,
memorandum
of association, articles of association, and by-laws, as applicable,
of the
Subsidiary Debtors in effect prior to the Effective Date, except to the
extent
such certificates or articles of incorporation, memorandum of association,
articles of association, and by-laws, as applicable, are amended pursuant
to the
Plan.
| 6.2 |
Certificates
of Incorporation and By-laws
|
The
New
FiberMark Charter and the New FiberMark By-laws shall be substantially
in the
forms attached hereto as Exhibit A and Exhibit B, respectively. The certificate
of incorporation, memorandum of association, articles of association
and
by-laws, as applicable, of each Reorganized Subsidiary Debtor, shall
be amended
as necessary to satisfy the provisions of the Plan and the Bankruptcy
Code and
shall include, among other things, pursuant to Section 1123(a)(6) of
the
Bankruptcy Code, a provision prohibiting the issuance of non-voting equity
securities, but only to the extent required by Section 1123(a)(6) of
the
Bankruptcy Code.
On
the
Effective Date, the Exit Facility, together with new promissory notes
and
guarantees evidencing obligations of the Reorganized Debtors thereunder,
and all
other documents, instruments, mortgages, and agreements to be entered
into,
delivered, or confirmed thereunder on the Effective Date, shall become
effective. The obligations incurred by the Reorganized Debtors pursuant
to the
Exit Facility and related documents shall be paid as set forth in the
Exit
Facility and related documents. The Debtors shall file with the Bankruptcy
Court
a commitment letter with respect to the Exit Facility no later than three
(3)
days prior to the Confirmation Hearing.
In
connection with obtaining the Exit Facility, the Debtors shall be permitted
to
participate as a guarantor and pledgor in any contemporaneous financing
obtained
by the Debtors’ foreign subsidiaries. In addition, the Debtors shall be
permitted to continue to obtain funding from their foreign subsidiaries,
in the
form of intercompany loans, dividends, repatriation, or other form of
transfer,
to the extent available and permitted under applicable law.
| 6.4 |
Cancellation
of Old Securities and Agreements
|
(a) On
the
Effective Date, except as otherwise provided for herein, (a) the Old
Securities,
including, without limitation, the FiberMark Notes, the FiberMark Interests,
and
any other note, bond, or indenture evidencing or creating any public
indebtedness or obligation of any Debtor shall be deemed extinguished,
cancelled
and of no further force or effect, and (b) the obligations of the Debtors
(and
Reorganized Debtors) under any agreements, indentures, or certificates
of
designations governing the Old Securities and any other note, bond, or
indenture
evidencing or creating any indebtedness or obligation of any Debtor with
respect
to the Old Securities shall be discharged in each case without further
act or
action under any applicable agreement, law, regulation, order, or rule
and
without any action on the part of the Bankruptcy Court or any Person;
provided,
however,
that
the FiberMark Notes and the Indentures shall continue in effect solely
for the
purposes of (i) allowing the holders of the FiberMark Notes to receive
the
distributions provided for Noteholder Claims hereunder, (ii) allowing
the
Disbursing Agent or the Indenture Trustee, as the case may be, to make
distributions on account of the Noteholder Claims, and (iii) preserving
the
rights of the Indenture Trustee with respect to the Indenture Trustee
Expenses,
including, without limitation, the Indenture Trustee Charging Lien and
any
indemnification rights provided by the Indentures.
(b) Subsequent
to the performance by the Indenture Trustee or its agents of any duties
that are
required under this Plan, the Confirmation Order and/or under the terms
of the
Indentures, the Indenture Trustee and its agents shall be relieved of,
and
released from, all obligations associated with the FiberMark Notes arising
under
the Indentures or under other applicable agreements or law and the Indentures
shall be deemed to be discharged.
| 6.5 |
Authorization
and Issuance of New Common Stock
|
(a) Reorganized
FiberMark shall (i) authorize on the Effective Date 20,000,000 shares
of New
Common Stock; (ii) issue on the Distribution Dates up to an aggregate
of
10,000,000 shares of New Common Stock for distribution to holders of
Allowed
Noteholder Claims and Allowed General Unsecured Claims, including amounts
necessary to establish the Common Stock Reserve for Disputed General
Unsecured
Claims; (iii) reserve for issuance the number of shares of New Common
Stock
necessary to provide required distributions to holders of subsequently
Allowed
General Unsecured Claims in the event the Common Stock Reserve is insufficient
to satisfy such distributions; and (iv) reserve for issuance the number
of
shares of New Common Stock necessary (excluding shares that may be issuable
as a
result of the antidilution provisions thereof) to satisfy the required
distributions of options granted under the New Equity Incentive Plan
(excluding
shares that may be issuable as a result of the antidilution provisions).
(b) The
New
Common Stock issued under the Plan shall be subject to dilution based
upon (i)
the issuance of New Common Stock pursuant to the New Equity Incentive
Plan as
set forth in Section 6.6 of the Plan, (ii) the issuance of New Common
Stock to
provide required distributions to holders of subsequently Allowed General
Unsecured Claims in the event the Common Stock Reserve is insufficient
to
satisfy such distributions, and (iii) any other shares of New Common
Stock
issued post-emergence.
(c) The
issuance and distribution of the New Common Stock pursuant to distributions
under the Plan to holders of Allowed Noteholder Claims and Allowed General
Unsecured Claims shall be authorized under Section 1145 of the Bankruptcy
Code
as of the Effective Date without further act or action by any Person,
except as
may be required by the New FiberMark Charter, the New FiberMark By-laws,
or
applicable law, regulation, order or rule; and all documents evidencing
same
shall be executed and delivered as provided for in the Plan.
(d) As
of the
Effective Date, upon the filing of the necessary certifications with
the
Securities and Exchange Commission, it is intended that Reorganized FiberMark
shall not be a “public” company and shall not be subject to periodic filing
requirements pursuant to the Securities Exchange Act of 1934. The rights
of the
holders of New Common Stock shall be as provided for in the New FiberMark
Charter, the New FiberMark By-laws, and the Registration Rights Agreement,
which
shall include restrictions on transfer of the New Common Stock.
| 6.6 |
New
Equity Incentive Plan; Further Participation in Incentive
Plans
|
(a) On
the
Effective Date, Reorganized FiberMark shall be authorized and directed,
subject
to all requisite shareholder approvals, to establish and implement the
New
Equity Incentive Plan on or before the 6-month anniversary of the Effective
Date
for up to 10% of the total amount of New Common Stock issued on the Effective
Date. Awards granted thereunder may be in the form of options, stock,
restricted
stock, and other forms of equity grants. The New Equity Incentive Plan
shall be
promulgated by the New Board for the benefit of such members of management,
employees, and directors of Reorganized FiberMark and any of its subsidiaries
as
are designated by the New Board, in its sole and absolute discretion,
on such
terms as to timing of issuance, manner and timing of vesting, duration,
individual entitlement and all other terms, as such terms are determined
by the
New Board in its sole and absolute discretion. The New Equity Incentive
Plan may
be amended or modified from time to time by the New Board. No members
of
management, employees, and directors of Reorganized FiberMark and its
subsidiaries who are entitled to receive awards pursuant to the New Equity
Incentive Plan shall be obligated to participate in such plan.
(b) Except
as
provided in Section 7.5(c) of the Plan, any pre-existing understandings,
either
oral or written, between the Debtors and any member of management or
any
employee as to entitlement to participate in any pre-existing equity
or other
incentive plan of any kind shall be null and void as of the Effective
Date and
shall not be binding on Reorganized FiberMark with respect to the New
Equity
Incentive Plan or any other incentive plan implemented after the Effective
Date.
All decisions as to entitlement to participate after the Effective Date
in any
new incentive plan shall be within the sole and absolute discretion of
the New
Board.
| 6.7 |
Directors
of Reorganized Debtors
|
(a) The
initial New Board shall be comprised of seven (7) directors. All of the
directors taking office on the Effective Date shall be designated by
Silver
Point Capital, L.P.; provided, that Silver Point Capital, L.P. may in
its sole
discretion permit one (1) of such initial directors to be designated
jointly by
AIG Global Investment Corp. and Post Advisory Group, LLC, provided that
such
designee is reasonably acceptable to the Debtors and Silver Point Capital,
L.P.
The designations shall be announced in a filing with the Bankruptcy Court
no
later than five (5) days prior to the Confirmation Hearing. Upon the
failure of
Silver Point Capital, L.P. (or, if applicable, AIG Global Investment
Corp. and
Post Advisory Group, LLC) to timely file their respective designations,
such
party shall be deemed to have waived its rights to designate, and the
Debtors
shall instead make such designations in a filing with the Bankruptcy
Court no
later than three (3) days prior to the Confirmation Hearing. The initial
directors shall serve until the first annual meeting of stockholders
following
the first anniversary of the Effective Date or until earlier removed
or replaced
in accordance with New FiberMark Charter.
(b) The
existing directors of the Subsidiary Debtors shall continue to serve
in their
same respective capacities after the Effective Date for the Reorganized
Subsidiary Debtors, until replaced or removed in accordance with the
certificate
of incorporation, memorandum of association, articles of association
and
by-laws, as applicable, of such entities.
| 6.8 |
Officers
of Reorganized Debtors
|
(a) The
existing senior officers of
FiberMark shall serve initially in the same capacities after the Effective
Date
for Reorganized FiberMark until replaced or removed in accordance with
the New
FiberMark Charter and New FiberMark By-laws.
(b)
The
existing senior officers of the Subsidiary Debtors shall continue to
serve in
their same respective capacities after the Effective Date for the Reorganized
Subsidiary Debtors, until replaced or removed in accordance with the
certificate
of incorporation, memorandum of association, articles of association
and
by-laws, as applicable, of such entities.
| 6.9 |
Revesting
of Assets; Releases of Liens
|
Except
as
otherwise provided herein, the property of each Debtor’s Estate, together with
any property of each Debtor that is not property of its Estate and that
is not
specifically disposed of pursuant to the Plan, shall
revest in the applicable Debtor on the Effective Date. Thereafter, each
Reorganized Debtor may operate its business and may use, acquire, and
dispose of
such property free of any restrictions of the Bankruptcy Code, the Bankruptcy
Rules, and the Bankruptcy Court. As of the Effective Date, all such property
of
each Reorganized Debtor shall be free and clear of all Claims and Interests,
except as specifically provided in the Plan or the Confirmation Order.
| 6.10 |
Post-Effective
Date Restructuring Transactions
|
(a) On,
as
of, or after the Effective Date, with the consent of the New Board or
the board
of directors of the Subsidiary Debtors, as applicable, each of the Reorganized
Debtors may enter into such transactions and may take such actions as
may be
necessary or appropriate, in accordance with any applicable state law,
to effect
a corporate or operational restructuring of their respective businesses,
to
otherwise simplify the overall corporate or operational structure of
the
Reorganized Debtors, to achieve corporate or operational efficiencies,
or to
otherwise improve financial results; provided,
however,
that
such transactions or actions are not otherwise inconsistent with the
Plan, the
distributions to be made under the Plan, the New FiberMark Charter, the
New
FiberMark By-laws, the Registration Rights Agreement, or the Exit Facility.
Such
transactions or actions may include such mergers, consolidations,
restructurings, dispositions, liquidations, closures, or dissolutions,
as may be
determined by the Reorganized Debtors to be necessary or appropriate.
(b) Without
limiting the generality of subsection (a) above, FiberMark is specifically
authorized to make a capital contribution of its ownership interests
in
Specialty Paperboard (Hong Kong) Ltd. and FiberMark SARL to FIH.
| 6.11 |
Indemnification
of Debtors’ Directors, Officers, and
Employees
|
(a) Upon
the
Effective Date, the New FiberMark Charter, the New FiberMark By-laws,
and the
certificate of incorporation, memorandum of association, articles of
association
and by-laws, as applicable, of each Reorganized Subsidiary Debtor shall
contain
provisions which (i) eliminate the personal liability of the Debtors’ directors,
officers, and key employees (as identified for purposes of the Key Employee
Protection Order, along with James P. Carolan) serving on and after the
Petition
Date and the Reorganized Debtors’ directors, officers, and key employees (as
identified by the Chief Executive Officer of the Reorganized Debtors
in
conjunction with the New Board) serving on and after the Effective Date
for
monetary damages resulting from breaches of their fiduciary duties (other
than
for willful misconduct or gross negligence) and (ii) require such Reorganized
Debtor, subject to appropriate procedures, to indemnify those of the
Debtors'
directors, officers, and key employees (as identified by the Chief Executive
Officer of the Reorganized Debtors in conjunction with the New Board)
serving
immediately prior to, on, or after the Effective Date for all claims
and actions
(other than for willful misconduct or gross negligence), including, without
limitation, for pre-Effective Date acts and occurrences.
(b) On
or as
of the Effective Date, the Reorganized Debtors shall enter into separate
written
agreements providing for the indemnification of each Person who is a
director,
officer, or key employee (as identified by the Chief Executive Officer
of the
Reorganized Debtors in conjunction with the New Board) of such Reorganized
Debtor as of the Effective Date.
| 6.12 |
Preservation
of Rights of Action; Resulting Claim
Treatment
|
(a) Except
as
otherwise provided in the Plan or the Confirmation Order, or in any contract,
instrument, release, indenture, or other agreement entered into in connection
with the Plan, in accordance with Section 1123(b) of the Bankruptcy Code,
on the
Effective Date, each Debtor or Reorganized Debtor shall retain all of
their
respective Litigation Rights that such Debtor or Reorganized Debtor may
hold
against any Person. Each Debtor or Reorganized Debtor shall retain and
may
enforce, sue on, settle, or compromise (or decline to do any of the foregoing)
all such Litigation Rights. Each Debtor or Reorganized Debtor or their
respective successor(s) may pursue such retained Litigation Rights as
appropriate, in accordance with the best interests of the Reorganized
Debtors or
their successor(s) who hold such rights in accordance with applicable
law and
consistent with the terms of the Plan.
(b) If,
as a
result of the pursuit of any Litigation Rights, a Claim would arise from
a
recovery pursuant to Section 550 of the Bankruptcy Code after distributions
under the Plan have commenced, making it impracticable to treat the Claim
in
accordance with the applicable provisions of Article IV of the Plan,
the
Reorganized Debtors shall be permitted to reduce the recovery by an amount
that
reflects the value of the treatment that would have been accorded to
the Claim
under the Plan, thereby effectively treating the Claim through the
reduction.
| 6.13 |
Effectuating
Documents; Further Transactions
|
The
chief
executive officer, the president, the chief financial officer, the general
counsel or any other appropriate officer of Reorganized FiberMark, or
any
applicable Reorganized Subsidiary Debtor, as the case may be, shall be
authorized to execute, deliver, file, or record such contracts, instruments,
releases, indentures, and other agreements or documents, and take such
actions
as may be necessary or appropriate to effectuate and further evidence
the terms
and conditions of the Plan. The secretary or assistant secretary of Reorganized
FiberMark, or any applicable Reorganized Subsidiary Debtor, as the case
may be,
shall be authorized to certify or attest to any of the foregoing
actions.
| 6.14 |
Exemption
From Certain Transfer Taxes
|
Pursuant
to Section 1146(c) of the Bankruptcy Code, any transfers from a Debtor
to a
Reorganized Debtor or any other Person pursuant to the Plan in the United
States, including any Liens granted by a Debtor or a Reorganized Debtor
to
secure the Exit Facility, shall not be taxed under any law imposing a
stamp tax,
real estate transfer tax, sales or use tax, or other similar tax. Such
exemption
specifically applies, without limitation, to all documents necessary
to evidence
and implement the provisions of and the distributions to be made under
the Plan,
including the New FiberMark Charter, the New FiberMark By-laws, the Registration
Rights Agreement, and the documents reflecting the Exit Facility.
On
the
Effective Date, the adoption and filing of the New FiberMark Charter
and the New
FiberMark By-laws, the appointment of directors and officers of Reorganized
FiberMark, and all actions contemplated hereby shall be authorized and
approved
in all respects pursuant to this Plan. All matters provided for herein
involving
the corporate structure of the Debtors or Reorganized Debtors, and any
corporate
action required by the Debtors or Reorganized Debtors in connection with
the
Plan, shall be deemed to have occurred and shall be in effect, without
any
requirement of further action by the stockholders or directors of the
Debtors or
Reorganized Debtors. On the Effective Date, the appropriate officers
or
directors of the Reorganized Debtors are authorized and directed to issue,
execute and deliver the agreements, documents, securities, and instruments
contemplated by the Plan in the name of and on behalf of the Reorganized
Debtors
without the need for any required approvals, authorizations, or consents
except
for express consents required under this Plan.
ARTICLE
VII
TREATMENT
OF EXECUTORY CONTRACTS
AND
UNEXPIRED LEASES
| 7.1 |
Assumed
Executory Contracts and Unexpired
Leases
|
(a) Except
as
otherwise provided in the Plan, or in any contract, instrument, release,
indenture, or other agreement or document entered into in connection
with the
Plan, as of the Effective Date, each Debtor shall be deemed to have assumed
each
executory contract and unexpired lease to which it is a party unless
such
executory contract or unexpired lease (i) was previously assumed or rejected
upon motion by a Final Order, (ii) previously expired or terminated pursuant
to
its own terms, or (iii) is the subject of any pending motion, including
to
assume, to assume on modified terms, to reject or to make any other disposition
filed by a Debtor on or before the Confirmation Date. The Confirmation
Order
shall constitute an order of the Bankruptcy Court under Section 365(a)
of the
Bankruptcy Code approving the executory contract and unexpired lease
assumptions
described above, as of the Effective Date.
(b) Each
executory contract and unexpired lease that is assumed and relates to
the use,
ability to acquire, or occupancy of real property shall include (i) all
modifications, amendments, supplements, restatements, or other agreements
made
directly or indirectly by any agreement, instrument, or other document
that in
any manner affects such executory contract or unexpired lease and (ii)
all
executory contracts or unexpired leases appurtenant to the premises,
including
all easements, licenses, permits, rights, privileges, immunities, options,
rights of first refusal, powers, uses, reciprocal easement agreements,
vaults,
tunnel or bridge agreements or franchises, and any other interests in
real
estate or rights in
rem
related
to such premises, unless any of the foregoing agreements has been rejected
pursuant to an order of the Bankruptcy Court.
| 7.2 |
Payments
Related to Assumption of Executory Contracts and Unexpired
Leases
|
Any
monetary amounts by which each executory contract and unexpired lease
to be
assumed pursuant to the Plan is in default shall be satisfied, under
Section
365(b)(1) of the Bankruptcy Code, at the option of the Debtor party to
each such
contract or lease or the assignee of such Debtor party assuming such
contract or
lease, by Cure. If there is a dispute regarding (a) the nature or amount
of any
Cure, (b) the ability of any Reorganized Debtor or any assignee to provide
“adequate assurance of future performance” (within the meaning of Section 365 of
the Bankruptcy Code) under the contract or lease to be assumed, or (c)
any other
matter pertaining to assumption, Cure shall occur following the entry
of a Final
Order resolving the dispute and approving the assumption or assumption
and
assignment, as the case may be; provided,
however,
that
the Reorganized Debtors shall be authorized to reject any executory contract
or
unexpired lease to the extent the Reorganized Debtors, in the exercise
of their
sound business judgment, conclude that the amount of the Cure obligation
as
determined by such Final Order, renders assumption of such executory
contract or
unexpired lease unfavorable to the Reorganized Debtors.
| 7.3 |
Rejected
Executory Contracts and Unexpired
Leases
|
The
Debtors reserve the right, at any time prior to the Effective Date, except
as
otherwise specifically provided herein, to seek to reject any executory
contract
or unexpired lease to which any Debtor is a party and to file a motion
requesting authorization for the rejection of any such executory contract
or
unexpired lease. Any executory contracts or unexpired leases that expire
by
their terms prior to the Effective Date are deemed to be rejected, unless
previously assumed or otherwise disposed of by the Debtors.
| 7.4 |
Rejection
Damages Bar Date
|
If
the
rejection by a Debtor, pursuant to the Plan or otherwise, of an executory
contract or unexpired lease results in a Claim, then such Claim shall
be forever
barred and shall not be enforceable against any Debtor or Reorganized
Debtor or
the properties of any of them unless a Proof of Claim is filed with the
clerk of
the Bankruptcy Court and served upon counsel to the Reorganized Debtors
within
thirty (30) days after entry of the order authorizing the rejection of
such
executory contract or unexpired lease. The foregoing applies only to
Claims
arising from the rejection of an executory contract or unexpired lease;
any
other Claims held by a party to a rejected contract or lease shall have
been
evidenced by a Proof of Claim filed by earlier applicable bar dates or
shall be
barred and unenforceable.
| 7.5 |
Compensation
and Benefit Programs
|
(a) Except
to
the extent (i) otherwise provided for in the Plan, (ii) previously assumed
or
rejected by an order of the Bankruptcy Court entered on or before the
Confirmation Date, (iii) the subject of a pending motion to reject filed
by a
Debtor on or before the Confirmation
Date, or (iv) previously terminated, all employee compensation and benefit
programs of the Debtors as set forth on Exhibit D hereto, including all
health
and welfare plans, pension plans within the meaning of Title IV of the
Employee
Retirement Income Security Act of 1974, as amended, and all programs
subject to
Sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered into before
or
after the Petition Date, shall be deemed to be, and shall be treated
as though
they are, executory contracts that are assumed under the Plan. Nothing
contained
herein shall be deemed to modify the existing terms of such employee
compensation and benefit programs, including, without limitation, the
Debtors’
and the Reorganized Debtors' rights of termination and amendment thereunder.
(b) Subject
to the rights of the Debtors and the Reorganized Debtors to terminate
or amend
as provided for in Section 7.5(a) of the Plan, the Reorganized Debtors
shall
continue after the Effective Date all of their defined benefit pension
plans
covered by Title IV of the Employee Retirement Income Security Act of
1974, as
amended (“ERISA”), 29 U.S.C. §§ 1301-1461. As part of the continuation of the
defined benefit pension plans, subject to any such termination or amendment,
the
Reorganized Debtors shall meet the minimum funding standards under ERISA
and the
Internal Revenue Code, pay all insurance premiums owed to the Pension
Benefit
Guaranty Corporation (the “PBGC”), and administer and operate the defined
benefit pension plans in accordance with their terms and ERISA. Nothing
in this
Plan is intended to release or discharge any statutory liability or obligation
of the Debtors or the Reorganized Debtors with respect to the PBGC or
the
defined benefit pension plans. Neither the PBGC nor any of the defined
benefit
pension plans shall be enjoined or precluded from enforcing such liability
as a
result of the Plan.
(c) The
Key
Employee Protection Order is incorporated herein by reference. All rights,
claims, interests, entitlements, and obligations of the Debtors under
the Key
Employee Protection Order and under the Key Employee Retention Plan,
the Key
Employee Severance Plan, and the Discretionary Recognition Plan approved
by such
order shall continue in full force and effect after the Effective Date
as
rights, claims, interests, entitlements, and obligations of the Reorganized
Debtors.
(d) The
Debtors’ supplemental executive retirement plans, deferred compensation plans,
and related trust and individual agreements shall terminate as of the
Effective
Date; to the extent such plans and agreements (and any separate agreements
that
may incorporate such plans and agreements) are considered to be executory
contracts, such plans and agreements (and any separate agreements that
may
incorporate such plans and agreements) shall be deemed to be rejected
pursuant
to Section 365 of the Bankruptcy Code under the Plan pursuant to the
Confirmation Order; and the Claims of all vested participants in such
plans
shall be calculated as of the Petition Date and treated as General Unsecured
Claims under the Plan.
(e) As
of the
Effective Date, any and all stock based incentive plans and stock ownership
plans of the Debtors entered into before the Effective Date shall be
deemed to
be, and shall be treated as though they are, executory contracts that
are
rejected pursuant to Section 365 of the Bankruptcy Code under the Plan
pursuant
to the Confirmation Order.
(f) Any
employee compensation or benefit program that is not listed on Exhibit
D hereto
shall be deemed to be, and shall be treated as though it is, an executory
contract that is rejected under the Plan, unless such employee compensation
or
benefit program is (i) otherwise provided for in the Plan, (ii) previously
assumed or rejected by an order of the Bankruptcy Court entered on or
before the
Confirmation Date, (iii) the subject of a pending motion to assume filed
by a
Debtor on or before the Confirmation
Date, or (iv) previously terminated.
| 7.6 |
Certain
Indemnification Obligations
|
(a) Indemnification
Obligations owed to those of the Debtors' directors, officers, and employees
serving on and after the Petition Date shall be deemed to be, and shall
be
treated as though they are, executory contracts that are assumed pursuant
to
Section 365 of the Bankruptcy Code under the Plan, and such Indemnification
Obligations (subject to any defenses thereto) shall survive the Effective
Date
of the Plan and remain unaffected by the Plan, irrespective of whether
obligations are owed in connection with a pre-Petition Date or post-Petition
Date occurrence. All other Indemnification Obligations owed to any person
who
was a director, officer, or employee of the Debtor prior to the Petition
Date
shall be deemed to be, and shall be treated as though they are, executory
contracts that are rejected pursuant to Section 365 of the Bankruptcy
Code under
the Plan pursuant to the Confirmation Order (unless assumed or rejected
upon
motion by a Final Order).
(b) Indemnification
Obligations owed to any Professionals pursuant to Sections 327 or 328
of the
Bankruptcy Code and order of the Bankruptcy Court, whether such Indemnification
Obligations relate to the period before or after the Petition Date, shall
be
deemed to be, and shall be treated as though they are, executory contracts
that
are assumed pursuant to Section 365 of the Bankruptcy Code under the
Plan.
| 7.7 |
Extension
of Time to Assume or Reject
|
Notwithstanding
anything set forth in Article VII of the Plan, in the event of a dispute
as to
whether a contract is executory or a lease is unexpired, the right of
the
Reorganized Debtors to move to assume or reject such contract or lease
shall be
extended until the date that is thirty (30) days after entry of a Final
Order by
the Bankruptcy Court determining that the contract is executory or the
lease is
unexpired. The deemed assumption provided for in Section 7.1(a) of the
Plan
shall not apply to any such contract or lease, and any such contract
or lease
shall be assumed or rejected only upon motion of the Reorganized Debtors
following the Bankruptcy Court's determination that the contract is executory
or
the lease is unexpired.
| 7.8 |
Claims
Arising From Assumption or
Rejection
|
All
Allowed Claims arising from the assumption of any executory contract
or
unexpired lease shall be treated as Administrative Claims pursuant to
Section
4.1(a) of this Plan; all Allowed Claims arising from the rejection of
an
executory contract or unexpired lease shall be treated as General Unsecured
Claims pursuant to Section 4.3(g) of this Plan unless otherwise ordered
by Final
Order of the Bankruptcy Court; and all other Allowed Claims relating
to an
executory contract or unexpired lease shall have such status as they
may be
entitled to under the Bankruptcy Code as determined by Final Order of
the
Bankruptcy Court.
ARTICLE
VIII
PROVISIONS
GOVERNING DISTRIBUTIONS
| 8.1 |
Distributions
for Claims Allowed as of Effective
Date
|
Except
as
otherwise provided herein or as ordered by the Bankruptcy Court, all
distributions to holders of Allowed Claims as of the applicable Distribution
Date shall be made on or as soon as practicable after the applicable
Distribution Date. Distributions on account of Claims that first become
Allowed
Claims after the applicable Distribution Date shall be made pursuant
to Section
9.2 of the Plan. The Reorganized Debtors shall have the right, in their
discretion, to accelerate any Distribution Date occurring after the Effective
Date if the facts and circumstances so warrant.
Unless
otherwise specifically provided for in the Plan or the Confirmation Order,
or
required by applicable bankruptcy law, post-petition interest shall not
accrue
or be paid on Claims, and no holder of a Claim shall be entitled to interest
accruing on or after the Petition Date on any Claim. Interest shall not
accrue
or be paid upon any Disputed Claim in respect of the period from the
Petition
Date to the date a final distribution is made thereon if and after such
Disputed
Claim becomes an Allowed Claim.
| 8.3 |
Designation;
Distributions by Disbursing Agent
|
(a) The
Debtors shall, in their sole discretion, on or before the Effective Date,
designate the Person to serve as the Disbursing Agent under the Plan
on mutually
agreeable terms and conditions.
(b) Unless
otherwise provided herein, the Disbursing Agent shall make all distributions
of
New Common Stock and Distribution Cash required to be made to holders
of General
Unsecured Claims on the respective Distribution Dates under the Plan
and such
other distributions as are delegated to the Disbursing Agent by Reorganized
FiberMark.
(c) The
Indenture Trustee shall make all distributions of New Common Stock and
Distribution Cash required to be made to holders of Noteholder Claims
in
accordance with the terms of the Indenture, subject to the terms of the
Plan, or
shall have the right to delegate such distributions to the Disbursing
Agent.
(d) If
the
Disbursing Agent is an independent third party designated to serve in
such
capacity, such Disbursing Agent shall receive, without further Bankruptcy
Court
approval, reasonable compensation for distribution services rendered
pursuant to
the Plan and reimbursement of reasonable out of pocket expenses incurred
in
connection with such services from Reorganized FiberMark. No Disbursing
Agent
shall be required to give any bond or surety or other security for the
performance of its duties unless otherwise ordered by the Bankruptcy
Court.
| 8.4 |
Means
of Cash Payment
|
(a) Cash
payments made pursuant to the Plan shall be in U.S. funds, by the means
agreed
to by the payor and the payee, including by check or wire transfer or,
in the
absence of an agreement, such commercially reasonable manner as the payor
shall
determine in its sole discretion.
(b) For
purposes of effectuating distributions under the Plan, any Claim denominated
in
foreign currency shall be converted to U.S. Dollars pursuant to the applicable
published exchange rate in effect on the Petition Date.
| 8.5 |
Calculation
of Distribution Amounts of New Common
Stock
|
No
fractional shares of New Common Stock shall be issued or distributed
under the
Plan. Each Person entitled to receive New Common Stock shall
receive the total number of whole shares of New Common Stock to which
such
Person is entitled. Whenever any distribution to a particular Person
would
otherwise call for distribution of a fraction of shares of New Common
Stock, the
actual distribution of shares of such stock shall be rounded to the next
higher
or lower whole number as follows: (a) fractions one-half (½) or greater shall be
rounded to the next higher whole number and (b) fractions of less than
one-half
(½) shall be rounded to the next lower whole number. Notwithstanding the
foregoing, whenever rounding to the next lower whole number would result
in such
Person receiving zero shares of New Common Stock, such Person shall receive
one
(1) share of New Common Stock. If two or more Persons are entitled to
equal
fractional entitlements and the aggregate amount of New Common Stock
that would
otherwise be issued to such Persons with respect to such fractional entitlements
as a result of such rounding exceeds the number of whole shares which
remain to
be allocated, the Disbursing Agent shall allocate the remaining whole
shares to
such holders by random lot or such other impartial method as the Disbursing
Agent deems fair. Upon the allocation of all of the whole shares authorized
under the Plan, all remaining fractional portions of the entitlements
shall be
cancelled and shall be of no further force and effect. The Disbursing
Agent
shall have the right to carry forward to subsequent distributions any
applicable
credits or debits arising from the rounding described in this paragraph.
| 8.6 |
Delivery
of Distributions
|
Distributions
to holders of Allowed Claims shall be made by the Disbursing Agent (a)
at the
addresses set forth on the Proofs of Claim filed by such holders (or
at the last
known addresses of such holders if no Proof of Claim is filed or if the
Debtors
or the Reorganized Debtors have been notified of a change of address),
(b) at
the addresses set forth in any written notices of address changes delivered
to
the Debtors, the Reorganized Debtors, or the Disbursing Agent after the
date of
any related Proof of Claim, (c) at the addresses reflected in the Schedules
if
no Proof of Claim has been filed and the Debtors, the Reorganized Debtors,
or
the Disbursing Agent have not received a written notice of a change of
address,
(d) in the case of an GECC Credit Agreement Claim, to GECC, or (e) in
the case
of the holder of a Noteholder Claim, distributions shall be sent to the
Indenture Trustee or as directed by the Indenture Trustee. If any holder’s
distribution is returned as undeliverable, no further distributions to
such
holder shall be made unless and until the Disbursing Agent is notified
of such
holder’s then current address, at which time all missed distributions shall
be
made to such holder without interest. Unless otherwise agreed between
the
Reorganized Debtors and the Disbursing Agent, amounts in respect of
undeliverable distributions made by the Disbursing Agent shall be returned
to
the Reorganized Debtors until such distributions are claimed. All claims
for
undeliverable distributions must be made on or before the second (2nd)
anniversary of the Distribution Date, after which date all unclaimed
property
shall revert to the Reorganized Debtors free of any restrictions thereon
and the
claims of any holder or successor to such holder with respect to such
property
shall be discharged and forever barred, notwithstanding any federal or
state
escheat laws to the contrary. In the event of a timely claim for an unclaimed
distribution, the Reorganized Debtors shall deliver the applicable unclaimed
property to the Disbursing Agent for distribution pursuant to the Plan.
Nothing
contained in the Plan shall require any Debtor, any Reorganized Debtor,
any
Disbursing Agent, or any Indenture Trustee to attempt to locate any holder
of an
Allowed Claim.
| 8.7 |
Application
of Distribution Record Date
|
At
the
close of business on the Distribution Record Date, the claims registers
for all
Claims and the transfer ledgers for the FiberMark Notes shall be closed,
and
there shall be no further changes in the record holders of such Claims
or
FiberMark Notes. The Reorganized Debtors, the Disbursing Agent, the Indenture
Trustee, and each of their respective agents, successors, and assigns
shall have
no obligation to recognize any transfer of Claims or FiberMark Notes
occurring
after the Distribution Record Date and shall be entitled instead to recognize
and deal for all purposes hereunder with only those record holders stated
on the
claims registers or transfer ledgers as of the close of business on the
Distribution Record Date irrespective of the number of distributions
to be made
under the Plan to such Persons or the date of such distributions.
| 8.8 |
Withholding
and Reporting Requirements
|
In
connection with the Plan and all distributions hereunder, the Disbursing
Agent
shall, to the extent applicable, comply with all tax withholding and
reporting
requirements imposed by any federal, state, provincial, local, or foreign
taxing
authority, and all distributions hereunder shall be subject to any such
withholding and reporting requirements. The Disbursing Agent shall be
authorized
to take any and all actions that may be necessary or appropriate to comply
with
such withholding and reporting requirements. Notwithstanding any other
provision
of the Plan, (a) each holder of an Allowed Claim that is to receive a
distribution pursuant to the Plan shall have sole and exclusive responsibility
for the satisfaction and payment of any tax obligations imposed by any
governmental unit, including income, withholding, and other tax obligations,
on
account of such distribution, and (b) no distribution shall be made to
or on
behalf of such holder pursuant to the Plan unless and until such holder
has made
arrangements satisfactory to the Disbursing Agent for the payment and
satisfaction of such withholding tax obligations. Any property to be
distributed
pursuant to the Plan shall, pending the implementation of such arrangements,
be
treated as an undeliverable distribution pursuant to Section
8.6 of the Plan.
The
Reorganized Debtors may, but shall not be required to, set off against
any
Claim, and the payments or other distributions to be made pursuant to
the Plan
in respect of such Claim, claims of any nature whatsoever that the Debtors
or
the Reorganized Debtors may have against the holder of such Claim; provided,
however,
that
neither the failure to do so nor the allowance of any Claim hereunder
shall
constitute a waiver or release by the Reorganized Debtors of any such
claim that
the Debtors or the Reorganized Debtors may have against such
holder.
Except
as
otherwise provided in the Plan, any ancillary documents entered into
in
connection herewith, or the Confirmation Order, the Reorganized Debtors
shall
have the right to prepay, without penalty, all or any portion of an Allowed
Claim at any time; provided,
however,
that any
such prepayment shall not be violative of, or otherwise prejudice, the
relative
priorities and parities among the Classes of Claims.
| 8.11 |
No
Distribution in Excess of Allowed Amount of
Claim
|
Notwithstanding
anything to the contrary herein, no holder of an Allowed Claim shall
receive in
respect of such Claim any distribution of a value as of the Effective
Date in
excess of the Allowed amount of such Claim (excluding payments on account
of
interest due and payable from and after the Effective Date pursuant to
the
Plan).
| 8.12 |
Allocation
of Distributions
|
All
distributions received under the Plan by holders of Claims shall be deemed
to be
allocated first to the principal amount of such Claim as determined for
United
States federal income tax purposes and then to accrued interest, if any,
with
respect to such Claim.
ARTICLE
IX
PROCEDURES
FOR RESOLVING DISPUTED,
CONTINGENT,
AND UNLIQUIDATED CLAIMS AND
DISTRIBUTIONS
WITH RESPECT THERETO
| 9.1 |
Prosecution
of Objections to Claims
|
(a) Objections
to Claims
All
objections to Claims must be filed and served on the holders of such
Claims by
the Claims Objection Deadline. If an objection has not been filed to
a Proof of
Claim by the Claims Objection Deadline, the Claim to which the Proof
of Claim or
scheduled Claim relates shall be treated as an Allowed Claim if such
Claim has
not been allowed earlier. The Reorganized Debtors may, at any time, request
that
the Bankruptcy Court estimate any contingent or unliquidated Claim pursuant
to
Section 502(c) of the Bankruptcy Code, regardless of whether the Debtors
or the
Reorganized Debtors have previously objected to such Claim or whether
the
Bankruptcy Court has ruled on any such objection, and the Bankruptcy
Court shall
retain jurisdiction to estimate any Claim at any time during litigation
concerning any objection to any Claim, including during the pendency
of any
appeal relating to any such objection. In the event the Bankruptcy Court
so
estimates any contingent or unliquidated Claim, that estimated amount
shall
constitute either the Allowed amount of such Claim or a maximum limitation
on
such Claim, as determined by the Bankruptcy Court, as applicable. If
the
estimated amount constitutes a maximum limitation on such Claim, the
Reorganized
Debtors may elect to pursue any supplemental proceedings to object to
any
ultimate payment on such Claim. All of the aforementioned Claims objection,
estimation, and resolution procedures are cumulative and are not necessarily
exclusive of one another. Claims may be estimated and thereafter resolved
by any
permitted mechanisms.
(b) Authority
to Prosecute Objections
After
the
Effective Date, only the Reorganized Debtors shall have the authority
to file
objections to Claims and to settle, compromise, withdraw, or litigate
to
judgment objections to Claims, including Claims for reclamation under
Section
546(c) of the Bankruptcy Code. The Reorganized Debtors may settle or
compromise
any Disputed Claim without approval of the Bankruptcy Court.
| 9.2 |
Treatment
of Disputed Claims
|
(a) No
Distributions Pending Allowance
Notwithstanding
any other provisions of the Plan, no payments or distributions shall
be made on
account of a Disputed Claim or, if less than the entire Claim is a Disputed
Claim, the portion of a Claim that is Disputed, until such Claim becomes
an
Allowed Claim.
(b) Distributions
on Account of Disputed Claims Once They Are Allowed
The
Disbursing Agent shall, on the applicable Distribution Dates, make distributions
on account of any Disputed Claim that has become an Allowed Claim. Such
distributions shall be made pursuant to the provisions of the Plan governing
the
applicable Class. Such distributions shall be based upon the cumulative
distributions that would have been made to the holder of such Claim under
the
Plan if the Disputed Claim had been an Allowed Claim on the Effective
Date in
the amount ultimately Allowed.
| 9.3 |
Provisions
for Disputed General Unsecured Claims
|
(a) Common
Stock Reserve; Additional Issuances
On
the
Effective Date, the Debtors shall (i) determine the amount of the New
Common
Stock reasonably calculated to be sufficient to provide distributions
to
Disputed General Unsecured Claims that are expected to become Allowed
Claims and
(ii) direct the Disbursing Agent to establish the Common Stock Reserve
with the
requisite amount of New Common Stock. In the event that the amount of
New Common
Stock in the Common Stock Reserve proves to be insufficient to satisfy
all
Disputed General Unsecured Claims that subsequently become Allowed Claims,
the
Reorganized Debtors shall issue additional shares of New Common Stock
as
necessary to ensure that all holders of Allowed General Unsecured Claims
and
Allowed Noteholder Claims ultimately receive the same Pro Rata distribution
of
New Common Stock.
(b) Cash
Reserve
On
the
Effective Date, the Debtors shall (i) determine the amount of the Distribution
Cash reasonably calculated to be sufficient to provide distributions
to Disputed
General Unsecured Claims that are expected to become Allowed Claims and
(ii)
direct the Disbursing Agent to establish the Cash Reserve with the requisite
amount of Distribution Cash. In the event that the amount of Distribution
Cash
in the Cash Reserve proves to be insufficient to satisfy all Disputed
General
Unsecured Claims that subsequently become Allowed Claims, the Reorganized
Debtors shall transfer additional funds to the Disbursing Agent as necessary
to
ensure that all holders of Allowed General Unsecured Claims and Allowed
Noteholder Claims ultimately receive the same Pro Rata distribution of
Distribution Cash.
(c) Redistribution
of Reserved Amounts
With
respect to the shares of New Common Stock held in the Common Stock Reserve
on
account of Disputed General Unsecured Claims, not later than the one
hundred
twentieth (120th)
day
following the Distribution Date and not less frequently than every one
hundred
twentieth (120th)
day
thereafter, the Disbursing Agent, as directed by the Reorganized Debtors,
shall
calculate the amount, if any, by which the number of such shares exceeds
the
number that would be allocable to any of the remaining Disputed Claims
that are
expected to become Allowed Claims. Except with respect to the final
distribution, in the event the Disbursing Agent determines, as directed
by the
Reorganized Debtors, that an excess exists that would result in distributions
in
the aggregate of at least 10,000 shares of New Common Stock, such excess
shall
be promptly distributed or allocated on a Pro Rata basis in accordance
with
Sections 4.3(f) and 4.3(g) to holders of Allowed Noteholder Claims and
Allowed
General Unsecured Claims. With respect to the final distribution, all
remaining
shares in the Common Stock Reserve shall be promptly distributed or allocated
on
a Pro Rata basis in accordance with Sections 4.3(f) and 4.3(g) to holders
of
Allowed Noteholder Claims and Allowed General Unsecured Claims unless
the number
of shares is de minimis and the cost of the distribution, as determined
by the
Reorganized Debtors, would exceed the value of the remaining shares.
Any shares
of New Common Stock not distributed shall be cancelled.
With
respect to Distribution Cash held in the Cash Reserve on account of Disputed
General Unsecured Claims, not later than the one hundred twentieth
(120th)
day
following the Distribution Date and not less frequently than every one
hundred
twentieth (120th)
day
thereafter, the Disbursing Agent, as directed by the Reorganized Debtors,
shall
calculate the amount, if any, by which such Distribution Cash exceeds
the amount
that would be allocable to any of the remaining Disputed Claims that
are
expected to become Allowed Claims. Except with respect to the final
distribution, in the event the Disbursing Agent determines that an excess
exists
that would result in distributions in the aggregate of at least $100,000,
such
excess shall be promptly distributed or allocated on a Pro Rata basis
in
accordance with Sections 4.3(f) and 4.3(g) to holders of Allowed Noteholder
Claims and Allowed General Unsecured Claims. With respect to the final
distribution, the remaining amount of Distribution Cash in the Cash Reserve
shall be promptly distributed or allocated on a Pro Rata basis in accordance
with Sections 4.3(f) and 4.3(g) to the holders of Allowed Noteholder
Claims and
Allowed General Unsecured Claims unless such remaining amount is de minimis
and
the cost of the distribution would exceed such remaining amount. Any
of the Cash
that is not distributed shall be returned to the Reorganized
Debtors.
(d) Organic
Change
After
the
Effective Date, if Reorganized FiberMark consummates an Organic Change,
then the
successor or acquiring entity shall assume Reorganized FiberMark's obligations
regarding payment of Disputed Claims and shall adjust the reserves and
payouts
for potential payment of Disputed Claims such that the reserves and payouts
consist of the consideration, if any, that would have been paid with
respect to
the remaining New Common Stock and Distribution Cash reserved for Disputed
Claims had such New Common Stock and Distribution Cash been outstanding
immediately prior to the consummation of the Organic Change.
(e) No
Reserve for Other Claims
No
reserve shall be required with respect to payments or other distributions
to be
made under the Plan to any Claim that is not a Noteholder Claim or a
General
Unsecured Claim.
ARTICLE
X
CONDITIONS
PRECEDENT TO CONFIRMATION
AND
CONSUMMATION OF THE PLAN
| 10.1 |
Conditions
to Confirmation
|
The
following are conditions precedent to the occurrence of the Confirmation
Date,
each of which must be satisfied or waived in accordance with Section
10.3 of the
Plan:
(a) an
order
finding that the Disclosure Statement contains adequate information pursuant
to
Section 1125 of the Bankruptcy Code shall have been entered; and
(b) the
proposed Confirmation Order shall be in form and substance reasonably
satisfactory to the Debtors, GECC as the lender under the DIP Facility,
and the
lender or the agent for the lenders under the Exit Facility.
| 10.2 |
Conditions
to Effective Date
|
The
following conditions precedent must be satisfied or waived on or prior
to the
Effective Date in accordance with Section 10.3 of the Plan:
(a) the
Confirmation Order shall have been entered in form and substance reasonably
satisfactory to the Debtors, GECC as the lender under the DIP Facility,
and the
lender or the agent for the lenders under the Exit Facility, and shall,
among
other things:
(i) provide
that the Debtors and the Reorganized Debtors are authorized and directed
to take
all actions necessary or appropriate to enter into, implement, and consummate
the contracts, instruments, releases, leases, indentures, and other agreements
or documents created in connection with the Plan;
(ii) approve
the Exit Facility;
(iii) authorize
the issuance of the New Common Stock; and
(iv) provide
that notwithstanding Rule 3020(e) of the Bankruptcy Rules, the Confirmation
Order shall be immediately effective, subject to the terms and conditions
of the
Plan;
(b) the
Confirmation Order shall not then be stayed, vacated, or reversed;
(c) the
documents evidencing the Exit Facility shall be in form and substance
reasonably
acceptable to the Debtors and the lender or the agent for the lenders
under the
Exit Facility, and, to the extent any of such documents contemplates
execution
by one or more persons, any such document shall have been executed and
delivered
by the respective parties thereto, and all conditions precedent to the
effectiveness of each such document shall have been satisfied or waived;
(d) the
New
FiberMark Charter, the New FiberMark By-laws, and the Registration Rights
Agreement shall have been executed and delivered by the respective parties
thereto, and all conditions precedent to the effectiveness of each such
document
shall have been satisfied or waived;
(e) the
Debtors shall have determined that the number of record holders of New
Common
Stock as of the Effective Date shall be less than 300;
(f) all
material authorizations, consents, and regulatory approvals required,
if any, in
connection with consummation of the Plan shall have been obtained;
and
(g) all
material actions, documents, and agreements necessary to implement the
Plan
shall have been effected or executed.
| 10.3 |
Waiver
of Conditions
|
Each
of
the conditions set forth in Sections 10.1 and 10.2, with the express
exception
of the conditions contained in Section 10.1(a) and Section 10.2(a) and
(b), may
be waived in whole or in part by the Debtors without any notice to parties
in
interest or the Bankruptcy Court and without a hearing, provided,
however,
that
such waiver shall not be effective without the consent of GECC and the
lender or
the agent for the lenders under the Exit Facility, as the case may be.
ARTICLE
XI
RETENTION
OF JURISDICTION
| 11.1 |
Scope
of Retention of Jurisdiction
|
Under
Sections 105(a) and 1142 of the Bankruptcy Code, and notwithstanding
entry of
the Confirmation Order and occurrence of the Effective Date, and except
as
otherwise ordered by the Bankruptcy Court, the Bankruptcy Court shall
retain
exclusive jurisdiction over all matters arising out of, and related to,
the
Chapter 11 Case and the Plan to the fullest extent permitted by law,
including,
among other things, jurisdiction to:
(a) allow,
disallow, determine, liquidate, classify, estimate, or establish the
priority or
secured or unsecured status of any Claim or Interest not otherwise Allowed
under
the Plan (other than personal injury or wrongful death Claims, unless
agreed by
the holder), including the resolution of any request for payment of any
Administrative Claim and the resolution of any objections to the allowance
or
priority of Claims or Interests;
(b) hear
and
determine all applications for compensation and reimbursement of expenses
of
Professionals under the Plan or under Sections 327, 328, 330, 331, 503(b),
1103,
and 1129(a)(4) of the Bankruptcy Code; provided,
however,
that
from and after the Effective Date, the payment of the fees and expenses
of the
retained Professionals of the Reorganized Debtors shall be made in the
ordinary
course of business and shall not be subject to the approval of the Bankruptcy
Court;
(c) hear
and
determine all matters with respect to the assumption or rejection of
any
executory contract or unexpired lease to which a Debtor is a party or
with
respect to which a Debtor may be liable, including, if necessary, the
nature or
amount of any required Cure or the liquidation or allowance of any Claims
arising therefrom;
(d) effectuate
performance of and payments under the provisions of the Plan;
(e) hear
and
determine any and all adversary proceedings, motions, applications, and
contested or litigated matters arising out of, under, or related to,
the Chapter
11 Case or the Litigation Rights;
(f) enter
such orders as may be necessary or appropriate to execute, implement,
or
consummate the provisions of the Plan and all contracts, instruments,
releases,
and other agreements or documents created in connection with the Plan,
the
Disclosure Statement, or the Confirmation Order;
(g) hear
and
determine disputes arising in connection with the interpretation,
implementation, consummation, or enforcement of the Plan, including disputes
arising under agreements, documents, or instruments executed in connection
with
the Plan, provided,
however, that
any
dispute arising under or in connection with the New FiberMark Charter,
the New
FiberMark By-laws, the Registration Rights Agreement, and the Exit Facility
shall be dealt with in accordance with the provisions of the applicable
document;
(h) consider
any modifications of the Plan, cure any defect or omission, or reconcile
any
inconsistency in any order of the Bankruptcy Court, including, without
limitation, the Confirmation Order;
(i) issue
injunctions, enter and implement other orders, or take such other actions
as may
be necessary or appropriate to restrain interference by any entity with
the
implementation, consummation, or enforcement of the Plan or the Confirmation
Order;
(j) enter
and
implement such orders as may be necessary or appropriate if the Confirmation
Order is for any reason reversed, stayed, revoked, modified, or
vacated;
(k) hear
and
determine any matters arising in connection with or relating to the Plan,
the
Disclosure Statement, the Confirmation Order, or any contract, instrument,
release, or other agreement or document created in connection with the
Plan, the
Disclosure Statement, or the Confirmation Order;
(l) enforce
all orders, judgments, injunctions, releases, exculpations, indemnifications,
and rulings entered in connection with the Chapter 11 Case;
(m) except
as
otherwise limited herein, recover all assets of the Debtors and property
of the
Estates, wherever located;
(n) hear
and
determine matters concerning state, local, and federal taxes in accordance
with
Sections 346, 505, and 1146 of the Bankruptcy Code;
(o) hear
and
determine all disputes involving the existence, nature, or scope of the
Debtors’
discharge;
(p) hear
and
determine such other matters as may be provided in the Confirmation Order
or as
may be authorized under, or not inconsistent with, provisions of the
Bankruptcy
Code;
(q) hear
and
determine any matters arising under the Key Employee Protection Order,
the Key
Employee Retention Plan, the Key Employee Severance Plan, and the Discretionary
Recognition Plan, including, without limitation, any dispute relating
to the
existence of “Good Reason” under such plans; and
(r) enter
a
final decree closing the Chapter 11 Case.
| 11.2 |
Failure
of the Bankruptcy Court to Exercise
Jurisdiction
|
If
the
Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction
or is otherwise without jurisdiction over any matter arising in, arising
under,
or related to the Chapter 11 Case, including the matters set forth in
Section
11.1 of the Plan, the provisions of this Article XI shall have no effect
upon
and shall not control, prohibit, or limit the exercise of jurisdiction
by any
other court having jurisdiction with respect to such matter.
ARTICLE
XII
MISCELLANEOUS
PROVISIONS
| 12.1 |
Professional
Fee Claims; Indenture Trustee
Expenses
|
(a) All
final
requests for payment of Professional Fee Claims pursuant to Sections
327, 328,
330, 331, 503(b), or 1103 of the Bankruptcy Code and Substantial Contribution
Claims under Section 503(b)(3), (4), or (5) of the Bankruptcy Code must
be filed
and served on the Reorganized Debtors, their counsel, and other necessary
parties in interest no later than sixty (60) days after the Effective
Date,
unless otherwise ordered by the Bankruptcy Court. Objections to such
requests
for payment must be filed and served on the Reorganized Debtors, their
counsel,
and the requesting Professional or other entity no later than twenty
(20) days (or such longer period as may be allowed by order of the Bankruptcy
Court) after the date on which the applicable request for payment was
served.
(b) Each
Reorganized Debtor may, without application to or approval by the Bankruptcy
Court, pay reasonable professional fees and expenses in connection with
services
rendered to it after the Effective Date.
(c) The
Indenture Trustee Expenses shall be paid solely in accordance with the
procedures established in this Section 12.1(c). To the extent the Indenture
Trustee Expenses are paid in Cash in full by the Debtors or the Reorganized
Debtors, distributions received by holders of Noteholder Claims pursuant
to the
Plan shall not be reduced on account of the fees and expenses of the
Indenture
Trustee. On or before the Confirmation Date, the Indenture Trustee shall
serve
on the Debtors reasonably substantiating documents in support of the
Indenture
Trustee Expenses incurred to date by the Indenture Trustee, whether incurred
prior or subsequent to the Petition Date, together with a detailed, reasonable
estimate of any fees and expenses to be incurred through the Effective
Date.
Such estimate may include, without limitation, projected fees and expenses
relating to surrender and cancellation of the FiberMark Notes, distribution
of
the New Common Stock and the Distribution Cash, and in respect of any
challenge
to the claims asserted by the Indenture Trustee, whether based on the
FiberMark
Notes or the claimed amount of the Indenture Trustee Expenses. On or
as soon as
reasonably practicable after the Effective Date, the Reorganized Debtors
shall
pay in Cash the undisputed amount of the Indenture Trustee Expenses without
the
need for the Indenture Trustee to file an application for the allowance
thereof
with the Bankruptcy Court. If, prior to the Effective Date, the Debtors
objected
in writing to all or a portion of the Indenture Trustee Expenses, (i)
the
Reorganized Debtors shall pay the undisputed portion of the Indenture
Trustee
Expenses as provided above and (ii) such Indenture Trustee may, in its
sole
discretion, either (a) submit the disputed portion of the Indenture Trustee
Expense to the Bankruptcy Court for resolution or (b) exercise its rights
under
the Indentures to ensure full payment of the Indenture Trustee Expenses.
The
allowance of the disputed portion of the Indenture Trustee Expenses shall
be
determined under a “reasonableness” standard. In connection with such allowance,
the Indenture Trustee shall not be required to file fee applications
or comply
with guidelines and rules applicable to fee applications, and shall not
be
subject to Sections 330 or 503(b) of the Bankruptcy Code. To the extent
that the
Reorganized Debtors fail to pay any portion of the Indenture Trustee
Expenses,
whether as a result of the Bankruptcy Court's determination or the Indenture
Trustee's determination not to seek payment therefor, the Indenture Trustee
shall have the right to assert the Indenture Trustee Charging Lien for
the
Payment of any such unpaid amount. Nothing in the Plan or Confirmation
Order
shall be deemed to impair, waive, or discharge the Indenture Trustee
Charging
Lien, or any other rights of the Indenture Trustee (including, without
limitation, the right of the Indenture Trustee to contest the jurisdiction
of
the Bankruptcy Court with respect to such matters) with respect to the
payment
of any portion of the Indenture Trustee Expenses not paid by the Reorganized
Debtors. The Reorganized Debtors shall pay in the ordinary course of
the
Reorganized Debtors' business the reasonable direct out-of-pocket costs
and
expenses, including the reasonable attorney's fees and expenses, incurred
by the
Indenture Trustee after the Effective Date in connection with making
distributions pursuant to the Plan.
| 12.2 |
Administrative
Claims
|
All
requests for payment of an Administrative Claim (other than as set forth
in
Sections 4.1(a) and 12.1 and this Section 12.2 of the Plan) must be filed
with
the Bankruptcy Court and served on counsel for the Reorganized Debtors
no later
than forty-five (45) days after the Effective Date. Unless the Reorganized
Debtors object to an Administrative Claim within sixty (60) days after
receipt,
such Administrative Claim shall be deemed Allowed in the amount requested.
In
the event that the Reorganized Debtors object to an Administrative Claim,
the
Bankruptcy Court shall determine the Allowed amount of such Administrative
Claim. Notwithstanding the foregoing, no request for payment of an
Administrative Claim need be filed with respect to an Administrative
Claim which
was paid or payable by a Debtor in the ordinary course of business.
| 12.3 |
Payment
of Statutory Fees
|
All
fees
payable pursuant to Section 1930 of Title 28 of the United States Code,
as
determined by the Bankruptcy Court at the Confirmation Hearing, shall
be paid on
or before the Effective Date. All such fees that arise after the Effective
Date
shall be paid by the Reorganized Debtors. The obligation of each of the
Reorganized Debtors to pay quarterly fees to the Office of the United
States
Trustee pursuant to Section
1930 of Title 28 of the United States Code shall continue until such
time as a
particular Chapter 11 case is closed, dismissed or converted.
| 12.4 |
Modifications
and Amendments
|
The
Debtors may alter, amend, or modify the Plan under Section 1127(a) of
the
Bankruptcy Code at any time prior to the Confirmation Date. After the
Confirmation Date and prior to substantial consummation of the Plan,
as defined
in Section 1101(2) of the Bankruptcy Code, the Debtors may, under Section
1127(b) of the Bankruptcy Code, institute proceedings in the Bankruptcy
Court to
remedy any defect or omission or reconcile any inconsistencies in the
Plan or
the Confirmation Order, provided,
however,
that
prior notice of such proceedings shall be served in accordance with the
Bankruptcy Rules or order of the Bankruptcy Court.
| 12.5 |
Severability
of Plan Provisions
|
If,
prior
to Confirmation, any term or provision of the Plan is held by the Bankruptcy
Court to be invalid, void, or unenforceable, the Bankruptcy Court, at
the
request of any Debtor, shall have the power to alter and interpret such
term or
provision to make it valid or enforceable to the maximum extent practicable,
consistent with the original purpose of the term or provision held to
be
invalid, void, or unenforceable, and such term or provision shall then
be
applicable as altered or interpreted. Notwithstanding any such holding,
alteration, or interpretation, the remainder of the terms and provisions
of the
Plan shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated by such holding, alteration, or interpretation.
The
Confirmation Order shall constitute a judicial determination and shall
provide
that each term and provision of the Plan, as it may have been altered
or
interpreted in accordance with the foregoing, is valid and enforceable
pursuant
to its terms.
| 12.6 |
Successors
and Assigns and Binding Effect
|
The
rights, benefits, and obligations of any Person named or referred to
in the Plan
shall be binding on, and shall inure to the benefit of, any heir, executor,
administrator, personal representative, successor, or assign of such
entity,
including, but not limited to, the Reorganized Debtors and all other
parties in
interest in the Chapter 11 Case.
| 12.7 |
Compromises
and Settlements
|
From
and
after the Effective Date, the Reorganized Debtors may compromise and
settle
various Claims against them and/or Litigation Rights and other claims
that they
may have against other Persons without any further approval by the Bankruptcy
Court. Until the Effective Date, the Debtors expressly reserve the right
to
compromise and settle (subject to the approval of the Bankruptcy Court)
Claims
against them and Litigation Rights or other claims that they may have
against
other Persons.
| 12.8 |
Releases
and Satisfaction of Subordination
Rights
|
All
Claims against the Debtors and all rights and claims between or among
the
holders of Claims relating in any manner whatsoever to any claimed subordination
rights shall be deemed satisfied by the distributions under, described
in,
contemplated by, and/or implemented in Sections 4.1, 4.2, and 4.3 of
the Plan.
Distributions under, described in, contemplated by, and/or implemented
by the
Plan to the various Classes of Claims hereunder shall not be subject
to levy,
garnishment, attachment, or like legal process by any holder of a Claim
by
reason of any claimed subordination rights or otherwise, so that each
holder of
a Claim shall have and receive the benefit of the distributions in the
manner
set forth in the Plan.
| 12.9 |
Releases
and Related Matters
|
(a) Releases
by Debtors
As
of the Effective Date, for good and valuable consideration, the adequacy
of
which is hereby confirmed, the Debtors, the Reorganized Debtors and any
Person
seeking to exercise the rights of the Debtors' estate, including, without
limitation, any successor to the Debtors or any estate representative
appointed
or selected pursuant to Section 1123(b)(3) of the Bankruptcy Code, shall
be
deemed to forever release, waive, and discharge all claims, obligations,
suits,
judgments, damages, demands, debts, rights, causes of action (including
claims
or causes of action arising under Chapter 5 of the Bankruptcy Code),
and
liabilities whatsoever (other than for fraud, willful misconduct, or
gross
negligence) in connection with or related to the Debtors, the Chapter
11 Case,
or the Plan (other than the rights of the Debtors and the Reorganized
Debtors to
enforce the Plan and the contracts, instruments, releases, indentures,
and other
agreements or documents delivered thereunder), whether liquidated or
unliquidated, fixed or contingent, matured or unmatured, known or unknown,
foreseen or unforeseen, then existing or thereafter arising, in law,
equity, or
otherwise, that are based in whole or part on any act, omission, transaction,
event, or other occurrence taking place on or prior to the Effective
Date in any
way relating to the Debtors, the Reorganized Debtors, the Chapter 11
Case, or
the Plan, and that may be asserted by or on behalf of the Debtors, the
Estates,
or the Reorganized Debtors against (i) any of the other Debtors and any
of the
Debtors' non-Debtor subsidiaries, (ii) any of the directors, officers,
or
employees of any of the Debtors or any of the Debtors’ non-Debtor subsidiaries
serving during the pendency of the Chapter 11 Case, (iii) any Professionals
of
the Debtors, (iv) GECC and its advisors, and (v) the Indenture Trustee
and its
advisors; provided,
however,
that nothing in this Section 12.9(a) shall be deemed to prohibit the
Debtors or
the Reorganized Debtors from asserting and enforcing any claims, obligations,
suits, judgments, demands, debts, rights, causes of action or liabilities
they
may have against any employee (other than any director or officer) that
is based
upon an alleged breach of a confidentiality, noncompete or any other
contractual
or fiduciary obligation owed to the Debtors or the Reorganized Debtors.
(b) Releases
by Holders of Claims and Interests
As
of the Effective Date, for good and valuable consideration, the adequacy
of
which is hereby confirmed, each holder of a Claim that affirmatively
votes in
favor of the Plan shall be deemed to forever release, waive, and discharge
all
claims, obligations, suits, judgments, damages, demands, debts, rights,
causes
of action, and liabilities whatsoever (other than for fraud, willful
misconduct,
or gross negligence) against the directors, officers, or employees of
any of the
Debtors serving during the pendency of the Chapter 11 Case (collectively,
the
“Claimholder Releasees”), in connection with or related to the Debtors, the
Chapter 11 Case, or the Plan (other than the rights under the Plan and
the
contracts, instruments, releases, indentures, and other agreements or
documents
delivered thereunder), whether liquidated or unliquidated, fixed or contingent,
matured or unmatured, known or unknown, foreseen or unforeseen, then
existing or
thereunder arising, in law, equity, or otherwise, that are based in whole
or
part on any act, omission, transaction, event, or other occurrence taking
place
on or prior to the Effective Date in any way relating to the Debtors
or the
Reorganized Debtors, the Chapter 11 Case, or the Plan.
Each
of the Claimholder Releasees shall be deemed to forever release, waive,
and
discharge any claims, obligations, suits, judgments, damages, demands,
debts,
rights, causes of action, and liabilities whatsoever (other than for
fraud,
willful misconduct, or gross negligence) taking place on or prior to
the
Effective Date in any way relating to the Debtors or the Reorganized
Debtors,
the Chapter 11 Case, or the Plan, that such Claimholder Releasees may
hold in
their individual capacities against each holder of a Claim that affirmatively
votes in favor of the Plan. This provision does not constitute, and shall
not be
deemed to effect, a release by the Debtors or the Reorganized Debtors
of any
claims, obligations, suits, judgments, damages, demands, debts, rights,
causes
of action, and liabilities held by the Debtors or the Reorganized
Debtors.
| 12.10 |
Discharge
of the Debtors
|
(a) Except
as
otherwise provided herein or in the Confirmation Order, all consideration
distributed under the Plan shall be in exchange for, and in complete
satisfaction, settlement, discharge, and release of, all Claims of any
nature
whatsoever against the Debtors or any of their assets or properties and,
regardless of whether any property shall have been abandoned by order
of the
Bankruptcy Court, retained, or distributed pursuant to the Plan on account
of
such Claims, upon the Effective Date, the Debtors, and each of them,
shall (i)
be deemed discharged and released under Section 1141(d)(1)(A) of the
Bankruptcy
Code from any and all Claims, including, but not limited to, demands
and
liabilities that arose before the Effective Date, and all debts of the
kind
specified in Section 502 of the Bankruptcy Code, whether or not (A) a
Proof of
Claim based upon such debt is filed or deemed filed under Section 501
of the
Bankruptcy Code, (B) a Claim based upon such debt is Allowed under Section
502
of the Bankruptcy Code, (C) a Claim based upon such debt is or has been
disallowed by order of the Bankruptcy Court, or (D) the holder of a Claim
based
upon such debt accepted the Plan, and (ii) terminate all FiberMark
Interests.
(b) As
of the
Effective Date, except as provided in the Plan or the Confirmation Order
or
under the terms of the documents evidencing and orders approving the
DIP
Facility and/or the Exit Facility, all Persons shall be precluded from
asserting
against the Debtors or the Reorganized Debtors, any other or further
claims,
debts, rights, causes of action, claims for relief, liabilities, or equity
interests relating to the Debtors based upon any act, omission, transaction,
occurrence, or other activity of any nature that occurred prior to the
Effective
Date. In accordance with the foregoing, except as provided in the Plan
or the
Confirmation Order, the Confirmation Order shall be a judicial determination
of
discharge of all such Claims and other debts and liabilities against
the Debtors
and termination of all FiberMark Interests, pursuant to Sections 524
and 1141 of
the Bankruptcy Code, and such discharge shall void any judgment obtained
against
the Debtors at any time, to the extent that such judgment relates to
a
discharged Claim or terminated Interest.
(a) Except
as provided in the Plan or the Confirmation Order, as of the Effective
Date, all
Persons that have held, currently hold, may hold, or allege that they
hold, a
Claim or other debt or liability that is discharged or an Interest or
other
right of an equity security holder that is terminated pursuant to the
terms of
the Plan are permanently enjoined from taking any of the following actions
against the Debtors, the Reorganized Debtors, and their respective subsidiaries
or their property on account of any such discharged Claims, debts, or
liabilities or terminated Interests or rights: (i) commencing or continuing,
in
any manner or in any place, any action or other proceeding; (ii) enforcing,
attaching, collecting, or recovering in any manner any judgment, award,
decree,
or order; (iii) creating, perfecting, or enforcing any Lien or encumbrance;
(iv)
asserting a setoff, right of subrogation, or recoupment of any kind against
any
debt, liability, or obligation due to the Debtors or the Reorganized
Debtors; or
(v) commencing or continuing any action, in each such case in any manner,
in any
place, or against any Person that does not comply with or is inconsistent
with
the provisions of the Plan.
(b) As
of the Effective Date, all Persons that have held, currently hold, or
may hold,
a Claim, obligation, suit, judgment, damage, demand, debt, right, cause
of
action, or liability that is released pursuant to Section 12.8, 12.9,
or 12.12
of the Plan are permanently enjoined from taking any of the following
actions on
account of such released Claims, obligations, suits, judgments, damages,
demands, debts, rights, causes of action, or liabilities or terminated
Interests
or rights: (i) commencing or continuing, in any manner or in any place,
any
action or other proceeding; (ii) enforcing, attaching, collecting, or
recovering
in any manner any judgment, award, decree, or order; (iii) creating,
perfecting,
or enforcing any Lien or encumbrance; (iv) asserting a setoff against
any debt,
liability, or obligation due to any released Person; or (v) commencing
or
continuing any action, in any manner, in any place, or against any Person
that
does not comply with or is inconsistent with the provisions of the
Plan.
(c) Without
limiting the effect of the foregoing provisions of this Section 12.11
upon any
Person, by accepting distributions pursuant to the Plan, each holder
of an
Allowed Claim receiving distributions pursuant to the Plan shall be deemed
to
have specifically consented to the injunctions set forth in this Section
12.11.
(d) Without
limiting the generality of the foregoing provisions of this Section 12.11
and
the foregoing Section 12.10, if any Person has held, currently holds,
may hold,
or alleges that s/he/it holds a Claim, and such Person either did not
timely
file a Proof of Claim with respect such Claim or filed a Proof of Claim
that is
or was disallowed by order of the Bankruptcy Court, then such Person
is
permanently enjoined from taking any of the following actions on account
of such
Claim or on account of any acts, omissions, transactions, occurrences,
or other
activities upon which such Claim is or may be based: (i) commencing or
continuing, in any manner or in any place, any action or other proceeding;
(ii)
enforcing, attaching, collecting, or recovering in any manner any judgment,
award, decree, or order; (iii) creating, perfecting, or enforcing any
Lien or
encumbrance; (iv) asserting a setoff, right of subrogation, or recoupment
of any
kind against any debt, liability, or obligation due to the Debtors or
the
Reorganized Debtors; or (v) commencing or continuing any action, in each
such
case in any manner, in any place, or against any Person that does not
comply
with or is inconsistent with the provisions of the Plan.
| 12.12 |
Exculpation
and Limitation of Liability
|
(a) None
of the Debtors, the Reorganized Debtors or their respective subsidiaries,
GECC,
the Indenture Trustee, or any of their respective present or former members,
officers, directors, employees, advisors, Professionals, or agents, shall
have
or incur any liability to any holder of a Claim or an Interest, or any
other
party in interest, or any of their respective agents, employees,
representatives, advisors, attorneys, or affiliates, or any of their
successors
or assigns, for any act or omission in connection with, relating to,
or arising
out of, the Chapter 11 Case, the formulation, negotiation, or implementation
of
the Plan, the solicitation of acceptances of the Plan, the pursuit of
Confirmation of the Plan, the Confirmation of the Plan, the consummation
of the
Plan, or the administration of the Plan or the property to be distributed
under
the Plan, except for acts or omissions which are the result of fraud,
gross
negligence, or willful misconduct or willful violation of federal or
state
securities laws or the Internal Revenue Code, and in all respects shall
be
entitled to reasonably rely upon the advice of counsel with respect to
their
duties and responsibilities under the Plan.
(b) Notwithstanding
any other provision of the Plan, no holder of a Claim or an Interest,
no other
party in interest, none of their respective agents, employees, representatives,
advisors, attorneys, or affiliates, and none of their respective successors
or
assigns shall have any right of action against any Debtor, any Reorganized
Debtor, any of its subsidiaries, GECC, or the Indenture Trustee or any
of their
respective present or former members, officers, directors, employees,
advisors,
Professionals and agents, for any act or omission in connection with,
relating
to, or arising out of, the Chapter 11 Case, the formulation, negotiation,
or
implementation of the Plan, solicitation of acceptances of the Plan,
the pursuit
of Confirmation of the Plan, the Confirmation of the Plan, the consummation
of
the Plan, or the administration of the Plan or the property to be distributed
under the Plan, except for acts or omissions which are the result of
fraud, or
willful misconduct or willful violation of federal or state securities
laws or
the Internal Revenue Code.
| 12.13 |
Term
of Injunctions or Stays
|
Unless
otherwise provided herein or in the Confirmation Order, all injunctions
or stays
provided for in the Chapter 11 Case under Sections 105 or 362 of the
Bankruptcy
Code or otherwise, and extant on the Confirmation Date (excluding any
injunctions or stays contained in the Plan or the Confirmation Order),
shall
remain in full force and effect until the Effective Date.
| 12.14 |
Revocation,
Withdrawal, or Non-Consummation
|
The
Debtors reserve the right to revoke or withdraw the Plan at any time
prior to
the Confirmation Date and to file subsequent plans of reorganization.
If the
Debtors revoke or withdraw the Plan, or if Confirmation or the Effective
Date
does not occur, then (a) the Plan shall be null and void in all respects,
(b)
any settlement or compromise embodied in the Plan (including the fixing
or
limiting to an amount certain any Claim or Class of Claims), assumption
or
rejection of executory contracts or leases effected by the Plan, and
any
document or agreement executed pursuant to the Plan shall be deemed null
and
void, and (c) nothing contained in the Plan, and no acts taken in preparation
for consummation of the Plan, shall (i) constitute or be deemed to constitute
a
waiver or release of any Claims by or against, or any Interests in, any
Debtor
or any other Person, (ii) prejudice in any manner the rights of any Debtor
or
any Person in any further proceedings involving a Debtor, or (iii) constitute
an
admission of any sort by any Debtor or any other Person.
Any
notice, request, or demand required or permitted to be made or provided
to or
upon a Debtor or a Reorganized Debtor under the Plan shall be (a) in
writing,
(b) served by (i) certified mail, return receipt requested, (ii) hand
delivery,
(iii) overnight delivery service, (iv) first class mail, or (v) facsimile
transmission, and (c) deemed to have been duly given or made when actually
delivered or, in the case of notice by facsimile transmission, when received
and
telephonically confirmed, addressed as follows:
FIBERMARK,
INC.
161
Wellington Road
P.O.
Box
498
Brattleboro,
Vermont 05302
Attn:
Alex
Kwader
Telephone:
(802) 257-0365
Fax:
(802) 258-2720
with
a
copy to:
SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP
Four
Times Square
New
York,
New York 10036-6522
Attn:
D.
J.
Baker, Esq.
Telephone:
(212) 735-3000
Fax:
(212) 735-2000
| 12.16 |
Dissolution
of Creditors Committee
|
On
the
Effective Date, the Creditors Committee shall dissolve and its members
shall be
released and discharged from all duties and obligations arising from
or related
to the Chapter 11 Case. The Professionals retained by the Creditors Committee
and the members thereof shall not be entitled to compensation or reimbursement
of expenses for any services rendered after the Effective Date, except
as may be
necessary to file final requests for payment pursuant to Section 12.1(a)
of the
Plan.
| 12.17 |
Computation
of Time
|
In
computing any period of time prescribed or allowed by the Plan, the provisions
of Rule 9006(a) of the Bankruptcy Rules shall apply.
Unless
a
rule of law or procedure is supplied by federal law (including the Bankruptcy
Code and Bankruptcy Rules), the laws of (a) the State of Vermont shall
govern the construction and implementation of the Plan and (except as
may be
provided otherwise in any such agreements, documents, or instruments)
any
agreements, documents, and instruments executed in connection with the
Plan and
(b) the laws of the state of incorporation of each Debtor shall govern
corporate
governance matters with respect to such Debtor; in each case without
giving
effect to the principles of conflicts of law thereof.
Dated:
June 23, 2005 FIBERMARK,
INC.
FIBERMARK
NORTH
AMERICA, INC.
FIBERMARK
INTERNATIONAL HOLDINGS LLC
By:
Name: Alex
Kwader
Title:
Chairman
and Chief Executive Officer
D.
J.
Baker
Rosalie
Walker Gray
Adam
S.
Ravin
David
M.
Turetsky
SKADDEN,
ARPS, SLATE, MEAGHER & FLOM LLP
Four
Times Square
New
York,
New York 10036-6522
Telephone:
(212) 735-3000
Facsimile:
(212) 735-2000
Raymond
J. Obuchowski (Bar ID 00502389)
Jennifer
Emens-Butler (Bar ID 000845663)
OBUCHOWSKI
& EMENS-BUTLER
P.O.
Box
60, 1542 Vt. Rt. 107
Bethel,
Vermont 05032
Telephone:
(802) 234-6244
Facsimile:
(802) 234-6245
Co-Counsel
for Debtors
EXHIBIT
A
NEW
FIBERMARK CHARTER
EXHIBIT
B
NEW
FIBERMARK BY-LAWS
EXHIBIT
C
REGISTRATION
RIGHTS AGREEMENT
EXHIBIT
D
SECTION
7.5(a) BENEFITS
FiberMark
Pension Plan for Hourly Employees
Paper
Industry Union Management Pension Fund / Hourly Pension for Lowville
Employees
401(k)
/
Defined Contribution Pension Plans
Management
Incentive Plan
Sales
Incentive Plan
Severance
Program / Practice
Post-Retirement
Benefits (Medical / Life Insurance)
Health
Insurance (Medical, Dental, Vision, Rx, Stoploss, COBRA)
Short
Term Disability Insurance
Long
Term
Disability Insurance
Accidental
Death & Dismemberment Insurance
Life
Insurances
Accident
& Sickness Insurance
Worker's
Compensation Programs
Flexible
Spending Account Plan
Travel
Insurance
Auto
Allowance Program
Unused
Vacation Policy
Outplacement
Employment Services
Site-Based
Incentive Programs (Safety / Productivity)
Non-Tobacco
Use Certification Program
Sick
Days
Relocation
Business
Expense Reimbursement
Education
Reimbursement / Limited Development
Holidays
Legally
Required Leave
Funeral
Leave
Employee
Assistance Programs
Site-Based
Employee Events
Service
Awards
Work-Related
Health Management Services
Training
& Development Programs
Lunchroom
Support (Coffee / Bottled Water / Vending Supply)
Safety
Supplies
Uniform
Rental Service
Security
Services (Key Cards, Fire Systems, etc.)
State
Unemployment Compensation/Disability Insurance
Employer
Social Security / Medicare Contribution
Exhibit
2.3
|
DISTRICT
OF VERMONT
|
|
In
re: )
)
FiberMark,
Inc., )
FiberMark
North America, Inc., and )
FiberMark
International Holdings LLC, )
)
Debtors. )
|
)
)
)
)
)
)
|
Case
No. 04-10463 cab
Chapter
11
Jointly
Administered
|
DEBTORS'
MOTION FOR ORDER UNDER 11 U.S.C. §§ 105(a)
AND
363(b) AUTHORIZING (I) IMPLEMENTATION OF STRATEGIC COST REDUCTION PROGRAM
AND
(II) RELATED RELIEF
FiberMark,
Inc. and certain of its subsidiaries and affiliates, debtors and
debtors-in-possession in the above-captioned cases (collectively, the
"Debtors"), hereby move for entry of an order under 11 U.S.C. §§ 105(a) and
363(b) (i) authorizing the Debtors, in their discretion, to take
such
actions as are necessary to implement a strategic cost reduction program
which
involves, among other things, the downsizing of their New Jersey papermaking
operations and (ii) granting related relief. In support of this
Motion the
Debtors respectfully represent as follows:
BACKGROUND
1.
On
March
30, 2004 (the "Petition Date"), the Debtors filed voluntary petitions
for
reorganization relief under chapter 11 of title 11 of the United States
Code, 11
U.S.C. §§ 101-1330 (the "Bankruptcy Code"). Their cases are being jointly
administered by order of this Court.
2.
The
Debtors are operating their businesses and managing their properties
as
debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy
Code. No request has been made for the appointment of a trustee.
3.
On
April
7, 2004, the Office of the United States Trustee (the "U.S. Trustee")
appointed
an official committee of unsecured creditors to serve in these cases
pursuant to
section 1103 of the Bankruptcy Code.
4.
The
Debtors and their foreign affiliates are leading producers of specialty
fiber-based materials for a broad range of industrial and consumer needs
worldwide, serving thousands of customers in the transportation, publishing,
packaging, graphic arts, office products and other industries. Using
versatile
manufacturing capabilities - comprising papermaking, synthetic/nonwoven
material
technology, saturating, coating and other finishing processes - the Debtors
and
their foreign affiliates generate products such as filter media; base
materials
for specialty tapes, electrical and graphic arts applications, wallcovering
and
sandpaper; and covering materials for office and school supplies, book
production/publishing, printing and premium packaging. The Debtors' operations
are located primarily within the United States and are focused on publishing
and
packaging, office products, and technical specialties.
5.
The
Court
has jurisdiction over this matter under 28 U.S.C. §§ 157 and 1334. Venue is
proper under 28 U.S.C. §§ 1408 and 1409. This is a core proceeding under 28
U.S.C. § 157(b)(2).
6.
The
statutory predicates for the relief requested herein are sections 105(a)
and
363(b) of the Bankruptcy Code.
RELIEF
REQUESTED
7.
In
an
effort to strengthen their business and to reinforce their position as
a highly
specialized value added company built upon certain core strengths, the
Debtors
seek authorization to implement, in their discretion, a strategic cost
reduction
program (the “Strategic Cost Reduction Program”), which involves, among other
things, the downsizing of the Debtors' New Jersey papermaking operations.
More
specifically, the Strategic Cost Reduction Program contemplates, in the
discretion of and on the timetable determined by the Debtors, the closure
of the
Debtors' papermaking facility located in Hughesville, New Jersey (the
“Hughesville Plant”) and the elimination of one of the Debtors' papermaking
machines located in Warren Glen, New Jersey (the “Warren Glen Plant” and
together with the Hughesville Plant, the “New Jersey Plants”). Additionally, the
Strategic Cost Reduction Program involves the transfer of certain product
lines
from the New Jersey Plants to other of the Debtors' papermaking facilities
and/or paper machines. Finally, the Strategic Cost Reduction Program
involves
the initiation of certain cost-cutting measures, including certain reductions
in
Selling, General & Administrative ("SG&A") costs, designed to maximize
the efficiencies realized from the aforementioned downsizing and transfers.
The
Debtors’ current intention, which may be adjusted as they proceed based upon
the
needs of the business, is to effectuate this restructuring of operations
over a
period of approximately three to six months, commencing upon approval
of this
Motion and concluding during the fourth quarter of 2005 (the "Strategic
Cost
Reduction Period").
8.
In
connection with the proposed downsizing of their New Jersey operations,
the
Debtors intend to comply fully with all applicable environmental regulations.
Based on the Debtors' current understanding of the predicted effort to
comply
with the regulations, they do not believe that implementing the Strategic
Cost
Reduction Program will result in a significant environmental
liability.
9.
By
this
Motion, the Debtors do not
seek to
abandon or otherwise dispose of the real property, fixtures, or equipment
associated with the New Jersey Plants. Instead, it is the Debtors' intention
that such property will remain property of the Debtors' estates, and
will be
administered through separate motion if any non-ordinary course disposition
is
sought during the pendency of these cases. Likewise, the Debtors do not
at this
time seek to reject any executory contracts or unexpired leases connected
with
the operations of the New Jersey Plants. To the extent there are any
such
contracts or leases, the Debtors intend to assume and assign, if applicable,
or
reject such contracts or leases by separate motion, and the Debtors reserve
all
of their rights with respect to such contracts or leases.
OVERVIEW
OF THE
STRATEGIC
COST REDUCTION PROGRAM AND
DESCRIPTION
OF ATTENDANT BENEFITS
10.
Beginning
in the third quarter of 2004, the Debtors began to think about whether
there
were operational
changes
that could be implemented that would serve to enhance the benefits of
lower
indebtedness (and other economic
benefits) provided by the Joint Plan of Reorganization Under Chapter
11, Title
11, United States Code of FiberMark, Inc., et al., Debtors dated June
December
17, 2004 (as amended, the "Plan of Reorganization"). After analyzing
numerous
issues, the Debtors identified the following operational goals:
| · |
Reorganize
the paper producing operations so as to optimize the use of
fewer paper
machines, thus becoming more efficient at base paper
manufacturing;
|
| · |
Align
more effectively with the Debtors' market strategies by focusing
on the
Debtors' strongest markets and exiting those markets that have
low
strategic importance and poor profitability;
|
| · |
Focus
on fewer products and eliminate low margin offerings that serve
non-strategic markets; and
|
| · |
Increase
the Debtors' operating cash flow by eliminating non-value added
SG&A
activities and re-engineering SG&A in line with strategic
markets.
|
11.
The
Debtors firmly believe that, if achieved, these operational goals would
result
in enhanced value for all parties in interest and allow the Debtors to
reinforce
their position as a highly-specialized, value-added company built on
polymer
chemistry, coating, printing and embossing core competencies focused
on
achieving color, design and texture competitive advantage in industrial,
graphic
arts, fashion and style-driven markets.
| A. |
Necessary
Steps to Achieve Operational Goals of Strategic Cost
Reduction
Program
|
12.
The
Debtors' management team and its advisors devoted significant time and
energy to
determining how best to achieve the aforementioned operational goals.
After
doing so, the Debtors identified the following as potential steps towards
those
goals:
| · |
Close
the Hughesville Plant, thereby discontinuing the operation
of "Paper
Machine No. 9";
|
| · |
Downsize
the Warren Glen Plant by discontinuing use of "Paper Machine
No. 8," one
of the two paper machines located
there;
|
| · |
Narrow
the focus of the Warren Glen Plant's "Paper Machine No. 7"
to handle those
products that the Debtors believe are best suited for such
machine.
Specifically, the Debtors intend to focus Paper Machine No.
7 on large
volume paper grades. The
product mix planned for this paper machine is significantly
reduced to
simplify operations, resulting in meaningful productivity and
efficiency
improvements; and
|
| · |
Transfer
production paper grades from Paper Machine Nos. 8 and 9 to
either (a)
Paper Machine No. 7 located at the Warren Glen Plant, (b) the
"Kobayashi
Machine" located at the Debtors' facility in Brattleboro, VT,
or (c) the
paper machine located at the Debtors' Brownville, NY facility
- - each
contingent upon the Debtors' determination that (i) the
capital
outlay related to such transfer is minimal; (ii) the
transition plan
and expenses are clearly defined; and (iii) the grades
at issue have
a strategic purpose to the Debtors' business.
|
13.
Additionally,
as part of the Strategic Cost Reduction Program, the Debtors identified
several
potential efficiency gains and cost reduction impacts in connection with
SG&A expenses, including the effects of the changes in the business focus
resulting from the steps outlined above. Specifically, the Debtors identified
three primary areas of their business in which such cost savings could
be
realized: (a) greater efficiencies in sales, marketing and customer service
activities; and (b) greater savings in the Debtors' corporate and facility
overhead.
14.
As
to the
specific sales efficiencies that the Debtors intend to implement, the
Debtors
plan to complete the expansion of the Oracle enterprise resource planning
software platform across the North American business, enabling a reduction
in
the Debtors' customer service staffing. The Debtors also plan to reevaluate
their international coverage and deployment of sales and marketing personnel,
based upon the more narrowly focused product offerings and target markets.
Additionally, the Debtors plan to realign their sales force due to product
line
rationalization. All of these efforts are expected to result in additional
savings.
15.
As
to
corporate overhead, the Debtors intend to realize savings in such areas
as
legal, consulting and personnel.
| B. |
Costs of Implementing Strategic
Cost Reduction Program
|
16.
Of
course, the implementation of the aforementioned operational initiatives
are not
without costs. Most significantly, complete implementation of the program
will
result in the loss of approximately 135 jobs, mostly in the New Jersey
Plants.
Although the Debtors deeply regret the need to terminate these employees,
these
difficult steps must be taken in order to optimize the Debtors' financial
performance for all parties in interest.
17.
These
employee terminations involve certain cash outlays related to severance.
Salaried employees are eligible to receive severance, provided that they
are
terminated without cause and do not resign. Eligible salaried employees
will,
pursuant to the Debtors' past practices, receive one week of severance
for each
year of service the employee provided.1
The
severance weeks calculation will be rounded up to the next whole week
increment
to recognize any fractional year of service for a severed
employee.
Additionally, as to eligible severed salaried employees (a) the Debtors
will pay
the Company's share of healthcare premiums for the first three months
in which
such employees elect to continue their healthcare under "COBRA" coverage,
and
(b) the Debtors will provide outplacement support.
18.
All
of
the terminated hourly employees are subject to that certain Agreement
between
FiberMark, Inc. Warren and Hughesville Mills and Paper, Allied-Industrial,
Chemical & Energy Workers International Union (PACE) and its affiliated
Local No. 2-1712 dated
May
23, 2004 (the
"CBA").
The
CBA
provides the Debtors with the right to downsize and/or shutdown the New
Jersey
Plants. During the Strategic Cost Reduction Period, the Debtors and the
union's
representatives will engage in "effects bargaining" over the issue of
severance
for such employees. Accordingly, the specific amount and nature of any
severance
that such employees might receive is unknown at this time. However, the
Debtors
have determined that the maximum amount of the total liability for salaried
and
hourly employees will not exceed $2.0 million.
19.
Additionally,
there will be certain one-time implementation costs associated with the
implementation of the Strategic Cost Reduction Program, such as trial
costs to
transfer products to other of the Debtors' facilities or equipment. The
Debtors
estimate that such one-time implementation costs will not be material.
Lastly,
it should be noted that a non-cash fixed asset impairment charge not
expected to
exceed approximately $17.5 million will be recorded upon Bankruptcy Court
approval of the Strategic Cost Reduction Program.
20.
As
to
other potential
costs,
the New Jersey Plants have historical environmental issues that are the
contractual obligations of a predecessor owner. A plant closure (and
possibly
curtailment of production) resulting from the Strategic Cost Reduction
Program
likely will require the Debtors to investigate and potentially remediate
contamination (if any is identified) at one or both of the New Jersey
Plants in
accordance with applicable law. The extent of such measures, if any are
required, is not known at this time; however, it is not expected to result
in a
material liability for the Debtors.
| C. |
Benefits
of Implementing the Strategic Cost Reduction
Program
|
21.
The
benefits that will be realized through the complete implementation of
the
Strategic Cost Reduction Program are significant. Specifically, the Debtors
believe that the operational changes noted above will produce the following
benefits:
| · |
Rapid
increase in EBITDA estimated at over $12 million
per year (within a 12 month period of implementation)2 These
savings are net of gross margin contribution from businesses
that will be
exited under the Strategic Cost Reduction Program.
from fixed overhead reduction in New Jersey, enhanced operating
performance including yield, downtime and productivity, and
reduced
SG&A costs.
|
| · |
The
elimination of maintenance capital and working capital on two
paper
machines.
|
| · |
Maintain
growth potential on Paper Machine No. 7 by keeping adequate
available
capacity while running a lean support staff in the
interim.
|
22.
Suffice
it to say, the costs of implementing the Strategic Cost Reduction Program
are
substantially outweighed by the benefits. Notably, the financial projections
(the "Projections") contained in the Disclosure Statement With Respect
to First
Amended Joint Plan of Reorganization Under Chapter 11, Title 11, United
States
Code of FiberMark, Inc., et al., Debtors dated June 23, 2005 assume
implementation of the Strategic Cost Reduction Program. Accordingly,
the ability
to achieve the Projections is dependent upon the implementation of the
Strategic
Cost Reduction Program and, to the extent that the Strategic Cost Reduction
Program is not implemented, the Projections will be materially
worse.
23.
Lastly,
the Debtors believe it appropriate to point out that the Strategic Cost
Reduction Program (substantially in the form described herein) was presented
to
the Creditors Committee for its review in the Fall of 2004. The Creditors
Committee hired a consulting firm, at estate expense, to evaluate whether
the
Strategic Cost Reduction Program was in the best interests of the estates.
The
consultants provided the Debtors with an oral report in which they gave
the
Strategic Cost Reduction Program a favorable review. Notwithstanding
this
favorable review, the Creditors Committee asked the Debtors to defer
implementation of the Strategic Cost Reduction Program until after the
effective
date of the Debtors' plan of reorganization. At the time the request
was made
these cases were in a much different posture, with confirmation expected
to
occur in late January 2005, and, thus, the Debtors were willing to accommodate
this request. However, given the significant delay in the plan process,
the
Debtors have determined that further delay in implementing the Strategic
Cost
Reduction Program is not in the best interests of the estates.
APPLICABLE
AUTHORITY
24.
The
Debtors submit that ample authority exists for the authorization to implement
the Strategic Cost Reduction Program. Section 363(b)(1) of the Bankruptcy
Code
provides that a debtor, "after notice and a hearing, may use, sell, or
lease,
other than in the ordinary course of business, property of the estate."
11
U.S.C. § 363(b)(1). See
also,
e.g.,
N.Y.
Typographical Union No. 6 v. Maxwell Newspapers, Inc.
(In re
Maxwell Newspapers, Inc.), 981 F.2d 85, 91 (2d Cir. 1992); In
re
Enron Corp.,
284
B.R. 376, 391-92 & n.15 (Bankr. S.D.N.Y. 2002); Bartel
v. Bar Harbor Airways, Inc.,
196
B.R. 268, 272-73 & n.1 (S.D.N.Y. 1996); Abel
v. Shugrue
(In re
Ionosphere Clubs, Inc.), 184 B.R. 648, 652-54 (S.D.N.Y. 1995).
25.
Courts
in
the Second Circuit and elsewhere have required that the decision to dispose
of
assets or undertake other actions outside the ordinary course of business
be
based upon the sound business judgment of the debtor. See Licensing
By Paolo, Inc. v. Sinatra
(In re
Gucci), 126 F.3d 380, 387 (2d Cir. 1997) ("A sale of a substantial part
of a
chapter 11 estate other than in the ordinary course of business may be
conducted
if a good business reason exists to support it."); Official
Comm. of Unsecured Creditors of LTV Aerospace & Defense Co. v. LTV
Corp.
(In re
Chateaugay Corp.), 973 F.2d 141, 143-45 (2d Cir. 1992) (affirming lower
courts'
finding that "good business reason" existed for, and subsequent approval
of sale
under 363(b)); In
re
Angelika Films 57th, Inc.,
Nos. 97
Civ. 2239, 97 Civ. 2241, 1997 WL 283412, at *5 (S.D.N.Y. May 29, 1997)
(recognizing the "good business reason" standard); see also In
re
Martin,
91 F.3d
389, 395 (3d Cir. 1996) (citing In
re
Schipper,
933
F.2d 513, 515 (7th
Cir.
1991)); In
re
Abbott's Dairies of Pennsylvania, Inc.,
788
F.2d 143 (3d Cir. 1986); In
re
Delaware Hudson Ry. Co.,
124
B.R. 169 (D. Del. 1991); In
re
GenTek, Inc.
Case No.
02-12986, Adv. Pro. 03-53139 (Bankr. D. Del. July 24, 2003) (upon Debtors'
motion under Code sections 105(a) and 363(b), Court entered consent settlement
order approving closure of chemical plant).
26.
The
Debtors submit that they have a sound business justification for the
relief
requested in this Motion. The cost savings that can be realized from
the
Strategic Cost Reduction Program are significant. Under these circumstances,
it
is in the best interests of the Debtors' estates that the Court approve
the
Strategic Cost Reduction Program on the terms described herein.
NOTICE
27.
Notice
of
this Motion has been provided to (a) the U.S. Trustee, (b) counsel for
the
Debtors' postpetition secured lender, (c) counsel for the Creditors'
Committee
and (d) the other parties in interest named on the Official Service List
maintained in these cases. The Debtors submit that no other or further
notice
need be given.
NO
PRIOR REQUEST
28.
No
prior
motion for the relief requested herein has been made to this or any other
Court.
WHEREFORE,
the Debtors respectfully request that the Court enter an order (i) authorizing
the Debtors to implement the Strategic Cost Reduction Program, and (ii)
granting
such other and further relief as is just and proper.
Dated:
June 23, 2005
/s/ Raymond
J. Obuchowski
Raymond
J. Obuchowski (Bar ID 00502389)
Jennifer
Emens-Butler (Bar ID 000845663)
OBUCHOWSKI
& EMENS-BUTLER
P.O.
Box
60, 1542 Vt. Rt. 107
Bethel,
Vermont 05032
Telephone:
(802) 234-6244
Facsimile:
(802) 234-6245
-and-
D.
J.
Baker
Rosalie
Walker Gray
Adam
S.
Ravin
SKADDEN,
ARPS, SLATE, MEAGHER
&
FLOM LLP
Four
Times Square
New
York,
New York 10036
Telephone:
(212) 735-3000
Facsimile:
(212) 735-2000
Attorneys
for Debtors and
Debtors-in-Possession
-and-
Mitchel
Appelbaum
Robert
Kirsch
Steven
C.
Bennett
WILMER
CUTLER PICKERING HALE
AND
DORR
LLP
60
State
Street
Boston,
Massachusetts 02109
Telephone:
(617) 526-6000
Facsimile:
(617) 526-5000
Special
Counsel to the Debtors and
Debtors-in-Possession
Exhibit
99.1
FOR
IMMEDIATE RELEASE Contact:
Janice
C.
Warren
Director
of Investor
Relations and Corporate Communications
802
257
5981
-
Also Announces Operational Steps to Further Improve
the
Cost Structure of Its North American Operations -
BRATTLEBORO,
Vt.—June 24, 2005—FiberMark, Inc. (OTCBB: FMKIQ) today announced that it has
filed a new Plan of Reorganization and Disclosure Statement with
the United
States Bankruptcy Court for the District of Vermont. The company
also announced
a number of planned steps aimed at further improving the cost structure
of its
North American operations.
The
new
Plan includes many of the terms and conditions contained in the company’s
original plan of reorganization that were agreed to by the company’s major
creditors when that plan was submitted for their approval. The Plan
also
contains a revised capital structure, with lower debt levels at lower
interest
rates. It proposes to distribute among unsecured creditors, including
bondholders, stock in the reorganized company and an aggregate cash
distribution
of $75 million. In addition, the Plan addresses the corporate governance
disputes among the company’s major bondholders that had prevented confirmation
of the original plan.
"Our
new
reorganization plan builds upon the fundamental soundness and substantial
areas
of agreement in our original plan of reorganization, including those
corporate
governance provisions that were agreed to by our three largest bondholders,”
said Alex Kwader, chairman of the board and chief executive officer.
“We believe
that this new Plan will attract significant creditor support and
can be
confirmed by the Bankruptcy Court.”
Mr.
Kwader continued: “The new Plan also includes a revised capital structure with
levels of debt that the new FiberMark can support, while building
upon our
important customer relationships in key markets. As an important
corollary to
the new Plan, we have filed a motion requesting court approval of
a major cost
reduction initiative that will significantly enhance the financial
strength of
our North American operations.”
Disputes
among major bondholders over post-reorganization corporate governance
provisions
prevented confirmation of the company’s prior plan of reorganization. In its new
Plan, the company has adopted enhanced corporate governance provisions
that it
believes will provide significant protections to all shareholders.
“We believe
that the provisions we have proposed go much further than is required
under
applicable law and provide significant protections to the shareholders
of the
reorganized FiberMark,” noted Mr. Kwader.
"All
parties in interest, including our bondholders, have acknowledged
the need for
the company to emerge from bankruptcy protection as quickly as possible.
We
believe that our new Plan provides the most effective framework for
that
outcome, and that its confirmation and implementation will allow
FiberMark to
emerge from Chapter 11 protection as a strong and dynamic enterprise
in a timely
manner,” Mr. Kwader said.
While
the
Plan of Reorganization and Disclosure Statement filed yesterday detail
the
classes of creditors and equity holders and their proposed treatment
under the
Plan, that Plan is likely to receive further modification before
the Disclosure
Statement is approved, and actual recoveries by stakeholders may
vary from the
treatment contemplated in the new Plan. However,
the Plan, as did the prior plan, specifies that existing shares will
be
cancelled and have no value upon emergence from chapter 11. The
company currently expects a hearing to address the Disclosure Statement
to take
place during August 2005.
Separately,
FiberMark also announced that to ensure the company’s continued competitiveness
and strength over the long term, the company intends to implement
several
operational steps aimed at further improving the cost structure of
its North
American operations. The steps were outlined in a separate motion
also filed
with the Court yesterday.
The
cost
reduction initiative includes the proposed closure of the company’s Hughesville,
N.J., operations and one of its two paper machines in Warren Glen,
N.J., both of
which have served strategic and non-strategic markets through the
company’s
technical specialties product families. Certain products would be
transferred to
the company’s modernized paper machine in Warren Glen, while others would be
transferred to the company’s Brownville, N.Y. and Brattleboro, Vt., operations.
The transition would begin as soon as the motion receives the necessary
Court
approval, and the transition process is expected to be completed
by the end of
2005. The initiative also includes various contemplated actions to
reduce
selling, general and administrative expenses. In total, we anticipate
first-year
net savings of $10 million and expect to take a non-cash impairment
charge of
approximately $17 million.
Mr.
Kwader said: “As part of the Chapter 11 reorganization process, we have been
carefully evaluating many options available to us to optimize our
production
capability while continuing to support the requirements of our most
valued
customers. This cost reduction initiative will allow an orderly transition
of
business to our three most versatile paper and board machines and,
at the same
time, enable us to exit certain non-strategic markets that no longer
provide
attractive financial returns.
“These
steps, if granted Bankruptcy Court approval, will result in a loss
of
approximately 135 jobs, largely in New Jersey. While we regret the
need to take
these difficult steps, we must focus our resources on the attractive
core
businesses that represent the future of FiberMark, namely, our strategic
businesses in publishing, specialty packaging, office products and
technical
specialties markets,” Mr. Kwader concluded.
FiberMark,
headquartered in Brattleboro, Vt., is a leading producer of specialty
fiber-based materials meeting industrial and consumer needs worldwide,
operating
11 facilities in the eastern United States and Europe. Products include
filter
media for transportation and vacuum cleaner bags; base materials
for specialty
tapes, electrical and graphic arts applications; wallpaper, building
materials
and sandpaper; and cover/decorative materials for office and school
supplies,
publishing, printing and premium packaging.
This
document contains forward-looking statements. Actual results may
differ
depending on the economy and other risk factors discussed in the
company's Form
10-K/A as filed with the SEC on May 4, 2005, which is accessible
on the
company's Web site at www.fibermark.com.