Combined Disclosure Statement and Plan of Reorganization; Instructions for Telephoning Chambers; Judge Klein's Chapter 13 Procedures; Judge Klein's Judicial Variance Statement; Judge Klein Requires Individual Chapter 11 Debtors To Use Local Bankruptcy Rules Forms; Procedure For Approval of Disclosur

=== Combined Disclosure Statement and Plan of Reorganization ===

JUDGE SANDRA R. KLEIN’S READING GUIDE TO DISCLOSURE STATEMENT AND PLAN OF REORGANIZATION 1. Before beginning, a complete copy of the Disclosure Statement (DS) and Plan of Reorganization (Plan), including endnotes, should be printed. 2. Each endnote contains either information to be inserted into the text of the Plan (in bold), or instructional information for the Plan Proponent (underlined), which should not be included in the text. Within the endnotes, information contained in <brackets> may apply, and should be inserted where appropriate. 3. After inserting the appropriate information, the endnotes (which are both in bold and redlined in the text) should be deleted from the text. 4. The Proponent should review the DS for spelling, typographical, and grammatical errors. In some paragraphs, either the singular or plural form of nouns or verbs is used; however, the particular facts of the Proponent's Plan may call for the opposite form. Be sure to make the appropriate changes. 5. Sections II, III, IV, and V should not be modified. Any voting information relevant to this Plan should be provided in Section VI. 6. If the Proponent has not included information required by this mandatory Disclosure Statement and Plan of Reorganization form, the Proponent should include within the motion for approval of the DS, the reason the disclosure made is adequate, including information and evidence regarding the complexity of the case, why the information left out would not benefit creditors and the cost of providing the information. Effective April 22, 2011 DISCLOSURE STATEMENT AND PLAN OF REORGANIZATION FOR ___________ [Debtor's name] Effective April 22, 2011 TABLE OF CONTENTS TABLE OF CONTENTS.................................................................................................. 1 I. II. INTRODUCTION .................................................................................................. 3 GENERAL DISCLAIMER AND VOTING PROCEDURE...................................... 3 III. WHO MAY OBJECT TO CONFIRMATION OF THE PLAN................................. 5 IV. WHO MAY VOTE TO ACCEPT OR REJECT THE PLAN ................................... 5 V. VOTES NECESSARY TO CONFIRM THE PLAN................................................ 8 VI. INFORMATION REGARDING VOTING IN THIS CASE ...................................... 8 VII. DESCRIPTION OF DEBTOR'S PAST AND FUTURE BUSINESS AND EVENTS PRECIPITATING BANKRUPTCY FILING ........................................................... 9 VIII. CRITICAL PLAN PROVISIONS......................................................................... 10 IX. DESCRIPTION AND TREATMENT OF CLAIMS............................................... 10 X. SOURCE OF MONEY TO PAY CLAIMS AND INTEREST-HOLDERS ............. 18 XI. FINANCIAL RECORDS TO ASSIST IN DETERMINING WHETHER PROPOSED PAYMENT IS FEASIBLE ........................................................... 19 XII. ASSETS AND LIABILITIES OF THE ESTATE.................................................. 20 XIII. TREATMENT OF NONCONSENTING CLASSES............................................. 20 XIV. TREATMENT OF NONCONSENTING MEMBERS OF CONSENTING CLASS (CHAPTER 7 LIQUIDATION ANALYSIS) ............................................ 22 XV. FUTURE DEBTOR............................................................................................. 23 XVI. SALE OR TRANSFER OF PROPERTY; ASSUMPTION OF CONTRACTS AND LEASES; OTHER PROVISIONS ....................................................................... 25 XVII. BANKRUPTCY PROCEEDINGS ....................................................................... 25 XVIII. TAX CONSEQUENCES OF PLAN .................................................................... 25 XIX. EFFECT OF CONFIRMATION OF PLAN .......................................................... 25 1 XX. DECLARATION IN SUPPORT OF DISCLOSURE STATEMENT AND PLAN .. 28 2 I. INTRODUCTION On 1, 2 (Debtor) filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code (Code). The document you are reading is both the Plan of Reorganization (Plan) and the Disclosure Statement (DS). 3 (Proponent) has proposed the Plan to treat the claims of the Debtor's creditors and, if applicable, the interests of shareholders or partners 4. A DS describes the assumptions that underlie the Plan and how the Plan will be executed. The Bankruptcy Court (Court) has approved the form of this document as an adequate DS, containing enough information to enable parties affected by the Plan to make an informed judgment about the Plan. The Court has not yet confirmed the Plan, which means the terms of the Plan are not now binding on anyone. The Proponent has reserved 5 in courtroom 6 for a hearing to determine whether the Court will confirm the Plan. Any interested party desiring further information should contact: 7. II. GENERAL DISCLAIMER AND VOTING PROCEDURE PLEASE READ THIS DOCUMENT, INCLUDING THE ATTACHED EXHIBITS, CAREFULLY. IT EXPLAINS WHO MAY OBJECT TO CONFIRMATION OF THE PLAN. 3 IT EXPLAINS WHO IS ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN. IT ALSO TELLS ALL CREDITORS AND ANY SHAREHOLDERS OR PARTNERS WHAT TREATMENT THEY CAN EXPECT TO RECEIVE UNDER THE PLAN, SHOULD THE PLAN BE CONFIRMED BY THE COURT. THE SOURCES OF FINANCIAL DATA RELIED UPON IN FORMULATING THIS DOCUMENT ARE SET FORTH IN THE DECLARATION IN SECTION XX BELOW. ALL REPRESENTATIONS ARE TRUE AND CORRECT TO THE PROPONENT'S KNOWLEDGE. NO REPRESENTATIONS CONCERNING THE DEBTOR THAT ARE INCONSISTENT WITH ANYTHING CONTAINED HEREIN ARE AUTHORIZED EXCEPT TO THE EXTENT, IF AT ALL, THAT THE COURT ORDERS OTHERWISE. After carefully reviewing this document and the attached exhibits, please vote on the enclosed ballot and return it in the enclosed envelope. The Proponent has reserved a hearing date for a hearing to determine whether the Court will confirm the Plan. Please refer to Section I above for the specific hearing date. If, after receiving the ballots, it appears that the Proponent has the requisite number of votes required by the Code, the Proponent will file a Motion for an Order Confirming the Plan. 4 The Motion shall at least be served on all impaired creditors and partners or shareholders who reject the Plan and on the Office of the United States Trustee. Any Opposition to the Motion shall be filed and served on the Proponent 8 no later than fourteen days prior to the hearing date. Failure to oppose the confirmation of the Plan may be deemed consent to the Plan's confirmation. III. WHO MAY OBJECT TO CONFIRMATION OF THE PLAN Any party in interest may object to confirmation of the Plan, but as explained below not everyone is entitled to vote to accept or reject the Plan. IV. WHO MAY VOTE TO ACCEPT OR REJECT THE PLAN A party can vote to accept or reject the Plan only if the party has an allowed and impaired claim or interest. A claim is defined by the Code to include a right to payment from the Debtor. An interest represents an ownership stake in the Debtor. In order to vote a creditor or interest-holder must first have an allowed claim or interest. With the exceptions explained below, a claim is allowed if proof of the claim or interest is properly filed before any bar date and no party in interest has objected, or if the Court has entered an order allowing the claim or interest. Please refer to Section VI below for specific information regarding bar dates in this case. 5 Under certain circumstances a creditor may have an allowed claim even if a proof of claim was not filed and the bar date for filing a proof of claim has passed. A claim is deemed allowed if the claim is listed on the Debtor's schedules and is not scheduled as disputed, contingent, or unliquidated. Exhibit "9" contains a list of claims that are not scheduled as disputed, contingent, or unliquidated. Similarly, an interest is deemed allowed if it is shown on the list of equity security holders filed by the Debtor with the Court and is not scheduled as disputed. In order to vote, an allowed claim or interest must also be impaired by the Plan. Impaired creditors include those whose legal, equitable, and contractual rights are altered by the Plan, even if the alteration is beneficial to the creditor. 10 A contract provision that entitles a creditor to accelerated payment upon default does not, however, necessarily render the claimant impaired, even if the Debtor defaulted and the Plan does not provide the creditor with accelerated payment. The creditor is deemed unimpaired so long as the Plan cures the default, reinstates the maturity of such claim as it existed before default, compensates for any damages incurred as a result of reasonable reliance upon the acceleration clause, and (except for a default arising from failure to operate a nonresidential lease subject to 11 U.S.C.A. § 365 (b)(1)(A) (West Supp. 2006 compensates for any actual pecuniary loss incurred as a result of any failure to perform a non-monetary obligation. 6 Impaired interest-holders include those whose legal, equitable, and contractual rights are altered by the Plan, even if the alteration is beneficial to the interest holder.11 There are also some types of claims that the Code requires be treated a certain way. For that reason they are considered unimpaired and therefore holders of these claims cannot vote. To summarize, there are two prerequisites to voting: a claim or interest must be both allowed and impaired under the Plan. If a creditor or interest-holder has an allowed and impaired claim or interest, then he or she may vote either to accept or reject the Plan (unimpaired claimants or interest- holders are deemed to have accepted the Plan). Impaired claims or interests are placed in classes and it is the class that must accept the Plan. Members of unimpaired classes do not vote, although as stated above, they may object to confirmation of the Plan. Even if all classes do not vote in favor of the Plan, the Plan may nonetheless be confirmed if the dissenting classes are treated in a manner prescribed by the Code. Please refer to Section VI below for information regarding impaired and unimpaired classes in this case. Section IX sets forth which claims are in which class. Secured claims are placed in separate classes from unsecured claims. Fed. R. Bankr. P. 3018(d) provides: "A 7 creditor whose claim has been allowed in part as a secured claim and in part as an unsecured claim shall be entitled to accept or reject a plan in both capacities." V. VOTES NECESSARY TO CONFIRM THE PLAN The Court may confirm the Plan if at least one non-insider impaired class of claims has accepted the Plan and certain statutory requirements are met as to both nonconsenting members within a consenting class and as to dissenting classes. A class of claims has accepted the Plan when more than one-half in number and at least two-thirds in amount of the allowed claims actually voting, vote in favor of the Plan. A class of interests has accepted the Plan when at least two-thirds in amount of the allowed interests of such class actually voting have accepted it. It is important to remember that even if the requisite number of votes to confirm the Plan are obtained, the Plan will not bind the parties unless and until the Court makes an independent determination that confirmation is appropriate. That is the subject of any upcoming confirmation hearing. VI. INFORMATION REGARDING VOTING IN THIS CASE The bar date for filing a proof of claim in this case was 12. The bar date for objecting to claims was 13. 8 In this case the Proponent believes that class 14 is impaired and therefore entitled to vote. Class 15 is unimpaired and therefore does not vote. A party that disputes the Proponent's characterization of its claim or interest as unimpaired may request a finding of impairment from the Court in order to obtain the right to vote. Ballots must be received by the Proponent, addressed to 16 by 17. VII. DESCRIPTION OF DEBTOR'S PAST AND FUTURE BUSINESS AND EVENTS PRECIPITATING BANKRUPTCY FILING The Debtor is a 18. Debtor conducted 19 of its business activity in 20 since 21. What follows is a brief summary of the dates and circumstances that led Debtor to file bankruptcy. 22 What follows is a brief description of the Debtor's business and future business plans. Further details relating to the Debtor's financial condition and post-confirmation operation of the Debtor are found in sections X, XI, XII, XVI, and XV. 23 9 24 VIII. CRITICAL PLAN PROVISIONS Listed below are the sources of money earmarked to pay creditors and interest-holders. a. b. 25 26 Most likely, general unsecured creditors can expect payment on: a. b. c. 27 in the amount of 28 and continuing every 29 for 30. IX. DESCRIPTION AND TREATMENT OF CLAIMS a. Overview of Plan Payments Below is a summary of who gets paid what, when and from what source. The identity of members within a particular class is explained beginning on the next page. The second column lists two amounts.31 First, the amount of each payment, or if only one is to be made, then that amount; second, the total amount that will be paid. The Proponent is usually not required by law to pay an unsecured creditor or interest holder everything it would otherwise be entitled to, had a bankruptcy case not commenced. The "Payment Due Date" column states the frequency with which payments will be made and the starting and ending dates. Look at the starting date to figure out who will be paid before 10 and after you and in what amount. The "Source of Payment" column describes the expected source of payment. Further details regarding the source of payment are found in sections X and XI. The timing of payments to many creditors is determined by the "Effective Date." Administrative claims, unless otherwise stated, must be paid by the Effective Date. The timing of payments to impaired creditors is measured from the Effective Date.32 In this case, the Effective Date is 33. 11 Payment Recipient Amount of each Payment Payment Due Date Source of Payment (Total amount to be paid) 1.Ms. Bankruptcy Attorney $50,000 12/15/92 $25,000 retainer ($50,000) [effective date] $25,000 sale of personal 2.Class "X" 3.Class "Y" $5,000 $15,000 $5,000 $100,000 quarterly; property 1/15/93 - 7/15/93 post-confirmation income quarterly; post-confirmation income 1/15/93 - 1/15/97 // // // // // // // // // // // // // // // // // // 12 All claims listed below are undisputed. 34 No claimant or interest holder is an affiliate of the Debtor. 35 Below is a detailed description and treatment of administrative expenses, claims and interests b. Administrative Expenses 1. These include the "actual, necessary costs and expenses of preserving the estate" as determined by the Court after notice to creditors of a request for payment and after a hearing thereon. 36 2. The Code requires that allowed administrative expenses be paid on the effective date unless the party holding the administrative expense agrees otherwise. The claimant has not agreed otherwise. 37 38 Administrative Expense #1. 39 Claimant: _______ $ ________________, subject to court approval 13 Administrative Expense # 2. Claimant: _______ $ _______________, subject to court approval TOTAL $ __________ c. Unsecured Tax Claims 1. These include certain types of property, sales, and income taxes. 40 2. The Code requires that the holders of such claims receive regular installment payments in cash over a period ending not later than five years after the date of the order for relief, unless agreed otherwise. The claimant has not agreed otherwise. 41 The total cash payments must have a present value equal to the amount of the allowed claim. The treatment of this claim is in a manner not less favorable than the most favored nonpriority unsecured claim provided in this Plan (other than any cash payments to an administratively convenient class). The amount of the allowed claim includes the amount of tax owed plus interest of 42 %. The present value is calculated as of the effective date. Tax Claim # 1. 14 Claimant: Date(s) of order for relief: Total amount of allowed claim as of [date]: Total amount of cash payments (over time) to satisfy the claim: Interest rate (to compensate creditor because claim is paid over time): First payment date: Amount of each installment: Frequency of payments: Total yearly payments: Final Payment date: TOTAL UNSECURED TAX CLAIM(S) $ __________ d. CLASS ONE 43 Secured Claim of 44 Total amount of allowed claim: Total amount of payments (over time) to satisfy the secured claim: Interest rate (to compensate creditor because claim is paid over time): Impaired 45 First payment date: Amount of each installment: 15 Frequency of payments: Total yearly payments: Final payment date: Lien is not modified in any way by the Plan. 46 Description of Collateral: Additional comments: 47 e. CLASS TWO Unsecured Claims See Exhibit "48" for list of claimants and amount owed each. Total amount of allowed claims: Total amount of payments (over time) to satisfy claims: Interest rate 49 : Impaired 50 First payment date: Amount of each installment: Frequency of payments: Total yearly payments: Final payment date: Additional comments: 16 f. CLASS THREE Insider Claims 1. This is the claim of a person as defined in 11 U.S.C.A. ' 101(31) (West Supp. 2006). Essentially, an insider is a person with a close relationship with the Debtor, other than a creditor-debtor relationship. Insider # 1. Claimant: Total amount of allowed claim: Total amount of payments (over time) to satisfy claims: Interest rate (to compensate creditors because claim is paid over time): Impaired 51 First payment date: Amount of each installment: Frequency of payments: Total yearly payments: Final payment date: Additional comments: TOTAL INSIDER CLAIMS $ __________ 52 17 g. CLASS FOUR Shareholders Interests 53 1. Under the Plan, shareholders simply retain their shares of stock. 54 X. SOURCE OF MONEY TO PAY CLAIMS AND INTEREST-HOLDERS The Plan cannot be confirmed unless the Court finds that it is "feasible," which means that the Proponent has timely submitted evidence establishing that the Debtor will have sufficient funds available to satisfy all expenses, including the scheduled creditor payments discussed above. What follows is a statement of projected cash flow for the duration of the Plan. The focus is on projected cash receipts and cash disbursements. All non-cash items such as depreciation, amortization, gains and losses are omitted. A positive number reflects a source of cash; a (negative number) reflects a use of cash. A more detailed statement of cash flow projections for the duration of Plan payments is attached as Exhibit "55". 18 Years of Plan Payments Year #1 Year #2 56 20 57 20 58 1,960,000 Net cash flow59 From operating activities: Collections from 60 $ Payments for inventory (1,227,000) Payments for selling Payments for interest Payments for income taxes Total $ Yearly plan payments: Net cash available to Debtor after all plan payments made: $ 84,000 (505,000) (15,000) (79,000) 134,000 (60,000) Section XV(c) states the assumptions and details surrounding the statement of projected cash flow. On the effective date, the Plan pays 61. XI. FINANCIAL RECORDS TO ASSIST IN DETERMINING WHETHER PROPOSED PAYMENT IS FEASIBLE 62 Attached as Exhibit "63" are three types of financial documents, including balance sheets, cash flow statements and income and expense statements for the period including the most recent twelve-month calendar year and all months subsequent 19 thereto. 64 XII. ASSETS AND LIABILITIES OF THE ESTATE a. Assets The identity and fair market value of the estate's assets are listed in Exhibit "65" so that the reader can assess what assets are at least theoretically available to satisfy claims and to evaluate the overall worth of the bankruptcy estate. Whether the Plan proposes to sell any of these assets is discussed in section XVI. b. Liabilities Exhibit "66" shows the allowed claims against the estate, claims whose treatment is explained in detail by section IX. c. Summary The fair market value of all assets equals 67. Total liabilities equal 68. XIII. TREATMENT OF NONCONSENTING CLASSES As stated above, even if all classes do not consent to the proposed treatment of their claims under the Plan, the Plan may nonetheless be confirmed if the dissenting classes are treated in a manner prescribed by the Code. The process by which dissenting classes are forced to abide by the terms of a plan is commonly referred to as 20 "cramdown." The Code allows dissenting classes to be crammed down if the Plan does not "discriminate unfairly" and is "fair and equitable." The Code does not define discrimination, but it does provide a minimum definition of "fair and equitable." The term can mean that secured claimants retain their liens and receive cash payments whose present value equals the value of their security interest. For example, if a creditor lends the Debtor $100,000 and obtains a security interest in property that is worth only $80,000, the "fair and equitable" requirement means that the claimant is entitled to cash payments whose present value equals $80,000 and not $100,000. The term means that unsecured claimants whose claims are not fully satisfied at least know that no claim or interest that is junior to theirs will receive anything under the Plan, except where the Debtor is an individual, has elected to retain property included in the Estate under 11 U.S.C.A. § 1115 (West Supp. 2006) and has satisfied 11 U.S.C.A. § 1129(b)(2)(B)(ii) (West Supp. 2006). "Fair and equitable" means that each holder of an interest must receive the value of such interest or else no junior interest is entitled to receive anything. Therefore, if a class of general unsecured claims votes against the Plan, the Plan cannot be confirmed where the Debtor or a class of interest holders (e.g. shareholders or partners) will receive or retain any property under the Plan, unless the Plan provides that the class of general unsecured claims shall be paid in full with interest.69 These are complex statutory provisions and the preceding paragraphs do not purport to state or explain all of them. 21 70 XIV. TREATMENT OF NONCONSENTING MEMBERS OF CONSENTING CLASS (CHAPTER 7 LIQUIDATION ANALYSIS) The Plan must provide that a nonconsenting impaired claimant or interest holder of a consenting class receive at least as much as would be available had the Debtor filed a Chapter 7 petition instead. In a Chapter 7 case the general rule is that the Debtor's assets are sold by a trustee. Unsecured creditors generally share in the proceeds of sale only after secured creditors and administrative claimants are paid. Certain unsecured creditors get paid before other unsecured creditors do. Unsecured creditors with the same priority share in proportion to the amount of their allowed claim in relationship to the total amount of allowed claims. A creditor would recover from the assets of the bankruptcy estate less under Chapter 7 than under Chapter 11 for three reasons 71. First, the liquidation value of 72 is less than its fair market value 73 because 74. Second, in a chapter 7 case a trustee is appointed and is entitled to compensation from the bankruptcy estate in an amount no more than 25% of the first $5,000 of all moneys disbursed, 10% on any amounts over $5,000 and up to $50,000, 5% on all amounts over $50,000 and up to $1,000,000, and 22 such reasonable compensation no more than 3% of moneys over $1,000,000. Finally, a chapter 7 recovery may be less because an individual Debtor is permitted to exempt a certain amount of the sales proceeds before unsecured creditors are paid anything.75 Chapter 7 Chapter 11 76 1. value of assets 2. administrative exp. secured claims priority unsecured claims 3. chapter 7 trustee fee 4. exemption(s) TOTAL AVAILABLE FOR DISTRIBUTION TO GENERAL UNSECURED CR._____________ unsecured creditors receive payment of 77% of total claims XV. FUTURE DEBTOR 79 a. Management of Debtor n/a n/a _______________ unsecured creditors receive payment of 78% of total allowed claims under Plan 1. 2. 3. 4. 5. Names of persons who will manage the Debtor's business affairs: Proposed compensation to persons listed above: Qualifications: Affiliation of persons to Debtor: Job description: 23 b. Disbursing Agent 80 is responsible for collecting money intended for distribution to claimants and transmitting it to them. The disbursing agent's address and telephone number are: 81. 1. 2. 3. 4. Proposed compensation to person listed above: Qualifications: Affiliation of person to Debtor: Job description: c. Future Financial Outlook The Proponent believes that the Debtor's economic health will improve 82 from its prebankruptcy state for the following reasons. 83 Section X provides a summary of the projected cash flow of the Debtor for the duration of the Plan. The following assumptions underlie the projections. 84 85 As previously stated, Plan payments will come from the continued operation of the Debtor's business. If the business generates insufficient funds to provide all of the Plan payments, then the Proponent will make up the shortfall under the following conditions and subject to the following terms 86. The Proponent's financial solvency, which is relevant to its ability to honor its commitment to make up any shortfall, is demonstrated by the following facts. 87 88 24 XVI. SALE OR TRANSFER OF PROPERTY; ASSUMPTION OF CONTRACTS AND LEASES; OTHER PROVISIONS The Plan provides for the following: 89 The Court must make certain findings of fact before approving the aforementioned provisions as part of the Plan. The Proponent will request that the Court make the appropriate findings at the confirmation hearing, based upon evidence submitted in support of the confirmation motion. XVII. BANKRUPTCY PROCEEDINGS 90 XVIII. TAX CONSEQUENCES OF PLAN 91 XIX. EFFECT OF CONFIRMATION OF PLAN a. General Comments 25 The provisions of a confirmed Plan bind the Debtor, any entity acquiring property under the Plan, and any creditor, interest holder, or general partner of the Debtor, even those who do not vote to accept the Plan. The confirmation of the Plan vests all property of the estate in the Debtor. 92 The automatic stay is lifted upon confirmation as to property of the estate. However, the stay continues to prohibit collection or enforcement of pre-petition claims against the Debtor or the Debtor's property until the date the Debtor receives a discharge, if any. If the Debtor does not seek a discharge, the discharge is deemed denied, and the stay as to the Debtor and the Debtor's property terminates upon entry of the order confirming the Plan. b. Discharge of Liability for Payment of Debts; Status of Liens; Equity Security Holders Unless the Debtor is not entitled to receive a discharge pursuant to 11 U.S.C.A. 1141(d)(3) (West 2004), the Debtor may obtain a discharge only upon specific order of the Court. 93 94 c. Modification of the Plan The Proponent may modify the Plan pursuant to 11 U.S.C.A. § 1127 (West 2004 & Supp. 2006). 26 d. Post-Confirmation Causes of Action To the best knowledge of the Proponent, the estate has the following causes of action: 95 96 is designated as representative of the estate under 11 U.S.C.A. § 1123(b)(3) (West 2004) and shall have the right to assert any or all of the above causes of action post- confirmation in accordance with applicable law. e. Final Decree Once the Plan has been consummated, a final decree may be entered upon motion of the Proponent. The effect of the final decree is to close the bankruptcy case. After such closure, a party seeking any type of relief relating to a Plan provision can seek such relief in a state court of general jurisdiction. 27 XX. DECLARATION IN SUPPORT OF DISCLOSURE STATEMENT AND PLAN I, 97, declare under penalty of perjury under the laws of the United States of America that the following statements are true and correct based upon my personal knowledge. 1. 2. 3. 98 is the individual who prepared this document. 99 The source of all financial data is 100. All facts and representations in the Plan and Disclosure Statement are true to the best of my knowledge. 4. No fact material to a claimant or equity security holder in voting to accept or reject the proposed Plan has been omitted. 5. The name of the person(s) who prepared the cash flow projections and the other financial documents is(are) 101, and such person(s) was(were) acting within the capacity of 102 for the Debtor. 7. The accounting method(s) used to prepare the cash flow projections and the other financial documents is (are) 103. 104 Signature: __________________________ Print Name: ______________________ Title: ______________________________ Date: __________________________ 28 Consolidated Balance Sheets December 31, 2010 and 2009 ASSETS 2010 2009 Current assets: $x,xxx Cash and cash equivalents Trade accounts and notes receivable, less allowance for doubtful accounts of $xxx in 2010 and $xxx in 2009 Due from officers and employees Inventories Finished goods Work in process Raw materials and supplies Total inventories Prepaid expenses x,xxx x,xxx x,xxx x,xxx xxx x,xxx xxx x,xxx x,xxx xxx x,xxx x,xxx x,xxx x,xxx xxx Total current assets Marketable investment securities Investments in affiliated companies Property, plant, and equipment: Land Buildings Machinery and equipment Leasehold improvements Construction in progress Less accumulated depreciation and amortization Net property, plant, and equipment Goodwill, less accumulated amortization Other assets, at cost, less accumulated amortization xx,xxx xx,xxx xxx x,xxx xxx x,xxx xxx xxx x,xxx x,xxx x,xxx x,xxx xxx xxx xxx xxx x,xxx xx,xxx xxx xxx x,xxx xx,xxx xxx xxx $xx,xxx xx,xxx 29 Consolidated Balance Sheets December 31, 2010 and 2009 LIABILITIES AND STOCKHOLDERS' EQUITY 2004 2003 Current liabilities: $ Notes payable to banks Current installments of long-term debt Current installments of obligations under capital leases Trade accounts payable Income taxes payable Due to affiliated company Accrued expenses Deferred income taxes Total current liabilities Long-term debt, excluding current installments Obligations under capital leases, excluding current installments Deferred income taxes Total liabilities Stockholders' equity $x cumulative preferred stock, $xx par value (aggregate involuntary liquidation preference $xxx). Authorized xx,xxx shares; issued and outstanding xx,xxx shares 2004 and xx,xxx shares in 2003 Common stock, $x par value. Authorized x,xxx,xxx shares; issued x,xxx,xxx shares in 2004 and x,xxx,xxx shares in 2003 Additional capital Retained earnings Less: Net unrealized loss on noncurrent marketable equity securities Treasury stock, x,xxx common shares, at cost Total stockholders' equity xxx xxx xxx x,xxx xxx xx xxx x,xxx x,xxx x,xxx x,xxx x,xxx xx,xxx xxx xxx xxx x,xxx xxx xx xxx x,xxx x,xxx x,xxx x,xxx x,xxx xx,xxx xxx xxx x,xxx x,xxx x,xxx xx,xxx (xxx) (xxx) xx,xxx xx,xxx x,xxx x,xxx x,xxx xx,xxx (xxx) (xxx) xx,xxx xx,xxx 30 INCOME AND EXPENSE STATEMENT FOR THE 12 MONTH PERIOD ENDING _____ Revenue: <Rental revenue> <Interest revenue> <Other revenue> Total revenue Expenses: General and administrative expense including salaries, utilities, etc. <Operating expenses> [Debtor = manufacturer] <Cost of goods sold> " <Advertising expense> <Bad debt expense> (including uncollectible accounts receivable) <Other expense> Total expense Net income for period: [An important point to bear in mind whenever disclosing financial data is that the financial data is usually presented in the form of voluminous illegible exhibits. This is worthless. It is much better to present this financial information in the form of clear and easily understood summaries. This area of disclosure must be fine-tuned to the particular case. For example, if all parties with the right to vote are sophisticated trades people or investors, then the information may be set forth in a more raw and less digested form. If however, the Debtor has many consumer creditors or small trade creditors, then it is better that the financial information be presented in a simple and brief format.] 31 STATEMENT OF CASH FLOWS Years ended December 31, 2010 and 2009 Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operated activities: Depreciation of plant and equipment Other amortization Allowance for doubtful accounts Loss on sale of marketable investment securities Undistributed income of affiliates Gain on sale of equipment Extraordinary loss on destruction of plant and equipment Increase in trade accounts and notes receivable Decrease (increase) in amounts due from officers and employees Decrease (increase) in inventories Increase in prepaid expenses Increase in trade accounts payable Decrease in amount due to affiliated company Increase (decrease) in accrued expenses Increase (decrease) in income taxes payable Increase in deferred income taxes Net cash provided by operating activities Cash flows from investing activities: Proceeds from sale of marketable investment securities Purchases of marketable investment securities Proceeds from sale of equipment Capital expenditures, including interest capitalized 2004 2003 $x,xxx x,xxx xxx xx xx xx (xxx) (xxx) xxx (xxx) (xx) xxx (xx) xxx (xx) xx (xxx) xxx $x,xxx xxx (xx) xxx (x,xxx) xxx xx xx xx (xxx) -- -- (xxx) xx (xxx) (xx) xxx (xx) (xx) xxx xxx x,xxx xxx (xx) -- (xxxx) Net cash used in investing activities (x,xxx) (xxxx) Cash flows from financing activities: Proceeds from issuance of notes payable to banks Principal payments on notes payable to banks Proceeds from issuance of long-term debt Principal payments on long-term debt Principal payments under capital lease obligations Proceeds from issuance of preferred stock Payments to acquire treasury stock Dividends paid 32 xxx (xxx) xxx (xxx) (xxx) xxx -- (xxx) xxx (xxx) -- (xxx) (xxx) -- (xxx) (xxx) Net cash provided by financing activities xxx xxx Net increase (decrease) in cash and cash equivalents xxx (xxx) Cash and cash equivalents at the beginning of year xxxx xxxx Cash and cash equivalents at end of year $ xxxx xxxx 33 BALLOT FOR ACCEPTING OR REJECTING PLAN 105 filed a Plan of Reorganization (Plan) on 106. 107 By this ballot you will decide whether to accept or reject this Plan. The Plan referred to in this ballot can be confirmed by the Court and thereby bind you if it is accepted by the holders of two-thirds in amount and more than one-half in number of claims in each class and the holders of two-thirds in amount of equity security interests in each class voting on the Plan. If the requisite acceptances are not obtained, the Court may nevertheless confirm the Plan if the Court finds that the Plan accords fair and equitable treatment to the class or classes rejecting it and otherwise satisfies the requirements of 11 U.S.C.A. § 1129(b) (West 2004 & Supp. 2006). Check the appropriate line below, which describes your interest: A. ______________________ The undersigned, a creditor with an allowed claim in the amount of $____________: B. ______________________ The undersigned, a holder of a bond in the amount of $______________, with a stated maturity date of ____________, registered in the name of _____________, and bearing serial number(s)________________________: C. _________ The undersigned, the holder of _______ shares of _____________ (explain type of stock) stock, with a certificate(s) no. _______________________: [ ] Accepts the Plan [ ] Rejects the Plan 108 Print or type name: ___________________________________________ State which class you are a member of: _________________________ Signed: ______________________________________________ If appropriate, by: _________________________ as ______________ Address: ________________________________ ______________________________ Return this ballot on or before 109 to 110. 34 1. 2. Insert petition date. Insert name of Debtor. 3. Insert name of plan proponent; insert "Debtor" if "Debtor" is the proponent. Less detail is required if the proponent is not the Debtor and does not have access to all relevant information, including all important financial documents, so long as the proponent has taken reasonable steps to procure such information. 4. 5. 6. 7. 8. Insert "and to reorganize the Debtor's business affairs" if the plan contemplates reorganization rather than liquidation. Insert hearing date and time reserved for the motion to confirm the plan. Insert appropriate courtroom number. Judge Klein's hearings are in courtroom 1575. Insert name, telephone number, and address of Proponent. Insert "Trustee" and "Committee" if appropriate. 9. Insert number/letter of exhibit. 10. Creditors who receive cash in full equal to their allowed claim by the effective date would be considered impaired. 11. Similarly, an interest holder who receives the greater of any fixed liquidation preference to which the terms of any security representing such interest entitle the interest holder or any fixed price at which the Debtor, under the terms of such security, may redeem such security from such holder is deemed impaired. 12. 13. Insert bar date for filing proofs of claim. If the bar date for filing proofs of claim has not yet passed, so state, and insert the bar date. Insert bar date for objecting to claims. If the bar date for objecting to claims has not yet passed, so state, and insert the bar date. In most bankruptcy cases it is necessary that a bar date for filing proofs of claims and objections thereto has passed before a disclosure statement and plan are proposed. Without knowing the amount and nature of the claims against the estate, it is impossible to complete a precise liquidation analysis and difficult to determine whether the Plan is feasible. If all bar dates have not yet passed, the motion for order approving the 35 disclosure statement should explain why the disclosure statement and plan are propounded now instead of waiting for all bar dates to pass. The Proponent can file a motion for order temporarily allowing a claim or interest for the purpose of accepting or rejecting a plan in accordance with Fed. R. Bankr. P. 3018, as can any party in interest. 14. Identify all impaired classes. Change singular words to plural if appropriate. 15. Identify all unimpaired classes. Change singular words to plural if appropriate. 16. Insert Proponent's address. 17. Insert deadline for submitting ballots. 18. Insert "corporation," "partnership," "limited partner of partnership "x"," "general partner of partnership x," "an individual," "unincorporated association," "business trust," etc. The Proponent must disclose whether the Debtor is a small business debtor, as defined in 11 U.S.C.A. § 101(51D) (West Supp. 2006). 19. Insert percentage of business conducted in the location given at note 20. 20. Insert city and state where business conducted. 21. Insert date Debtor began conducting business activity. 22. Insert summary of facts leading to bankruptcy. Proponent must disclose the receipt of any notices from any governmental agency relating in any manner to actual or potential liability on the part of the Debtor for any environmental or toxic waste hazards, whether or not occurring on the Debtor's premises. 23. Briefly describe the Debtor's business and future business plans. Insert one of the following, if applicable: a. b. Debtor is in the business of renting real estate. 1. 2. 3. 4. [follow same format if additional properties] Location building <#1>: Square footage: Current occupancy rate: Debtor will continue to lease its real estate <other?>. Debtor is a real estate developer. Location of Lot <#1>: 1. Size of lot<s>: 2. 36 Stage of development: Debtor will continue to develop and market real estate 3. 4. in order to sell <other?>. [follow same format if additional properties] c. d. Before bankruptcy, Debtor manufactured and<or> sold the following type of product<s>: ___________. <Debtor provided the following services for pay: ____________.> Debtor will continue this business <other?>. Debtor is an individual employed by ___________ in the capacity as ________ <individual contractor who provides "x" hours of service/week to __ in the capacity as _____>. Debtor will continue this course of conduct <other?>. 24. If the Debtor is an individual or a small business, insert a new section entitled, “PRE-CONFIRMATION REQUIREMENTS OF DEBTOR” and re-number the following sections and amend the Table of Contents as appropriate. a. If the Debtor is an individual, provide the following information in this new section: “Debtor <has/has not> filed all requested tax documents with the Court. Debtor <has/has not> paid any and all amounts for domestic support obligation that became payable post-petition.” 11 U.S.C.A. § 1129(a)(14) (West Supp. 2006); See Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, § 1228(b), 119 Stat. 23, 200 (2005). b. If the Debtor is a small business debtor, include the following information in this new section: “Debtor <has/has not> complied with the requirements of 11 U.S.C.A. § 1116 (West Supp. 2006).” 1. If the Debtor has complied with the requirements of 11 U.S.C.A. § 1116 (West Supp. 2006), the Proponent must indicate which requirements were satisfied, the date of satisfaction, and how the requirements were satisfied. 2. If the Debtor has not complied with the requirements of § 1116, the Proponent must explain the reason(s) for noncompliance. 37 25. Earnings a. If the Debtor is a business, insert the following: “Future earnings from continued operations of the Debtor.” b. If the Debtor is an individual, insert the following: “All or such portion of earnings from personal services performed by the Debtor after the commencement of the case or other future income of the Debtor as is necessary for the execution of the Plan.” See 11 U.S.C.A. § 1123(a)(8) (West Supp. 2006). 26. Insert additional sources of funds; e.g., b. Infusion of capital, consisting of: 1. 2. a loan; and <or> equity investment. c. Sale of some or all of the Debtor's assets. 27. Insert date of first payment to general unsecured creditors. 28. Insert the amount of the first payment to unsecured creditors. 29. Insert frequency of further payments to unsecured creditors (e.g., monthly, quarterly). 30. Insert length of time creditors will receive these payments. 31. If the Plan provides for distributions of property other than cash, delete the word "payment" and substitute "distribution" where appropriate. 32. If timing of payments is not tied to the Effective Date, explain why. 33. After the Court has approved the Disclosure Statement, the Proponent should insert a specific date as the Effective Date, which date should be on or after the date set for the hearing on the motion to confirm the Plan. 34. If any claims are disputed and the bar date for objecting to claims has not passed, or if there are disputed administrative expenses, then add the following paragraphs: 38 "On the effective date <insert another date if applicable> the Disbursing Agent <insert another entity if applicable> will deposit into a segregated account ("Reserve Account") an amount of cash equal to <insert amount>% of the aggregate amount of disputed claims. Cash together with interest accruing thereon will be held in trust for the benefit of holders of disputed claims. When a disputed claim becomes allowed, the Disbursing Agent will distribute to the holder thereof an amount equal to <insert amount>% of its claim plus accrued interest thereon. If a surplus arises from the fact that not all claims are allowed, then that money <shall be available to guarantee payment of other claims><shall revert back to the Debtor.>” 35. Modify statement if any person or entity is an affiliate of the Debtor. 36. If there are other types of administrative expenses in this case, define what they are. Also, ' 507(a)(3) claims must be treated in the same manner as administrative expenses. See 11 U.S.C.A. § 507(a)(3) (West Supp. 2006). 37. Change claimant to plural if necessary. If claimant(s) has (have) agreed to accept later payment, so state. 38. Holders of administrative expenses under ' 507(b) are paid before other administrative expenses. See 11 U.S.C.A. § 507(b) (West Supp. 2006). If any such expenses must be paid, so state. 39. Insert the applicable information in the spaces provided for each class. 40. If there are other types of taxes in this case, change the definition accordingly. The applicable code section is 11 U.S.C.A. ' 507(a)(8) (West 2004 & Supp. 2006). 41. If the claimant(s) has (have) agreed to accept later payment, so state. 42. Insert percentage. The interest rate is the rate determined under applicable nonbankruptcy law as of the calendar month in which the Plan is confirmed. See 11 U.S.C.A. § 511 (West Supp. 2006). 43. Unless the election is not available, the plan proponent must disclose that each class of secured claim(s) may elect 11 U.S.C ' 1111(b)(2) treatment at any time prior to the conclusion of the hearing on the disclosure statement or within such time as the Court may fix. See Fed. R. Bankr. P. 3014. If the Court has fixed a later time for an ' 1111(b)(2) election, then so state. 39 If an ' 1111(b)(2) election was made as to any of the following secured claims, then the treatment of any such claim must comply with ' 1129(a)(7)(B) which states that "each holder of a claim of such class will receive or retain under the plan on account of such claim property of a value, as of the effective date of the plan, that is not less than the value of such holder's interest in the estate's interest in the property that secures such claims." 11 U.S.C.A. § 1129(a)(7)(B) (West 2004); See also Fed. R. Bankr. P. 3014. 44. Insert priority of secured claim (e.g., 1st Deed of Trust). 45. Change to "Unimpaired" if appropriate. 46. If lien is modified by the Plan, so state, and describe the modification(s). 47. Place any additional secured creditors in separate secured classes and provide same information as that given above. If a governmental unit has a secured claim which, if it were unsecured, would be a § 507(a)(8) claim, the Plan must provide that the governmental unit will receive regular cash installment payments over a period of up to 5 years after the order for relief in a manner not less favorable than the most favored nonpriority unsecured class provided by the Plan (other than any cash payments to an administratively convenient class). 48. Insert number/letter of exhibit. 49. Interest ordinarily must be paid on unsecured claims only if unsecured creditors would receive payment in full if the Debtor were liquidated under chapter 7 on the Plan's effective date. However, if the Debtor is an individual and the holder of an allowed unsecured claim objects to confirmation, either: (1) the Plan must provide for payment in full of such claim with interest from the effective date, or (2) the value of property to be distributed under the Plan must at least equal the projected disposable income of the Debtor (as defined in § 1325(b)(2 to be received during the period for which the Plan provides payments, but not less than 5 years from the date the first payment is due under the Plan. See 11 U.S.C.A. § 1129(a)(15) (West Supp. 2006). 50. Change to "Unimpaired" if appropriate. 51. Change to "Unimpaired" if appropriate. 52. Insider claims that are secured must be placed in separate classes because they are not "substantially similar to the other claims" of such class as required by ' 40 1122. 53. If applicable, insert the following: “The Articles of Incorporation <insert "Bylaws" if appropriate> have been changed to include a provision prohibiting the issuance of nonvoting equity securities, as required by ' 1123(a)(6).” 54. If applicable, insert the following: "2. Shareholders redeem their shares of stock and receive consideration as described below." OR "Partner's interest<s> in partnership Debtor 1. Each partner's interest in the Debtor shall remain as it is now. The general partners are <insert identity of general partners> <If applicable, insert identity of limited partners.> The interest of some <insert "all" if applicable> of the partners changes under the Plan, as described below." 2. 55. Insert exhibit number/letter. The accounting method used to produce the financial information and the name of the accountant(s) who prepared the documents must be disclosed in the Declaration in Support of Disclosure Statement and Plan, Section XX. 56. Continue listing years of plan payments as applicable. 57. Insert last two digits of first year of plan payments. 58. Insert last two digits of second year of plan payments. 59. If the Debtor is an individual, the Plan must provide for the payment of creditors under the Plan of all or such portion of earnings from personal services performed by the Debtor after the commencement of the case or other future income of the Debtor as is necessary for the execution of the Plan. See 11 U.S.C.A. § 1123(a)(8) (West Supp. 2006). 60. Insert "customers," "tenants," or other source of income. If there are any additional sources or uses of cash from operating or nonoperating activities like the sale of property outside the ordinary course of business, then add and delete entries accordingly. 41 61. Insert amount to be paid on effective date. If applicable, add: "The Court has ordered that prior to confirming the Plan, <insert amount> must be deposited in a special account established for the exclusive purpose of making the distribution on this date.” The motion for order seeking approval of this document as containing "adequate information" must be accompanied by evidence of the amount of funds available for Plan payments as of the date the Disclosure Statement and Plan is filed. If the Court has not ordered funds deposited prior to confirming the Plan, then provide evidence in this document of how, when, and in what amount funds will become available for payment on the effective date. 62. If the Plan proposes to pay all creditors on the effective date, then it is not necessary to include any financial documentation. However, the Court may require, prior to confirming the Plan, the deposit with the debtor-in-possession or the trustee of the consideration required by the Plan to be distributed on the effective date. See Fed. R. Bankr. P. 3020. If the Debtor is a partnership, then the Proponent must disclose the financial condition of the general partners of the partnership, as required by 11 U.S.C.A. '' 1129(a)(7) (liquidation analysis) and 723(a) (liability of general partner for partnership deficiency). (West 2004 & Supp. 2006). 63. Insert number/letter of exhibit. 64. Unless the Proponent requests from the Court permission to do otherwise, all of these financial statements must be included even if this is a liquidating plan. That is because income and cash flow affect the valuation of assets and because these statements give creditors a basis for comparing the relative advantages and disadvantages of a liquidating plan versus a "going concern" plan. Balance sheets are useful because they provide a historic view of the Debtor's assets and liabilities. A balance sheet records the relationship between the Debtor's assets and liabilities as of a specific date. The basic equation represented by the balance sheet is that assets equal liabilities plus equity. The bottom line of a balance sheet does not in itself provide the reader much information. That is because it looks at the solvency of the Debtor on one particular day. Moreover, the balance sheet only gives the reader information about assets and not about past nor future earnings. An income and expense statement recognizes revenue in the period when earned rather than when cash is received. The income statement recognizes expenses in the period when incurred. In contrast, a cash flow statement describes the cash received 42 and spent during the period. Financial information should be provided for the most recent 12-month calendar year and all months subsequent thereto. For example, if the plan is proposed in June 2006, the proponent should include financial information for all of 2005, plus the first 5 months of 2006. An important point to bear in mind whenever disclosing financial data is that the financial data is usually presented in the form of voluminous illegible exhibits. This is worthless. It is much better to present this financial information in the form of clear and easily understood summaries. This area of disclosure must be fine-tuned to the particular case. For example, if all parties with the right to vote are sophisticated trades people or investors, then the information may be set forth in a more raw and less digested form. If, however, the Debtor has many consumer creditors or small trade creditors, then it is better that the financial information be presented in a simple and brief format. The Proponent must explain the basic accounting principles set forth above regarding balance sheets, cash flow statements, and income statements if Debtor's creditors and interest-holders are not sophisticated business people. 65. Insert number/letter of exhibit. The exhibit should include the following information for all assets: 1. property description <e.g., commercial/residential> A. fair market value <sales price> = <insert price> <if Plan contemplates sale, no need to provide information below> basis for opinion of value: <income/sales approach> qualifications of person rendering opinion: date of valuation: 1. 2. 3. <if rental property, provide info. below> 4. monthly cash flow, deducting for debt service and ordinary, necessary operating expenses; Average over past two years = <insert amount> Average over past three months = <insert amount> TOTAL ASSETS = _______________ Proponent must describe each item of property with particularity and give a value for each item separately. If possible, Proponent should also provide a going concern value for the business as a whole so long as the foundation for that opinion is explained. For accounts receivable, the Proponent must explain the likelihood of collecting the accounts and for what amount. In addition, the debtor's status as a plaintiff in a 43 lawsuit<s> represents potential value to the estate. Although it may be difficult to estimate the exact value of a lawsuit, an effort must be made to present a low and high range of value and the foundation for such belief. The amount of cash on hand must also be disclosed, including for any real property, any prepaid rent or security deposits paid by tenants and held by the Debtor. 66. Insert number/letter of exhibit. The exhibit should include the following information: Identity of Claimant Amount of Allowed Claim 1. 2. 3. TOTAL LIABILITIES = ____________ With regard to lawsuits that have been filed against the Debtor and not yet reduced to judgment and the bar dates for filing and/or objecting to claims has not yet passed, the following information must be provided: Plaintiff/Defendant/ Case #/Court Amount Sought in Prayer for Relief Debtor's Valuation of Suit 1. 2. 3. Provide the same level of detail relating to lawsuits that represent potential recovery to the estate. 67. Insert total fair market value of assets. 68. Insert total amount of liabilities. Distinguish between disputed and undisputed liabilities. 69. If the Debtor is a non-individual debtor, insert the following: “If a class of interest holders votes against the Plan, the Plan cannot be confirmed where the Debtor will receive or retain any property under the Plan, unless the Plan provides that the class of interest holders shall be paid in full with interest.” If the Debtor is an individual debtor, insert the following: 44 “Notwithstanding the foregoing, because the Debtor is an individual, the Debtor may retain property of the estate, so long as the Debtor has paid all amounts that came due on a domestic support obligation post-petition. The Debtor has decided to retain the following: <list property that the Debtor has retained, if any>.” See 11 U.S.C.A. § 1129(b)(2)(B)(ii) (West Supp. 2006). 70. If the Plan proposes to satisfy the "fair and equitable" requirement by giving secured creditors the "indubitable equivalent" of such claims as provided for in ' 1129(b)(2)(A)(iii), the Proponent must explain what that means exactly. See 11 U.S.C.A. ' 1129(b)(2)(A)(iii) (West 2004). If ' 1129(b)(2)(A)(ii) applies, so state. 11 U.S.C.A. ' 1129(b)(2)(A)(ii) (West 2004). 71. Delete or add reasons as applicable. 72. Insert liquidation value. 73. Insert sales price, if Plan contemplates a sale. 74. Insert explanation. 75. 76. 77. 78. The foregoing paragraph is not applicable if the plan provides for payment from future income rather than from proceeds from sale of assets. Items 1, 2, 3, and 4 of this column are not applicable if the plan provides for payment from future income rather than from proceeds from sale of assets. Insert percentage of total claims unsecured creditors would receive in chapter 7 liquidation. Insert percentage of total allowed claims unsecured creditors would receive under the Plan. 79. Use this section if claims will be paid from post-confirmation operations of the Debtor. Insert the applicable information in the spaces provided. 80. Insert name of proposed disbursing agent. 81. Insert address and telephone number of disbursing agent. 82. Change to "has improved" if appropriate. 83. Insert explanation for improved economic state. 84. Insert assumptions underlying projections. 45 Specificity is required because this statement is the principle tool for determining whether the Plan is feasible. For example, specify if classes are not supposed to share the post-confirmation income pro rata and in proportion to the amount of their allowed claims. 85. If the Debtor is to be sold, insert: "Section XVI provides that the Debtor will be sold to the Proponent <insert another entity if applicable>." 86. Insert applicable conditions and terms. 87. Insert any applicable facts. 88. If applicable, insert the following: <MULTI-PURPOSE POST-CONFIRMATION AGENT> <DISBURSING AGENT> If creditors will not be paid out of the Debtor's continuing post-confirmation operations nor from the sale of all of the Debtor's assets to the Proponent or other entity, choose one of the two titles depending upon whether the Plan appoints a representative of the estate to pursue causes of action and to resolve matters other than the sale of assets and distribution of sales proceeds. Insert: "<name of Disbursing Agent> has agreed to be employed by the Debtor for the purpose of selling the assets of the estate and distributing the proceeds in accordance with the Plan. He <or "she"> has no <or "has an"> affiliation with the Debtor. <Explain the nature of any affiliation with the Debtor.> The rate of compensation is as follows <insert compensation>. The Disbursing Agent will pay all amounts due under the Plan from a fund hereby authorized to be opened. This fund shall be maintained in a segregated, interest-bearing account in a depository approved by the United States Trustee for the Central District of California for deposits of funds by trustees." If the Plan envisions a post-confirmation agent who will assume responsibility beyond simply liquidating assets and making distributions, then describe in detail the scope of the agent's responsibilities, qualifications, any affiliations with the Debtor, compensation, and attach as an exhibit any employment agreement. Insert the relevant paragraphs from those listed here and add others as 89. necessary. 46 “a. b. Sale of property of the estate <identify type of property; identify buyer, terms of sale, buyer's financial condition. If 11 U.S.C ' 1129(b)(2)(A)(ii) (West 2004) applies, then explain how that section impacts on the rights of a lienholder at a sale of the property.> The assumption, rejection, or assignment of an executory contract or unexpired lease. <Identify subject of contract or lease and the parties to the agreement. If assumed, apply the requirements of 11 U.S.C.A. ' 365 (West 2004 & Supp. 2006) to the facts of this case.>” If the Plan proposes a sale of all or substantially all of the Debtor's assets to one party, then disclose the financial solvency of the proposed buyer. Note: all transfers of property of the Plan shall be made in accordance with any applicable provisions of nonbankruptcy law that govern the transfer of property by a corporation or trust that is not a moneyed, business, or commercial corporation or trust. See 11 U.S.C.A. § 1129(a)(16) (West Supp. 2006). 90. Describe and explain what orders have been entered and when, pending motions and adversaries, and whether all professionals' employment have been court- approved. 91. State the potential material Federal tax consequences of the Plan to the Debtor, any successor to the Debtor, and a hypothetical investor typical of the holders of claims or interests in the case, that would enable such a hypothetical investor of the relevant class to make an informed judgment about the Plan, even if uncertain. See 11 U.S.C.A. § 1125(a)(1) (West Supp. 2006). If the Proponent has no idea of what such consequences might be, then disclose that fact and why it is so. If the Disclosure Statement and Plan is propounded by the Debtor, it is hard to imagine a situation where the tax consequences would not be considered because any tax liability would affect distribution to creditors, to whom the Debtor owes a fiduciary duty to maximize the return to the estate. Tax considerations might affect the likelihood of continued successful post-confirmation operation of the Debtor and may also affect the feasibility analysis. For these reasons it seems unlikely that the Proponent would have no idea of the tax consequences of the Plan. 92. If the Plan will provide otherwise, so state. 93. If ' 1141(d) does not provide for a discharge for the type of debtor involved in this 47 case, state instead that the Debtor will not receive a discharge. 11 U.S.C.A. § 1141(d) (West 2004 & Supp. 2006). 94. In the case of an individual debtor, insert the following: “A discharge does not discharge a debt excepted from discharge under 11 U.S.C.A. § 523 (West 2004 & Supp. 2006). Additionally, confirmation of the Plan does not discharge any debt provided for in the Plan until the Court grants a discharge on completion of all payments under the Plan. At any time after the confirmation of the Plan, and after notice and a hearing, the Court may grant a discharge to the Debtor who has not completed payments under the Plan if – (i) the value, as of the Effective Date of the Plan, of property actually distributed under the Plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under Chapter 7 on such date; and (ii) modification of the Plan under section 1127 is not practicable, unless the Court finds that there is no reasonable cause to believe that – (i) section 522(q)(1) may be applicable to the Debtor; and (ii) there is pending any proceeding in which the Debtor may be found guilty of a felony of the kind described in section 522(q)(1)(A) or liable for a debt of the kind described in section 522(q)(1)(B).” See 11 U.S.C.A. § 522(q)(1)(A)- (B) (West Supp. 2006). In the case of a corporate debtor, insert the following: “The confirmation of the Plan does not discharge the Debtor from any debt of a kind specified in 11 U.S.C.A. § 523(a)(2)(A)-(B) (West 2004 & Supp. 2006) that is owed to a domestic governmental unit, or owed to a person as the result of an action filed under subchapter III of chapter 37 of title 31 or any similar State statute, or for a tax or customs duty with respect to which the debtor made a fraudulent tax return or willfully attempted in any manner to evade or to defeat such tax or such customs duty.” See 11 U.S.C.A. § 1141(d)(5)-(6) (West Supp. 2006). 95. Describe all causes of action, including but not limited to avoiding actions, and designate proposed defendants, and, if applicable, the amount in controversy. 96. Insert name of entity designated as representative of the estate under 11 U.S.C.A. 1123(b)(3) (West 2004). 97. Insert name of declarant. 48 98. Insert name of individual<s> who prepared Plan. 99. Explain relationship of person preparing document to Proponent. 100. Insert source of financial data. 101. Insert name of person(s). 102. Identify the capacity in which the person who prepared the financial statements is employed by and/or serves the Debtor. 103. Describe the accounting method(s) (e.g., cash or accrual, generally accepted accounting principles, etc.). 104. Insert date declaration signed. 105. Insert name of Proponent. 106. Insert date on which Plan was filed. 107. If more than one plan is proposed, state that the first one listed is Plan A. Repeat these two sentences, changing Plan "A" to Plan "B" et seq. 108. If more than one plan filed, insert the following: "The undersigned prefers the plans accepted in the following order: First: Second:" 109. Insert deadline for returning ballots. 110. Insert name and address to which ballots should be sent. 49

=== Instructions for Telephoning Chambers ===

JUDGE SANDRA R. KLEIN’S INSTRUCTIONS FOR TELEPHONING CHAMBERS Fed. R. Bankr. P. 9003(a) provides that “[e]xcept as otherwise permitted by applicable law. . . any party in interest, and any attorney, accountant, or employee of a party in interest shall refrain from ex parte meetings and communications with the court concerning matters affecting a particular case or proceeding.” Because of concerns regarding ex parte communications, the court has prepared the following instructions for telephoning chambers. Please review carefully before placing a call to chambers. A. PHONE CALLS THAT WILL BE RETURNED 1. Requesting Emergency Hearings: Judge Klein requires compliance with LBR 9075-1. If you seek a hearing on less than 48 hours notice under LBR 9075-1(a), please call Judge Klein’s chambers, (213) 894-7741, and leave a message. You must file the motion as well as hand-deliver a Judge’s copy of the motion to chambers before a law clerk will call you back. If you are filing an application for an order setting a hearing on shortened time, follow the procedures outlined in LBR 9075-1(b), which do not require a phone call to chambers. 2. Placing a Hearing on Second Call: If you are calling to place a matter on second call, please identify the calendar number of your matter by checking the tentative ruling calendar on the main page of the court’s website, www.cacb.uscourts.gov. Please indicate how late the attorney or litigant will be, the reason for the delay, and whether you have notified the other parties who are appearing on the same matter. B. PHONE CALLS THAT WILL NOT BE RETURNED 1. Status of Cases, Results of Hearings: Judge Klein’s staff will not return calls asking about the status of a case or the results of a hearing. Instructions for obtaining an audio or written transcript are posted on the court’s website on the “Other Forms” page under the links “Audio Recording of Court Proceedings Order Form” or “Transcripts Order Form.” 2. Status of Orders: Judge Klein’s staff will not return calls regarding the status of an order if less than 7 days have passed since the order was lodged. 3. Seeking Advice: Judge Klein’s staff will not return calls asking how to file or respond to pleadings, which procedures to follow, which rules apply, etc. 4. Inquiring if a Hearing was Continued or if an Appearance is Necessary: Judge Klein’s staff will not return calls asking whether a hearing was “taken off calendar.” All hearings remain on the calendar, although appearances may not be required in certain cases, so all parties should review Judge Klein’s tentative rulings that will generally be posted by 12:00 noon the day before the hearing. 5. Special Procedures and Required Forms for Judge Klein: Special procedures and required forms for Judge Klein are posted on her section of the website at Revised September 6, 2022 www.cacb.uscourts.gov. If a special procedure is not posted, Judge Klein requires compliance with the applicable Local Bankruptcy Rules. 6. Problems Filing or Lodging Documents: If you have an issue with electronically filing or lodging a document, please call the CM/ECF Help Desk (213) 894-2365. If you received a Notice to Filer regarding a docketing error/issue, please contact Judge Klein’s Courtroom Deputy, Thais May, (213) 894-5856. Revised September 6, 2022

=== Judge Klein's Chapter 13 Procedures ===

JUDGE SANDRA R. KLEIN’S CHAPTER 13 PROCEDURES Effective April 22, 2011, the following procedures will be followed for all chapter 13 cases assigned or reassigned to Judge Sandra R. Klein: 1. All confirmation hearings will start promptly at the time listed on the court calendar. 2. Pursuant to Local Bankruptcy Rule (LBR) 1001-1(d), the court waives application of LBR 3015-1(m)(6) & (7). Therefore, debtors are not required to file with the court and serve on the chapter 13 trustee and all secured creditors a declaration on court-mandated Form F 3015-1.4, entitled, “Declaration Setting Forth Postpetition, Preconfirmation Deed of Trust Payments [Local Bankruptcy Rule 3015-1(m)]” commonly referred to as a “mortgage declaration.” 3. All new requests to value and avoid liens in chapter 13 cases must be brought via motion pursuant to Federal Rule of Bankruptcy Procedure 9014. Such motions (commonly referred to as “lien strip motions,” “motions to value,” “Lam motions,”1 etc.) must be made on Local Form 4003-2.4- MOTION, entitled “Debtor's Motion to Avoid Junior Lien on Principal Residence [11 U.S.C. § 506(d)]” (Motion to Avoid Junior Lien). The form may be found on the Court’s website, www.cacb.uscourts.gov, by clicking on “Forms/Rules/General Orders,” then “Local Bankruptcy Rules & Forms,” and scrolling down to F 4003-2.4-MOTION. a. After April 22, 2011, if a Lam motion is not filed using Local Form 4003-2.4-MOTION, including the proof of service, the motion will not be set for hearing. 4. Any pending adversary proceedings to value and avoid liens in chapter 13 cases that are reassigned to Judge Klein may, in the discretion of the plaintiff, continue to be adjudicated in an adversary proceeding or may be dismissed and refiled using Local Form 4003-2.4-MOTION. If a pending adversary is dismissed and refiled using Local Form 4003-2.4-MOTION, the motion must be supported by admissible evidence and there must be sufficient notice and service to comply with the Federal Rules of Bankruptcy Procedure and Local Bankruptcy Rules. a. If the plaintiff chooses to continue litigating a pending adversary proceeding to value and avoid liens in a chapter 13 case, the plaintiff must utilize Local Form 4003-2.5.DEFAULT.MOTION, entitled “Debtor’s Motion for Default Judgment Re Complaint to Avoid Junior 1 Lam v. Thrift Investors (In re Lam), 211 B.R. 36 (9th Cir. B.A.P. 1997). Revised September 28, 2016 Lien on Principal Residence [11 U.S.C. § 506(a),(d), FRBP 3012]” as well as Local Form 4003-2.5.DEFAULT JUDGMENT, entitled “Default Judgment Re Complaint to Avoid Junior Lien on Principal Residence [11 U.S.C. § 506(a)(d), FRBP 3012].” These forms may also be found on the Court’s website, www.cacb.uscourts.gov. 5. All motions to value and avoid liens before Judge Klein must be scheduled for hearing before the date scheduled for confirmation of the chapter 13 plan. If a lien strip motion cannot be scheduled for a hearing before the date scheduled for confirmation, Debtor or where applicable, Debtor’s counsel, must contact the chapter 13 trustee at least 3 days before the date scheduled for the confirmation hearing and Debtor or where applicable, Debtor’s counsel, must obtain an oral stipulation to continue the confirmation hearing until after the date scheduled for the hearing to value and avoid the lien. Revised September 28, 2016

=== Judge Klein's Judicial Variance Statement ===

Judicial Variance Statement for Judge Sandra R. Klein Regarding LBRs, The Central Guide, and Forms Bankruptcy Judge Klein enforces the Local Bankruptcy Rules, The Central Guide, and use of mandatory Court forms. However, here are a few clarifications and exceptions: A. Local Bankruptcy Rules (LBRs): 1. 3015(e)(3) and (m)(6) - Evidence of Payment: Judge Klein does not require Debtors to file the declaration regarding post-petition payments on LBR Form 3015-1.4.DEC.PRECONF.PAYMTS. 2. 7016-1(b)(1) and (b)(3) - Pre-trial Stipulations: Judge Klein requires that a pre-trial stipulation be filed, but not separately lodged, in LOU. B. Mandatory LBR Forms: All LBR forms marked “mandatory” in the footer of the form are also mandatory in Judge Klein’s cases. 1. LBR 2081-2 - Chapter 11 Debtors Who are Individuals: All of the LBR forms created for use when a chapter 11 debtor is an individual are mandatory in Judge Klein’s cases. For complete a list of forms that are mandatory when a chapter 11 debtor is an individual, see “Judge Klein Requires Individual Chapter 11 Debtors to Use Local Bankruptcy Rules Forms” document found on the “Instructions/Procedures” page of Judge Klein’s section of the Court website. 2. Chapter 13 Cases - Avoiding Junior Lien on Principal Residence: Judge Klein allows junior liens on principal residences to be avoided by filing a Motion. Debtors seeking to avoid a junior lien on a principal residence must use LBR Form 4003-2.4.JR.LIEN.MOTION. C. Other forms required to be used by Judge Klein: 1. Chapter 11 Disclosure Statement and Plan: When a chapter 11 debtor is NOT an individual, it is mandatory that the debtor use Judge Klein’s Disclosure Statement and Plan of Reorganization. It is found on the “Forms” page of her section of the Court website. A reading guide is also provided. Revised February 4, 2022

=== Judge Klein Requires Individual Chapter 11 Debtors To Use Local Bankruptcy Rules Forms ===

JUDGE SANDRA R. KLEIN REQUIRES INDIVIDUAL CHAPTER 11 DEBTORS TO USE LOCAL BANKRUPTCY RULES FORMS Effective December 1, 2011, use of the following Local Bankruptcy Rules Forms in individual chapter 11 cases is mandatory: - F 2081-1.4.MOTION.UTILITIES – Notice of Motion and Motion in Individual Chapter 11 Case for Order Authorizing Debtor to Provide Adequate Assurance of Payment to Utility Service Providers [11 U.S.C. § 366]; - F 2081-1.4.ORDER.UTILITIES – Order Re Notice of Motion and Motion in Individual Chapter 11 Case for Order Authorizing Debtor to Provide Adequate Assurance of Payment to Utility Service Providers [11 U.S.C. § 366]. These forms may be found on the Court’s website, www.cacb.uscourts.gov, by clicking on “Forms,” then “Local Bankruptcy Rules Forms” and scrolling down to the appropriate form. After December 1, 2011, if an individual chapter 11 debtor does not use these forms, the matter will not be set for hearing and/or the order will not be signed. Effective July 1, 2011, use of the following Local Bankruptcy Rules Forms in individual chapter 11 cases is mandatory: - Form 2081-1.DISCLSR.STMT - Individual Debtor’s Disclosure Statement in Support of Plan of Reorganization; - Form 2081-1.PLAN - Individual Debtor’s Chapter 11 Plan of Reorganization; - F 2081-1.1.MOTION.CASH.COLLATERAL - Notice of Motion and Motion in Individual Chapter 11 Case for Order Authorizing Interim Use of Cash Collateral [11 U.S.C. § 363]; - F 2081-1.1.ORDER.CASH.COLLATERAL - Order Re: Notice of Motion and Motion in Individual Chapter 11 Case for Order Authorizing Interim Use of Cash Collateral [11 U.S.C. § 363]; - F 2081-1.2.MOTION.BUDGET - Notice of Motion and Motion in Individual Chapter 11 Case for Order Setting Budget for Interim Use of Estate Property as Defined in 11 U.S.C. § 1115; - F 2081-1.2.ORDER.BUDGET - Order Re: Notice of Motion and Motion in Individual Chapter 11 Case for Order Pursuant to 11 U.S.C. § 363(b) Setting Budget for Interim Use of Estate Property as Defined in 11 U.S.C. § 1115; 1 - F 2081-1.3.MOTION.PAYROLL - Notice of Motion and Motion in Individual Chapter 11 Case for Order Authorizing Payment of Prepetition Payroll and to Honor Prepetition Employment Procedures: LBR 2081-1(a)(6); and - F 2081-1.3.ORDER.PAYROLL - Order Authorizing Payment of Prepetition Payroll and to Honor Prepetition Employment Procedures: LBR 2081-1(a)(6). These forms may be found on the Court’s website, www.cacb.uscourts.gov, by clicking on “Forms,” then “Local Bankruptcy Rules Forms” and scrolling down to the appropriate form. After July 1, 2011, if an individual chapter 11 debtor does not use these forms, the matter will not be set for hearing and/or the order will not be signed. 2 Revised April 8, 2013

=== Procedure For Approval of Disclosure Statement and Confirmation of Chapter 11 Plan When the Debtor is Not an Individual ===

JUDGE SANDRA R. KLEIN’S PROCEDURE FOR APPROVAL OF DISCLOSURE STATEMENT AND CONFIRMATION OF CHAPTER 11 PLAN WHEN THE DEBTOR IS NOT AN INDIVIDUAL A. Requests for orders approving disclosure statements pursuant to 11 U.S.C. § 1125 and for orders confirming plans of reorganization pursuant to 11 U.S.C. § 1129 are motions within the meaning of Federal Rules of Bankruptcy Procedure 9013 and 9014. All motions must be supported by evidence admissible under the Federal Rules of Evidence and in compliance with Local Bankruptcy Rule 9013- 1(i). B. Unless the court orders otherwise, the proponent of any reorganization plan must use the Combined Disclosure Statement and Plan of Reorganization, which is located in the “Forms” section of Judge Klein’s website and called “Combined Disclosure Statement and Plan of Reorganization.” Please note that the “Combined Disclosure Statement and Plan of Reorganization” utilized by Judge Klein is different from the separate Chapter 11 Disclosure Statement and Chapter 11 Plan adopted by the Central District of California as forms F 3017-1 and F 3018-1, respectively. C. Hearings on approval of disclosure statements must be set on at least 36 days notice, unless the court prescribes a shorter period. The plan proponent must serve with the disclosure statement a notice of: 1. 2. The disclosure statement hearing date; and The requirement that objections to disclosure statements must be filed and served on the proponent at least 14 days before the hearing. Please note that the court reviews each proposed disclosure statement before the disclosure hearing, regardless of whether any objections have been filed. Accordingly, counsel are required to notify chambers no later than the Monday before the scheduled hearing if the disclosure statement hearing will be continued. D. An amended disclosure statement shall not be filed before the initial hearing on the adequacy of the original disclosure statement. The court strongly encourages all plan proponents to submit a copy of the disclosure statement to creditors, the United States trustee, and any committee prior to filing the disclosure statement with the court, to permit changes pursuant to comments made by these parties in interest. Effective April 22, 2011 If a hearing on approval of the disclosure statement is continued to permit revision of the disclosure statement, the plan proponent shall make all necessary changes and prepare, in anticipation of the next hearing, "redlined" copies of the amended disclosure statement. A "redlined" copy and a "clean" copy must be filed with the court and served on all other parties who appeared at the previous hearing. E. After granting a disclosure statement motion, the court will set the following: 1. 2. 3. 4. A hearing date for the Motion to Confirm the Plan (Confirmation Motion); A deadline for serving the approved disclosure statement and the notice of hearing for the Confirmation Motion; A deadline for filing of claims and for objecting to claims, if not already set; and A deadline for creditors and equity security holders to transmit ballots. F. A Confirmation Motion must be prepared, filed and served in accordance with Local Bankruptcy Rule 9013-1 and therefore must meet at least the following criteria: 1. 2. 3. Be supported by evidence demonstrating that the plan is confirmable under 11 U.S.C. § 1129; Be served at least 21 days before the confirmation hearing on the United States trustee, any official committee, and all impaired creditors and equity security holders who rejected the plan; and The plan proponent must serve with the Confirmation Motion a notice of the confirmation hearing date and of the requirement that any party opposing the Motion must file and serve, at least 14 days before the confirmation hearing date, its written opposition supported by admissible evidence. NOTE: Because the Confirmation Motion ordinarily must be served at least 21 days before the confirmation hearing, the proponent should select a confirmation hearing date so that sufficient time is given for ballots to be returned and for the preparation of the Motion. G. Unless otherwise ordered, every order confirming a chapter 11 plan must contain the language required by Local Bankruptcy Rule 3020-1(b). The proposed order shall be accompanied by proof of payment of any special charges due the Clerk's Office as described in Local Bankruptcy Rule 3020-1(a). Effective April 22, 2011

=== Procedures for Auction Sales ===

JUDGE SANDRA KLEIN’S PROCEDURES FOR AUCTION SALES 1. Approval Process Parties seeking approval of auction procedures may bring a separate motion for approval of such procedures before the sale motion pursuant to LBR 6004-1(b), or may include a request for approval of the sale procedures in the sale motion itself. Parties should be aware, however, that if advance approval is not sought, it may be more difficult for the movant to: a) persuade the Court to approve a break-up fee or expense reimbursement for a stalking horse; or 2) preclude someone from bidding because they have not complied with the proposed sale procedures. 2. Auction Location/Identity of Auctioneer Generally, Judge Klein will not conduct an auction herself on the record. She permits the movant to conduct the sale outside the courtroom, at another location and/or at another time. The movant need not provide the Court with a transcript of the auction proceedings to obtain approval of the sale. A report from movant regarding the outcome of the auction will be sufficient. 3. Conduct of Bidding Parties must comply with all Court approved bidding procedures, including any minimum overbid increments. Parties may escalate their bids and may increase their bids until the auction has concluded as long as they comply with minimum overbid increments and the Court approved bidding procedures. 4. Willingness to Make Exceptions Movant may propose any auction procedures that movant believes are reasonable and appropriate under the circumstances. Judge Klein will consider all requests for approval of proposed auction procedures on a case-by-case basis. 5. Break-up Fees and Expense Reimbursements a. Judge Klein is reluctant to approve both a breakup fee and expense reimbursement for a stalking horse because one of the justifications for approving a breakup fee is to reimburse the stalking horse for the costs it incurred in serving as a stalking horse. b. Judge Klein prefers to approve reimbursement of the stalking horse’s actual expenses up to a maximum amount, rather than a flat fee expense reimbursement that does not require evidence of actual expenses incurred. 1 Effective 8/1/17 c. Judge Klein considers the amount of or conditions concerning the payment of breakup fees and expense reimbursements on a case-by-case basis. She does not have any guidelines or rules of thumb regarding the amount of or conditions concerning the payment of breakup fees and/or expense reimbursements. d. Depending on the facts of a particular case, Judge Klein may be willing to make an exception to these guidelines if there is cause to do so. 6. Backup Bidders: If the successful bidder fails to close a transaction, the movant may require the backup bidder to perform. Judge Klein prefers to approve provisions that create an option for a backup bidder to purchase at a set price if the successful bidder defaults. If the backup bidder exercises this option, the parties need not return to court to obtain approval of the sale to the backup bidder. If, however, the backup bidder and the movant agree to a sale of the assets on different terms, the movant will need to seek approval of the new sale. 7. Good Faith Findings Generally, declarations from the movant and the buyer regarding the manner in which the buyer was located, the arms-length nature of their negotiations, and any connections between the movant and the buyer are sufficient under section 363(m). Judge Klein is unlikely to require live testimony from the successful bidder unless the facts and circumstances suggest that collusion may have occurred. 8. Rule 6004(h) If no oppositions are filed or if all oppositions have been consensually resolved, Judge Klein will generally waive the 14-day stay of Fed. R. Bankr. Proc. 6004(h). This will only occur if such relief was requested in the sale motion. 2 Effective 8/1/17

=== Tentative Ruling Procedures ===

JUDGE SANDRA R. KLEIN’S TENTATIVE RULING PROCEDURES In most cases, Judge Klein issues tentative rulings by 2:00 p.m. the day before the hearing date. These rulings are generally available via the Court’s webPACER service and will appear on the calendars posted outside the courtroom and placed on counsel tables inside the courtroom on the date scheduled for the hearing. Please note that even if the court has issued a tentative ruling appearances are still required unless: 1. The tentative ruling states explicitly that no appearance is required; or 2. Judge Klein’s chambers or calendar clerk has confirmed that no appearance is necessary. A moving party’s failure to attend a hearing on its motion will result in denial of the motion for failure to prosecute and may result in the issuance of an order to show cause re: sanctions. An opposing party’s failure to attend a hearing on a motion that it has opposed will be deemed to have withdrawn its opposition to the relief requested in the motion. Effective April 22, 2011

=== Click here for a printable version of these procedures ===

NOTICE RE VIDEO AND TELEPHONIC APPEARANCE PROCEDURES FOR JUDGE SANDRA R. KLEIN’S CASES Although the Roybal Federal Building and U.S. Courthouse is open for in-person proceedings, the bankruptcy bar has indicated its overwhelming support for continued virtual appearances. Judge Klein will continue utilizing ZoomGov in a hybrid format holding hearings by video, with an option for in-person hearings for evidentiary hearings, trials and other matters specially set with the Court’s prior approval. Parties are directed to review Judge Klein’s self-calendaring instructions for calendaring hearings, either by ZoomGov or in-person. IMPORTANT NOTICE REGARDING PROHIBITIONS OF PUBLIC VIDEO AND AUDIO ACCESSIBILITY OF COURT MATTERS The Administrative Office of the United States Courts has now mandated that the public may not observe by video any court proceedings unless they are actual parties or counsel with matters before the Court in which they have an official interest. As an accommodation to the public, many court proceedings will still be accessible by audio. The audio accommodation is limited to: 1) non-trial matters; and 2) non-live witness testimony hearings. During non-trial matters and hearings where no live testimony is being given, the Court may permit the public to access the hearings by audio, but not video. Please note that the Court may choose to terminate audio accessibility at any time, regardless of the type of hearing. Audio services for hearings that will not include live testimony are accessible through ZoomGov, and the public may utilize the telephone number login, but not the video login, presented by the Court on its publicly posted hearing calendar, which may be viewed online at: http://ecf- ciao.cacb.uscourts.gov/CiaoPosted/default.aspx, and then selecting “Judge Klein” from the tab on the left-hand side of the page. The public may always appear in court for any proceedings. Judge Klein’s courtroom is located in the Roybal Federal Building and U.S. Courthouse, 255 E. Temple Street, Courtroom 1575, Los Angeles, CA 90012. On virtual hearing days, Judge Klein’s courtroom will be open so that individuals who wish to observe a hearing will be able to view ZoomGov participants. There will be video monitors on and viewable during all hearings. The parties, including counsel, their clients, and self-represented individuals, may virtually join the hearing via ZoomGov. No testimony, however, will be permitted by ZoomGov unless specifically authorized by the Court either before or during the hearing. For matters set for an in-person hearing in which any party does not wish to appear in-person, virtual appearances may be permitted utilizing ZoomGov, with prior Court approval, by contacting Judge Klein’s chambers at least seventy-two (72) hours before the hearing09 to arrange the virtual appearance. Revised 09/21/23 ZoomGov: Video and audio connection information for each hearing are posted on Judge Klein's hearing calendar, which is available at: http://ecf- ciao.cacb.uscourts.gov/CiaoPosted/default.aspx, and then selecting “Judge Klein” from the tab on the left-hand side of the page. As noted above, hearing participants may view and/or listen to hearings before Judge Klein using ZoomGov free of charge. Individuals may appear by ZoomGov video and audio using a personal computer (equipped with camera, microphone and speaker), or a handheld mobile device (such as an iPhone). Individuals may participate by ZoomGov audio only using a telephone (standard telephone charges may apply). Neither a Zoom nor a ZoomGov account are necessary to participate, and no pre- registration is required. The audio portion of each hearing will be recorded electronically by the Court and constitute its official record. Members of the general public, however, may only view the hearings from the Courtroom, which will remain open, or by audio access, as noted above. Important: All persons are strictly prohibited from making any recording of court proceedings, whether by video, audio, "screenshot," or otherwise. Violation of this prohibition may result in the imposition of monetary and non-monetary sanctions. The Clerk of the Court maintains an audio recording of all proceedings, which recording constitutes the official record of those proceedings. Tips for a Successful ZoomGov Court Experience 1. Test the video and audio capabilities of your computer or mobile device before the hearing (i.e., at least one day in advance). a. You can do this by clicking on the ZoomGov meeting link posted for the hearing and/or check your video and audio using the ZoomGov app. 2. If you intend to speak during the hearing, please find a quiet place from which to participate. 3. If you are connecting to a hearing using a wireless device, make sure to have a strong wireless signal. 4. Until your matter is called, please turn off your video and mute your audio to minimize distractions and background noise. a. If you are connecting to ZoomGov by video, you can turn your video on/off by clicking on the video camera on the lower left side of the screen and mute/unmute your audio by clicking on the microphone on the lower left side of your screen. Revised 09/21/23 b. If you are connecting to ZoomGov by telephone, you can mute or unmute your connection by pressing *6 on your phone. 5. If you are participating via video: a. Please change your Zoom screen name to include your calendar number, your first initial and last name, and your client’s name in parentheses (e.g., 1, R. Jones (ABC Corp. . You can change your Zoom screen name by moving the cursor over the upper right corner of your video tile, clicking on “. . .” and then clicking on “rename.” 1. If you are appearing on more than one matter, after your first matter is finished, please change your screen name to reflect the next matter on which you will appear. b. Please wear attire consistent with the decorum of court proceedings. c. If you choose to use a virtual background, please avoid backgrounds that are offensive or distracting. d. Try to avoid having a window or bright background behind you. Otherwise, you may appear on video as a shadow. If you cannot avoid a bright background, a desk lamp or other light source might help to brighten your face. 6. When you first speak—and each time you speak after someone else has spoken—please say your name. This is essential to make a good court record. The only part of the hearing being recorded is the audio. If a transcript is requested, it is sometimes difficult for the transcriber to know who is speaking. 7. If available, a headset-microphone often provides better sound quality for listening and speaking. 8. Participants and members of the public should remember that although conducted remotely, ZoomGov hearings are official court proceedings, and individuals should act accordingly. Revised 09/21/23

=== Appointed April 22, 2011 by the United States Court of Appeals for the Ninth Circuit ===

N E W S R E L E A S E March 30, 2011 Contact: David Madden, (415) 355-8800 Court of Appeals Appoints New Bankruptcy Judge for Central District of California SAN FRANCISCO — Chief Judge Alex Kozinski of the United States Court of Appeals for the Ninth Circuit has announced the appointment of Sandra R. Klein to serve as a judge of the U.S. Bankruptcy Court for the Central District of California. Ms. Klein, who will be sworn into office April 22, will have chambers in Los Angeles. She will fill a judgeship left vacant by the retirement of Bankruptcy Judge Kathleen H. Thompson in January 2011. Judge Thompson is currently serving as a recalled bankruptcy judge in the Central District. “Ms. Klein knows bankruptcy law well, has worked on a significant variety of bankruptcy related matters, and has demonstrated a commitment to public service. We welcome her to the bench in one of our busiest bankruptcy courts,” Judge Kozinski said in announcing the appointment. Ms. Klein, 50, has been the acting chief of the Criminal Enforcement Unit of the Department of Justice, U.S. Trustee Program, since 2009. Her work focuses on increasing detection and prosecution of criminal conduct in the bankruptcy system. She previously served in the program as a bankruptcy fraud criminal coordinator from 2003 to 2009. She also worked as a special assistant U.S. attorney in the Central District of California from 1997 to 2003. In addition to her public sector experience, Ms. Klein was a litigation associate at the law firm of O’Melveny & Myers, LLP, from 1995 to 1997. Ms. Klein has served as a part-time adjunct professor at Loyola Law School in Los Angeles in 2003, 2005, and 2006. She taught a white collar crime elective course designed to emphasize ethical issues arising in law and business. A native of Boston, Massachusetts, Ms. Klein received her undergraduate degree in 1982 from the University of Massachusetts, where she graduated magna cum laude. She received her J.D. in 1992 from Loyola Law School, also graduating magna cum laude and serving as the comment editor for the Loyola International & Comparative Law Journal. Ms. Klein clerked for Circuit Judge Arthur L. Alarcón of the U.S. Court of Appeals for – more – the Ninth Circuit from 1994 to 1995. She received her master’s degree in 2009 from the UCLA Anderson School of Management, where she graduated as a member of its Honor Society. Ms. Klein was co-chair of the Law Student Mentoring Committee, Women Lawyers Association of Los Angeles, from 2004 to 2005. She served as a volunteer instructor for National Institute of Trial Advocacy training in Los Angeles in 2005, 2006, 2007, and 2010. The U.S. Bankruptcy Court for the Central District of California serves seven Southern California counties. The court is authorized 24 judges, which includes three authorized temporary judgeships, and received 138,585 bankruptcy filings in fiscal year 2010, up 42.2 percent from the previous year. Judges of the U.S. Court of Appeals for the Ninth Circuit have statutory responsibility for selecting and appointing bankruptcy judges in the nine western states that comprise the Ninth Circuit. The court uses a comprehensive merit selection process for the initial appointment and for reappointments. Bankruptcy judges serve a 14-year, renewable term, at a salary of $160,080, and handle all bankruptcy-related matters under the Bankruptcy Code. # # #

=== Appointed as a Recalled Bankruptcy Judge ===

JUDICIAL COUNCIL OF THE NINTH CIRCUIT IN RE RECALL APPOINTMENT OF RETIRED UNITED STATES BANKRUPTCY JUDGE FOR SERVICE WITHIN THE NINTH CIRCUIT ORDER RE RECALL APPOINTMENT (28 U.S.C. § 155(b Before: MURGUIA, Chief Judge Chief Bankruptcy Judge Theodor C. Albert requested the recall appointment of Bankruptcy Judge Sandra R. Klein to the Central District of California. Pursuant to 28 U.S.C. § 155(b), the Judicial Council approves the ad-hoc, full-time recall. Judge Klein, having consented to serve, is recalled for service to the Central District of California, Judge Klein’s duty station will be Los Angeles, California, commencing April 22, 2025, and ending April 21, 2026. During this time period, Judge Klein may exercise all the powers and duties of the office of bankruptcy judge. For the Judicial Council Mary H. Murguia Chief Judge Dated: December 3, 2024

=== Appointed as a Recalled Bankruptcy Judge ===

JUDICIAL COUNCIL OF THE NINTH CIRCUIT IN RE RECALL APPOINTMENT OF RETIRED UNITED STATES BANKRUPTCY JUDGE FOR SERVICE WITHIN THE NINTH CIRCUIT ORDER RE RECALL APPOINTMENT (28 U.S.C. § 155(b Before: MURGUIA, Chief Judge Chief Bankruptcy Judge Julia W. Brand requested the recall appointment of Bankruptcy Judge Sandra R. Klein to the Central District of California. Pursuant to 28 U.S.C. § 155(b), the Judicial Council approves the ad-hoc, full-time recall. Judge Klein, having consented to serve, is recalled for service to the Central District of California, Judge Klein’s duty station will be Los Angeles, California, commencing April 22, 2026, and ending April 21, 2027. During this time period, Judge Klein may exercise all the powers and duties of the office of bankruptcy judge. For the Judicial Council Mary H. Murguia Chief Judge Dated: 10/3/2025