New Bankruptcy Opinion: IN RE CADILLAC NURSING HOME, INC. – Bankr. Court, ED Michigan, 2016

In re CADILLAC NURSING HOME, INC., Chapter 11, Debtor.

Case No. 16-41554.

United States Bankruptcy Court, E.D. Michigan, Southern Division.

May 19, 2016.

ORDER REQUIRING THE DEBTOR TO AMEND DISCLOSURE STATEMENT

THOMAS J. TUCKER, Bankruptcy Judge.

On May 17, 2016, the Debtor filed a plan and disclosure statement, in a document entitled “Debtor’s Combined Plan of Liquidation and Disclosure Statement” (Docket # 88). The Court cannot yet grant preliminary approval of the disclosure statement contained within this document (“Disclosure Statement”). The Court notes the following problems, which the Debtor must correct.

First, the Debtor must estimate the amounts of the administrative claims in Paragraph 2.1 on page 10 of the Plan. [1]

Second, the Debtor must list which creditors are being treated in Group II in Paragraph 2.2 of the Plan on page 11, and the Debtor must estimate the amount of each creditor’s claim. Where there is a dispute over the amount or priority of a claim, the Debtor should indicate that (e.g., the IRS has a priority claim of $96,700.14 according to the IRS’s proof of claim, but the Debtor estimates that the IRS has a priority claim of $520,850.00). [2]

Third, in Article III on pages 12-15 of the Plan, with regard to each secured creditor, the Debtor must state the amount of the claim without regard to the value of the collateral; the property securing the claim (if real estate, the full address, including city and state); the fair market value of the property securing the claim; whether any portion of the claim is unsecured; and if so, whether the secured creditor will have an unsecured deficiency claim, to be included and treated in the class of general unsecured claims; and if so, the amount of such unsecured claim. If more than one secured creditor has a lien on property, the Debtor must state the priority of each secured creditor (i.e., which creditor has a first priority lien and which creditor has a second priority lien). [3]

Fourth, in Paragraph 5. 1 of the Plan, on pages 14-15, the Debtor must estimate the amount of each of the claims treated in Class V, and the amount of the monthly payments to be made on each claim.

Fifth, the Debtor must state in Paragraph 7.1 of the Plan on page 15, who are the “Holders of Interests in the Debtor.” [4]

Sixth, the Debtor must delete Paragraph 5.1 in Article V of the Plan on page 18, because it is contrary to law, in a case such as this one, where the Debtor is a corporation which is liquidating and not continuing in business. See 11 U.S.C. § 1141(d)(3).

Seventh, the Debtor must change “residence” in the last sentence of Section IV.A of the Disclosure Statement on page 15 to “residents.”

Eighth, the Debtor must delete the following language from the first sentence of Paragraph V.B.1 on page 20 of the Disclosure Statement: “which may result from a discharge granted by the confirmation of the Plan,” because the Debtor will not be receiving a discharge.

Ninth, the Debtor must delete the last sentence in Section VI.E on page 23 of the Disclosure Statement (“See Part II-A of this Disclosure Statement to determine which of the above paragraphs applies in this case”), and replace it with the following sentence: “Paragraph VI.E.2.(b) applies in this case.”

Accordingly,

IT IS ORDERED that no later than May 27, 2016, the Debtor must file an amended combined plan and disclosure statement that is consistent with this Order.

IT IS FURTHER ORDERED that no later than May 27, 2016, the Debtor also must file a redlined version of the amended combined plan and disclosure statement, showing the changes the Debtor has made to “Debtor’s Combined Plan of Liquidation and Disclosure Statement,” filed May 17, 2016.

[1] Although this information is provided in Section IV.E of the Disclosure Statement on pages 18-19, it also must be included in the Plan.

[2] Although this information is provided in Section IV.D on pages 17-18 of the Disclosure Statement, it also must be included in the Plan.

[3] Although some of this information is provided in Section IV.D on pages 17-18 of the Disclosure Statement, all of it must be included in the Plan.

[4] Although the Debtor provides this information in Section II.A on page 3 of the Disclosure Statement, it also must provide this information in the Plan.

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