In re: DECARLOAN ENTERPRISES, INC., et al.,  Chapter 11, Debtors.
Case No. 16-41262.
United States Bankruptcy Court, E.D. Michigan, Southern Division.
June 3, 2016.
ORDER REQUIRING DEBTORS TO AMEND DISCLOSURE STATEMENT
THOMAS J. TUCKER, Bankruptcy Judge.
On June 1, 2016, the Debtors in these jointly administered cases filed a plan and disclosure statement, in a document entitled “Combined Plan of Reorganization and Disclosure Statement of Decarloan Enterprises, Inc. and Gary A. DeCarlo” (Docket # 49). The Court cannot yet grant preliminary approval of the disclosure statement contained within this document (“Disclosure Statement”). The Court notes the following problems, which Debtors must correct.
First, Debtors must delete Paragraph 2.3 of the Plan on pages 11 through 12, which treats the Group III claims of “Allowed Priority Claims other than those asserted under § 507(a)(8), if any.” If in fact there are any “Allowed Priority Claims other than those asserted under § 507(a)(8)” of the type described in Group III on pages 11 through 12, those claims must be classified under Article III of the Plan. 11 U.S.C. § 1123(a)(1) requires classification of all priority claims except those of a kind specified in 11 U.S.C. §§ 507(a)(2), (a)(3), or (a)(8).
Second, each secured creditor currently in Class I of the Plan, on page 13 (MS&G and Central), must be placed in a separate class. And with regard to each of these secured creditors, Debtors must state all of the following: the amount of the secured creditor’s claim without regard to the value of the collateral; 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, Debtors must state the priority of each secured creditor (e.g., which creditor has a first priority lien and which creditor has a second priority lien).
Third, in Paragraph 3.2 of the Plan on page 13 regarding Class II, Debtors must first indicate that this Class treats the allowed secured claim of the City of Warren. With regard to this secured creditor, Debtors also must provide all of the types of information required under the “Second” paragraph of this Order, above. The Court notes that claim of the City of Warren appears to be secured by the same real properties on which Wells Fargo has liens. Debtors therefore must provide information in this paragraph regarding the priority of the City of Warren’s liens on these properties.
Fourth, in Paragraph 3.3 of the Plan on page 13, Debtors state, in relevant part, that “Class II consists of the secured portion of the claim of Wells Fargo.” (Emphasis added.) First, Debtors must change “Class II” to the correct class number in this sentence. Then, Debtors must modify this sentence so that it states instead that this class consists of the allowed secured claim of Wells Fargo.” With regard to the secured claim of Wells Fargo, Debtors must provide all of the types of information required under the “Second” paragraph of this Order, above. Debtors also must state when payments to Wells Fargo will begin under the Plan.
Fifth, Debtors must modify the sentence in Paragraph 3.4.1 of the Plan on page 13 so that it states: “Neither pre-confirmation interest nor post-confirmation interest on Allowed Class IV Claims will be paid.”
Sixth, in Paragraph 3.5 of the Plan on page 14, Debtors must state who are the Interest Holders of the Debtor Decarloan Enterprises, Inc.  Debtors also must state in Paragraph 3.5.1.B of the Plan on page 14, who will own Decarloan Enterprises, Inc. during the time period after confirmation of the Plan and until the auction sale of the Interests in that Debtor, if Class III rejects the Plan. See generally 11 U.S.C. § 1141(d)(1)(B).
Seventh, in the first sentence of Paragraph V.5.1 of the Plan on page 16, Debtors state, in relevant part: “Class III is conclusively presumed to have accepted the Plan pursuant to § 1126(f) of the Bankruptcy Code.” (Emphasis added.) This is an incorrect statement because Class III is impaired under the Plan. See 11 U.S.C. § 1126(f). Debtors therefore must delete this sentence.
Eighth, Debtors must modify Paragraph 5.3 of the Plan on page 16 so that it correctly lists which classes are impaired under the Plan, and therefore entitled to vote on the Plan.
Ninth, in Paragraph II.B.i of the Disclosure Statement on page 29, Debtors must state that Decarloan Enterprises, Inc. is a corporation, and Debtors must state under which state’s laws Decarloan Enterprises, Inc. is incorporated.
Tenth, in Paragraph II.B.ii of the Disclosure Statement on page 29, Debtors must state what compensation and fringe benefits Gary DeCarlo and Patricia DeCarlo received pre-petition, and what fringe benefits they received post-petition. Debtors also must describe the background of Gary DeCarlo and Patricia DeCarlo (i.e., their education and work history).
Eleventh, in Paragraph II.B.iii of the Disclosure Statement on pages 29-30, Debtors must describe the bases of the claims referred to in this paragraph.
Twelfth, Paragraph III.C of the Disclosure Statement on page 31 states, in relevant part: “Pursuant to section 362 of the Bankruptcy Code, cases commenced against the Debtors were automatically stayed due to the bankruptcy filing.” Debtors must describe what cases, if any, were commenced against the Debtors that have been stayed.
Thirteenth, in Exhibit A to the Disclosure Statement, Debtors must estimate the value of the potential causes of action against “Neighbor and Insurance Company” and “Hands on Boxing.” Debtors also must list these potential causes of action and describe them in Paragraph IV.C of the Disclosure Statement on pages 32-33.
Fourteenth, Debtors must attach to the Disclosure Statement financial information regarding Gary DeCarlo for (1) the three-year pre-petition period, and (2) the post-petition to date period.
Fifteenth, Debtors must modify Paragraph VI.E. of the Disclosure Statement on pages 49-50, so that it states:
E. Effect of confirmation
If the plan is confirmed by the Court:
1. Its terms are binding on the debtor, all creditors, shareholders and other parties in interest, regardless of whether they have accepted the plan.
2. Except as provided in the plan and in 11 U.S.C. § 1141(d):
(a) In the case of a corporation that is reorganizing and continuing business:
(1) All claims and interests will be discharged.
(2) Creditors and shareholders will be prohibited from asserting their claims against or interests in the debtor or its assets.
(b) In the case of a corporation that is liquidating and not continuing its business:
(1) Claims and interests will not be discharged.
(2) Creditors and shareholders will not be prohibited from asserting their claims against or interests in the debtor or its assets.
(c) In the case of an individual or husband and wife:
(1) Claims will be discharged, except as provided in 11 U.S.C. §§ 523 and 1141(d). Unless the Court orders otherwise, the discharge will be entered only after completion of plan payments as provided in § 1141(d)(5)(a). It is the usual practice of the Court to close Chapter 11 cases after confirmation, then the individual debtor files a motion to reopen the case for entry of discharge upon completion of plan payments.
(2) Creditors will be prohibited from asserting their claims except as to those debts which are not discharged or dischargeable under 11 U.S.C. §§ 523 and 1141(d).
Parts VI.E.2(a) of this Disclosure Statement applies to the Debtor Decarloan Enterprises, Inc., and Part VI.E.2(c), applies to the Debtor Gary A. DeCarlo.
Sixteenth, Debtor must correct the following apparent typographical errors on page 14 of the Plan:
• Debtor must modify the first sentence of Paragraph 3.5.1.B so that it states: If Class III rejects the Plan, and the Court determines that, as a result of such rejection, the Plan but for this Section 3.5.1(B) does not comply with the absolute priority rule, the Interests of the Debtors shall be sold at the Equity Auction as set forth in Section 4.1 of this Plan.
• In the first sentence of Paragraph 4.1, Debtor must change “3.5.1(A)” to “3.5.1(B).”
• In Paragraph 4.1.1, Debtor must change “Class III” to “Class IV.”
IT IS ORDERED that no later than June 9, 2016, Debtors must file an amended combined plan and disclosure statement that is consistent with this Order.
IT IS FURTHER ORDERED that no later than June 9, 2016, Debtors also must file a redlined version of the amended combined plan and disclosure statement, showing the changes Debtors have made to the “Combined Plan of Reorganization and Disclosure Statement of Decarloan Enterprises, Inc. and Gary A. DeCarlo,” filed June 1, 2016.
 The Debtors in these jointly administered cases are Decarloan Enterprises, Inc. (Case No. 16-41262) and Gary A. DeCarlo (Case No. 16-41263).
 Although this information is provided in Paragraphs II.B.i, II.C.i and II.C.ii of the Disclosure Statement on pages 29-30, it also must be provided in Paragraph 3.5 of the Plan.
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