- What events prompted the
Global Settlement?
- What is the rate of post-petition
interest paid on allowed claims under the Global Settlement?
- Will that single interest
rate be applicable to all distributions of interest to be made
in the case?
- Why after more than a decade
in Chapter 7 would the case be converted to Chapter 11?
- Will the holders of Senior
and Subordinated Notes share in distributions of post-petition
interest on a pro rata basis?
- What other payments were
provided for under the Global Settlement?
- When did the Bankruptcy Court
consider the Global Settlement?
- Did I need to appear at the
hearing or file any papers in order to receive future distributions
from the bankruptcy estate?
- What impact will the Global
Settlement have on distributions of post-petition interest to
creditors other than the holders of Senior and Subordinated
Notes?
- Are the terms of the Global
Settlement Order binding on me?
- When were the payments under
the Global Settlement made?
- How much post-petition interest
am I entitled to, and how much will I receive?
- Will I be required to pay
state and federal income taxes on payments of post-petition
interest?
- Does the Global Settlement
provide for any distribution or payment to holders of the Debtor's
common stock?
- How can I obtain answers
to other questions about the Global Settlement?
Ongoing Frequently Asked Questions and News
- I have heard that all allowed
claims of bondholders and other creditors have been paid in
full. Does that mean that there will there be any value for
the common stock of SEBC coming from the bankruptcy liquidation?
- If the remainder of that
$80 million or more in interest is paid, will the holders of
SEBC common stock then receive a distribution?
- What if anything can be
done to create value for the holders of SEBC common stock?
- What form of equity infusion
transaction is envisioned?
- How can I contact the stock
transfer agent to confirm that my holdings of SEBC common stock
are reflected accurately on the shareholder list?
- Notwithstanding entry of
the Trading Injunction Order, what level of trading has existed
in the SEBC common stock?
- What
is the likelihood and contemplated timing of any future distributions
to bondholders and other creditors?
- What is the current status
of cash on hand and SEBC net operating loss carryovers, and
what number of shares of SEBC common stock are outstanding?
- What is the status of the
remaining properties owned by SEBC and what happened to the
sale to Liberty Properties that was approved by the Court?
- Is there a summary of all
Interim Distributions made over the course of the case, and
how much post-petition interest remains unpaid?
- Has the Bankruptcy Court
ruled on the Trustee's Motion to Convert the case to a case
under Chapter 11, and what happens next?
- What is the purpose behind
the conversion of the case to Chapter 11?
- What are the details, status
and timing of the proposed transaction which was discussed in
the motion to convert the Southeast Banking Corporation case
to Chapter 11?
- Now that the case has been
converted, will creditors and shareholders be required to file
proofs of claim or interest in order to participate in the distribution
under any Chapter 11 plan?
- The answer to Question No.
28 above indicates that no information about the proposed transaction
will be disclosed until after a deal is already struck. Should
there not be some form of public competitive bidding process
for the remaining assets of SEBC?
- As the case moves forward in Chapter 11,
will the interests of shareholders be represented in the
process of developing and presenting a plan of
reorganization?
- What additional information is the
Trustee in a position to disclose about the status of the
investor and the proposed transaction that is intended to
serve as a basis for the Chapter 11 plan?
- What is the precise extent of the
bankruptcy estate's interest in the Jacksonville Properties
described in FAQ #24?
- What additional information can the
Trustee provide about the common stock to be issued in
connection with the proposed investor transaction described
in FAQ #32 above?
- Now that the Bankruptcy Court has
authorized the Legal Representative for Holders of SEBC
Common Stock to engage a financial advisor, can you explain
the respective roles of the Legal Representative, the
Chapter 11 Trustee and their advisors?
- When will you post more information about
SEBC or the transaction discussed in the recent postings on
the website?
- Has the Trustee reached a definitive
agreement with the Investor for the filing of a Chapter 11
Plan, and how will the confirmation process proceed?
- I received in the mail or have seen on
this website a Notice of Deadline for the Filing of Requests
for the Payment of Administrative Claims. What is an
administrative claim and who is required to file and serve a
request for payment of an administrative claim?
- On February 9, 2009 the Bankruptcy Court
entered a series of Orders which have been posted on this
website. How does the bankruptcy process proceed from here?
- Will SEBC Holdings, LP Common Units be
traded on an exchange or in the "Pink Sheets"?
- Will SEBC Holdings, LP pay dividends on
its Common Units?
- Assuming that the Plan is confirmed and
the Transaction contemplated in the Plan closes, how and
when will current Holders of shares of SEBC Common Stock
convert such shares into the SEBC Holdings Common Units to
which they are entitled under the Plan?
- Assuming that the Plan is confirmed and
the Transaction contemplated by the Plan closes, how will
Holders of Senior Notes, Subordinated Notes, Claims and
Series A and Series E Preferred Stock receive the Cash
Distribution, Reorganized SEBC Series K Junior Preferred
Stock and/or SEBC Holdings Senior and Junior Preferred Units
to which they are entitled under the Plan?
- Now that the Bankruptcy Court has
confirmed the Plan, what happens next?
- Has the Effective Date of the Plan
occurred?
- What is the status of the Trustee's
efforts to pursue the Transaction with the Investor and/or
an alternative investor?
- Has the Trustee sought a further
extension of the deadline for the occurrence of the Plan
Effective Date?
- Has the deadline for the occurrence of
the Plan Effective Date been extended further, and, if so,
what is the status of the Trustee's efforts to pursue the
Transaction with the Investor and/or an alternative
investor?
- The extended Effective Date Deadline for
the confirmed Chapter 11 Plan expired on August 31, 2009
without the Trustee having sought to further extend this
deadline. Does this mean that the Effective Date can no
longer be extended?
- What is the current status of the
Trustee's efforts to pursue a transaction with an
alternative investor?
- The Trustee recently sought a further
extension of the Effective Date Deadline under the confirmed
Chapter 11 Plan through and including December 31, 2009. Is
there anything to report on whether an alternate Transaction
may close by that date?
- What are the tax status, financial
position and asset status of the SEBC estate?
- Why has the Trustee sought a further
extension of the December 31, 2009 Effective Date Deadline?
- What is the latest update on the
Trustee's efforts to pursue an alternative transaction that
could realize further value from SEBC's remaining assets and
has the Trustee sought a further extension of the Effective
Date of the confirmed Plan?
- Why has the Trustee sought a further
extension of the Effective Date of the confirmed Plan?
- Why are quotations for shares of common
stock of SEBC no longer available on the Pink OTC Markets (pinksheets.com)?
- What did the Trustee report to the Court
at the August 17, 2010 status conference?
- Has SEBC's common stock been
de-registered?
- What is the latest status of the SEBC bankruptcy case?
- What is the latest status of the SEBC bankruptcy case?
- What would need to transpire in order for stockholders to receive any distribution in the SEBC case?
- I am a creditor of SEBC. Now that the case has been re-converted back to
Chapter 7, how does that affect my claims?
- I am a stockholder of SEBC. Now that the case has been re-converted back to
Chapter 7, how does that affect my equity interests?
- I am a former employee of Southeast Bank, N.A.n How does the re-conversion of SEBC’s case back to
Chapter 7 affect me?
- What is the latest status of the SEBC bankruptcy case?
- When does the Trustee expect to wind up and close the SEBC bankruptcy case, and how much does the Trustee expect to distribute in a final distribution to creditors?
- When will final distributions be made?
- Now that the Trustee’s Final Report has filed, when will final distributions be made?
- Will there be a distribution to shareholders of Southeast Banking Corporation?
Question 1: What events prompted the Global
Settlement?
Beginning in 1993 the Chapter 7 Trustee made a series of Interim
Distributions to creditors of the Southeast bankruptcy estate, including
the holders of one class of Senior Notes and five different issues
of Subordinated Notes.
As a result of the Sixth Interim Distribution made on or about July
31, 2002, all allowed, timely-filed general unsecured claims (including
all allowed claims arising from the Senior Notes and Subordinated
Notes) were paid in full, in cash, including interest through the
date of the bankruptcy filing (i.e., pre-petition interest), but
without interest since such date (i.e., post-petition interest).
Under the scheme of priorities established in the Bankruptcy
Code, the Trustee was required next to pay those allowed claims
that were filed after the bar date established by the Bankruptcy
Court back in 1992, and then to pay post-petition interest on all
allowed claims. In addition, the Trustee must pay ongoing administrative
expenses relating to the bankruptcy case, which expenses take priority
over the payment of post-petition interest. The Trustee estimated
that after the resolution and payment of the late-filed claims and
the payment of such administrative expenses, there will be additional
funds on hand with which to pay some amount of post-petition interest
to creditors.
A dispute arose between the holder of a majority of the Senior
Notes and certain holders of Subordinated Notes (and their respective
Indenture Trustees) regarding the effect of the subordination provisions
contained in the Subordinated Note Indentures on the respective
rights of Senior Noteholders and Subordinated Noteholders to receive
post-petition interest, after the bankruptcy estate had paid all
allowed claims in full as described above. The majority Senior Noteholder
and the Senior Indenture Trustee contended that (i) holders of the
Senior Notes were entitled to receive all distributions of post-petition
interest that would otherwise be distributed on a pro rata basis
to Subordinated Noteholders, until the Senior Noteholders received
all of their post-petition interest, and (ii) for purposes of the
reallocation, the post-petition interest on the Senior Notes should
be calculated and compounded at the 11.25% contract rate under the
Senior Indenture. The Ad Hoc Committee of Subordinated Noteholders
and the Subordinated Indenture Trustee asserted that (i) the subordination
provisions of the various Indentures did not apply to distributions
of post-petition interest under the Bankruptcy Code, (ii) the post-petition
interest on all claims should be calculated at the "legal rate"
(as discussed below), not the contract rate; and (iii) they were
entitled to receive distributions of post-petition interest on a
ratable basis with Senior Noteholders. The Global Settlement resolved
these and other important issues.
An additional dispute developed relating to the claims of the various
Indenture Trustees to receive attorneys' fees and expenses and indenture
trustee fees and expenses under their respective Indentures, as
well as the claim of the majority Senior Noteholder and Ad Hoc Committee
for reimbursement of their attorneys fees and expenses. The Global
Settlement also resolved these issues, as well as a number of other
issues described in the Settlement Motion posted on the Southeast
website.
Question 2: What is the rate of post-petition
interest paid on allowed claims under the Global Settlement?
The statute under which post-petition interest is payable speaks
of the "legal rate" of interest, without specifying that rate, and
does not make clear whether interest is compounded on an annual
or other periodic basis. Two of the Subordinated Notes provide for
floating interest rates, while the other Senior and Subordinated
Notes carry fixed rates ranging from 4.75% to 11.25%. The Global
Settlement provided for a uniform post-petition interest rate of
5.57% per annum through May 31, 2002 for all allowed claims, based
on the statutory federal judgment rate in effect at the time the
Southeast bankruptcy case was filed, and for no compounding of interest.
Question 3: Will that single interest rate
be applicable to all distributions of interest to be made in the
case?
Since its filing in 1991, the Southeast bankruptcy case has been
pending under Chapter 7 of the Bankruptcy Code. The Global Settlement
provides that the 5.57% rate will apply if the case remains pending
under Chapter 7; if, however, the case were to be converted to a
case under Chapter 11 of the Bankruptcy Code, the rate of interest
would increase to 8% per annum from the Petition Date, and the allowed
claim of each creditor eligible to receive post-petition interest
shall include an amount equal to the difference between (i) post-petition
interest on its allowed claim at the rate of 8% per annum through
May 31, 2002 and (ii) the aggregate amount of distributions made
to such creditor on account of post-petition interest during the
Chapter 7 case.
Question 4: Why after more than a decade in
Chapter 7 would the case be converted to Chapter 11?
At present there is no plan to convert the case to Chapter 11.
If, however, the Trustee and other parties in interest are to determine
that such conversion would be necessary to realize additional incremental
value for creditors, the Court may be asked by separate motion to
consider such conversion. The reallocation of "Chapter 11 Attributable
Distributions" in a Chapter 11 case is addressed in the accompanying
Summary.
Question 5: Will the holders of Senior and
Subordinated Notes share in distributions of post-petition interest
on a pro rata basis?
No. The Indentures governing the several issues of Subordinated
Notes contain various subordination provisions which require that
certain amounts owed in respect of the Senior Notes be "paid in
full" prior to any payment on the Subordinated Notes. From 1994
through 1999 certain holders of the Senior and Subordinated Notes
and their respective Indenture Trustees were involved in litigation
and a series of appeals over the application of those provisions
to the Senior Noteholders' claims for post-petition interest at
the contract rate out of that portion of the Interim Distributions
allocable to Subordinated Noteholders; however, it was unclear whether
the disposition of that litigation resolved the issue of whether
the distribution of post-petition interest on the Subordinated Notes
is subordinated to distributions of post-petition interest on the
Senior Notes. The Global Settlement adopted a formula under which
a portion of the post-petition interest payable in respect of the
Subordinated Notes is reallocated to holders of the Senior Notes
until the Senior Noteholders have received, out of the distribution
of post-petition interest otherwise allocable to the holders of
Subordinated Notes, up to 48% of the difference between (i) approximately
$13 million and (ii) the Senior Noteholders' ratable share of the
distributions of post-petition interest to creditors. The effect
of the subordination of the FDIC Claims on this reallocation is
addressed in the accompanying Summary.
Question 6: What other payments were provided
for under the Global Settlement?
In addition to the payment and reallocation of post-petition
interest as described above, the Global Settlement also provided
that certain of the parties who participated in the settlement negotiations
would receive payment or reimbursement from the bankruptcy estate
of their attorneys' fees incurred in connection with the bankruptcy
case through July 31, 2002. This portion of the Global Settlement
resolved an appeal pending in the District Court, in which the Senior
Indenture Trustee and majority holder of the Senior Notes were seeking
the payment of some $1.35 million in fees.
Under the Global Settlement, the Senior and Subordinated Indenture
Trustees (but not any individual holder of Senior or Subordinated
Notes) receivde certain post-petition attorneys' fees as provided
under the terms of the various Indentures, and the Ad Hoc Committee
of Subordinated Noteholders also received payment of attorneys'
fees relating to its activity in the bankruptcy case over the past
several years. However, unless the bankruptcy case is converted
to a case under Chapter 11 of the Bankruptcy Code, the Indenture
Trustees will give up any claim against the bankruptcy estate (but
not against the distributions to Senior and Subordinated Noteholders
under the terms of the applicable Indentures) for any fees and expenses
incurred after July 31, 2002, and the Ad Hoc Committee will give
up any claim for attorneys' fees and expenses incurred after that
date as well. Any other creditor asserting a right to recover attorneys
fees from the bankruptcy estate was afforded a period of time within
which to file a claim for those fees, as incurred through and including
July 31, 2002. However, the Chapter 7 Trustee and all other parties
in interest in the bankruptcy case reserved the right to object
to any such claim for fees.
Question 7: When will the Bankruptcy Court
consider the Global Settlement?
The Bankruptcy Court conducted a final hearing on the Global
Settlement for Monday, November 3, 2003 at 1:00 p.m., at the location
specified in the Notice Order, which is posted on the Southeast
website. The Notice Order also provided that any creditor or party
in interest affected by the Global Settlement who desires to object
must file a written Objection by not later than October 1, 2003,
and serve copies of that Objection on counsel for the Trustee and
other parties identified in the Notice Order so as to be received
by that same date.
Question 8: Did I need to appear at the hearing
or file any papers in order to receive future distributions from
the bankruptcy estate?
No. You did not need to appear at the hearing or file anything
with the Bankruptcy Court in order to receive future distributions
of post-petition interest to which you may become entitled. If you
failed to appear or object on a timely basis, you were deemed to
have waived your right to be heard on the issues addressed in the
Settlement Motion, and the reallocation provisions described in
the Settlement Order will govern distributions of post-petition
interest on the Senior and Subordinated Notes.
Question 9: What impact will the Global Settlement
have on distributions of post-petition interest to creditors other
than the holders of Senior and Subordinated Notes?
Creditors other than holders of the Senior and Subordinated Notes
who are entitled to receive post-petition interest and whose distributions
are not subject to contractual subordination provisions will also
receive distributions of their pro rata shares of post-petition
interest at the legal rate described in Answer No. 2 above. The
reallocation provisions of the Global Settlement are intended and
designed to have no impact on the post-petition interest distributions
to such non-noteholder creditors.
Question 10: Are the terms of the Global Settlement
Order be binding on me?
Yes. The Settlement Order has become final under the Federal
Rules of Bankruptcy Procedure, its terms have become binding on
the Trustee, the Indenture Trustees, all holders of the Senior and
Subordinated Notes, and all other creditors asserting claims against
the estate.
Question 11: When were the payments under
the Global Settlement made?
The payments of post-petition attorneys' fees were made as soon
as the Settlement Order became final and was no longer subject to
rehearing or appeal under the Federal Rules of Bankruptcy Procedure.
Payments of post-petition interest will be made on an irregular
basis as the Chapter 7 Trustee may determine, based upon the availability
of funds and other factors within his judgment. In order for any
distributions of post-petition interest to proceed, the Chapter
7 Trustee was required first to resolve and pay all of the late-filed
claims, including the FDIC Claim of $22.1 million plus interest
described in the Settlement Motion and the Settlement Order, and
all pending administrative expenses.
Question 12: How much post-petition interest
am I entitled to, and how much will I receive?
The amount of post-petition interest payable on each claim can
be calculated by applying the 5.57% annual interest rate to the
amount of the claim, on a simple basis without compounding through
May 31, 2002; however, the amount of the claim on which interest
is calculated is reduced by the amount of each Interim Distribution
made since the bankruptcy filing, with each reduction taking place
on the date on which the Interim Distribution was made to the Indenture
Trustees or first made available to holders of the Subordinated
Notes. The Settlement Order describes the formula for reallocation
of post-petition interest between holders of the Senior Notes and
Subordinated Notes. The accompanying Summary (which is also posted
on the Southeast website) includes a chart describing the amount
of post-petition interest payable on claims arising under the Senior
Notes, Subordinated Notes, and other obligations of the Debtor,
based upon hypothetical distribution amounts. It is not possible
at this stage to predict the total amount of such distributions,
or the amount of post-petition interest that will be paid to each
creditor.
Question 13: Will I be required to pay state
and federal income taxes on payments of post-petition interest?
The tax consequences associated with your receipt of post-petition
interest may vary depending on a number of factors. You are advised
to consult with your personal tax advisor about your particular
situation.
Question 14: Does the Global Settlement provide
for any distribution or payment to holders of the Debtor's common
stock?
No. The Bankruptcy Code affords priority to the payment of post-petition
interest on all allowed claims before any distribution is made to
the holders of equity securities. The Global Settlement addresses
only the payment of such post-petition interest, as well as professional
fees and costs incurred by the Indenture Trustees and creditors
of the estate.
Question 15: How can I obtain answers to other
questions about the Global Settlement?
You may post a question on the bulletin board of the Southeast
Website by accessing the on-line forum through the link located
on the Website. The Chapter 7 Trustee and his staff will attempt
to post an answer to every question within three (3) United States
business days, but cannot guarantee that every question will be
answered and cannot offer legal or financial advice about any individual
situation. All questions and answers posted on the forum will be
available to anyone who may access the Website, so inquiries of
a personal or confidential nature should be discussed with your
own counsel or advisor rather than posted on the website.
You may also contact counsel for the Chapter 7 Trustee in writing
or by e-mail at the addresses indicated below; however, counsel
is not in a position to provide any legal advice to you or maintain
the confidence of any inquiries directed to him. The best way to
obtain further answers and information unique to your personal situation
would be to consult with counsel of your own choosing.
GREENBERG TRAURIG, P.A.
Counsel for Jeffrey H. Beck, Chapter 7 Trustee
333 Avenue of the Americas (S.E. 2nd Avenue)
Suite 4400
Miami, Florida 33131
Telephone: (305) 579-0500
Ongoing
Frequently Asked Questions and News
Question 16: I have heard that all allowed
claims of bondholders and other creditors have been paid in full.
Does that mean that there will there be any value for the common
stock of SEBC coming from the bankruptcy liquidation?
SEBC is in a Chapter 7 bankruptcy case. In a Chapter 7 liquidation,
holders of common stock are not entitled to receive any funds realized
from the liquidation of assets until creditors and preferred shareholders
have been paid in full the amounts to which they are entitled. Creditors
are entitled to be paid the full amount of their claims, which is
the amount due at the time of the bankruptcy filing in September
of 1991, plus interest on those claims from the date of the bankruptcy
filing until the date of payment of the full amount of their claims.
While the claims of creditors have been paid in full through a series
of Interim Distributions in the bankruptcy case, interest on those
claims amounting to more than $130 million became due prior to the
payment in full. Of that amount approximately $50 million of interest
has been paid, and therefore, over $80 million of interest remains
due to creditors and unpaid, all payable before any distribution
can be made to holders of common stock in a Chapter 7 case.
Question 17: If the remainder of that $80
million or more in interest is paid, will the holders of SEBC common
stock then receive a distribution?
First, it does not appear that the Chapter 7 bankruptcy estate
has sufficient assets from which to pay the remainder of the interest
to creditors and bondholders in full. In addition, at the time of
the bankruptcy filing SEBC also had outstanding two series of preferred
stock, each of which is similarly entitled to priority in payment
or other distribution from the bankruptcy estate ahead of common
stock. The remaining assets of SEBC consist of land holdings in
Jacksonville, Florida. The value of such holdings is not certain
as it is dependent upon the outcome of permit applications now pending
before regulatory agencies and upon the results of sales efforts
which will occur upon receipt of the permits. However, there is
no prospect for the results of liquidation of the remaining land
holdings to be sufficient to pay the remaining interest due to creditors
or the amounts which would be due to satisfy preferred shareholders'
entitlements. Thus, there is little or no likelihood of value for
common shareholders if the SEBC case remains pending under Chapter
7 and the remaining assets are liquidated.
Question 18: What if anything can be done
to create value for the holders of SEBC common stock?
The Trustee recently sought and obtained approval of the Bankruptcy
Court to retain an investment banker to determine whether it may
be possible to enter into a business transaction with an investor
willing to invest new equity which, if accomplished, might create
value for the common stock. The investment banker has been retained
on a contingent fee basis, holds considerable experience in transactions
of this type, and has been in contact with a number of potential
investors known to be financially capable of entering into such
a transaction.
Question 19: What form of equity infusion
transaction is envisioned?
The form, substance and economic structure of any such transaction
remain uncertain at this time, and depend entirely upon whether
the efforts to attract a suitable investor will be successful. The
implementation of any such transaction might require first that
the bankruptcy case be converted to a case under Chapter 11, which
would require the filing of a motion and a hearing in the Bankruptcy
Court. In connection with any such filing, the Trustee will issue
a press release that will be posted on this website, and provide
other notice and a hearing in the Bankruptcy Court as required by
the Bankruptcy Code and Rules.
Question 20: How can I contact the stock transfer
agent to confirm that my holdings of SEBC common stock are reflected
accurately on the shareholder list?
The last known shareholder list compiled by or for SEBC is dated
February 4, 1989. One of the prior bankruptcy trustees for SEBC
determined that there was no benefit to the estate from continuing
to pay the fees typically charged by a stock transfer agent, and
accordingly there has been no transfer agent for several years.
The prior trustee did, however, seek and obtain a Trading Injunction
Order from the Bankruptcy Court on July 7, 1994, prohibiting and
enjoining the sale, trade or transfer of SEBC common and Series
E Preferred Stock by any person or entity that owned, or would own
after such sale, trade or transfer, 5% of the issued and outstanding
shares of SEBC common stock or any amount of shares of the Series
E Preferred Stock. At the direction of the Bankruptcy Court the
Order was published in major metropolitan newspapers throughout
the country.
Question 21: Notwithstanding entry of the
Trading Injunction Order, what level of trading has existed in the
SEBC common stock?
As the stock does not trade on any recognized market and there
is currently no prospect for distribution to shareholders, the Trustee
is not aware of the level of trading activity in the SEBC common
stock. As necessary, the Trustee will seek enforcement of the Trading
Injunction Order against any persons or entities who may have sold,
traded, transferred or acquired any common or Series E Preferred
Stock in violation of that Order.
Question 22: What is the likelihood and contemplated
timing of any future distributions to bondholders and other creditors?
The Trustee has no immediate plans to make any further distribution
at this time. The likely source of any such distribution would be
the proceeds from a sale of the remaining properties in Jacksonville.
The ultimate value of those properties, which are owned by a non-debtor
subsidiary of the bankruptcy estate, will depend upon finalizing
a wetlands permit application which has been pending before the
Army Corps of Engineers since August of 2005. Unfortunately the
Corps is not subject to any regulation governing the time frame
to act on such an application; however, the Trustee expects the
application to be processed within the next few months, after which
the properties can be marketed and sold, most likely in the last
quarter of 2007 or first quarter of 2008. At that time, the Trustee
may be in a position to make a further distribution of post-petition
interest to creditors and bondholders in accordance with the Global
Settlement Agreement described on this website.
In addition, as reflected in Question 18 above, the Trustee recently
retained an investment banker to explore and pursue a form of equity
infusion transaction with an investor that could realize some additional
financial benefit for the estate. At this time it is not possible
to predict whether the efforts of the investment banker will be
successful, whether or when any such additional value may be realized,
and how the timing of any such transaction may affect the disposition
of the Jacksonville properties.
Question 23: What is the current status of
cash on hand and SEBC net operating loss carryovers, and what number
of shares of SEBC common stock are outstanding?
The Trustee has the following approximate cash on hand as of
April 30, 2007:
Southeast Banking Corporation:
$6.1 million
Southeast Bank, N.A.
$10.8 million
The net operating carryover of SEBC as of December 31, 2005,
was $801,586,099. According to SEBC's 10Q filing for the fiscal
year ended December 31, 1990, there were 34,329,064 million shares
of common stock outstanding as of that date.
Question 24: What is the status of the remaining
properties owned by SEBC and what happened to the sale to Liberty
Properties that was approved by the Court?
SEBC owns several companies which own outright or interests in
several parcels of real estate in Jacksonville, Florida. They are
referred to as the Southwest Quadrant and Belfort properties and
will be addressed separately below.
Southwest Quadrant Property
Through wholly owned subsidiaries SWQ Properties, Inc. and Southeast
Properties, Inc. a 70% interest was held in undeveloped residential
and commercially zoned acreage located south of J.T. Butler Boulevard
and west of Southside Boulevard in Jacksonville. This property has
been referred to over the period of ownership by the estate's subsidiaries
as the "Southwest Quadrant" property. As of the appointment of the
current successor Trustee in 1998, a settlement had just been reached
and approved by the Bankruptcy Court in long standing litigation
with the co-owners of the property. Since 1998, the Trustee has
engaged in a significant and orderly sequence of steps to realize
the full potential of the Southwest Quadrant property regarding
zoning, planning, access and wetlands issues.
First, after engaging planning and engineering firms and after engaging
the local co-owners of the property for management and oversight
assistance, the Trustee successfully moved to rezone and change
land use plan treatment of this property to categories commensurate
with the highest and best use of the properties. Then, because of
steps taken by local authorities which, it was believed, had the
effect of inappropriately restricting access to the Southwest Quadrant
property, the Trustee initiated litigation with the Jacksonville
Transportation Authority ("JTA") over access issues. This litigation
was settled after Bankruptcy Court approval, with the agreement
by the JTA to compensate the estate's subsidiaries and their co-owners
with a combination of payment of $2.25 million and the construction
of an urban 4 lane divided roadway traversing the Southwest Quadrant
property providing excellent access. In addition to the cash and
roadway, the JTA agreed to allow the estate's subsidiaries and co-owners
to utilize the construction costs over the Southwest Quadrant property
as a means of obtaining a credit with local authorities toward what
are called "concurrency" impact fees that would otherwise be due
upon the development of the property. Using this right, the Trustee
negotiated a "Fair Share" impact fee credit agreement with the City
of Jacksonville for a credit in excess of $5 million toward such
concurrency impact fees. The roadway, which is estimated to have
cost well in excess of $10 million was partially completed in July
2005.
Because of the then strength of the residential market, the lack
of wetlands issues on the residential parcel at the Southwest Quadrant
and the partial completion of the roadway, the Trustee determined
to sell the residential parcel at the Southwest Quadrant. In July
2005, the Trustee was able to sell the residential parcel of approximately
32.5 upland acres for $400,000 per acre or $13 million (for the
interest of both the estate's subsidiaries and its co-owners) to
D.R. Horton Homes.
In addition to monitoring the completion of the balance of the JTA
roadway, the next step in the sequence of readying the remainder
of the property for development and sale was the completion of plans
for development and sale of the remaining acreage of the Southwest
Quadrant property coupled with efforts to obtain a permit to fill
certain of the wetlands areas of the property. In order to prepare
for the requirements anticipated to be imposed for obtaining this
wetlands fill permit, the Trustee sought and obtained Bankruptcy
Court approval to purchase 110 "mitigation credits" from an appropriate
regional mitigation bank. Mitigation credits represent the commitment
to convert upland acreage to wetlands within the same geographic
area and water basin. The Trustee, utilizing the services of engineers
and environmental consultants, filed in the summer of 2005, applications
with the local water management district, the St. Johns River Water
Management District and with the US Army Corps of Engineers, for
permission to fill certain wetland areas within the Southwest Quadrant
property. The amount of upland acreage that will be available to
be developed and sold will depend upon the outcome of such permit
applications to the regulatory authorities. A permit was approved
in early April 2007 by the local water management district. The
US Army Corps of Engineers continues to process the application.
A decision is expected in the next few months.
The JTA roadway was completed in late 2006. In addition, a sale
had been negotiated in late 2006 with Liberty Properties, Inc. for
the sale of a parcel adjacent to the residential property sold to
D.R. Horton. The buyer was to use the property to construct a facility
to be leased to the US General Services Administration and was subject
to the buyer and this site being selected by that agency. The sale
was conditioned upon the issuance of the wetlands permit sufficient
to deliver to Liberty Properties approximately 11 upland acres for
the construction of the anticipated facility. Unfortunately, the
sale was cancelled by the buyer within the time period it was permitted
to do so under the contract of sale. The Trustee believes that this
was based, largely, on the fact that the wetlands permit had not
been issued by both the local authority and the Army Corps of Engineers
by the time a decision had to be made for the site selection for
the anticipated facility.
As the outcome of the permit application process nears a close and
the outcome can be anticipated, the Trustee will actively prepare
the balance of properties for development and sale. As indicated,
there is a wide range of the amount of upland acreage that will
be available for development or sale which depends upon the final
outcome of the permit application. That range is between 40 and
70 upland acres. The 110 mitigation credits are still owned and
a portion or all of them will be used to meet the requirements of
the regulatory agencies in the conditions of the permit to be obtained
for the Southwest Quadrant property and the Belfort property discussed
below. Any unused credits will be resold. It is anticipated that
this property and the mitigation credits will either be sold outright
or will be included in a development venture within the next year.
Belfort Property
Through Second Pioneer Corporation, a wholly owned subsidiary of
First Pioneer Corporation, a wholly owned subsidiary of SEBC, a
100% interest is held in 7.32 acres of undeveloped commercially
zoned land at the intersection of Skinner Parkway and Salisbury
Road in Jacksonville, Florida referred to as the "Belfort" property.
Since the current Trustee's appointment, marketing efforts have
proceeded with several active offers and a sale contract approved
by the Court. Unfortunately, such contract offers and approved contract
were terminated by buyers for a number of reasons. The most important
reason was the existence of wetlands on the property which would
impair the use of the property for its highest and best use.
The Trustee determined that the full value of the Belfort parcel
would not be obtained unless the wetlands issues there were properly
addressed. Thus, the Trustee employed management assistance on the
property and employed engineers and environmental consultants to
seek a permit to fill the wetlands on the parcel from the local
water management district, the St. Johns River Water Management
District, and from the US Army Corps of Engineers. The Army Corps
of Engineers has approved the application for permit. Additional
information as requested has been provided to the water management
district and its approval is anticipated in the coming months.
As with the Southwest Quadrant property, as the permit process winds
to a close, the Trustee is preparing to actively pursue development
and sale of the Belfort parcel. It is anticipated that this property
will be sold outright or will be included in a development venture
within the next year.
Question 25 (posted August 17, 2007):
Is there a summary of all Interim Distributions made over the course
of the case, and how much post-petition interest remains unpaid?
Yes. Our financial advisors have prepared a
Summary of Distributions to Bondholders
and Other Creditors, which you may access by clicking on the
foregoing link. The Summary reflects the aggregate amounts
of claims allowed, post-petition interest accrued, and payments
made to the holders of Senior and Subordinated Debt and to other
Creditors in each of the nine Interim Distributions, including the
amounts paid in respect of the Subordinated FDIC Claims and 48%
Guarantee Reserve as required by the Global Settlement Order.
The Summary also reflects the post-petition interest that remains
unpaid for each of the foregoing creditor groups. Note, however,
that in accordance with the Global Settlement Order the Summary
calculates post-petition interest at the rate of 5.57%, and that
if the case is converted to a case under Chapter 11 the effective
interest rate may be adjusted and recalculated as provided in the
Global Settlement Order or a Chapter 11 Plan.
Question 26 (posted September 21, 2007):
Has the Bankruptcy Court ruled on the Trustee's Motion to Convert
the case to a case under Chapter 11, and what happens next?
Yes. The Court granted the Motion to Convert the Case at a hearing
held on September 11, 2007, and issued an Order Granting Motion
to Convert Case to Chapter 11 on September 17, 2007. The Court also
approved a request at the September 11 hearing that a Chapter 11
Trustee be appointed by the United States Trustee, and entered an
Order Granting Motion to Appoint Trustee on September 17, 2007 as
well. The United States Trustee has announced that Jeffrey H. Beck
will be appointed as Chapter 11 Trustee.
It is anticipated that the United States Trustee will decide
whether to appoint an official committee of creditors and a separate
committee of equity holders, or a representative for equity holders.
In his capacity as Chapter 11 Trustee, Mr. Beck will continue to
work with the proposed investor and any such committee, committees,
and/or representative to finalize the terms of the transaction which
will serve as the basis for a Chapter 11 Plan. Once those terms
are finalized the Chapter 11 Trustee will file the Plan, along with
an accompanying Disclosure Statement which must be approved by the
Bankruptcy Court as containing adequate information before votes
can be solicited to accept the Plan. As soon as a Disclosure Statement
and Plan are filed, additional information will be posted on this
website.
Question 27 (posted September 21, 2007):
What is the purpose behind the conversion of the case to Chapter
11?
As previously reported, over the past several months the Trustee
and his professionals have been exploring the possibility of a business
transaction that would serve as the basis to reorganize Southeast
Banking Corporation ("SEBC") through a Chapter 11 Plan. With the
conversion to Chapter 11, the Trustee is now in a position to propose
and seek confirmation of such a Plan.
The aim of the Chapter 11 Plan will be to facilitate an infusion
of new capital into SEBC, continue the existence of SEBC (or a portion
of it) in the financial services industry (not including banking)
in which it and its affiliates had participated, allow SEBC to utilize
certain of its remaining assets (including certain tax attributes),
and create a modest amount of additional value not only for bondholders
and other creditors, but possibly also for the holders of SEBC Preferred
and Common Stock.
Toward that objective, the Chapter 7 Trustee sought and obtained
approval of the Bankruptcy Court to retain an investment banker,
Structured Capital Solutions, LLC ("SCS"), to determine whether
it may be possible to enter into a business transaction with an
investor willing to invest new capital to facilitate the reorganization.
The Trustee then proceeded to enter into a non-binding term sheet
with a well-financed and legitimate institutional investor, subject
to provisions of a confidentiality agreement pending completion
of the investor's due diligence, that provided a basis for conversion
of the case to Chapter 11.
While the investor proposal requires that the transaction be
implemented through confirmation of a Chapter 11 Plan, the ultimate
form of the Plan and the potential benefits for all parties in interest
has yet to be finalized. The more specific details of the transaction,
along with the treatment of each class of SEBC creditors and shareholders
will be disclosed in the Plan and detailed Disclosure Statement
to be filed in due course. As required by the Bankruptcy Code and
Rules, the Plan will be subject to approval by vote of SEBC creditors
and shareholders as well as the Bankruptcy Court.
Question 28 (posted October 16, 2007):
What are the details, status and timing of the proposed transaction
which was discussed in the motion to convert the Southeast Banking
Corporation case to Chapter 11?
Because of confidentiality restrictions, there is no more additional
information to disclose at this point than is indicated in the recent
pleadings (motion to approve employment of SCS, as investment banker,
and motion to convert to chapter 11), and elsewhere on this website.
As previously stated, the assets of the Southeast Banking Corporation
estate (including its non-bankrupt subsidiaries) currently consist
of cash; an operating history in financial services and financial
investments; registered marks and related intellectual property;
ownership through subsidiaries of undeveloped land in Jacksonville,
Florida; and existing tax attributes, including accumulated net
operating loss carryovers. The Chapter 7 Trustee executed a non-binding
letter of intent with a highly qualified institutional investor
to enter into a transaction that would bring SEBC out of bankruptcy
through a Chapter 11 plan, and on the basis of that letter, moved
successfully to convert the case to Chapter 11. The investor has
engaged an accounting firm and counsel to complete due diligence
and to propose and negotiate deal documents. If effectuated, the
transaction would bring modest additional value to creditors and
a modest amount of value to existing preferred and common shareholders.
The proposed transaction does not involve reopening a bank or engaging
in retail banking activity.
The letter of intent contains confidentiality provisions that preclude
the Chapter 11 Trustee from disclosing any additional details until
we are in a position to file a Chapter 11 plan and related disclosure
statement. The Trustee will file a plan and disclosure statement
if and when a definitive agreement is signed with the institutional
investor, and seek approval of the disclosure statement and confirmation
of the plan in accordance with the requirements of the Bankruptcy
Code. The Chapter 11 Trustee and his professionals do not control
the timing or completion of the investor's due diligence, nor the
final form of agreement, and cannot predict whether and when that
process will be completed.
The Trustee anticipates that as soon as a final form of agreement
is signed, a Chapter 11 plan and disclosure statement disclosing
the identity of the proposed investor and the details of the proposed
transaction will be filed. The plan and disclosure statement will
also describe the treatment of, and value of the transaction for
each class of SEBC creditors and shareholders created under the
plan. The Bankruptcy Court will issue an order setting forth the
dates of hearings and other relevant deadlines arising in connection
with the disclosure and plan confirmation process. Copies of that
order, along with the disclosure statement, plan and other relevant
court documents, will be posted to this website.
Question 29 (posted October 25, 2007):
Now that the case has been converted, will creditors and shareholders
be required to file proofs of claim or interest in order to participate
in the distribution under any Chapter 11 plan?
The answer is different for creditors than for shareholders.
As for creditors, shortly after the commencement of the Chapter
7 case the Bankruptcy Court issued a Notice establishing a bar date
of February 10, 1992 for the filing of proofs of claim. More
than 1,135 proofs of claim were filed, and after an extended period
of review, negotiation and, in some cases, objection to disputed
claims, a total amount of $384 million in unsecured claims of bondholders
and creditors were allowed. That bar date is long past, and
bondholders and creditors are not required to re-file proofs of
claim in order to participate in any distribution under a Chapter
11 plan.
As for shareholders, the Notice referenced above did not establish
any bar date for the filing of proofs of interest. As it is
now contemplated that any Chapter 11 plan will include some modest
recovery for the holders of preferred and common stock, the Trustee
will seek either by motion or through such plan to provide a mechanism
and extended deadline for stockholders to file proofs of interest,
or otherwise establish the extent of their holdings so as to participate
in any distribution to be made under a plan.
Question 30 (posted October 29, 2007): The answer
to Question No. 28 above indicates that no information about the
proposed transaction will be disclosed until after a deal is
already struck. Should there not be some form of public
competitive bidding process for the remaining assets of SEBC?
The sale of SEBC assets and the potential restructuring
through a Chapter 11 plan has been and will remain a competitive
process. When it is permissible and appropriate to do so in
accordance with existing confidentiality agreements and the
requirements of the Bankruptcy Code and Rules, all relevant
information will be disclosed. To understand how that is so,
this answer will provide an explanation of two different methods
of realizing value for the constituents of a company in
bankruptcy. In addition, this answer will indicate how the
requirements of competition and disclosure of those methods are
being followed in the SEBC case.
The first method is a sale of the debtor's assets, either
individually or collectively. The procedures that govern sales
during a Chapter 7 or Chapter 11 case are different from those
applicable to a restructuring of the shares and finances of a
company through a Chapter 11 plan. Asset sales require some form
of competitive bidding process and approval of the Bankruptcy
Court and, in most instances, are accomplished through a notice
or motion seeking that approval. In addition to the competitive
process leading up to the proposal of a sale, every proposed
sale brought before the Court is subject to higher or better
offers. Generally the debtor or trustee works to generate
interest on the part of buyers, and negotiates with a number of
prospective buyers in order to achieve the best price and terms
of sale. Note, however, that the negotiations leading to a
proposed sale and the particular terms of a sale are not
disclosed until a specific proposal is made and approval of a
particular sale is requested.
The second method to realize value for creditors and, where
possible, shareholders is the restructuring of the shares and
finances of the company through a Chapter 11 plan. Unlike a sale
of assets as described above, this process requires the filing
of a Chapter 11 plan which appropriate constituents of the
company actually vote to accept or reject, after receiving a
disclosure statement approved by the Bankruptcy Court as
containing "adequate information" about the nature of the
company and the proposed restructuring. Generally, the debtor or
trustee works to find a method to finance the restructuring of
the company internally or through outside financing, or to seek
qualified investors to invest in the restructuring. When a
Chapter 11 trustee has been appointed, as has occurred in this
case, the right to file a plan does not rest exclusively with
the trustee; rather, any creditor or party in interest can
propose a plan, and in many cases two or more competing plans
are proposed and considered.
It is important to note that the outcome of competition for a
sale of assets is determined solely by an order of the
Bankruptcy Court after notice and opportunity to object, while
the confirmation of any Chapter 11 plan -- even where competing
plans are proposed -- is addressed by the Court after a vote of
the affected constituents on whether to accept or reject each
plan under consideration. As with a sale of assets, the
negotiations leading to a particular restructuring plan are
generally not disclosed until a definitive plan is proposed.
During the lengthy period of time when this case was pending
under Chapter 7 of the Bankruptcy Code, substantially all of the
asset sales which occurred were conducted under some form of
competitive bidding process, in which sales were placed before
the Bankruptcy Court subject to higher and better offers. At
present, other than the historic business, tax attributes and
capitalization structure of the company, the principal tangible
assets remaining in the SEBC estate consist of real estate
holdings. If those real estate holdings are sold during the
course of the bankruptcy case, the sale will occur through a
competitive process as occurred repeatedly during the Chapter 7
phase of this case, with full disclosure of the terms of sale
and identity of a buyer after the negotiations have led to a
definitive agreement.
As indicated in an Question No. 17 above, the value of the
remaining tangible assets in the SEBC bankruptcy estate is not
sufficient to pay in full the remaining post-petition interest
obligations to bondholders and other creditors. Thus, absent a
consensual restructuring of SEBC under a Chapter 11 plan
involving new financing or a new investment, there will be no
distribution to shareholders. The only potential for a
distribution to shareholders would have to arise from a
transaction involving the restructuring of shares and finances
of the company through a Chapter 11 plan under the process
briefly described above. Shareholders can only receive value if
the restructuring either provides more than sufficient value to
pay creditors in full or if the creditors vote to accept the
Chapter 11 plan and consent to the shareholders receiving some
value even though the creditors are not paid in full.
For a number of years, the Trustee and his professionals have
sought an investor willing to invest in such a restructuring of
shares and finances. More recently, the Trustee employed an
investment banker to seek potential qualified investors willing
to invest in a restructuring of SEBC. Through the efforts of the
Trustee, his professionals and the investment banker, virtually
all of the qualified potential investors have been identified
and approached. Several of those potential investors have
undertaken substantial due diligence activities to determine the
suitability and terms on which such they might make an
investment in SEBC. From that group of potential investors, the
Trustee received and negotiated proposals for a form of
financing or investment that would provide the greatest benefit
to SEBC creditors and shareholders.
The highest and best of those proposals was received from the
investor with which the Trustee recently executed a letter of
intent ("LOI"). Although the transaction contemplated in the LOI
will provide modest additional value to the creditors, the
transaction does not provide that the post-petition interest
which remains unpaid to creditors will be paid in full. Thus, as
indicated in the discussion above, the approval of this
transaction by creditors through their acceptance of a Chapter
11 plan is a necessary requirement for shareholders to receive
any distribution from the bankruptcy estate. For these reasons,
it is not possible to effectuate the proposed transaction
through a traditional sale of assets. It was on the basis that
the transaction contemplated in that LOI could only be approved
under a Chapter 11 plan that the Trustee moved for conversion of
the SEBC case from Chapter 7 to Chapter 11.
Among other provisions, the LOI requires that the Trustee
maintain confidentiality as to the identity of the investor and
specifics of the proposed transaction at the present time. The
investor has engaged counsel and accounting professionals to
complete further due diligence and negotiate and/or prepare
further documents. It is anticipated that if a final and
definitive agreement is negotiated, it will be subject to
approval as part of a Chapter 11 plan for restructuring of SEBC,
which will involve the full disclosure of all relevant
information about the transaction and the identity of the
proposed investor. Until that time, however, the Trustee cannot
disclose such information. If the transaction goes forward,
creditors and shareholders will be asked to vote to accept or
reject that plan only after delivery to them of a Court approved
disclosure statement describing the transaction in detail. If
the required vote for approval is received after all of the
votes are calculated, the Bankruptcy Court will be asked to
approve the transaction as part of its confirmation of the
Chapter 11 plan. Once again, as with any Chapter 11 case in
which a trustee has been appointed, any party in interest may
propose a Chapter 11 plan with any alternative restructure and
proposed investment in SEBC, subject to the disclosure,
classification and other requirements of the Bankruptcy Code and
Rules.
Question 31 (posted November 2, 2007):
As the case moves forward in Chapter 11, will the interests of
shareholders be represented in the process of developing and
presenting a plan of reorganization?
The Trustee intends shortly to file a Motion requesting the
Bankruptcy Court to appoint a Special Representative for Holders
of SEBC Common Stock. As presently contemplated, the proposed
duties of the Special Representative will be to represent and
further the interests of Common Stock Holders generally in
connection with the process of developing, negotiating and
confirming a Plan with the Trustee, the sponsor of the Plan, and
other constituents; advise on the form and substance of
supplemental notice to Common Stock Holders and their
participation in the Plan process, including communication with
Common Stock Holders regarding Plan issues; and otherwise act on
their behalf in connection with issues arising in connection
with the confirmation of a Plan. The Trustee will also request
that with respect to matters that may fall within the scope of
the foregoing responsibilities, the Special Representative be
granted the ability to appear and be heard on such matters
before the Court, and to seek payment of fees and reimbursement
of expenses from the Estate.
In an effort to streamline the process associated with the
Motion requesting this appointment, the Trustee and his counsel
have discussed these matters with the Indenture Trustees for the
various issues of senior and subordinated notes, as well as
members of the Ad Hoc Committee of Subordinated Noteholders
formed in the Chapter 7 phase of the case. While the ultimate
decision necessarily is left to the Bankruptcy Court, the
Trustee believes as of this writing that none of the other
principal constituencies who have been consulted will interpose
an objection to the appointment. Copies of the Motion and Notice
of Hearing will be posted on this web site as soon as filed with
the Court.
Question 32 (posted January 9, 2008):
What additional information is the Trustee in a position to
disclose about the status of the investor and the proposed
transaction that is intended to serve as a basis for the Chapter
11 plan?
On November 14, 2007, the Trustee entered into a non-binding
enhanced letter of intent (the "ELOI") with a bulge bracket
U.S. investment bank headquartered in New York (the "Investment
Bank"), the same investor with whom he had executed an earlier
non-binding letter of intent which served as the basis to
convert the case to Chapter 11. The original letter of intent
and ELOI describe the broad outline for the Investment Bank to
purchase (i) approximately $1.5 billion in a new class of SEBC
preferred stock and (ii) approximately $3.5 million of new SEBC
common stock, constituting approximately 22.5% of the total SEBC
common stock (the "Transaction"). The terms of the common and
preferred stock will be set forth in the documentation to be
created under a Chapter 11 Plan, and the consummation of the
Transaction is subject to approval as part of that Plan. In the
ELOI, subject to the confirmation of a Chapter 11 Plan and
definitive documentation acceptable to it in its sole and
absolute discretion, the Investment Bank has reaffirmed its
intention to undertake the Transaction with a view toward
closing the Transaction in early 2008 (subject to the conditions
set out above and the acquisition of all internal approvals, as
determined in the Investment Bank's sole discretion).
Prior to entering into the original letter of intent and ELOI
with the Investment Bank, the Trustee and his professionals
evaluated a number of potential transaction structures and
conducted an exhaustive search of institutional and other
investors with an interest in pursuing a form of equity infusion
transaction that would provide additional value for bondholders
and creditors and, for the first time in the case, some form of
return for equity holders as well. The Trustee's determination
that the SEBC Estate pursue the proposed Transaction with the
Investment Bank comes after an exhaustive pursuit and analysis
of both those other transaction structures and variations on a
similar equity infusion transaction with other potential
candidates. Although a number of the potential investors so
contacted expressed initial interest in the concept of such a
transaction, it was ultimately the Investment Bank which stepped
forward with a proposal that was acceptable to the Trustee as
the basis for a Chapter 11 Plan to be proposed for consideration
by parties in interest in the case. In addition, the Investment
Bank's proposal would result in greater value to the Estate than
the terms proposed by or discussed with any other potential
investor. As a result of the foregoing, the Trustee believes
that the Investment Bank Transaction represents the most
favorable transaction available to SEBC to realize a greater
value for the Estate and its various constituents than that
available under a liquidation plan.
It is the Trustee's understanding -- and the ELOI confirms
that it is the Investment Bank's understanding as well -- that
the terms set forth in the ELOI reflect the basic business terms
of the transaction, and that the issues remaining to be
negotiated are mostly legal in nature. Consummation of the
Transaction, however, remains subject to receipt of the
Investment Bank's internal approvals and other conditions set
out in the ELOI and, except as might be provided in the
definitive Transaction documents, the Trustee will not have a
claim for damages against the Investment Bank if the Transaction
does not close.
It is anticipated that the remaining negotiations will be
conducted between and among representatives of the Senior and
Subordinated Indenture Trustees, significant holders of senior
and subordinated bonds, the holders of SEBC Series A and E
Preferred Stock, and the Legal Representative for Holders of
SEBC Common Stock recently appointed by the Court. Currently,
the Trustee and his professionals are preparing a financial
analysis and term sheet for such parties to illustrate the
likely economics of the Transaction, as well as a comparison of
the Transaction with the potential result of liquidation under
either a liquidating Chapter 11 plan or through re-conversion to
and liquidation under Chapter 7. Such analysis will be included
in the Disclosure Statement that would accompany the filing of
the Chapter 11 Plan to approve and implement the Transaction.
Upon completion and dissemination of that analysis, the Trustee
anticipates that the negotiation of the definitive Transaction
documents will be completed.
The Transaction contemplates that Reorganized SEBC will use
the funds contributed by the Investment Bank to make a number of
fixed income investments, and thereby continue to be engaged in
a financial investment business. Prior to the bankruptcy filing
SEBC was a storied name in Florida finance; the Transaction will
result in the revival of a portion of the (non-bank) financial
investment activities in which it previously engaged. The
Jacksonville Property (more fully described in FAQ #24 above)
will not be transferred to Reorganized SEBC under the Chapter 11
Plan, but rather will be transferred to a Liquidating Trust to
be created under the Plan for the sole benefit of bondholders
and creditors. Holders of existing SEBC preferred and common
stock will receive a total of 52.5% of the new common stock to
be issued by Reorganized SEBC under the Plan, with the remainder
distributed 22.5% to the Investment Bank and 25% to existing
bondholders (both senior and subordinated) and general creditors
of the estate.
SEBC does not anticipate that dividends will be paid on the
new issue of common shares for at least 5 years. At the end of
the fifth year after issuance, SEBC anticipates that 52.5% of
the common shares to be issued to existing SEBC preferred and
common shareholders will have a value of approximately $10.9
million and that the 25% of common shares to be issued to
bondholders and general creditors will have a value of $5.2
million. In addition, such bondholders and general creditors
will receive a new issue of preferred shares, junior to the
preferred shares to be issued to the Investment Bank. The
junior preferred shares will be entitled to a stream of payments
and ultimate redemption totaling $7.5 million over 5 years.
These amounts are based on the prevailing market rates in
October of 2007, and accordingly, may fluctuate depending on
market conditions at closing, asset performance (the assets
could be worth more or less than forecasts, and therefore, the
common shares may fluctuate in value), and timing of financial
close (with the exception of the junior preferred shares which
are expected to remain stable).
One of the terms required by the Investment Bank is that
trading of the new common shares be restricted in order to
preserve the benefits of the Transaction for the Investment
Bank, for the existing common and preferred shareholders, and
for the existing bondholders and other general creditors.
Accordingly, the terms of the Plan and the corporate
documents governing the creation of Reorganized SEBC and the
issuance of the new common stock will provide that trading in
that class of stock be restricted for a considerable period of
time, which is currently anticipated to be 5 years.
There are, of course, tax and other significant implications
of the Transaction and the Chapter 11 Plan that would approve
and implement the Transaction. A detailed description of the
terms and conditions of the Transaction will be set forth in the
Chapter 11 Plan and accompanying Disclosure Statement to be
filed in the Bankruptcy Court. Until such time as the
Bankruptcy Court enters an Order approving the Disclosure
Statement as containing "adequate information" within the
meaning of Section 1125 of the Bankruptcy Code no person is
permitted to solicit acceptances for the Chapter 11 plan. The
posting of this FAQ to this website is for informational
purposes only and does not constitute such a solicitation.
Question 33 (posted February 5, 2008):
What is the precise extent of the bankruptcy estate's interest
in the Jacksonville Properties described in FAQ #24?
As indicated in FAQ #24, the SEBC bankruptcy estate
indirectly owns a 70% interest in the Southwest Quadrant
property through its wholly owned subsidiaries SWQ Properties,
Inc. and Southeast Properties, Inc., and a 100% interest in the
Belfort property through Second Pioneer Corporation, a
second-tier subsidiary wholly owned by First Pioneer Corporation
which, in turn, is owned by the SEBC estate. Neither of
the properties is encumbered by any lien, mortgage or other
interest of record, such that upon disposition of the properties
the proceeds of sale, net of expenses of sale, will be divided
in accordance with the ownership interests.
Question 34 (posted February 6, 2008):
What additional information can the Trustee provide about the
common stock to be issued in connection with the proposed
investor transaction described in FAQ #32 above?
The substance and business terms of the proposed equity
infusion remain substantially as described in FAQ #32 above, and
the final details, timing and mechanics remain under active
discussion with the investor. It is anticipated that the
Chapter 11 plan pursuant to which the shares will be issued will
provide for trading restrictions on the common stock of the
reorganized company at least as restrictive as those that have
governed the existing stock since the entry of the Trading
Injunction Order in 1994, as described in FAQ #20 above. The
final details of the proposed transaction, including but not
limited to the extent of the trading restriction, the issuance
of shares, and other mechanics of implementation, have not been
finally determined. The Trustee and his professionals met with
representatives of the investor during the last week of January,
and remain engaged in ongoing discussions about the transaction.
While we have received a great number of specific and
thoughtful questions requesting additional information, the
precise terms of the proposed transaction will be described in
the plan and disclosure statement to be filed with the
Bankruptcy Court. The existing capital structure of SEBC is
described in the Annual Report on Form 10-K for the fiscal year
ended December 31, 1990.
Upon the filing of the plan and disclosure statement, the
Bankruptcy Court will schedule a hearing to determine whether
the disclosure statement contains adequate information to enable
a reasonable investor in the position of a creditor to determine
whether to accept the plan. Until the Court has approved the
disclosure statement as containing adequate information, neither
the Trustee nor any other party in interest in the case is
permitted to solicit acceptances for the plan. Once the
disclosure statement has been approved it will be circulated to
those impaired classes of creditors and shareholders who may be
entitled to vote on the plan, along with the full plan and a
form ballot to accept or reject the plan. After the votes of
those parties who are entitled to vote are tabulated and
certified to the Court, the Court will conduct a further hearing
to determine whether the plan meets the requirements for
confirmation under the Bankruptcy Code. If the plan is
confirmed it will then become effective on the effective date
provided in the plan and the Confirmation Order issued by the
Bankruptcy Court, and the transaction with the investor can be
implemented. The Trustee is required to provide notice of the
foregoing events to creditors, shareholders and other parties in
interest in the case, and will do so through service,
publication and additional postings on this website. Parties in
interest will be afforded the opportunity to pose questions or
file objections to the disclosure statement and/or the plan, and
any objections which cannot be resolved consensually will be
addressed by the Court at the disclosure or confirmation
hearing, as appropriate.
The proposed transaction remains under negotiation and a
definitive agreement between SEBC and the prospective investor
has not yet been executed. Accordingly, there can be no
assurance that a definitive agreement will be reached, either on
the current terms under discussion or other terms. Furthermore,
because consummation of a transaction contemplated by any
definitive agreement, if executed, will be subject to certain
conditions precedent, including, without limitation,
confirmation of the plan of reorganization, no assurance can be
given that any such transaction will actually occur.
Question 35 (posted July 10, 2008):
Now that the Bankruptcy Court has authorized the Legal
Representative for Holders of SEBC Common Stock to engage a
financial advisor, can you explain the respective roles of the
Legal Representative, the Chapter 11 Trustee and their advisors?
As more fully described in FAQ #31 above, the role of the
Legal Representative is to represent and further the interests
of Common Stock Holders generally in connection with issues
arising in connection with the confirmation of a Chapter 11 plan
of reorganization. The Chapter 11 Trustee's request for
appointment of the Legal Representative was motivated in part by
the recognition that in his own capacity as a fiduciary for all
creditors and shareholders of the bankruptcy estate he is not in
a position to represent or advocate the interests of any one
constituency, and accordingly that the holders of common stock
should have separate representation.
Directly upon his appointment as Legal Representative on
November 21, 2007, Jerry Markowitz, Esq. entered into a
confidentiality agreement with the Chapter 11 Trustee. Pursuant
to that agreement, the Trustee has provided to the Legal
Representative certain confidential, non-public information and
material to enable him to understand the nature and history of
the proposed transaction to date. Mr. Markowitz has now sought
and obtained authority to engage James S. Feltman and Mesirow
Financial Corporation as his financial advisor, to assist him in
analyzing that information along with such additional
information as may be made available in connection with the
negotiation and filing of a Chapter 11 plan.
The Trustee and his financial advisor, Structured Capital
Solutions, continue to work with the Investor on the terms of a
proposed transaction that would serve as the basis for a Chapter
11 reorganization plan which the Trustee will file as proponent.
In advance of filing that plan and the accompanying disclosure
statement, the Trustee intends to work cooperatively with Mr.
Markowitz and the representatives of other constituencies to
obtain their input in order to finalize the terms of the
transaction and formulate the Chapter 11 plan. As a party in
interest on behalf of the holders of SEBC common stock, the
Legal Representative will have many of the same legal rights as
other parties in interest in the bankruptcy case, including the
right to appear and be heard in connection with any issue
related to the disclosure statement and plan. Ultimately, after
considering the votes of any impaired classes of parties which
are determined to be entitled to vote on the plan, and any
indications of support or objections filed by the Legal
Representative or any other party in interest, the Bankruptcy
Court will determine whether to confirm the plan.
Question 36 (posted July 31, 2008):
When will you post more information about SEBC or the
transaction discussed in the recent postings on the website?
The website will continue to be used for the purpose of
sharing public information about SEBC and the transaction
discussed in the recent postings to the website. The Trustee
and his professionals continue to work on the administration of
SEBC and the transaction discussed above. As to the transaction,
we understand the desire of interested parties to be fully
informed, but disclosure of the negotiations of a transaction is
neither prudent not permitted under the operative letter of
intent discussed above in earlier FAQs. Accordingly, we do not
plan to post information about the nature and content of
continuing discussions between the SEBC estate and the potential
investor or the issues under review. We currently anticipate
that we will make an additional posting to our website
concerning the transaction only at such time as either one of
two definitive events occurs: that we have reached a definitive
agreement with the potential investor that will lead to the
filing of a chapter 11 plan and disclosure statement to approve
and implement such agreement; or that either the Trustee or the
potential investor has categorically terminated negotiations
toward reaching such a definitive agreement.
Question 37 (posted November 21, 2008):
Has the Trustee reached a definitive agreement with the Investor
for the filing of a Chapter 11 Plan, and how will the
confirmation process proceed?
On November 19, 2008, the Trustee and the proposed Investor
executed a Master Subscription Agreement ("MSA"), which,
together with a Chapter 11 plan, disclosure statement and
related documents, constitutes a definitive agreement providing
for the comprehensive restructuring of SEBC. The MSA and related
documents are the product of over a year's effort to negotiate
and conclude an agreement that began with the ELOI (enhanced
letter of intent) for a Transaction referred to in the response
to Question 32 posted to this site on January 9, 2008. On
November 20, 2008 the Trustee filed a Chapter 11 Plan of
Reorganization with the Bankruptcy Court, including the MSA as
an exhibit. Copies of the Plan may be obtained at no charge by
e-mail request to
dominguezk@gtlaw.com.
The Trustee is prohibited from soliciting votes to accept the
Plan until a Disclosure Statement is approved by the Bankruptcy
Court. The Trustee intends to file a Disclosure Statement during
the week of November 24, 2008, along with a series of Motions
intended to govern the confirmation process. All of those
filings will be posted on this site within one day of filing
with the Court and service on parties in interest who have
appeared in the bankruptcy case or otherwise are entitled to
notice by mail. The Bankruptcy Court will schedule hearings to
consider those Motions and the adequacy of the Disclosure
Statement, and fix a deadline for the filing of objections to
the Disclosure Statement. The Notice setting those dates will
also be posted to this website when available.
Both the Plan and Disclosure Statement remain subject to
revision through the date of the hearing on the Disclosure
Statement. Additional postings reflecting any such revisions
will be made to this site.
Question 38 (posted January 7, 2009):
I received in the mail or have seen on this website a Notice of
Deadline for the Filing of Requests for the Payment of
Administrative Claims. What is an administrative claim and who
is required to file and serve a request for payment of an
administrative claim?
An administrative claim under the Bankruptcy Code is a claim
that arises out of a transaction with the company while it was
in bankruptcy (for example, a claim for professional services
rendered by attorneys and accountants who were retained by the
bankruptcy estate). Only persons or entities who assert an
administrative claim that has not yet been allowed and paid are
required to file and serve a request for payment of an
administrative claim. If you hold an investment in SEBC pursuant
to stock, notes, or other debt obligations of SEBC issued before
September 20, 1991 (the date SEBC filed for bankruptcy), you do
not need to file a request for payment of an administrative
claim even if you acquired the stock, notes or other obligations
after the bankruptcy case was filed. Likewise, if you incurred
an administrative claim during the pendency of SEBC's bankruptcy
case and that administrative claim has already been allowed and
paid, you do not need to file another request for payment of an
administrative claim.
If you are a stockholder of SEBC and have further questions, you
should contact the Legal Representative for Holders of Common
Stock appointed by the Court, Jerry Markowitz, who may be
reached at 305 670-5000. If you still have further questions
about whether you should file a request for payment of an
administrative claim, you should contact an attorney.
Question 39 (posted February 17, 2009):
On February 9, 2009 the Bankruptcy Court entered a series of
Orders which have been posted on this website. How does the
bankruptcy process proceed from here?
The process of confirming the Trustee's Third Amended Chapter
11 Plan will now proceed in accordance with two of the Orders
entered by the Bankruptcy Court at the February 9, 2009 hearing.
The Order Approving Amended Disclosure Statement, Etc.
enables the Plan confirmation process to proceed by determining
that the Trustee's Amended Disclosure Statement -- which was
extensively revised and amended to include and address comments
offered by various parties in interest, including the United
States Trustee, Securities and Exchange Commission, Senior and
Subordinated Indenture Trustees, Ad Hoc Committee of
Subordinated Noteholders, and Legal Representative for Holders
of SEBC Common Stock -- contains "adequate information"
sufficient to enable the Classes entitled to vote under the Plan
to make an informed judgment about the Plan. Thus, the Trustee
as Plan Proponent may now proceed to solicit acceptances from
those Classes, and to seek Confirmation of the Plan at a hearing
to be conducted on March 9, 2009. That same Order sets forth a
series of deadlines associated with the Plan confirmation
process, including a deadline of February 27, 2009 to file
ballots and any objections to confirmation, and March 4, 2009
for the Trustee to file a report and affidavit to be considered
by the Court at the Confirmation Hearing on March 9, 2009.
Please note, as more fully explained below, that Holders of
Senior and Subordinated Notes, Allowed Claims and Common Stock
Interests are not required to and are not permitted to file
ballots, which will not affect their entitlement to the
Distributions provided for them under the Plan.
The Third Amended Plan of which the Trustee will seek
confirmation provides that Holders of Senior and Subordinated
Notes and other Allowed Claims (classified in Classes 1, 2 & 3,
respectively) are unimpaired and therefore not entitled to cast
ballots to accept or reject the Plan. In addition, the Order
Granting Motion for Entry of an Order Governing Solicitation of
Ballots for Trustee's Chapter 11 Plan provides that Holders of
Common Stock Interests in Class 6 will not vote, since (a) the
books and records available to the Trustee at this stage are
insufficient to solicit the acceptances of those Holders without
considerable delay and expense, and (b) the amount of unpaid
interest owed in respect of the senior Classes of Claims is
greater than the value of the remaining assets in the SEBC
Estate, such that Holders of Common Stock would receive nothing
if the case were liquidated under Chapter 7 of the Bankruptcy
Code. The Court will treat all of such Holders of Common Stock
Interests as having cast ballots rejecting the Plan. In order to
confirm the Plan without the acceptance of these Class 6
Holders, the Trustee will have to demonstrate to the Court at
the Confirmation Hearing that the value of the SEBC Holdings LP
Common Units to be issued to each such Holder under the Plan is
equal to the value of the SEBC Common Stock Interests held by
such Holder. As indicated above, if the Plan is confirmed and is
effectuated, notwithstanding that they will not be filing
ballots, Holders of Senior and Subordinated Notes, Allowed
Claims and Common Stock Interests will be nevertheless be
entitled to receive the Distributions provided for them under
the Plan.
Question 40 (posted March 2, 2009):
Will SEBC Holdings, LP Common Units be traded on an exchange or
in the "Pink Sheets"?
It is not anticipated that the SEBC Holdings, LP Common Units
will be listed for trading on an exchange. It is the Trustee's
understanding that brokers may quote trades in a particular
securityin the "Pink Sheets" only if a broker has filed detailed
information regarding the issuer of such security with the
Financial Industry Regulatory Authority. As a practical matter,
such a filing requires participation by the issuer because the
required information may not otherwise be available,
particularly if the issuer is not a reporting issuer under the
federal securities laws. SEBC Holdings does not yet exist, will
only come into existence if the currently pending Third Amended
Chapter 11 Plan (the "Plan") is confirmed and becomes effective,
and will not be a reporting issuer until, in all likelihood,
early 2010. Accordingly, it will not be possible for SEBC
Holdings LP to facilitate the filing of the information required
in order for its Common Units to be listed in the Pink Sheets at
its inception. Ultimately, it will be up to the management of
SEBC Holdings to determine whether to facilitate Pink Sheet
trading.
Question 41 (posted March 2, 2009):
Will SEBC Holdings, LP pay dividends on its Common Units?
As reflected in the Amended Disclosure Statement for the
Plan, the business plan and legal structure of SEBC Holdings, LP
do not permit payment of dividends on Common Units until after
the retirement in full, by redemption or otherwise, of the SEBC
Holdings Senior Preferred Units and Junior Preferred Units.
Following such retirement, dividends may be paid on the Common
Units to the extent that cash is available as determined by the
general partner. Based upon the business plan as described in
the Amended Disclosure Statement, it is uncertain when that
retirement of the Preferred Units will occur, as the timing
remains dependent upon cash flows of SEBC Holdings.
Question 42 (posted March 2, 2009):
Assuming that the Plan is confirmed and the Transaction
contemplated in the Plan closes, how and when will current
Holders of shares of SEBC Common Stock convert such shares into
the SEBC Holdings Common Units to which they are entitled under
the Plan?
The Plan and the SEBC Holdings Charter provide that
outstanding shares of SEBC Common Stock will, in effect,
automatically convert into SEBC Holdings Common Units on a
one-for-one basis as of the Effective Date of the Plan. The Plan
and Plan Supplement provide that SEBC Holdings LP will act as
the Disbursing Agent for the securities SEBC Holdings will issue
and distribute pursuant to the Plan. It is currently anticipated
that SEBC Holdings LP will engage a Transfer Agent/Registrar,
which will also act as an exchange agent to facilitate the
exchange of SEBC Common Stock for SEBC Holdings Common Units.
The Transfer Agent/Registrar is identified in the Plan
Supplement filed with the Bankruptcy Court on February 27, 2009
and posted elsewhere on this website. The Transfer
Agent/Registrar will employ customary and industry standard
mechanisms, such as letters of transmittal, to effectuate the
exchange of certificates representing SEBC Common Stock for SEBC
Holdings Common Units, either through physical or book entry
means of delivery. It is also currently anticipated that
Holdings Common Units will be "DTC-eligible" to facilitate book
entry delivery. Further announcements will be made and posted to
this website as to specifics of these matters when the mechanism
is in place and ready to be employed.
Question 43 (posted March 2, 2009):
Assuming that the Plan is confirmed and the Transaction
contemplated by the Plan closes, how will Holders of Senior
Notes, Subordinated Notes, Claims and Series A and Series E
Preferred Stock receive the Cash Distribution, Reorganized SEBC
Series K Junior Preferred Stock and/or SEBC Holdings Senior and
Junior Preferred Units to which they are entitled under the
Plan?
The Plan and the Plan Supplement provide that SEBC Holdings,
LP and Reorganized SEBC will act as the Disbursing Agent for the
securities to be issued and distributed from such entities under
the Plan. SEBC Holdings LP and Reorganized SEBC will engage a
Transfer Agent/Registrar to facilitate issuance of, register and
provide transfers of the various securities to be issued under
the Plan. The Transfer Agent/Registrar is identified in the Plan
Supplement filed with the Bankruptcy Court on February 27, 2009
and posted elsewhere on this website. It is currently
anticipated that the Transfer Agent/Registrar will employ
customary and industry standard mechanisms, such as letters of
transmittal, to facilitate the issuance of the Reorganized SEBC
Series K Junior Preferred Stock, SEBC Holdings Senior and SEBC
Holdings Junior Preferred Units to the current holders of SEBC
Senior Notes, SEBC Subordinated Notes, SEBC General Unsecured
Claims, SEBC Series A Stock and SEBC Series E Preferred Stock,
either through physical or book entry means of delivery. It is
also currently anticipated that such securities will be
"DTC-eligible" to facilitate book entry delivery.
As provided for in the Plan and the Plan Supplement, the Cash
Distribution to Holders of General Unsecured Claims is
anticipated to be made by the SEBC Estate through the Chapter 11
Trustee, in his capacity as Disbursing Agent for Cash
Distributions under the Plan. The Cash Distribution to Holders
of SEBC Senior Notes is expected to be made through Bank of New
York Mellon, and to Holders of SEBC Subordinated Notes through
U.S. Bank (the Chapter 11 Trustee anticipates working with U.S.
Bank to employ the Transfer Agent/Registrar to act as its agent
for the purpose of facilitating Cash Distribution in respect of
the EuroNotes). Holders of SEBC Senior Notes and SEBC
Subordinated Notes will be required to comply with the
requirements of the Plan and the requirements of Bank of New
York Mellon and U.S. Bank, respectively, including, but not
limited to, the surrender of their Notes, in order to receive
their share of the Cash Distribution and securities under the
Plan. Further announcements will be made and posted to this
website as to specifics of these matters when the mechanisms are
in place and ready to be employed.
Current holders of SEBC Senior Notes and SEBC Subordinated Notes
and General Unsecured Claims are reminded that, in addition to
other required submissions, such as, in the case of the holders
of Senior and Subordinated Notes, surrender of the Notes, they
will be required to submit the Creditor Questionnaire to EPIQ by
June 1, 2009 in order to participate fully in the Mixed
Securities Distribution contemplated by the Plan. The Creditor
Questionnaire is available by contacting Maribel Fontanez,
Greenberg Traurig, P.A., 333 Avenue of the Americas (S.E. 2nd
Avenue), Suite 4400, Miami, FL 33131,
305-579-7837 (tel.), 305-579-0717 (fax), e-mail:
fontanezm@gtlaw.com or by clicking here:
Creditor
Questionnaire.
Question 44 (posted April 3, 2009): Now that the
Bankruptcy Court has confirmed the Plan, what happens next?
Answer: The Order of the Bankruptcy Court confirming the
Third Amended Plan of Reorganization ("Plan") became final on
March 23, 2009. The Effective Date of the Plan is to occur when
the Transaction contemplated in the Plan actually closes. The
terms of the Transaction call for a closing on or before April
30, 2009, unless extended by mutual agreement of the Investor
and the Trustee. As of the date of this posting, the Investor
has not confirmed a definitive closing date, and there can be no
assurance that a closing will take place by April 30, 2009 or
any subsequent date. Further developments concerning the closing
of the Transaction and thus the occurrence of the Effective
Date, will be posted on this website, and a Notice of such
posting filed with the Court as circumstances warrant.
All of the various transactions and Distributions
contemplated under the Plan are intended to occur on or
following the Effective Date. In his capacity as Disbursing
Agent the Trustee will make Cash Distributions directly to
general non-bondholder creditors, and to Bank of New York Mellon
and U.S. Bank to make Cash Distributions to Holders of Senior
Notes and Subordinated Notes, respectively. On behalf of
Reorganized SEBC (SEBC Financial Corporation) and SEBC Holdings,
Inc., the Trustee will retain Computershare, Inc. to serve as
Transfer Agent and Registrar for all of the classes of
securities to be issued to SEBC creditors and shareholders under
the Plan, and as sub-agent to make Cash Distributions due to
Holders of EuroNotes.
In order to receive distribution of their pro rata portions
of the $4 million in securities that are part of the Mixed
Securities Distribution (consisting of Reorganized SEBC Series K
Junior Preferred Stock and/or SEBC Holdings Senior Preferred
Units), bondholders and creditors must complete and return the
Creditor Questionnaire so that it is received at the address set
forth in the Questionnaire by June 1, 2009. This requirement is
in addition to all other conditions of distribution, including
the surrender by bondholders of their bonds. Creditors or
bondholders who have not returned such Creditor Questionnaire by
June 1, 2009, will remain entitled to receive their respective
pro rata portions of Cash and SEBC Holdings, Inc. Junior
Preferred Units, but will be deemed to have forfeited any right
to their pro rata distributions of the securities that are part
of the Mixed Securities Distribution. Those forfeited securities
will be redistributed on a pro rata basis to timely responding
creditors or bondholders within the same Class as those
creditors or bondholders who failed timely to return the
Creditor Questionnaire. Any creditor or bondholder who has not
received a Creditor Questionnaire may print a copy from the link
contained in the "Court Pleadings" section of this website.
Upon the occurrence of the Effective Date Reorganized SEBC
will publish and post on this website a Notice stating that the
Effective Date has occurred. The Bankruptcy Court has also
scheduled a post-confirmation Status Conference for May 26, 2009
at 10:30 a.m., to consider a series of matters depending upon
whether the Effective Date has occurred.
No. The Effective Date of the Plan was to occur when the
Transaction contemplated in the Plan actually closed, on or
before April 30, 2009. On April 28, 2009, the Trustee received
from the Investor a notice of its election to terminate the
Master Subscription Agreement pursuant to Section 6.12(f)
thereof, which terminated the Investor's obligations to close
the Transaction with no liability whatsoever to the Investor.
Thus, the Effective Date of the Plan has not occurred.
Even though the Investor has terminated the Master Subscription
Agreement and is no longer under any obligation to close the
Transaction, the Trustee believes that the Investor will
continue to work to attempt to find a third party investor that
might enable the Investor to close the Transaction in the
relatively near future. Likewise, the Estate's investment
banker, SCS, believes that there are alternative prospects for
investors who might independently and/or in conjunction with the
Investor engage in the Transaction or perhaps an alternative
transaction.
In order to preserve for a reasonable period of time the
possibility of a future closing of the Transaction with the
Investor and/or alternative investors procured by it or by SCS,
the Trustee has filed a motion seeking authority from the Court
to extend the April 30, 2009 deadline for occurrence of the
Effective Date through and including June 30, 2009, with the
ability to grant further extensions if deemed reasonable and
appropriate upon consultation with parties in interest in the
bankruptcy case.
Copies of the Trustee's motion seeking the extension and the
related Notice of Non-Occurrence of Effective Date as filed with
the Bankruptcy Court are posted separately on this website.
Question 46 (posted June 15, 2009):
What is the status of the Trustee's efforts to pursue the
Transaction with the Investor and/or an alternative investor?
As represented to the Court at hearings on May 19 and 26,
2009, and as discussed above in the answer to Question 45, the
Estate's investment banker SCS believes that there are
alternative prospects for investors who might independently
and/or in conjunction with the Investor engage in the
Transaction or perhaps an alternative transaction.
Based upon SCS's efforts and the possibility of a future closing
of the Transaction with the Investor and/or alternative
investors, and in order to maximize the Trustee's ability to
generate value for the Estate from the Transaction, the Trustee
has also sought and obtained authority to extend the Effective
Date Deadline through and including June 30, 2009, and to seek
further extensions of the Effective Date Deadline for one or
more additional periods upon further motion and notice by the
Trustee to all known creditors, equity security holders, and
other parties in interest, providing such parties an opportunity
to object to any proposed further extension. A copy of the Order
Modifying Confirmed Chapter 11 Plan to extend the deadline for
the occurrence of the Effective Date is posted separately on
this website.
Likewise, by order entered on June 1, 2009, the Court modified
and extended the terms of SCS's retention through and including
September 30, 2009, or such earlier date as the modified
engagement may be terminated on not less than 30 days' notice,
so that SCS can continue its efforts to pursue a transaction. A
copy of the Order Modifying Retention and Employment of
Structured Capital Solutions, LLC as Investment Banker for
Chapter 11 Trustee, Nunc Pro Tunc to May 1, 2009, is posted
separately on this website.
Question 47 (posted July 1, 2009):
Has the Trustee sought a further extension of the deadline for
the occurrence of the Plan Effective Date?
Yes. A copy of the Trustee's motion seeking a further
extension of the deadline for the occurrence of the Plan
Effective Date is posted separately on this website.
Question 48
(posted August 4, 2009): Has the deadline for the
occurrence of the Plan Effective Date been extended further,
and, if so, what is the status of the Trustee's efforts to
pursue the Transaction with the Investor and/or an alternative
investor?
At a hearing on August 3, 2009, the Bankruptcy Court approved
a further extension of the deadline for the occurrence of the
Plan Effective Date through and including August 31, 2009,
without prejudice to the Trustee seeking additional extensions
of this deadline. The Trustee, with the assistance of the
Estate's investment banker, SCS, continues to pursue alternative
investors, including two well-recognized international and U.S.
financial institutions who have begun the process of exploring
the details of the Transaction and are beginning to undertake
their own due diligence.
Question 49 (posted September 3, 2009):
The extended Effective Date Deadline for the confirmed Chapter
11 Plan expired on August 31, 2009 without the Trustee having
sought to further extend this deadline. Does this mean that the
Effective Date can no longer be extended?
The Order which extended the Effective Date Deadline to
August 31, 2009 provides that a further extension may be sought
up to five days prior to the next post-confirmation status
conference before the Bankruptcy Court on September 22, 2009.
The Trustee and his professionals continue to pursue the
possibility of concluding the Transaction with one or more
alternative investors, including a number of well-recognized
international and U.S. financial institutions which are in the
process of exploring the details of the Transaction and
undertaking their own due diligence. Should circumstances
warrant, the Trustee will consider filing a motion to further
extend the Effective Date Deadline not later than five days
before the September 22, 2009 status conference.
Question 50 (posted September 17,
2009): What is the current status of the Trustee's efforts
to pursue a transaction with an alternative investor?
Following a conference call on September 15, 2009, with the
Ad Hoc Committee, the Indenture Trustees, the Legal
Representative for Holders of SEBC Common Stock and other
parties in interest in this case, each of whom have signed a
confidentiality agreement, the Trustee has filed a motion for a
further extension of the Effective Date Deadline through October
30, 2009. A copy of the motion is posted separately on this
website. As set forth in the motion, SCS, the Estate's
investment banker, is currently engaged in advanced discussions
with at least two major financial institutions that have
expressed significant interest (including having retained and/or
consulted with outside counsel for this purpose) in entering
into a transaction similar to the Transaction to be implemented
under the Plan. Of course, the Trustee cannot predict whether or
not any institution will determine to commit to undertaking a
transaction with the Estate. Should any of these discussions
lead to the execution of a letter of intent (a draft of which
has been exchanged with one of these financial institutions) and
should the counterparty to the letter of intent negotiate with
the Estate a definitive agreement to undertake a transaction,
the Trustee will then need to file a motion pursuant to 11
U.S.C. § 1127(b) to modify the Plan, and confirm such Plan as
modified, in order to implement any such alternative transaction
(a "Plan Modification Motion"). To the extent
necessary, such Plan Modification Motion will also seek a
further extension of the Effective Date Deadline.
Question 51
(posted October 21, 2009): The Trustee recently sought
a further extension of the Effective Date Deadline under the
confirmed Chapter 11 Plan through and including December 31,
2009. Is there anything to report on whether an alternate
Transaction may close by that date?
One of the potential investors with which the Trustee's
investment bankers at SCS have been negotiating the terms of a
possible Transaction indicated recently that it will not be in a
position to go forward. SCS continues to negotiate with at least
one other potential investor that continues to express interest
in pursuing such a Transaction; however, in light of recent
Orders issued by the Bankruptcy Court and the diminishing
prospects that a Transaction will occur the Trustee and his
professionals have embarked on the consideration of other
alternatives to wind up the bankruptcy case. In addition, the
Trustee and SCS have agreed that effective October 31, 2009 SCS
no longer will receive a monthly fee for services from the
estate, but will look solely to the contingent fee payable to it
upon the closing of a Transaction. There can be no assurance
that the form of any modified or future Chapter 11 Plan will
contain the same provisions or offer the same recovery to any of
the classes of creditors or equity holders as provided in the
confirmed Plan.
Question 52 (posted December 7, 2009):
What are the tax status, financial position and asset status of
the SEBC estate?
The SEBC estate holds the following assets: a) cash; b) as
described in the Amended Disclosure Statement with respect to
the Trustee's Third Amended Chapter 11 Plan of Reorganization
Dated February 9, 2009 (the "Amended Disclosure Statement"), an
ownership interest in certain real estate holdings in
Jacksonville, Florida and attendant rights appurtenant to the
real estate; c) ownership of certain mitigation bank credits in
the Loblolly Mitigation Bank; and d) a right to be reimbursed
certain sums expended for the preservation and improvement of
such real estate from co-owners of its real estate holdings.
The SEBC estate has filed all required tax returns through 2008
and is current through October 2009 with all required Trustee in
Possession reports due to be filed with the Bankruptcy Court.
The SEBC estate has substantial net operating loss
carry-forwards and, accordingly, has neither past nor current
income tax obligations. The SEBC estate does, however, owe
certain current reimbursement obligations to certain indenture
trustees and creditors for their fees and expenses incurred in
connection with the case, as well as amounts to professionals
and others performing services to the Estate.
The Trustee has prepared a summary of selected financial and tax
information entitled "Select
Financial Data as of October 31, 2009" which is available to
be viewed and downloaded. The Trustee has also compiled
additional information on the Jacksonville Property, which was
discussed in detail in Section V.A.3.(a) of the Amended
Disclosure Statement (at pages 24 – 26) posted on the "Court
Pleadings" page of this website (warning: the Amended
Disclosure Statement is a very large file, in excess of 16 MB).
In addition, listed below are links to various documents
relating to the Jacksonville Property (capitalized terms not
otherwise defined in this FAQ shall have the definitions set
forth in the Amended Disclosure Statement and in the Trustee's
Third Amended Chapter 11 Plan of Reorganization dated February
9, 2009, which is also posted on the "Court
Pleadings" page of this website):
Attached as Exhibit "A" is
a copy of an agreement in respect of the Southwest Quadrant
Property by which SEPI and SWQ hold the right to receive 70%
from the proceeds of any sale, and the Southwest Quadrant Joint
Venture ("SQJV") – an unrelated joint venture in which the
Estate has no interest – owns the right to receive the remaining
30% of the proceeds, entered into by, between, and among the
Estate, SEPI, SWQ, and SQJV in April of 1998, and approved by
the Bankruptcy Court in the Chapter 7 Case.
Attached as Exhibit "B" is
a copy of an agreement by SEBC, SEPI and SWQ employing the
principals of SQJV as local onsite management for the
maintenance, planning and disposition activities of the
Southwest Quadrant Property, which agreement is renewable
annually through December 31 of each year (the "SQJV Management
Agreement"). This Agreement has been renewed through and
including December 31, 2009 and is likely to be renewed through
and including December 31, 2010.
Attached as Exhibit "B-1"
is a copy of a Motion filed with the Bankruptcy Court seeking
approval of the SQJV Management Agreement as well as the Order
of the Bankruptcy Court approving the SQJV Management Agreement.
Attached as Exhibit "C"
is a copy of the agreement by and between the City of
Jacksonville on the one hand and SEPI, SWQ and SQJV
(collectively the "Southwest Quadrant Parties") on the other
hand, pursuant to which the City of Jacksonville agreed to
provide credits to the Southwest Quadrant Parties to be used
toward transportation contributions that would otherwise have
been due from the Southwest Quadrant Parties or their successors
in applying for and obtaining permits for further development
and construction on the Southwest Quadrant Property. The Trustee
is currently engaged in negotiations with the City of
Jacksonville to amend and extend the effect of this agreement.
Attached as Exhibit "D"
are copies of permits sought and obtained by the Southwest
Quadrant Parties from the St. Johns River Water Management
District and the United States Army Corps of Engineers regarding
fill and/or modification of certain wetlands within the
Southwest Quadrant Property. The Trustee is currently
considering clearing and/or filling certain of the wetlands
which are subject to these permits.
Attached as Exhibit "E"
are copies of parcel maps for the three parcels together
comprising 69.4 acres of upland saleable acreage of the
Southwest Quadrant Property, which have been divided into (a)
45.3 developable acres referred to as the "North Parcels"; (b)
11.7 developable acres referred to as the "South Parcel"; and
(c) 12.4 developable acres referred to as the "Southside
Parcel."
Attached as Exhibit "F"
is a copy of the parcel map of the Belfort Property.
Attached as Exhibit "G"
is a copy of the agreement between Second Pioneer Corporation
("Second Pioneer") and James Efstathion, one of the principals
of SQJV, and his company Siga Development Company, to employ Mr.
Efstathion as local onsite management for the maintenance,
planning and disposition activities of the Belfort Property,
which agreement is renewable annually through December 31 of
each year. This agreement has been renewed through and including
December 31, 2009 and is likely to renewed through and including
December 31, 2010.
Attached as Exhibit "H"
are copies of the permits Second Pioneer has sought and obtained
from the St. Johns River Water Management District and the
United States Army Corps of Engineers regarding fill and/or
modification of certain wetlands within the Belfort Property.
The Trustee is currently considering clearing and/or filling
certain of the wetlands which are subject to these permits.
Any potential investors desiring additional information for
due diligence purposes should contact the Trustee or his counsel
to discuss entry into a confidentiality agreement in order to
receive further information.
Question 53 (posted January 19, 2010):
Why has the Trustee sought a further extension of the December 31, 2009 Effective Date
Deadline?
Although presently the Trustee does not have a commitment from
any party interested in entering into a transaction similar to
the Transaction to be implemented under the Plan, the Trustee
and his professionals, including SCS (the Estate's investment
banker), continue to pursue potential investors. The Trustee is
aware of at least four potential qualified and substantial
institutional and/or corporate investors that continue to have
dialogue with SCS about the Estate, the Plan and a potential
transaction.
The Trustee understands that these four potential investors
are considering a transaction, but it is uncertain at this point
whether these or any other entities that may be contacted in the
future would ultimately consummate a transaction. SCS believes
it is still possible, even some time into 2010, that an investor
will determine to engage in a transaction with the Estate on
terms similar to those embodied in the Plan. Accordingly, SCS is
willing continue to pursue efforts at realizing a transaction
into 2010 without current compensation other than the prospect
of its success fee if a transaction closes. SCS has informed the
Trustee, however, that a commitment from an investor is not
imminent and that it will be several months before it is
realistic to expect such a decision to be made by any
prospective investor.
Given SCS's willingness to continue its efforts without
current compensation, the cost to the Estate of further
extending the Effective Date Deadline should be relatively
minimal. At the same time, because no potential investor is
presently committed to a transaction that would incorporate or
require the retention of the Jacksonville Property, the Trustee
continues to manage the Jacksonville Property and hold it open
for sale. Given current market conditions, however, the
likelihood of sale of such unimproved real property at a
reasonable price in the immediate future is not strong.
Nevertheless, the Trustee will consider and act on any
reasonable offer to purchase all or a portion of the
Jacksonville Property.
Thus, while the Trustee has no immediate opportunity to
consummate reorganization of SEBC under the Plan (or any
alternative version thereof), the possibility of reorganization
remains, and the continued pursuit of that possibility does not
portend to drain Estate resources significantly. Moreover, no
immediately available and desirable liquidation alternative
presently exists which would require cessation of reorganization
efforts. The Trustee, in consultation with the Indenture
Trustees and Noteholders who have signed confidentiality
agreements, has therefore determined that it is in the best
interests of the Estate and its constituents to seek to extend
the Effective Date Deadline through April 30, 2010. On January
14, 2010, the Bankruptcy Court granted the Trustee's request,
and extended the Effective Date Deadline through April 30, 2010,
without prejudice to seek further extensions.
Question 54 (posted April 30, 2010):
What is the latest update on the Trustee's efforts to pursue an
alternative transaction that could realize further value from
SEBC's remaining assets and has the Trustee sought a further
extension of the Effective Date of the confirmed Plan?
The Trustee and SCS (the Estate's investment banker) continue
to pursue potential investors and alternative transactions. All
such potential transactions are in the early stages of
discussion, and the likelihood that any such transaction will be
consummated is speculative at this point. The Trustee and his
professionals expect to have more feedback within the coming
month as to the viability of and interest by investors in such
potential transactions.
By motion filed on April 30, 2010, the Trustee has sought a
further extension of the Effective Date Deadline for the
confirmed Chapter 11 Plan, through and including July 31, 2010,
without prejudice to seek additional extensions. As noted in
the motion seeking this further extension, however, in the
absence of a desire by the key case constituents to extend the
Effective Date Deadline beyond July 31, 2010, the Trustee is not
inclined to seek a further extension.
In the event no further extension is sought beyond July 31,
2010, the Trustee and his Professionals will continue to work
with the Noteholders and Indenture Trustees, holders of SEBC
preferred equity, and Legal Representative for Holders of SEBC
Common Stock, all of whom have executed confidentiality
agreements, to review and evaluate a series of alternatives for
winding up and closing the Bankruptcy Case in the event that no
reorganization transaction can be consummated.
Question 55 (posted August 2, 2010):
Why has the Trustee sought a further extension of the Effective
Date of the confirmed Plan?
Although at the present time the Trustee does not have a
commitment from any party interested in entering into a
transaction similar to the Transaction to be implemented under
the Plan, the Trustee and his professionals, including SCS (the
Estate's investment banker), continue to pursue potential
investors for alternative transactions, although the likelihood
that any such transaction will be consummated is speculative at
this point. The Trustee also continues to manage the
Jacksonville Property and hold it open for sale, although there
is not a strong likelihood of sale at a reasonable price in the
immediate future.
With no immediate opportunity to either consummate
reorganization under the Plan or an alternative version of the
Plan, and no reasonable likelihood of sale of the Jacksonville
Property on the horizon, the Trustee and his professionals
continue to consult with the Noteholders, Senior and
Subordinated Indenture Trustees, holders of preferred SEBC
equity, and Legal Representative for Holders of SEBC Common
Equity, all of whom have executed confidentiality agreements
(collectively, the "Confidentiality Parties"), to review and
evaluate a series of alternatives for winding up and closing the
Bankruptcy Case in the event that no reorganization transaction
can be consummated. Based on those discussions, which are still
ongoing, the Trustee has determined to move for a further
extension of the Effective Date Deadline through and including
December 31, 2010. Pending further discussions with the
Confidentiality Parties, however, the Trustee may consider
withdrawing his request for further extension of the Effective
Date Deadline at or before the August 17, 2010 status conference
hearing in this case.
Question 56 (posted August 17, 2010):
Why are quotations for shares of common stock of SEBC no longer
available on the Pink OTC Markets (pinksheets.com)?
We understand that the Pink OTC Markets has discontinued the
display of quotations on
pinksheets.com for shares of SEBC common stock because the
Securities and Exchange Commission ("SEC") has instituted a
proceeding under Section 12(j) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and in connection has
temporarily suspended trading in such shares pursuant to Section
12(k) of the Exchange Act from 9:30 a.m. eastern time on August
10, 2010 until 11:59 p.m. on August 23, 2010. According to the
SEC, these steps have been taken because SEBC has not filed
reports with the SEC since prior to the time it entered
bankruptcy protection in 1991. A proceeding under Section 12(j)
of the Exchange Act could result in the suspension or revocation
of SEBC's Exchange Act registration. In the event that Exchange
Act registration were suspended or terminated, Section 12(j) of
the Exchange Act would prohibit market making and broker dealer
activity in shares of SEBC common stock.
The Trustee first became aware of these matters on August 12,
2010 and, through counsel, has been informed by the staff of the
SEC that the only remedy to prevent suspension or termination of
registration would be the filing of all delinquent reports. The
Trustee believes, however, that the costs of becoming compliant
with SEC reporting requirements would require hundreds of
thousands of dollars in legal, accounting, audit,
administrative, and other professional expenses. In addition,
maintaining such compliance would require significant ongoing
legal, accounting, audit, administrative and other professional
expenses.
Neither the current Trustee nor his predecessors chose to make
SEC filings during the 19 year history of the case because of
such significant expenses associated with doing so, particularly
when there was little likelihood that the assets of SEBC would
produce any recovery for common shareholders. The Trustee had
intended to undertake SEC reporting compliance in connection
with the transaction contemplated by the proposed plan of
reorganization because that transaction provided a prospect of
recovery for common shareholders. Because that transaction was
not consummated and no alternative transaction has yet become
available, the Trustee continues to believe that these costs are
not warranted. If the Trustee later determines that an available
transaction will generate a recovery to common shareholders and
warrants public reporting status for SEBC, then SEBC could once
again become a reporting company by filing a new Exchange Act
registration statement, a process that would be more cost
effective than attempting to file all delinquent reports. In the
interim, the Trustee continues to file periodic reports with the
Bankruptcy Court as required, and to provide additional
information to the public through the posting of these FAQs on
this website.
For the foregoing reasons, the Trustee currently anticipates
that SEBC will consent to deregistration in order to preserve a
relationship of cooperation with the SEC.
Question 57 (posted August 18, 2010):
What did the Trustee report to the Court at the August 17, 2010
status conference?
On August 17, 2010, the Bankruptcy Court held a status
conference, at which the Trustee reported to the Court that he
does not presently have a commitment from any party interested
in entering into a transaction similar to the Transaction to be
implemented under the Plan. SCS, the estate's investment banker,
believes that, although the chances are diminished, there
remains a possibility of securing an investor for a business
transaction through the end of this year. However, SCS believes
that there will be little or no possibility of accomplishing
such a transaction after the end of 2010. Accordingly, SCS
continues to pursue potential investors for alternative
transactions, but the likelihood that any such transaction will
be consummated is speculative at this point. Compensation for
SCS is contingent on consummation of a transaction.
The Trustee reported that he continues to hold the
Jacksonville real estate for sale, but that, although there has
been some interest from prospective purchasers, there are no
immediate prospects for sale. The Trustee also indicated that he
is exploring the possibility of obtaining a reduction of the
real estate property tax assessment of the real property
holdings and undertaking steps to extend or preserve the
wetlands permits for the property. The Trustee recommended that
it would not be advisable to attempt to sell the real estate by
auction at the present time and that he believes that the
passage of time will improve the prospects for sale and pricing.
With no immediate opportunity to either consummate
reorganization under the Plan or an alternative version of the
Plan, and no reasonable likelihood of sale of the Jacksonville
Property on the horizon, the Trustee believes that the estate
would be best served by continuing to the end of the year to
seek an investor for a business transaction and to continue to
offer the real estate for sale. Should there be no transaction
or sale of real estate by year end or early 2011, the Trustee
believes that the estate's alternatives should be revisited. The
Trustee and his professionals continue to consult with the
Noteholders, Senior and Subordinated Indenture Trustees, and
Legal Representative for Holders of SEBC Common Equity, all of
whom have executed confidentiality agreements (collectively, the
"Confidentiality Parties"), to review and evaluate a series of
alternatives for winding up and closing the Bankruptcy Case in
the event that no reorganization transaction can be consummated.
Based on those discussions, the Trustee has determined to
proceed forward with his previously filed motion for a further
extension of the Effective Date Deadline through and including
December 31, 2010. At the conclusion of the August 17, 2010,
status conference, the Court noted that it does not contemplate
any further status conferences at this time, and that a future
status conference will be set only upon request of the Trustee
or another party in interest.
Finally, the Trustee reported that the estate currently has
cash of approximately $1.9 million. The Trustee indicated that
he and the estate professionals are endeavoring to minimize
expenses as the estate seeks the most productive approach and
timing to consummating a transaction or sale of its real estate
portfolio.
Question 58 (posted October 1, 2010):
Has SEBC's common stock been de-registered?
For the reasons set forth in FAQ #56
, the Trustee sought bankruptcy court approval to consent to the
deregistration of SEBC's common stock. By
Order
entered on September 17, 2010, the Bankruptcy Court authorized
the Trustee to consent to deregistration of SEBC's common
stock. Pursuant to the Bankruptcy Court's authorization, the
Trustee then consented to de-registration of SEBC's common
stock. Accordingly, on September 27, 2010, the SEC issued an
Order Making Findings and
Revoking Registration of Securities Pursuant to Section 12(j) of
the Securities Exchange Act of 1934 as to Southeast Banking
Corp.
Question 59 (posted December 1, 2011): What
is the latest status of the SEBC bankruptcy case?
Jeffrey H. Beck, Trustee ("Trustee") of Southeast Banking
Corporation, Debtor ("SEBC" or "estate"), last filed and posted
to the estate's website,
www.sebcglobalsettlement.com, a status update as of August
2010. The update is found here:
http://sebcglobalsettlement.com/faq.htm#Q57. The following
is a further update on the status of SEBC as of December 1,
2011.
Business Transaction/Legal Representative for Holders of
SEBC Common Stock
From the time of the August 2010 update through the present, the
Trustee and his professionals have continued their efforts to
locate a counter party to a business transaction similar to that
embodied in the confirmed chapter 11 plan of SEBC, or a counter
party to any reasonable business transaction which would benefit
SEBC and its stakeholders. Unfortunately, although there have
been discussions with a number of parties since August 2010,
including some as recently as October and November of 2011, no
transaction has been proposed by an investor to date.
As a result, aside from monitoring the case for the possibility
of a transaction, Jerry Markowitz, the Legal Representative for
Holders of SEBC Common Stock appointed by the Court (Legal
Representative) has had no duties to perform. The Legal
Representative suggested and the Trustee agrees that there is no
benefit to the holders of common shares of SEBC stock to having
the Legal Representative's appointment remain active. Thus,
while the Trustee will continue to explore the possibility of a
transaction, in cooperation with the Legal Representative, the
Trustee has filed a motion to suspend the responsibilities and
appointment of the Legal Representative pending reactivation
should a transaction materialize. That motion is set for hearing
on December 13, 2011.
Real Estate Interests of SEBC Estate
Through its wholly owned subsidiaries, the SEBC estate continues
to own substantial unimproved real estate in Jacksonville,
Florida. The nature and extent of these interests are described
here:
http://sebcglobalsettlement.com/faq.htm#Q33; and here:
http://sebcglobalsettlement.com/faq.htm#Q52. Since the
status update in August 2010, the Trustee, in conjunction with
his professionals and management consultants, has continued to
actively market the properties for sale and to manage the
properties in order to realize the maximum potential from the
estate's interests. To that end, the estate has succeeded in
obtaining a Fair Share agreement with the City of Jacksonville
to extend and amplify the rights of the estate entities and
their co-owners .
In addition, the estate has successfully challenged the real
property tax assessments, resulting in a lowering of the
assessed values. Also, the estate has moved to extend the
duration of permits obtained from governmental authorities
concerning wetlands. The estate will implement the requirements
for such permits as soon as possible. Finally, the estate has
proposed and obtained local government approval of a forestry
plan for these unimproved properties to harvest and replant
saleable trees on the properties. SWQ and Belfort will enjoy an
agricultural exemption from real estate taxes while such
forestry activities are implemented and active.
In addition to the management activities, the estate has
continued to keep the properties available for sale. Market
conditions have not been conducive to sale of such unimproved
real property and little interest was seen until recently. Since
mid-summer 2011, a number of property developers have expressed
interest in the potential acquisition and development of
commercial and residential projects on estate property. The
estate will continue to explore the realization of maximum value
from its properties.
The estate has entered into a settlement agreement to resolve
certain disputes with co-owners ("SQJV") of a 50% interest in a
portion of the properties known as the Southwest Quadrant . Here
is a copy of the agreement and of the order of the bankruptcy
court approving it:
http://sebcglobalsettlement.com/pleadings/ExhibitA.pdf.
Under the agreement, the interest of SQJV was set at 30% of all
of the Southwest Quadrant properties, and SQJV became obligated
to repay the estate for its share of the expenses incurred by
the estate in management and sale of the properties. This
obligation carried an interest rate of 8.5%, which at the time
of the agreement in 1998 was the "prime rate" of interest as
published in the Wall Street Journal. Also under the agreement,
the parties contemplated sale of the entire of the Southwest
Quadrant Properties for $5 million. Certainly, it was not known
at the time of the effective date of the agreement that the
disposition of the properties would continue into 2011.
In addition, although the estate had exclusive right to manage
the Southwest Quadrant properties under the settlement agreement
with SQJV, the estate determined to employ the principals of
SQJV as property management and marketing consultants for the
Southwest Quadrant properties and one of such principals for the
other significant estate property holding, the Belfort property.
A copy of the agreements and order approving them for such
management of the properties is found here:
http://sebcglobalsettlement.com/pleadings/ExhibitB.pdf.
These management agreements have been renewed annually as
allowed under the agreements. SQJV and its principals have been
instrumental in the successful management and marketing of the
properties. Notwithstanding the settlement agreement provision
for sale at $5 million, a sale was consummated in 2005 for $13
million of a portion of the Southwest Quadrant properties.
In early 2011, SQJV and its principals requested a reduction of
the interest rate on the carried reimbursement obligation of
SQJV in the settlement agreement, arguing that the rate was
onerous given current market conditions. They requested that the
rate be reduced to 2% fixed. In addition, because of their
significant contributions to the management and sale of the
properties, they requested that estate acknowledge that they had
earned all compensation provided for in the management
agreements. After consultation with the principal creditor
representatives, the Trustee determined to propose to SQJV and
its principals that as of January 1, 2011 the interest rate on
accrued expense reimbursement be set at a floating rate at the
prevailing "prime rate" as published by the Wall Street Journal.
That rate has been 3.25% for the duration of 2011. After such
consultation, the Trustee further proposed to the principals of
SQJV to modify the management agreements to provide that they be
terminable by the estate only for cause so long as the estate
owned an interest in the properties covered by such agreements.
SQJV and its principals have accepted both proposals.
Accordingly, the estate has filed a motion to approve such
changes in early November 2011, and that motion is also set for
hearing on December 13, 2011.
Anticipated Actions Going Forward
Although it remains unlikely, the estate plans to continue to
explore a business transaction so long as there remains a viable
possibility of executing such a transaction and to the extent
that there are parties interested in pursuing such a
transaction. However, the estate will not expend significant
resources on such a transaction unless a serious and significant
offer is received, and only after further consultation with the
principal creditors. The estate will continue to manage its real
estate holdings and endeavor to realize the maximum proceeds
from disposition of the properties. The estate will minimize
expenses commensurate with protection of the estate's vested
rights in permits and entitlements. The Trustee believes that an
ordinary course of business sale of the real estate would
realize the maximum value for the estate and that this might
require additional time to accomplish. As of October 31, 2011,
the estate had cash of approximately $1.553 million. On December
13, 2011, the Court will consider fee applications by estate
professionals, as well as payment of indenture trustee fees and
expenses and substantial contribution claims of the Ad Hoc
Committee and Gabriel Capital. The total amount of requested
fees and expenses is approximately $787,000. If all fee and
expense requests are approved by the Court, the remaining amount
of cash on hand after payment of these fees and expenses would
be approximately $765,000. The Trustee believes that, by
conserving expenses, the cash on hand would be sufficient to
allow the estate to take the time necessary to maximize the
estate's value in its assets and attributes.
The Trustee consulted with the principal creditors as to whether
the estate should remain in chapter 11 with the possibility of
modification of the confirmed chapter 11 plan should a business
transaction materialize or a bulk sale of real estate be
possible, or instead to seek to convert the SEBC case to chapter
7. The Trustee believes that there is no advantage or compelling
reason, at present, to convert the case to chapter 7, especially
as there remains a possibility (although not a probability) of a
business transaction. It remains possible as well that a
modified chapter 11 plan could facilitate a bulk sale of the
real estate holdings. The consensus among the principal
creditors was to continue the case at present in chapter 11
pending further developments. As circumstances unfold, this
decision will be revisited.
Question 60 (posted June 29, 2012): What is the latest
status of the SEBC bankruptcy case?
Despite the Trustee’s continued efforts to locate a counter-party to a business
transaction similar to that embodied in the March 13, 2009 confirmed Chapter 11 plan,
or a counter-party to any reasonable business transaction which would benefit SEBC and
its stakeholders, no transaction has been proposed by an investor to date.
The Trustee has, however, continued to actively market the real estate owned by subsidiaries
of the SEBC estate, and on March 27, 2012, the Bankruptcy Court entered an Order
authorizing the Trustee to exercise the estate’s interest in one of its subsidiaries to
effectuate a sale of certain real estate for a minimum purchase price of $4,200,000.
By motion filed on June 18, 2012, the Trustee sought approval of certain modifications
to the contract for the sale of this real property. That motion is scheduled for
hearing on July 3, 2012. In the event that motion is granted, the Trustee anticipates closing on
the sale of the real property by July 20, 2012.
After the real estate sale closes, and in light of the inability to consummate the Chapter 11 Plan,
the Trustee intends on moving to convert this case back to a case under Chapter 7 of the Bankruptcy Code
in order to liquidate SEBC’s remaining assets. In determining to pursue this course of action, the Trustee
has engaged in continuous dialogue with the Confidentiality Parties regarding available options for winding up
this case and liquidating SEBC’s remaining assets. After considering several options – including modification to the
Chapter 11 Plan under 11 U.S.C. §1127(b) and conversion to Chapter 7 – and discussing those options with the
Confidentiality Parties, and in accordance with his business judgment, the Trustee believes that conversion to Chapter 7
is in the best interests of the Estate and its creditors at this time. The Trustee believes that the disposition of
the remaining real estate parcels can be accomplished in an orderly fashion after the case is converted to Chapter 7.
Because the Trustee believes that the prospect of any form of reorganization is very remote, the administration of the
case under Chapter 7 is more appropriate and preserves all possible avenues for realization of value for the SEBC estate.
Question 61 (posted June 29, 2012): What would need to transpire in order for stockholders
to receive any distribution in the SEBC case?
In order for stockholders to receive any distribution in the SEBC case, SEBC would either (1) need to realize
value from its remaining assets in excess of the amount of remaining unpaid post-petition interest due to creditors,
or (2) engage in an equity infusion transaction of the type proposed in the Chapter 11 plan.
As noted in previous FAQs ( see
#46,
#48,
#49,
#50,
#51,
#53,
#54,
#55,
#57 and
#59),
despite the efforts of the Trustee and his professionals since 2009, the Trustee has been unable to
locate an investor for an equity infusion transaction. The Trustee believes that the prospect of an
equity infusion transaction is very remote and, for that reason, as indicated in response to the immediate
prior question, the Trustee will be moving to convert the case to Chapter 7. With respect to the ability to
realize value from SEBC’s remaining assets in excess of the amount of remaining unpaid post-petition interest due to
creditors, the Trustee believes that the prospect of realizing such value is nil given the amount of post petition
interest remaining to be paid to creditors.
Question 62 (posted October 31, 2012): I am a creditor of SEBC. Now that the case has been re-converted back to Chapter
7, how does that affect my claims?
On October 10, 2012, the Bankruptcy Court entered an Order
re-converting SEBC’s case back to a Chapter 7 liquidation. The
case was re-converted at the Trustee’s request after the Trustee
was unable – after diligent efforts – to find a counterparty for
an equity infusion transaction similar to that embodied in the
March 13, 2009 confirmed Chapter 11 plan. Creditors are not
required to file new claims in order to participate in future
distributions in the case. The February 10, 1992 claims bar date
in this case passed over twenty years ago, and all filed claims
have been resolved long ago. Any future distributions of
post-petition interest will be paid to the holders of allowed
claims in accordance with the same principles of the Bankruptcy
Code that have governed in the past. The source of payment of
such interest will be cash on hand and the proceeds of future
sales of the estate’s subsidiary real estate holdings. It is not
possible to predict the amount of proceeds that will come from
the disposition of the real estate.
Question 63 (posted October 31, 2012) I am a stockholder of
SEBC. Now that the case has been re-converted back to Chapter 7,
how does that affect my equity interests? On October 10,
2012, the Bankruptcy Court entered an Order re-converting SEBC’s
case back to a Chapter 7 liquidation. The case was re-converted
at the Trustee’s request after the Trustee was unable – after
diligent efforts – to find a counterparty for an equity infusion
transaction similar to that embodied in the March 13, 2009
confirmed Chapter 11 plan.
The Bankruptcy Code requires
that creditors of SEBC must be paid in full, with interest,
before any distribution is made to preferred or common
stockholders in respect of their equity interests. While
creditors have been paid the full principal amount of their
claims and a portion of post-petition interest, the Trustee
believes that the amount of unpaid post-petition interest on
their claims far exceeds the value of the remaining tangible
assets of SEBC.
The bankruptcy case was initially filed
under Chapter 7, and converted to a case under Chapter 11 in
September 2007 in an effort to maximize realizations in general
and provide some recovery for shareholders under an investment
transaction that had been negotiated with an institutional
investor. Such a transaction would have been the only source of
providing a distribution to shareholders. On the basis of global
financial events in 2008, and specifically the impact of those
events on the investor, the investor exercised its right to
cancel the transaction. Efforts to attract an alternate investor
for a similar, down-sized form of transaction have been
unsuccessful, and without such an investor, the case has been
re-converted back to a liquidation under Chapter 7 of the
Bankruptcy Code. To date there has been no distribution to
holders of SEBC preferred or common stock, and no such
distribution is expected now that the case is proceeding as a
Chapter 7 liquidation.
Question 64 (posted October 31, 2012)
I am a former employee of Southeast Bank, N.A. How does the re-conversion of SEBC's case back to Chapter
7 affect me?
On October 10, 2012, the Bankruptcy Court entered an Order
re-converting SEBC’s case back to a Chapter 7 liquidation. The
case was re-converted at the Trustee’s request after the Trustee
was unable after diligent efforts to find a counterparty for
an equity infusion transaction similar to that embodied in the
March 13, 2009 confirmed Chapter 11 plan.
Nothing about
the re-conversion of this case back to Chapter 7 affects any
former employees of Southeast Bank, N.A. All claims of former
employees of Southeast Bank, N.A., were resolved long ago in the
FDIC receivership for Southeast Bank, N.A. The re-conversion of
the bankruptcy case of its parent holding company, Southeast
Banking Corporation, to a Chapter 7 liquidation does not affect
any former employees of Southeast Bank, N.A.
Cautionary Statement Regarding Forward-Looking Statements
The Trustee and his representatives from time to time
make written or oral forward-looking statements concerning
expectations, beliefs, plans, objectives, goals, strategies,
future events or performance and underlying assumptions and
other statements that are not historical facts. These statements
are "forward-looking statements." Generally, the inclusion of
the words "believe," "could," "should," "estimate," "expect,"
"intend," "anticipate," "will," "project," "plan," "goal,"
"target," "forecast" and similar expressions identify statements
that constitute "forward-looking statements." All statements
addressing events or developments that the Trustee expects or
anticipates will occur in the future, including statements
relating to future financial condition, assets and real
property, as well as statements expressing optimism or pessimism
about future results, are forward-looking statements.
The forward-looking statements are and will be based upon
the Trustee's then-current views and assumptions regarding
future events and developments and are applicable only as of the
dates of such statements. The Trustee assumes no obligation to
update or revise any forward-looking information or the
discussion of such risks and uncertainties to reflect actual
results, changes in assumptions or changes in other factors
affecting forward-looking information, whether as a result of
new information, future events or otherwise.
By their nature, all forward-looking statements involve
risks and uncertainties. Actual results could differ materially
from those anticipated in such forward-looking statements as a
result of several important factors, including, without
limitation, uncertainties inherent in government permitting for
the Jacksonville properties, including, without limitation, the
ability to obtain required permits that will allow the
development of the Jacksonville properties on a financially
favorable basis, the ability to fulfill on a commercially
reasonable basis any conditions or requirements set forth in any
permits already issued or in additional required permits and
potential adverse challenge, modification or expiration of any
issued permits before the initiation or completion of any
development project; potential changes in applicable
development, zoning, building code, environmental and other laws
and regulations affecting the commercial development of real
property; the ability to attract equity investors on a basis
that will permit the confirmed plan of reorganization or an
amended version thereof to be implemented; the ability to
negotiate, propose and confirm a modified form of the confirmed
plan of reorganization that will not adversely affect the
anticipated additional value for the benefit of creditors and
shareholders resulting from such confirmed plan; the continuing
downturn in the real estate market; the availability of
financing and the difficult conditions affecting capital
markets, particularly in respect to commercial real estate and
development projects; the ability to preserve certain tax
attributes, including, without limitation, the expiration of net
operating losses in accordance with current law and regulation,
changes in tax laws, regulations and interpretations that might
adversely affect current tax attributes, as well as the effect
on existing tax attributes of any transaction ultimately
available to the Trustee and the Estate; and extraordinary or
unforeseeable events.
The foregoing list is not exhaustive. There can be no
assurance that the Trustee has correctly identified and
appropriately assessed all factors affecting the Estate and its
assets, or that the publicly available and other information
with respect to these matters is complete and correct.
Additional risks and uncertainties not presently known or that
the Trustee currently believes to be immaterial also may
adversely impact the Estate. Should any risks and uncertainties
develop into actual events, these developments could have a
material adverse effect on the financial condition of the
Estate. For these reasons, you are cautioned not to place undue
reliance on any forward-looking statements.
In mid-2012, this Southeast Banking Corporation (“SEBC”) case was pending under Chapter 11
of the Bankruptcy Code. At that time, the estate’s principal assets (held through non-debtor
subsidiaries (the “Subsidiaries”)) consisted of: (1) a 70% interest in approximately 70 acres of
undeveloped land near the southwest corner of J. Turner Butler and Southside Boulevards in
Jacksonville, Florida (the “Southwest Quadrant Parcels”), of which the remaining 30% interest
was held by the Southwest Quadrant Joint Venture (“SQJV”); (2) a reimbursement obligation of
SQJV to SEBC for expenses advanced by SEBC on the Southwest Quadrant Parcels; and (3) a
100% interest in approximately 7.3 acres of undeveloped land at the intersection of AC Skinner
Parkway and Salisbury Road, also in Jacksonville, Florida (the “Belfort Parcel”).
A 17-acre portion of the Southwest Quadrant Parcels was sold and closed in August 2012 with
net proceeds to the estate of $3,872,776, inclusive of a partial expense reimbursement from
SQJV. The bankruptcy case was converted to Chapter 7 on October 10, 2012. At that time, 53
acres of the Southwest Quadrant Parcels and the Belfort Parcel remained, along with the
continuing expense reimbursement obligation of SQJV.
In October 2013, the Subsidiaries and SQJV entered into a $5.4 million contract to sell 15 acres
of the remaining 53 acres of the Southwest Quadrant Parcels to Eckstein Investments, LLC. The
Subsidiaries and SQJV closed on that contract on May 1 2014. See Trustee’s Report of Sale of
Non-Debtor Subsidiary Real Property (ECF No. 6172). The net cash to the estate from the sale
was $3,948,577.61, including a partial reimbursement of the continuing expense reimbursement
from SQJV.
In February 2014, the Subsidiaries and SQJV entered into a $2.4 million contract to sell
approximately 10 of the remaining 38 acres of the Southwest Quadrant Parcels to Charter
Schools Development Corporation. The estate’s non-debtor subsidiaries closed on that contract
on March 12, 2014. See Trustee’s Report of Sale of Non-Debtor Subsidiary Real Property (ECF
No. 6145). The net cash to the estate from the sale was $1,851,498.45.
In March 2014, the Subsidiaries and SQJV entered into a $6.0 million contract to sell 13 of the
remaining 28 acres of the Southwest Quadrant Parcels to DeMedici Investments, LLC. The
buyer under this contract has exercised its right to terminate the sale agreement within the
inspection period. See Notice of Termination of Non-Debtor Subsidiary Sale Contract (ECF No.
6173). As a result, there remains 28 acres of the Southwest Quadrant Parcels.
In May 2014, the Subsidiaries and SQJV entered into a $5.4 million contract to sell 15 of the
remaining 28 acres of the Southwest Quadrant Parcels to AC Packer, LLC. The buyer is moving
forward with planning, has submitted a site plan to the sellers and has engaged counsel for the
required zoning. The inspection period on this contract expired on September 3, 2014, and the
buyer has not terminated the contract; conditioned, however, on a credit that has been agreed to
be applied at closing for $360,000 in respect of soil and other issues found by the buyer during
the inspection period.
If the AC Packer Sale closes, then the estate’s principal remaining assets (held through its nondebtor
subsidiaries) will be: (a) the remaining approximately 13-acre portion of the Southwest
Quadrant Parcels that DeMedici Investments was originally under contract to buy; (b) the
7.3-acre Belfort Parcel; and (c) the remaining expense reimbursement due from SQJV. In
addition, there are certain excess wetlands mitigation credits and some vacant acreage severely
negatively impacted by wetlands and a conservation easement. Significant progress has been
made in wrapping up the estate. Of the 77 acres of undeveloped land at the Southwest Quadrant
and Belfort Parcels held in mid-2012, 42 acres have been sold and closed and an additional 15
acres are under a binding contract to sell. The Trustee continues to pursue buyers for the
remaining real estate, and is evaluating options for liquidating the wetlands mitigation credits.
The estate has cash on hand of $8,569,778 as of August 20, 2014.
Question 66 (posted January 13, 2016):
When does the Trustee expect to wind up and close the SEBC bankruptcy case, and how much does the Trustee expect to distribute in a final distribution to creditors?
On January 11, 2016, Second Pioneer Corporation (“Second Pioneer”), an indirectly wholly-owned non-debtor subsidiary of Southeast Banking Corporation (“SEBC”), closed on a sale of the “Belfort” property – an undeveloped parcel of real property – to Rimrock Devlin Development LLC, for a total cash purchase price of $2,000,000. After expenses and other closing costs, the proceeds of the sale upstreamed to the SEBC estate were $1,859,838.90.
After the closing of the Belfort sale, the last remaining material non-cash assets of SEBC are the interests of its wholly-owned nondebtor subsidiaries Southeast Properties, Inc. and SWQ Holdings, Inc. (the “Non-Debtor Subsidiaries”) in undeveloped real property and other related property interests (“Southwest Quadrant”) owned 70% by the Non-Debtor Subsidiaries and 30% owned by a partnership not affiliated with SEBC, the Southwest Quadrant Joint Venture (“SQJV”).
By order entered on September 9, 2015, the Bankruptcy Court authorized SEBC to proceed with the sale of the Non-Debtor Subsidiaries’ real and other related property interests in the Southwest Quadrant to Kent Schmidt and James H. Efstathion (who are the joint venture partners in SQJV) or their successors, assigns or designees (“Purchasers”), for a total cash purchase price of $3 million, plus half of all closing costs and assumption of all ongoing obligations (the “SQJV Sale”). Under the terms of the sale contract as amended, the Purchasers have made a non-refundable deposit of $25,000 and an additional refundable deposit of $100,000 with the inspection period to expire February 8, 2016. Assuming the Purchasers do not elect to cancel on or prior to February 8, 2016, the Purchasers have until March 9, 2016 to close.
If the SQJV Sale closes, the Trustee will then begin to take the necessary steps to wind up the SEBC Chapter 7 bankruptcy case, prepare his final report, and make distribution to creditors of the funds to which they are entitled. The choice of the mechanics of making such distribution will be explored and discussed with the constituents, United States Trustee and, as appropriate, the Court.
As of January 12, 2016, and including the proceeds of the Belfort sale, the SEBC estate has cash on hand of approximately $13,635,556.75. If the SQJV Sale closes, the SEBC estate expects to receive additional cash of approximately $2,700,000, resulting in approximately $16,335,556.75 in cash on hand. Projected expenses to close the case, including payment of trustee and professional fees, as well as a conservative contingency reserve, are approximately $2,335,717.85, resulting in estimated projected funds available for distribution to creditors of approximately $14,000,000. See attached chart. Preliminary estimates of projected distributions are set forth in the attached table, along with Exhibit A thereto. The foregoing amounts are estimates only and could vary materially.
As indicated above, the mechanics of making distributions to creditors will be discussed with various parties and has not been determined. Given the logistics involved in making distributions to holders of six different bond issues, including two issues of EuroNotes and the need to prepare and file final tax returns and to comply with other requirements of winding down the estate, the Trustee anticipates that it will take several months following the closing of the Southwest Quadrant property before final distributions can be made and the SEBC Chapter 7 case can be closed.
As of June 3, 2016, all assets of Chapter 7 Debtor Southeast Banking Corporation and its subsidiaries have been administered, all proceeds have been received, the 2015 and short year Final 2016 income tax returns have been filed and prompt determination requests have been made for the returns. It is expected that the prompt determination period on the 2015 and 2016 returns will have passed on or about August 1, 2016. Assuming that the Internal Revenue Service does not select one or both of the returns for audit, final fee applications of professionals will be filed with the Court and the Trustee’s Final Report (“Final Report”) will be filed with the Office of the United States Trustee for review shortly after August 1, 2016. The Final Report will cover the period of the current Chapter 7 that commenced October 10, 2012. Upon completion of the United States Trustee’s review of the Final Report and resolution of any questions or issues raised by the United States Trustee, the United States Trustee will forward the Final Report to the Court. There is no set time period for the review of the Final Report by the United States Trustee.
Upon the filing of the Final Report with the Court, a notice of filing of the Final Report is sent to all creditors. The notice informs the creditors: that the Final Report is on file with the clerk of the Court; that the Trustee and estate professionals have applied for the compensation indicated; that the money on hand will be used to satisfy the Trustee’s fees and expenses, the fees and expenses of the Trustee’s professionals and to make the final distribution to creditors; and that the creditors have a right to object to the Final Report. Court orders are necessary prior to payment of fees and expenses and to resolve any objections filed to the Final Report. Upon all such orders becoming final, distributions will be made in accordance with the Final Report, or otherwise as provided in the order.
Subject to the timing of the steps of this process not within his control, Jeffrey H. Beck, as Chapter 7 Trustee, will make every effort to complete the final distribution prior to the end of 2016. Estate cash on hand was $16,643,255.07 as of June 3, 2016. The Trustee and his professionals have made projections of the fees, expenses and other estate costs going forward, including a modest contingency. Based upon these projections and subject to changes after completing the steps described above, it is anticipated that the amount available for final distribution to noteholders and general creditors will be $15,200,000.
A copy of the projections of expenses and resulting cash available for distribution is attached as Exhibit A. Based upon this projection of cash available for the final distribution, the Trustee and his professionals have prepared an estimate of the amounts that would be distributed to each creditor and to the indenture trustee for each bond issue in the final distribution. A copy of that projection for the final distribution is attached as Exhibit B. Based upon this projection, the Trustee and his professionals have prepared a summary of all distributions from case inception through the final distribution. A copy of that summary is attached as Exhibit C.
As indicated in Exhibit C, the estate has already paid in full the principal amount of the petition date claims of creditors in the amount of $407,169,317, along with $47,649,997 of post-petition interest. Based upon the projection of $15,200,000 of additional cash available for the final distribution shown in Exhibit A, the total post-petition interest paid will be $62,849,997, for total combined distributions to creditors of $470,019,314. Of course, the actual final distribution could vary from the projection and will not be finalized until after all of the steps outlined above are completed.
Cautionary Statement Regarding Forward-Looking Statements
The Trustee and his representatives from time to time make written or oral forward-looking statements concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements.” Generally, the inclusion of the words “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “project,” “plan,” “goal,” “target,” “forecast” and similar expressions identify statements that constitute “forward-looking statements.” All statements addressing events or developments that the Trustee expects or anticipates will occur in the future, including statements relating to future financial condition, assets and real property, as well as statements expressing optimism or pessimism about future results, are forward-looking statements.
The forward-looking statements are and will be based upon the Trustee’s then-current views and assumptions regarding future events and developments and are applicable only as of the dates of such statements. The Trustee assumes no obligation to update or revise any forward-looking information or the discussion of such risks and uncertainties to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, whether as a result of new information, future events or otherwise.
By their nature, all forward-looking statements involve risks and uncertainties. Actual results could differ materially from those anticipated in such forward-looking statements as a result of extraordinary or unforeseeable events.
There can be no assurance that the Trustee has correctly identified and appropriately assessed all factors affecting the Estate and its assets, or that the publicly available and other information with respect to these matters is complete and correct. Additional risks and uncertainties not presently known or that the Trustee currently believes to be immaterial also may adversely impact the Estate. Should any risks and uncertainties develop into actual events, these developments could have a material adverse effect on the financial condition of the Estate. For these reasons, you are cautioned not to place undue reliance on any forward-looking statements.
Question 68 (posted November 9, 2016):
Now that the Trustee’s Final Report has filed, when will final distributions be made?
On November 4, 2016, the Office of the United States Trustee filed the Trustee’s Final Report ("TFR") with the Court. Jeffrey H. Beck, as Chapter 7 Trustee (the "Chapter 7 Trustee") then served a Notice of Trustee’s Final Report ("NFR") and the Trustee's Summary of Requested Fees and Expenses (“Fee Summary”) on all creditors and parties in interest on November 7, 2016. The deadline for objections to the NFR is November 28, 2016.
If no objections to the NFR are timely filed, then shortly after November 28, 2016, the Chapter 7 Trustee intends to submit to the Court for entry a proposed form of final fee order, approving the final fees of the Chapter 7 Trustee and estate professionals in the amounts set forth in the Fee Summary (the “Final Fee Order”). Once the Court enters the Final Fee Order, the Chapter 7 Trustee will then serve the Final Fee Order on all creditors and parties in interest. If no party in interest appeals or seeks rehearing or reconsideration of the Final Fee Order within fourteen days of its entry, then immediately after the expiration of such 14-day period, the Chapter 7 Trustee will be in a position to make final distributions in accordance with the TFR.
Subject to the steps in this process that are not within his control, the Chapter 7 Trustee will continue to make every effort to make final distributions as soon as practicable after the expiration of all application deadlines. In the event no objections are timely filed with respect to the NFR, and no appeals, motions for reconsideration or rehearing are filed with respect to the Final Fee Order, it remains possible, but not assured, that final distributions will be made before the end of 2016.
If you are a non-bondholder creditor, final distribution checks will be sent to you at the address listed on your proof of claim, or any updated address previously filed with the Court. In order to be sure that we have your current address, please confirm or update your address with the Chapter 7 Trustee by contacting Meredith Walker of Kapila/Mukamal LLP (the accountants for the bankruptcy estate) either via email to MWalker@kapilamukamal.com, or by phone at 954/323-2025, by no later than November 28, 2016. In the event the address we have on file for you is not your current address, Ms. Walker will provide directions to you to submit to her a signed letter or notice of address change, which we will then file with the Court for you.
Cautionary Statement Regarding Forward-Looking Statements
The Trustee and his representatives from time to time make written or oral forward-looking statements concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements.” Generally, the inclusion of the words “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “project,” “plan,” “goal,” “target,” “forecast” and similar expressions identify statements that constitute “forward-looking statements.” All statements addressing events or developments that the Trustee expects or anticipates will occur in the future, including statements relating to future financial condition, assets and real property, as well as statements expressing optimism or pessimism about future results, are forward-looking statements.
The forward-looking statements are and will be based upon the Trustee’s then-current views and assumptions regarding future events and developments and are applicable only as of the dates of such statements. The Trustee assumes no obligation to update or revise any forward-looking information or the discussion of such risks and uncertainties to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, whether as a result of new information, future events or otherwise.
By their nature, all forward-looking statements involve risks and uncertainties. Actual results could differ materially from those anticipated in such forward-looking statements as a result of extraordinary or unforeseeable events.
There can be no assurance that the Trustee has correctly identified and appropriately assessed all factors affecting the Estate and its assets, or that the publicly available and other information with respect to these matters is complete and correct. Additional risks and uncertainties not presently known or that the Trustee currently believes to be immaterial also may adversely impact the Estate. Should any risks and uncertainties develop into actual events, these developments could have a material adverse effect on the financial condition of the Estate. For these reasons, you are cautioned not to place undue reliance on any forward-looking statements.
All assets of Southeast Banking Corporation have now been liquidated. There will be no distribution to shareholders. The final distribution in the Chapter 7 bankruptcy case is the last distribution before the close of the case, and consists of a further partial payment to creditors of post-bankruptcy interest. Because the creditors’ claims for post-petition interest exceeds the remaining funds, there are not now and there will never be any funds for distribution to shareholders.
Cautionary Statement Regarding Forward-Looking Statements
The Trustee and his representatives from time to time make written or oral forward-looking statements concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not historical facts. These statements are “forward-looking statements.” Generally, the inclusion of the words “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “anticipate,” “will,” “project,” “plan,” “goal,” “target,” “forecast” and similar expressions identify statements that constitute “forward-looking statements.” All statements addressing events or developments that the Trustee expects or anticipates will occur in the future, including statements relating to future financial condition, assets and real property, as well as statements expressing optimism or pessimism about future results, are forward-looking statements.
The forward-looking statements are and will be based upon the Trustee’s then-current views and assumptions regarding future events and developments and are applicable only as of the dates of such statements. The Trustee assumes no obligation to update or revise any forward-looking information or the discussion of such risks and uncertainties to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, whether as a result of new information, future events or otherwise.
By their nature, all forward-looking statements involve risks and uncertainties. Actual results could differ materially from those anticipated in such forward-looking statements as a result of extraordinary or unforeseeable events.
There can be no assurance that the Trustee has correctly identified and appropriately assessed all factors affecting the Estate and its assets, or that the publicly available and other information with respect to these matters is complete and correct. Additional risks and uncertainties not presently known or that the Trustee currently believes to be immaterial also may adversely impact the Estate. Should any risks and uncertainties develop into actual events, these developments could have a material adverse effect on the financial condition of the Estate. For these reasons, you are cautioned not to place undue reliance on any forward-looking statements.
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