-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Bm77nrKRUbU1UHVWkJjsjQseZbR+5/lAPj+5mk9ROsZzfD3cIUHVtHWiZ8TY79yc sxRomcnKX34M8JlAcIuPkQ== 0000004319-99-000001.txt : 19990818 0000004319-99-000001.hdr.sgml : 19990818 ACCESSION NUMBER: 0000004319-99-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990527 ITEM INFORMATION: FILED AS OF DATE: 19990817 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPAREL AMERICA INC CENTRAL INDEX KEY: 0000004319 STANDARD INDUSTRIAL CLASSIFICATION: WOMEN'S, MISSES', AND JUNIORS OUTERWEAR [2330] IRS NUMBER: 132648900 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-04954 FILM NUMBER: 99694501 BUSINESS ADDRESS: STREET 1: 1175 STATE ST CITY: NEW HAVEN STATE: CT ZIP: 06511 BUSINESS PHONE: 2037775531 MAIL ADDRESS: STREET 2: 1175 STATE STREET CITY: NEW HAVEN STATE: CT ZIP: 06511 FORMER COMPANY: FORMER CONFORMED NAME: MILLER SHOE INDUSTRIES INC DATE OF NAME CHANGE: 19890130 FORMER COMPANY: FORMER CONFORMED NAME: AMADAC INDUSTRIES INC DATE OF NAME CHANGE: 19840216 8-K 1 8-K REPORT DATED 05/27/99 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 27, 1999 Apparel America, Inc. (Exact name of registrant as specified in its charter) Delaware 0-4954 13-2648900 (State of incorporation) (Commission File Number) (IRS EIN) 300 Plaza Drive, Vestal, New York 13850 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 607-729-9331 1175 State Street, New Haven Connecticut 06511 (Former Address of principal executive offices) (Zip Code) Item 3. Bankruptcy or Receivership. (b) On May 27, 1999 an order confirming the Registrants Plan of Reorganization (the Plan) was entered in the U.S. Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). The Plan, a copy of which is attached hereto as Exhibit 2.3, provides provisions for the treatment of administrative claims and classification and treatment, of all claims and interests against the debtor. The Plaza Group, L.L.C. shall fund the plan to make all of the payments to the claimants pursuant to the plan in exchange for which The Plaza Group, L.L.C. shall be issued 19,783,317 Shares of stock of the Registrant representing all of the issued and outstanding stock of the reorganized Registrant out of 30,000,000 authorized shares. Financial information as to the assets and liabilities of the Registrant as of April 30, 1999 is attached hereto as Exhibit 99.2. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits Exhibit Number Description 2.3 Amended Plan of Reorganization 99.1 Order Confirming Plan of Reorganization 99.2 Consolidated Balance Sheet as of April 30, 1999 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Apparel America, Inc. (Registrant) Date: August 17, 1999 /s/ Robert C. Nolt Chief Financial Officer EXHIBITS Exhibit 2.3 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - --------------------------------X In re: Chapter 11 Case No. 98 B 44221 (AJG) APPAREL AMERICA, INC., AMENDED PLAN OF REORGANIZATION Debtor. - --------------------------------X Apparel America, Inc., debtor and debtor in possession, and the Plaza Group, L.L.C. propose the following amended plan of reorganization pursuant to section 1121(b) of Chapter 11 of Title 11 of the United States Code. ARTICLE I DEFINITIONS 1.1 Meaning. For the purpose of this chapter 11 Plan, each of the terms set forth herein shall have the meaning ascribed below and such meaning shall be equally applicable to the singular and plural forms of the terms defined. All of the definitions and provisions contained in this Article 1 are, and shall be, regarded as integral, substantive and operative provisions of this Plan. 1.2 Other Terms. A term that is used in the Plan and not defined herein, but that is defined in the Bankruptcy Code or in the Federal Rules of Bankruptcy Procedure, shall have the meaning set forth therein. Any reference contained in this Plan to a particular exhibit, paragraph or article shall be deemed to be a reference to an exhibit, paragraph or article of this Plan. 1.3 Rules of Construction. The rules of construction set forth in section 102 of the Bankruptcy Code shall be applicable to all of the provisions of this Plan. Without in any way limiting the foregoing, as used in this Plan, the words "includes" and "including" are without limitation. "Administrative Claim" shall mean any cost or expense of administration of the Case allowed under sections 503(b) or 507(a)(1) of the Bankruptcy Code, including all allowances of compensation or reimbursement of expenses to Professional Persons to the extent allowed by the Court only upon entry of a Final Order under section 330 of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, and any fees or charges assessed against the Debtor's estate under 28 U.S.C. section 1930. "AIA" shall mean A.I. Associates, Inc. "Allowed" or "Allowed Amount", when referring to a Claim, shall mean the amount of a Claim 1. filed with the Court on or before the Bar Date and as to which no objection to the allowance thereof has been interposed within any applicable period of limitation fixed by Final Order or this Plan, (b) which has been or hereafter is scheduled by the Debtor as liquidated and not disputed or contingent in amount, as to which no objection to the allowance thereof has been interposed within any applicable period of limitation, (c) as to which any objection has been interposed, to the extent such Claim has been allowed by a Final Order, or (d) any Claim specifically identified in this Plan as an Allowed Claim. "Ballot" shall mean the form distributed to holders of Claims and Interests on which is to be indicated acceptance or rejection of the Plan. "Bankruptcy Code" shall mean Chapter 11 of Title 11 of the United States Code, 11 U.S.C section 101, et. seq., as amended. "Bar Date" shall mean November 2, 1998, the last date fixed by Final Order dated October 6, 1998 for filing proofs of Claim or Interests in this Case, which arose at any time either (a) prior to the Filing Date, or (b) on or after the Filing Date through and including October 6, 1998. "BNYFC" shall mean BNY Financial Corporation. "BNYFC Agreements" shall mean the Accounts Receivable Management and Security Agreement made as of September 1, 1995, as amended by letter agreements dated November 3, 1995, January 31, 1996, August 26, 1996, November 1, 1996, November 15, 1996, August 11, 1997 and February 25, 1998, the Equipment Security Agreement dated August 14, 1992 and the Inventory Security Agreement dated August 14, 1992, all of which were approved by Final Order dated July 1, 1998. "BSB" shall mean the BSB Bank and Trust Company. "Business Day" shall mean any day on which commercial banks are open for business in New York, New York. "Case" shall mean the Debtor's case under chapter 11 of the Bankruptcy Code, Case No. 98 B 44221 (AJG), which was commenced by the filing of a voluntary petition with the Court on the Filing Date. "Cash" shall mean, with respect to payments under the Plan, lawful currency of the United States of America (U.S. dollars), regular check, certified check, bank check or wire transfer from a domestic bank. "Claim" shall have the meaning given to such term in section 101(5) of the Bankruptcy Code. "Claimant" shall mean the holder of a Claim. "Class" shall mean any category of Claims or Interests as specified in Article III of this Plan. "Committee" shall mean the Official Committee of Unsecured Creditors in this Case appointed by the United States Trustee on June 17, 1998. "Committee Counsel" shall mean Pick & Halperin, L.L.P., the attorneys retained by the Committee to represent it in this Case, which retention was approved by Final Order dated June 26, 1998. "Confirmation Date" shall mean the date of entry by the Court of the Confirmation Order. "Confirmation Order" shall mean an order of the Court confirming the Plan in accordance with the Bankruptcy Code. "Consummation Date" shall mean the date which is fifteen (15) days following the Effective Date. "Court" shall mean the United States Bankruptcy Court for the Southern District of New York, and any appellate or other court that is competent to exercise jurisdiction over any matter or proceeding arising in or relating to this Case. "Debtor" shall mean Apparel America, Inc., d/b/a Mayfair, Mayfair Industries, Gordon, RRRibbitt-RRRibbitt, B.J. Frog, Robby Len, Waverly, Waverly Beachwear, Longitude, Why Not, Jane Colby, Harbor Casuals, Roxanne, Lenee, Sand Dollar and Coco Reef. "Disputed Claim" shall mean a Claim as to which an objection has been timely filed and which objection (a) is not the subject of a Final Order allowing or disallowing the Claim; and (b) has not been withdrawn. "Distributions" shall mean Cash which is required under the Plan to be distributed to the holders of Allowed Claims. "Effective Date" shall mean the date on which the Confirmation Order becomes a Final Order. "Escrow Agent" shall mean Marilyn Simon and Associates, bankruptcy counsel for the Debtor. "Escrow Fund" shall mean any and all Distributions to the holders of Class VI Claims remaining unclaimed 90 days after the distribution date, which shall be held by Escrow Agent in an interest bearing escrow account and used to make subsequent payments to the holders of Class VI Claims in accordance with Section 4.6 of this Plan. "Evergreen Letter of Credit" shall mean a revolving letter of credit which renews automatically unless twenty (20) days' prior written notice of cancellation is given to the beneficiary. "Federal Rules of Bankruptcy Procedure" shall mean the Federal Rules of Bankruptcy Procedure in effect on the date of this Plan. "Filing Date" shall mean June 12, 1998, the date on which the Debtor filed its voluntary petition under chapter 11 of the Code, thereby commencing the Case. "Final Order" shall mean an order of the Court which has not been reversed, stayed, modified or amended and (i) the time to appeal from, or to seek review or rehearing of, has expired, (ii) no appeal, review, certiorari or rehearing is pending, and (iii) the order has become conclusive of all matters adjudicated therefor and is in full force and effect. "Interest" shall mean the rights of owners of issued and outstanding shares of preferred stock, common stock or other equity securities of the Debtor. "Interest Holder Claims" shall mean Claims held by certain Interest holders for mandatory redemption of preferred stock and unpaid dividends, which Claims (a) are not secured by a lien or security interest in the assets of the Debtor and (b) are not entitled to priority under section 507 of the Bankruptcy Code. "L.C." shall mean the Evergreen Letter of Credit obtained by the Plaza Group and issued by BSB in favor of Committee Counsel, f/b/o the holders of Class VI Claims under this Plan, in an amount equal to three and one-third percent of the aggregate amount of Class VI Claims whose holders elected Option A (as defined in paragraph 4.6 of this Plan). "Milady" shall mean Milady Brassiere & Corset Co., Inc. "Milady Agreements" shall mean the agreements between the Debtor and Milady, all of the obligations under which were assumed by Swimwear Anywhere, Inc. under the Sale Order. "Milady Secured Claim" shall mean any secured claim that Milady may have against the Debtor with respect to (a) the Percentage Increment in the Purchase Price and the Consequent Minimum Percentage Increment due pursuant to the Milady Agreements arising from sales made by the Debtor and all other sums due under the Milady Agreements, and (b) all the license royalties and other proceeds received by the Debtor arising from the Debtor's license or other disposition of the "Roxanne" trademark, to any third party other than Swimwear Anywhere, Inc. "New Stock" shall mean the stock, with full voting and dividend privileges, issued on the Effective Date, or as soon as practicable thereafter, to the Plaza Group, which shall represent all issued and outstanding stock in the reorganized Debtor as of the Effective Date. "Plan" shall mean this Amended Plan of Reorganization. "Plaza Group" shall mean the Plaza Group, L.L.C., a limited liability corporation, which is the third party proponent of this Plan. "Priority Claim" shall mean any Claim entitled to priority in accordance with section 507(a) of the Bankruptcy Code other than an Administrative Claim, a Priority Tax Claim or the claim of the Union pursuant to the Union Stipulation. "Priority Tax Claim" shall mean any tax claim entitled to priority under section 507(a)(8) of the Bankruptcy Code. "Professional Persons" shall mean all attorneys, accountants and financial consultants retained by a Final Order within the meaning of sections 327 or 1103 of the Bankruptcy Code or otherwise. "Professional Fees" shall mean all fees, costs and expenses of Professional Persons incurred in the Case up to and including the Confirmation Date which fees, costs, and expenses shall have been awarded by Final Order pursuant to sections 330 or 503(b) of the Bankruptcy Code. "Purchase Agreements" shall mean collectively, the agreements by and between the Debtor and each of A.H. Schreiber Co., Incorporated and Swimwear Anywhere, Inc., pursuant to which the Debtor sold certain assets and licensed certain of its tradenames to each of A.H. Schreiber Co., Incorporated and Swimwear Anywhere, Inc. free and clear of liens, claims, and security interests, and which were approved by Final Order dated July 28, 1998. "Secured Claim" shall mean any Claim that is secured, within the meaning of section 506(a) of the Bankruptcy Code. "Sale Order" shall mean the Final Order of the Court dated July 28, 1998 approving the Purchase Agreements. "Term Lenders" shall mean collectively, The CDA, AIA, Inc., and BSB. "Term Lender Agreement" shall mean the Fifth Amended and Restated Credit Agreement by and among the Term Lenders. "The CDA" shall mean the Connecticut Development Authority. "Union" shall mean Local 151, Union of Needletrades Industrial and Textile Employees (UNITE). "Union Administrative Claim" shall mean the portion of claim number 150 filed by the Union that has been Allowed as an Administrative Claim pursuant to the Union Stipulation. "Union Stipulation" shall mean the stipulation between the Union and the Debtor, which among other things, settles the Union's Administrative and Priority Claims, which was approved by Final Order dated March 15, 1999, subject to confirmation of the Plan. "Unsecured Claim" shall mean any Claim that is not a Secured Claim, an Administrative Claim, a Priority Claim, or a Priority Tax Claim. ARTICLE II Provisions for Treatment of Administrative Claims 2(a) Administrative Claims, including the Union Administrative Claim, are not impaired and the Allowed Amount of such Claims shall be satisfied, settled and discharged, in full, by the payment in Cash on the Consummation Date or as soon as practicable thereafter, or shall be paid upon such terms as may be agreed upon between the Debtor and the respective Claimant entitled to such payment. ARTICLE III Classification of Claims and Interests 3 . ..1 A Claim is in a particular class only to the extent that the Claim falls within the description of that Class and is in a different Class to the extent that the remainder of the Claim falls within the description of such different Class. In addition, a Claim or Interest is in a particular Class only to the extent that the Claim or Interest is an Allowed Claim. Class I - Secured Claim of BNYFC. Class II - Secured Claim of the Term Lenders. Class III - Secured Claim of Milady. Class IV - Priority Tax Claims. Class V - Priority Claims. Class VI - Unsecured Claims. Class VII - Interest Holder Claims. Class VIII - Interests. 3 . ..2 Unimpaired Claims. All classes of Claims are unimpaired except for Classes VI, VII and VIII. ARTICLE IV Treatment of Classes of Claims and Interests 4 . ..1 The Allowed Class I Claim is not impaired and shall be satisfied, settled and discharged, in full, as follows: 4 . ..1a. All of the Debtor's inventory, accounts receivable and domestic equipment which secure the Allowed Claim of BNYFC shall be liquidated and the net liquidation proceeds of the collateral shall be paid to BNYFC, and 4 . ..1b. After the Allowed Secured Claims of Milady and the Term Lenders are paid in full, all of the net royalties payable to the Debtor under the Purchase Agreements shall be paid to BNYFC until BNYFC's Allowed Secured Claim is paid in full. 4 . ..2 The Allowed Class II Claim is not impaired and shall be satisfied, settled and discharged, in full, from net liquidation proceeds of the fixed assets subject to their liens and the net royalties payable to the Debtor under the Purchase Agreements after the payments due to Milady, such payments to be shared by the Term Lenders in the manner provided in the Term Lender Agreement. 4 . ..3 The Allowed Class III Claim is not impaired and shall be satisfied in accordance with the Milady Agreements, the Sale Order or upon such other terms as may be agreed upon by Milady and the Debtor and Milady shall have all of its rights and remedies due thereunder. 4 . ..4 Class IV Claims are not impaired and shall be satisfied, settled and discharged, in full, by the payment of 100% of the Allowed Amount of such Claims in quarterly deferred Cash installments, inclusive of interest at a rate of 9% per annum, in equal self amortizing payments commencing on the Consummation Date and every ninety (90) days thereafter, over a period not to exceed six (6) years after the date of assessment of said Claims. 4 . ..5 The Class V Claims are not impaired and shall be satisfied, settled and discharged, in full, by the payment of one hundred (100%) percent of the Allowed Amount of such Claims in three equal annual deferred Cash installments, inclusive of interest at a rate of 9% per annum, commencing on the Consummation Date and continuing thereafter on the next two (2) anniversaries of the Consummation Date. 4 . ..6 The Class VI Claims are impaired and shall be satisfied, settled and discharged, in full, by either (a) the payment of ten (10%) percent of the Allowed Amount of such Claims in three equal annual deferred Cash installments, without interest, commencing on the Consummation Date and continuing thereafter on the next two (2) anniversaries of the Consummation Date ("Option A"), or (b) the payment of seven and one half (7.5%) percent of the Allowed Amount of such Claims in Cash on the Consummation Date ("Option B"), as elected by each holder of a Class VI Claim on the Ballot. Any holder of a Class VI Claim who, or which, fails to make a payment election on the Ballot will be deemed to have accepted Option B. The payments to the holders of Class VI Unsecured Claims who elected Option A hereunder shall be secured by the L.C. 4 . ..7 The Class VII Interest Holder Claims are impaired. The holders of said Claims shall receive no Distribution under the Plan. 4 . ..8 The Class VIII Interests are impaired. All stock in the Debtor issued and outstanding as of the Confirmation Date, as well as any and all preemptive, redemption, dividend and registration rights relating thereto, shall be canceled, and the holders of Interests shall receive no Distribution under the Plan. ARTICLE V MEANS FOR EXECUTION OF THE PLAN 5 . ..1 Distributions. The Plaza Group shall fund the Plan to the extent necessary and required to make all of the payments to the holders of Allowed Administrative Claims, including the Allowed Union Administrative Claim, Allowed Class IV Priority Tax Claims, Allowed Class V Priority Claims, and Allowed Class VI Unsecured Claims in accordance with the terms of the Plan, in exchange for which the Plaza Group shall be issued the New Stock. Except as otherwise provided herein, on the Effective Date, title to all properties and assets of the Debtor shall pass to and vest in the reorganized Debtor, subject to the Secured Claims in Class I, II and III, but otherwise free and clear of all other Claims and Interests. The Secured Claims in Class I, II and III shall be secured solely by the collateral securing said claims as of the Effective Date of this Plan. Any asset(s) acquired by the reorganized Debtor from and after the Effective Date shall be subject to the Claims of Class IV, V and VI creditors but shall be free and clear of all other Claims and Interests. The Confirmation Order shall be a judicial determination of the discharge of all of the Debtor's liabilities, except as provided in the Plan, whether or not (a) a proof of Claim is filed or deemed filed under section 501 of the Bankruptcy Code, (b) such Claim becomes an Allowed Amount, or (c) the holder of such Claim has accepted the Plan. The Debtor and/or the Plaza Group shall make Distributions to Claimants only in accordance with the Plan. Distributions of Cash pursuant to the Plan shall be rounded up to the nearest whole dollar. 5 . ..2 Distribution Schedules. As soon as practical following the Confirmation Date, but no later than the Consummation Date, the Debtor shall prepare Distribution schedules with respect to Administrative Claims and each Class of Claims, including Claims to which objections have been asserted, copies of which shall be forwarded to Committee Counsel. The Escrow Agent and Committee Counsel (in the event it draws upon the L.C.) shall obtain bonds from a recognized bonding company prior to the Effective Date. The bonding company shall be required to notify the Plaza Group, the Debtor, the Committee, the United States Trustee and the Court at least ten (10) business days prior to the expiration or termination of the bonds. The Debtor shall distribute a portion of the initial payment (in the event the Union elects Option A) or a portion of the one-time payment (in the event the Union elects Option B) due to the Union hereunder on account of its Administrative and Unsecured Claims directly to the Bargaining Unit Employees (as defined in the Union Stipulation), who are determined to be eligible for such distribution pursuant to a schedule to be supplied by the Union. The remaining portion of the initial payment or the one-time payment, as the case may be, and all future payments (in the event the Union elects Option A), due to the Union hereunder on account of its Administrative and Unsecured Claims shall be distributed to the Union and designated as payment for contributions due to employee benefit funds. 5 . ..3 Objections to Claims. The Debtor may file objections to the allowance of any Claim. Any such objection must be filed and served no later than the later of (a) the sixtieth (60th) day following the Effective Date, (b) thirty (30) days after the filing of the proof of such Claim, or (c) any later date set by Final Order. Any Claim for which no objection has been filed within the time fixed therefor shall be deemed an Allowed Claim in such amount as is set forth in a proof of claim filed with the Bankruptcy Court, or if no proof of claim is filed, as listed in the schedules filed by the Debtor with the Bankruptcy Court pursuant to Rule 1007 of the Federal Rules of Bankruptcy Procedure and not identified as disputed, contingent or unliquidated as to amount. 5 . ..4 Procedure. Unless otherwise ordered by the Bankruptcy Court or agreed to by written stipulation approved by a Final Order, or until the objection thereto is withdrawn, the Debtor may litigate the merits of each Disputed Claim until determined by Final Order. The Debtor shall have the sole and exclusive authority to assert objections to Claims and to prosecute, and settle all such objections to Claims pursuant to sections 510, 543 through 551 and 553 of the Bankruptcy Code. 5 . ..5 Unclaimed Distributions. Unclaimed Distributions (including Distributions made by checks which fail to be negotiated) shall be retained by the Debtor and held in trust for the beneficial holders of Allowed Claims entitled thereto for a period of 90 days after the Distribution date. Any Distribution remaining unclaimed 90 days after the distribution date shall be canceled (by a stop payment order or otherwise), the Claim(s) relating to such Distributions(s) shall be deemed forfeited and expunged and the holder of such Claim shall be removed from the Distribution schedule and shall receive no further Distributions under this Plan. Any and all canceled Distributions shall be returned to the Debtor, except that any and all canceled Distributions relating to Class VI Claims, less any costs to cancel the Distribution, shall be turned over to Escrow Agent and deposited in the Escrow Fund. The Escrow Fund shall be used to make subsequent payments to the holders of Class VI Claims in accordance with Section 4.6 of this Plan. Any Escrow Funds available after all payments are made to the holders of Class VI Claims in accordance with Section 4.6 of this Plan, shall be released to the Debtor. All Distributions shall be made to the holders of Claims at the address listed on their respective proofs of claim filed with the Bankruptcy Court or, if no proof of claim was filed, at their last known address. The Plaza Group and/or the Debtor shall take reasonable steps to ascertain the most current address of the holder of any Claims whose distribution check was returned as undeliverable. 5 . ..6 Escrow Agent. The duties of Escrow Agent are only as herein specifically provided and are purely ministerial in nature. 5 . ..6a. Escrow Agent shall incur no liability, whatsoever, for any action taken, or failure to act, except for its own gross negligence or wilful misconduct. 5 . ..6b. In the performance of its duties hereunder, Escrow Agent shall be entitled to rely upon any document, instrument or signature reasonably believed to be genuine. 5 . ..6c. Escrow Agent may assume that any party purporting to give any notice in writing in has been duly authorized to do so. 5 . ..6d. The Debtor and/or the Plaza Group shall pay Escrow Agent reasonable compensation for the service to be rendered as Escrow Agent and to pay or reimburse Escrow Agent upon request for all expenses, disbursements and advances in connection with carrying out its duties hereunder. 5 . ..6e. The Debtor and the Plaza Group hereby agree to jointly and severally indemnify Escrow Agent for and to hold it harmless against any loss, liability or expense incurred without willful negligence or gross misconduct on the part of Escrow Agent in carrying out its duties hereunder, including the costs and expenses of defending itself against any claim of liability. 5 . ..6f. The provisions of the two subparagraphs immediately preceding this subparagraph shall survive the termination of this Plan. 5 . ..7 Avoidable Transfers. The Debtor hereby waives all causes of action under sections 544(b), 547, and 548 of the Bankruptcy Code. Causes of action under any other section of the Bankruptcy Code are fully and completely preserved. 5 . ..8 Post-Confirmation Professional Fees. Counsel and accountants to the Debtor and to the Committee may, from time to time, provide professional services following the Confirmation Date. Such services will not be encompassed within an application for allowance which has been approved by the Court. Such services, inclusive of disbursements, shall be paid within ten (10) days after submission of a bill to the Debtor and the Plaza Group, provided that no objection to the payment is asserted. If an objection is asserted and remains unresolved, the affected Professional Person may file an application for allowance with the Court and such fees will be paid by the Plaza Group in amounts as may be fixed by the Court. The Plaza Group consents to the jurisdiction of this Court for the purpose of such fees if awarded by a Final Order. ARTICLE VI EXECUTORY CONTRACTS All executory contracts and unexpired leases of the Debtor not expressly assumed by the Debtor by a Final Order or previously rejected by the Debtor by Final Order shall be deemed disaffirmed and rejected by the Debtor. ARTICLE VII COVENANTS OF THE DEBTOR AND THE PLAZA GROUP For the period commencing the Consummation Date and until all Classes of Claims have been paid and satisfied pursuant to Article IV of this Plan, the Debtor or the Plaza Group shall: 7 . ..1 Pay when due all current, post-Confirmation Date taxes to taxing authorities, unless such taxes are disputed in good faith. 7 . ..2 Pay when due all payments required to be made under this Plan. 7 . ..3 Take all reasonable steps necessary to ensure that the L.C. remains in full force and effect until all payments are made to the holders of Class VI Claims who elected Option A in accordance with the terms of this Plan. 7 . ..4 Maintain business records in accordance with generally accepted accounting principles. 7 . ..5 Prepare annual financial reports and, within sixty (60) days following the end of the Debtor's fiscal year, furnish copies of such reports to BNYFC, each of the Term Lenders, Committee Counsel and accountants. 7 . ..6 Furnish to any holder of a Claim upon request, a copy of the Debtor's annual financial report, when available. 7 . ..7 Prepare and file with the United States Trustee all quarterly operating reports required to be filed and pay all fees due to the Office of the United States Trustee until a final decree is entered in this case. ARTICLE VIII THE COMMITTEE 8 . ..1 Until all of the payments are made to the holders of Class VI Claims in accordance with the terms of this Plan, the members of the Committee shall constitute the Committee. 8 . ..2 In the event that a vacancy occurs on the Committee by reason of death, resignation or retirement, or because a designee of a member of the Committee shall no longer be employed by such member, the vacancy thereby created shall be filled within thirty (30) days thereafter by a person designated by the member of the Committee that employed the former designee or with whom the former designee was affiliated. In the event such member of the Committee fails to designate a successor representative to serve on the Committee, the vacancy shall be filled by a designee of a majority of the remaining members of the Committee from among the employees or representatives of the remaining holders of Class VI Claims. 8 . ..3 Upon the occurrence of any one of the following events, and effective immediately upon such occurrence, a member of the Committee shall be deemed to have resigned from the Committee if such member: 8 . ..3a. shall assign all or any portion of its Claim (other than as security for an obligation of, or to an affiliate of, such Claimant), or 8 . ..3b. releases the Debtor from payment of all or a portion of its Claim. Any vacancy created as a result of the foregoing may, but need not, be filled by a designee of a majority of the remaining members of the Committee from among the employees or representatives of the remaining holders of the Class VI Claims. 8 . ..4 The Committee shall function as such whether or not any vacancy is filled. No holder of a Class VI Claim shall have more than one representative on the Committee at any given time. 8 . ..5 The Committee shall act by a majority vote of its members present and voting, either with or without formal meetings. 8 . ..6 The Committee shall have the power and the right to postpone the time of any Distribution provided for in Article IV of the Plan to the holders of Class VI Claims in whole or in part. Written notice of such postponement shall be given by the Debtor to all Class VI Claimants, in form and substance satisfactory to Committee Counsel, prior to the due date of such postponed Distribution. 8 . ..7 The Committee shall have the power and right, upon such terms and conditions as the Committee may determine, to waive, modify or excuse performance of any of the covenants of the Debtor or the Plaza Group set forth in the Plan, but such waiver or excuse shall not be deemed to constitute a waiver of any other term or provision of this Plan or waiver or excuse of the same covenant on a different occasion. 8 . ..8 Members of the Committee and their designees shall serve without compensation. However, the Debtor shall reimburse each member of the Committee for all reasonable out-of-pocket expenses or disbursements incurred by it or its designee in the performance of its duties as a member of the Committee, or a designee thereof. 8 . ..9 No member of the Committee, or any of its agents, shall be liable for any action taken, or failure to act, as a member of the Committee, except for their own gross negligence or wilful misconduct. 8 . ..10 Upon the completion of the Distributions to be made to the holders of Class VI Claims in accordance with Article IV of the Plan, the duties, powers, responsibilities and rights of the Committee and its agents shall terminate, ipso facto. ARTICLE IX EVENTS OF DEFAULT 9 . ..1 Secured Claims. The failure to turn over any net proceeds or any net royalty payments to the holders of Allowed Secured Claims when due under the Plan, which failure shall continue for a period of thirty (30) days after receipt of notice as provided in paragraph 12.4 hereof from the affected holder of the Allowed Secured Claim, shall constitute a default under this Plan, and at the election of the affected Secured Claimant, the entire unpaid balance of its Secured Claim shall become immediately due and payable. 9 . ..2 Priority Tax Claims and Priority Claims. The failure to make any Distribution to the holders of Allowed Class IV and Class V Claims when due under the Plan, which failure shall continue for a period of thirty (30) days after receipt of notice, as provided in paragraph 12.4 hereof, shall constitute a default under this Plan, and at the election of any such Claimant, all unpaid installments due such Claimant hereunder shall become immediately due and payable. 9 . ..3 Unsecured Claims. The failure to make any Distribution to the holders of Class VI Claims when due under the Plan, which failure shall continue for a period of thirty (30) days after receipt of notice, as provided in paragraph 12.4 hereof, shall constitute a default under this Plan. Upon the event of a default with respect to the Distributions to the holders of Class VI Claims who elected Option A, Committee Counsel may, upon five (5) business days' prior written notice thereafter to the Debtor and the Plaza Group, and provided the default is not cured during said period, draw upon the L.C. (in addition to exercising any and all other rights the holders of Class VI Claims may have to recover the payments required to be made to the holders of Class VI Claims under this Plan). In the event Committee Counsel draws upon the L.C. in accordance with this paragraph, within ten (10) business days thereafter, it shall distribute the proceeds to the holders of Allowed Class VI Claims, who elect Option A, in accordance with the terms of this Plan. In the event the Committee receives notification of termination of the L.C., or termination of the L.C. is threatened, Committee Counsel may, upon prior written notice to the Debtor and the Plaza Group draw upon the L.C. 9 . ..4 Other Defaults. The breach of any covenant under the Plan, other than the failure to make any Distribution when due for which provisions have already been made in paragraphs 9.1 through and including 9.3 hereof, shall constitute a default under this Plan unless cured within thirty (30) days following receipt by the Debtor of notice of such breach from any Claimant as provided in paragraph 12.4 hereof. In addition, the filing of a subsequent voluntary petition under the Bankruptcy Code by the Debtor, the filing of an involuntary petition under the Bankruptcy Code against the Debtor, or an assignment by the Debtor of its assets for the benefit of creditors, each at any time prior to full satisfaction of the payment provisions of this Plan, shall constitute a default under this Plan. In any such event, a holder of an Allowed Claim shall have the right, upon ten (10) business days' prior written notice thereafter to the Debtor and the Plaza Group to move the Bankruptcy Court for appropriate relief. ARTICLE X DISCHARGE Except as otherwise expressly provided in this Plan, as of the Effective Date, the Debtor shall be discharged from, and the Confirmation Order shall operate as an injunction against, the commencement or continuation of any action or the employment of any process to collect, offset or recover any sums against the Debtor with respect to (a) any Claim or interest thereon, and the Debtor's liability therefor shall be extinguished completely, whether or not a proof of claim is filed or deemed filed under section 501 of the Bankruptcy Code, such Claim becomes an Allowed Amount under section 502 of the Bankruptcy Code or the holder of such Claim has accepted the Plan, and whether or not such Claim is reduced to judgment, liquidated or unliquidated, contingent or noncontingent, asserted or unasserted, fixed or unfixed, matured or unmatured, disputed or undisputed, legal or equitable, known or unknown, that arises or may arise from any agreement of the Debtor entered into or obligation of the Debtor incurred before the Confirmation Date, or from any conduct of the Debtor prior to the Confirmation Date, or that otherwise arose before the Confirmation Date, and (b) any liability of a kind specified in sections 502(g), 502(h), and 502(i) of the Bankruptcy Code, whether or not a proof of claim is filed or deemed filed under section 501 of the Bankruptcy Code, such Claim becomes an Allowed Amount under section 502 of the Bankruptcy Code, or the holder of such Claim has accepted the Plan. ARTICLE XI BOARD OF DIRECTORS AND CHARTER OF REORGANIZED DEBTOR 11 . ..1 Board of Directors. On the Effective Date, the duties, powers, responsibilities and rights of the members of the Debtor's Board of Directors shall terminate, ipso facto. From and after the Effective Date, the Board of Directors of the reorganized Debtor shall consist of two members who shall be elected by the Plaza Group, as the holder of the New Stock, effective as of the Effective Date. 11 . ..2 Charter. After the Confirmation Date and on or before the Effective Date, the Debtor's Certificate of Incorporation and By-Laws shall be amended as provided in the Plan and in a manner as is necessary to implement the provisions of this Plan. On the Effective Date, the Debtor's Certificate of Incorporation and By-Laws shall be deemed modified by this Plan. ARTICLE XII MISCELLANEOUS PROVISIONS 12 . ..1 Effect of Confirmation. The Distributions and other treatment afforded holders of Claims and Interests under this Plan shall be in full and complete satisfaction, settlement and discharge of all Claims against and Interests in the Debtor. 12 . ..2 Entire Agreement. This Plan and the Confirmation Order, including any exhibits to this Plan, sets forth the entire agreement and understanding among the parties hereto relating to the subject matter hereof and supersedes all prior discussions and documents. No party shall be bound by any terms, conditions, definitions, warrants, understandings or representations with respect to the Plan other than as are expressly provided for herein. Should any provision in the Plan be determined to be unenforceable by a court of competent jurisdiction, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of the Plan. The duties, rights and obligations of any person or entity named or referred to in the Plan shall be binding upon, inure to the benefit of and shall be the responsibility of, the successors and assigns of such person or entity. 12 . ..3 Headings; Entire Plan. The headings of the Articles, paragraphs and sections of this Plan are inserted for convenience only and shall not affect the interpretation hereof. This Plan, including any exhibits and other attachments hereto, shall constitute the entire Plan, subject to amendment or modification solely as provided herein. Article I of this Plan is and shall be regarded as an integral, substantive and operative part of the Plan. 12 . ..4 Notices. Any notice described in or required by the terms of this Plan shall be deemed to have been properly given (a) when actually received or, (b) if mailed, five (5) days after the date of mailing, if such notice shall have been sent by registered or certified mail return receipt requested, or (c) if sent via facsimile, on the date of the transmission confirmation, to - the Debtor, addressed to its counsel: Marilyn Simon & Associates 200 Park Avenue South Suite 1700 New York, New York 10003-1503 Facsimile: 212-529-4823 - the Committee, addressed to its counsel: Pick & Halperin, LLP 1440 Broadway, 12th Floor New York, New York 10018 Facsimile: 212-819-1234 - the Plaza Group, addressed care of: Burton Koffman Koffman Enterprises 300 Plaza Drive Vestal, New York 91303 Facsimile: 607-797-7103 or to such other address or addressee as the recipient may give written notice in accordance with the provisions of this section of the Plan. 12 . ..5 Revocation. The Debtor and/or the Plaza Group reserve the right to revoke and withdraw this Plan at any time prior to the Confirmation Date. If the Plan is revoked or withdrawn, then the Plan shall be deemed null and void, and in such event, nothing contained herein shall be deemed to constitute a waiver or release any Claim by or against the Debtor or any other entity, or to prejudice in any manner, the rights of the Debtor or any entity in any further proceeding involving the Debtor. 12 . ..6 Substantial Consummation. The Plan will be deemed substantially consummated, as such term is used in section 1101(2) of the Bankruptcy Code, upon the commencement of distributions to the holders of Administrative Claims, Priority Claims, Priority Tax Claims, and Unsecured Claims. Following such substantial consummation, any appeal, rehearing or other post-confirmation motion of any nature with respect to this Plan or the Confirmation Order except as specifically provided herein or therein shall be rendered moot and no longer justiciable. 12 . ..7 Cramdown. If any impaired Class fails to accept the Plan in accordance with section 1129(a) of the Bankruptcy Code, the Debtor reserves the right to request the Bankruptcy Court to confirm the Plan in accordance with the provisions of section 1129(b) of the Bankruptcy Code. ARTICLE XVIII RESERVATION OF RIGHTS In the event that this Plan is not confirmed or that the Effective Date does not occur, the rights of all parties in interest in the Chapter 11 Case shall be reserved in full. ARTICLE XIV RETENTION OF JURISDICTION The Court shall retain jurisdiction of this proceeding under the provisions of the Bankruptcy Code, including, without limitation, section 1142(b) thereof and of the Federal Rules of Bankruptcy Procedure to ensure that the intent and the purpose of the Plan is carried out and given effect. Without limitation by reason of specification, the Court shall retain jurisdiction for the following purposes: (a) To consider any modification of the Plan pursuant to section 1127 of the Bankruptcy Code and/or any modification of the Plan after substantial consummation thereof; (b) To hear and to determine: (i) all controversies, suits and disputes, if any, as may arise in connection with the interpretation or enforcement of the Plan including whether an Event of Default has occurred pursuant to Article IX hereof; (ii) all controversies, suits and disputes, if any, as may arise between or among the holders of any Class of Claim and the Debtor or the Plaza Group; (iii) all causes of action which may exist on behalf of the Debtor; (iv) applications for allowance of com pensation and objections to Claim which have been timely asserted in accordance with orders of this Court; (v) any and all pending applications, adversary proceedings and litigated matters. Dated: New York, New York May 19, 1999 APPAREL AMERICA, INC. Debtor in Possession By: s/Jeffrey Koffman Jeffrey Koffman, President THE PLAZA GROUP By: s/Burton Koffman Burton Koffman, President Exhibit 99.1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------X In re: Chapter 11 Case No. 98 B 44221 (AJG) APPAREL AMERICA, INC., ORDER CONFIRMING PLAN OF REORGANIZATION Debtor. - -------------------------------X Apparel America, Inc., debtor and debtor in possession (the Debtor") and the Plaza Group, L.L.C. having proposed and filed a plan of reorganization dated April 13, 1999 (the "Prior Plan") in this case under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"); AND a hearing to consider approval of the Debtor's disclosure statement (the "Disclosure Statement") having been held before this Court on April 13, 1999 on notice to all holders of Claims* and Interests in the Case, and the Disclosure Statement having been approved by order of this Court dated April 13, 1999 (the "Disclosure Statement Order"); AND pursuant to the Disclosure Statement Order, copies of the Prior Plan, the Disclosure Statement, a "Notice Fixing the Time for Acceptances or Rejections of the Plan, the Hearing on the Confirmation of the Plan and the Time for Filing Objections to Confirmation" and the ballot form for acceptance or rejection of the Prior Plan (collectively, the "Solicitation Materials") having been transmitted to all holders of Claims and Interests; _______________________________ * Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Plan. AND the solicitation of acceptances from holders of Claims in this Case having been made within the time and in the manner required by the Disclosure Statement Order, and the acceptances and rejections of the Prior Plan having been received by counsel to the Official Committee of Unsecured Creditors (the "Committee") and having been filed with the Court under cover of a pleading entitled "Certification of Acceptances"; AND, the Debtor having filed an amended Plan of Reorganization dated May 19, 1999 (hereinafter, the "Plan"), which contained a modification to the Prior Plan, and by order dated May 20, 1999, the Court found that the modification was non- material and further found that the acceptances to the Prior Plan shall be deemed acceptances to the Plan; AND a confirmation hearing having been held by this Court on May 20, 1999 upon proper and timely notice to all persons entitled thereto in accordance with the Disclosure Statement Order, section 1128 of the Bankruptcy Code and Rule 2002(b) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and upon the affidavit of service by mail of the Solicitation Materials, and upon the record of such hearing and all the proceedings held before the Court in this Case, and after due deliberation, and sufficient cause appearing therefor; IT IS HEREBY FOUND, CONCLUDED and DETERMINED, after notice and a hearing, that: 1. The Plan complies with the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules: (1) Proper Classification (section 1123(a)(1)). The classification of Claims and Interests under the Plan complies with section 1122 of the Bankruptcy Code. The Claims or Interests placed in a particular class pursuant to the Plan are substantially similar to the other Claims or Interests, as the case may be, in such class. (2) Specific Unimpaired Classes (section 1123(a)(2)). Classes I, II, III, IV and V are not impaired under the Plan. (3) Specific Treatment of Impaired Classes (section 1123(a)(3)). The Plan specifies the treatment of impaired Classes VI, VII and VIII the details of which are contained in Article IV of the Plan. (4) No Discrimination (section 1123(a)(4)). The Plan provides for the same treatment of each Claim or Interest in a particular Class. (5) Implementation of the Plan (section 1123(a)(5)). The Plan provides adequate means for the Plan's implementation. (6) Executory Contracts and Unexpired Leases (section 1123(b)(2)). All executory contracts and unexpired leases of the Debtor shall be deemed rejected. (7) The Debtor Complies with the Bankruptcy Code (section 1129(a)(2)). The Debtor, as proponent of the Plan, has complied with the applicable provisions of the Bankruptcy Code. The solicitation of acceptances and rejections from holders of Claims that were placed in impaired Classes VI VII and VIII under the Plan was in compliance with (i) the Disclosure Statement Order, (ii) the applicable provisions of the Bankruptcy Code and (iii) the applicable Bankruptcy Rules. (8) Plan Proposed in Good Faith (section 1129(a)(3)). The Plan has been proposed in good faith and not by any means forbidden by law. (9) Payments of Costs and Expenses (section 1129(a)(4)). Any payment made or to be made by the Debtor for services or for costs and expenses in or in connection with the Case, or in connection with the Plan and incident to the Case has been disclosed to the Court, and where appropriate pursuant to the Plan, has been approved by the Court or is subject to the approval of the Court as reasonable. (10) Insider Employees (section 1129(a)(5)). All insider who will be employed or retained by the Debtor have been fully disclosed. (11) No Rate Change (section 1129(a)(6)). No rate changes are provided for in the Plan that would require governmental regulatory commission approval. (12) Best Interests of Creditors (section 1129(a)(7)). With respect to each impaired class of Claims or Interests, each holder of a Claim or Interest in any such Class has (i) accepted the Plan, or (ii) will receive or retain under the Plan on account of such Claim or Interest property of a value, as of the Effective Date, that is not less than the amount that such holder would so receive or retain if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such date. (13) Plan Acceptance (section 1129(a)(8)). (i) Class VI has accepted the Plan in accordance with the provisions of section 1126(c) and (d) of the Bankruptcy Code, (ii) Classes VII and VIII did not cast any votes, and (iii) Classes I, II, III, IV and V are unimpaired, within the meaning of section 1124 of the Bankruptcy Code, and are conclusively presumed to have accepted the Plan under section 1126(f) of the Bankruptcy Code. (14) Plan Treatment of Administrative Claims, Priority Claims and Priority Tax Claims (section 1129(a)(9)). Except to the extent that the holder of a particular Claim has agreed to a different treatment of such Claim, the Plan provides that with respect to a Claim of a kind specified in section 507(a)(1) and (2) of the Bankruptcy Code, each such Allowed Claim, which has not otherwise been paid previously, shall be satisfied and discharged by paying the holder thereof an amount equal to such Allowed Claim in Cash in full on the later of the Consummation Date or the date on which such Claim becomes Allowed. The Plan provides that with respect to a Claim of a kind specified in section 507(a)(3), (4), (5), (6), or (7) of the Bankruptcy Code, each such Allowed Claim, which has not otherwise been paid previously, shall be satisfied and discharged by paying the holder thereof one hundred (100%) percent of the Allowed Amount of such Claims in three equal annual deferred Cash installments commencing on the Consummation Date. The Plan provides that with respect to a Claim of a kind specified in section 507(a)(8) of the Bankruptcy Code, each such Allowed Claim, which has not otherwise been paid previously, shall be satisfied and discharged by the payment of 100% of the Allowed Amount of such Claims in quarterly deferred Cash installments, inclusive of interest at a rate of 9% per annum, in equal self amortizing payments commencing on the Consummation Date and every ninety (90) days thereafter, over a period not to exceed six (6) years after the date of assessment of said Claims. (15) At Least One Impaired Class of Claims Accepted the Plan (section 1129(a)(10)). Class VI which Class is impaired and does not include any insider of the Debtor, has accepted the Plan. (16) Feasibility (section 1129(a)(11)). The Debtor and the Plaza Group, L.L.C. demonstrated their ability to meet the financial obligations under the Plan and confirmation of the Plan is not likely to be followed by the need for liquidation of the Debtor under chapter 7 of the Bankruptcy Code. (17) Fees (section 1129(a)(12)). All fees payable under 28 U.S.C. section 1930, as determined by the Court at the Confirmation Hearing, have been or will be paid in Cash by the Debtor or the Plaza Group, L.L.C. through the entry of a final decree closing this case. (18) Retiree Benefits (section 1129(a)(13)). The Debtor does not have any obligations in respect of retiree benefits. (19) No Cramdown (section 1129(b)). Because all impaired classes of Claims and Interests have accepted the Plan under section 1129(a)(8) of the Bankruptcy Code, the Debtor is not seeking confirmation of the Plan under section 1129(b) of the Bankruptcy Code. (20) No Other Plan (section 1129(c)). No other chapter 11 plan has been filed in the Case. (21) Principal Purpose (section 1129(d)). The principal purpose of the Plan is neither the avoidance of taxes nor the avoidance of the application of section 5 of the Securities Act of 1933. B. The foregoing findings and conclusions satisfy the requirements of Bankruptcy Rule 7052. A finding of fact shall operate as a finding of fact, no matter how denominated, and a conclusion of law shall operate as a conclusion of law, no matter how denominated. All offers of proof and discussion for the record at the Confirmation Hearing constitute additional findings and conclusions with respect to this order. C. Finding that the Plan is confirmable for all of the foregoing reasons, IT IS HEREBY ORDERED THAT: A. The Plan, a copy of which is annexed hereto as Exhibit "A" (together with the exhibits thereto) the terms and provisions of which are incorporated by reference as if fully set forth herein, be, and it hereby is, confirmed in all respects regardless of whether specific reference is made herein to a particular article, paragraph or provision of the Plan. 2. The provisions of the Plan and this Order shall be, and they hereby are, binding upon the Debtor, the Plaza Group, L.L.C. and any holder of a Claim or Interest, whether or not the Claim or Interest is impaired under the Plan and whether or not the holder of such Claim or Interest has accepted the Plan. The provisions of this Order shall be, and they hereby are, non-severable and mutually dependent. 3. The Debtor and the Plaza Group, L.L.C., and their agents and attorneys shall be, and they hereby are, authorized, empowered and directed to execute, deliver and carry out all of the provisions of the Plan, and to perform such other acts as are necessary for the consummation of the Plan. 4. Subject to the limitations set forth in the Plan, all holders of Claims and Interests are precluded from asserting against the Debtor, its estate, the Plaza Group, L.L.C., the Committee, or their professionals, and the individual members thereof, any Claim based upon any act of, or omission by, the Debtor, or any transaction or other activity of the Debtor of any kind or nature that occurred prior to the Effective Date except for acts of willful neglect and malicious misconduct. 5. All executory contracts of the Debtor are hereby deemed rejected by the Debtor. 6. In accordance with section 1146(c) of the Bankruptcy Code, the transfer or sale of the assets and property of the Debtor during the administration of this case shall not be taxed under any state or local law imposing a stamp tax or similar tax. 7. The Debtor and the Plaza Group, L.L.C. be and they hereby are authorized to execute any and all documents, do any and all things and pay any and all sums necessary or required to effectuate the transactions approved or contemplated by this order. 8. This Court shall retain jurisdiction of this proceeding under the provisions of the Bankruptcy Code, including, without limitation, section 1142(b) thereof and of the Bankruptcy Rules, to ensure that the intent and the purpose of the Plan is carried out and given effect. Without limitation by reason of specification, this Court shall retain jurisdiction for the purposes set forth in Article XIV of the Plan. 9. The Debtor shall be responsible for the payment of United States Trustee quarterly fees arising under 28 U.S.C. section 1930(a)(6) through the entry of a final decree closing this case. 10. The Debtor shall be responsible for the filing of all post-confirmation reports. Dated: New York, New York May 27, 1999 s/Arthur J. Gonzalez UNITED STATES BANKRUPTCY JUDG Exhibit 99.2 Apparel America, Inc. Consolidated Balance Sheet As of April 30, 1999 In 000s
4/30/99 --------- ASSETS Current assets: Cash $ 62 Due from factor-net (23) Note receivable 149 Prepaid expenses and other current assets 4 --------- Total current assets 192 --------- Property, plant and equipment, net - Trademarks, net of accumulated amortization 1,275 Cost in excess of net assets acquired, net of accumulated amortization 4,049 --------- Total non current assets 5,324 --------- TOTAL ASSETS $ 5,516 ========= 4/30/99 --------- LIABILITIES Liabilities not subject to compromise: Current liabilities: Accounts payable - post-petition $ 41 Other current liabilities and accrued expenses 266 --------- Total current liabilities 307 --------- Long-term debt: Accrued purchase price - trademark 487 --------- Total long-term debt 487 --------- Total liabilities not subject to compromise 794 --------- Liabilities subject to compromise: Pre-petition loan payable - revolver (factor) (Note 1) 3,400 Accounts payable - pre-petition 1,634 Other liabilities and accrued expenses 2,663 Term loan 6,211 Deferred interest on term loan 430 Leasehold improvement and equipment loans 631 Subordinated note and accrued interest 665 $9 cumulative redeemable preferred stock & accr. dividends 5,705 $8.50 cum. redeemable preferred stock & accr. dividends 1,213 Provision for rejected executory contracts 825 --------- Total liabilities subject to compromise 23,377 --------- Total liabilities 24,171 --------- Stockholders' deficit: Common stock 989 Additional paid-in capital 64,071 Deficit (55,754) Less: Treasury stock (129) Acquisition costs in excess of historical basis of net assets acquired from affiliates (27,832) --------- Total stockholders' deficit (18,655) --------- TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 5,516 =========
NOTE 1-- The factor loan is secured by inventory and accounts receivable. The factor also holds a second lien on the income stream derived from the trademark license agreements approved by Bankruptcy Court order dated July 24, 1998. It is possible that a significant amount of any remaining Indebtedness (after liquidation of inventory and receivables) may be satisfied from the proceeds thereof. -----END PRIVACY-ENHANCED MESSAGE-----