8-K 1 y69241e8vk.txt DVI, INC. UNITED STATES 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): November 24, 2004 DVI, INC. -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) DELAWARE 001-11077 22-2722773 -------------------------------------------------------------------------------- (State or Other (Commission (IRS Employer Jurisdiction of Incorporation) File Number) Identification Number) 2500 YORK ROAD, JAMISON, PA 18929 Registrant's Telephone Number, Including Area Code: (215) 491-4800 N/A -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provision: ( ) Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ( ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.03 BANKRUPTCY OR RECEIVERSHIP (b) Order Confirming Plan of Liquidation On November 24, 2004, the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") entered an order (the "Confirmation Order") confirming the First Amended Joint Plan of Liquidation (the "Plan") of DVI, Inc. ("DVI"), DVI Financial Services Inc. ("DVIFS") and DVI Business Credit Corporation ("DVIBC," and together with DVI and DVIFS, the "Debtors"), dated October 8, 2004 under Chapter 11 of the Bankruptcy Code. A copy of the Plan is attached hereto as Exhibit 2.1 and a copy of the Confirmation Order is attached hereto as Exhibit 2.2. SUMMARY OF THE PLAN Below is a summary of the material features of the Plan. Capitalized terms used and not otherwise defined shall have the meanings ascribed in the Plan. The following summary is qualified, in all respects, by the terms of the Plan. The effective date ("Effective Date") of the Plan will be: (a) at least eleven (11) days following occurrence of the Confirmation Date; and (b) no more than five (5) Business Days following the first date on which no stay of the Confirmation Order is in effect and all conditions to the Effective Date set forth in Article 10 of the Plan have been satisfied or, if waivable, waived pursuant to Section 10.4 thereof. Conditions to the Effective Date include, the payment in full of Professional Payments and the execution and delivery of the documentation necessary to implement the Plan, including, the Liquidating Trust Agreement, the Asset Management Agreement and the Amended DIP Credit Agreement. The Effective Date is anticipated to be in first full week of December 2004. As of June 27, 2003, DVI had 15,181,921 shares of common stock outstanding. As further described below, in connection with the Plan, the holders of DVI's common stock along with all other holders of an "equity security" as defined in Bankruptcy Code section 101(16) will receive no distributions and their interests in DVI will be cancelled. Pursuant to the Plan, the board of directors and officers of DVI will be deemed to have resigned on the Effective Date. As soon as practicable after the Effective Date, each of the Debtors will be dissolved for all purposes. The Plan is premised on the substantive consolidation of all of the Debtors, except with respect to the General Secured Claims in Class 2, as provided below. The Plan contains three types of unclassified Claims: DIP Facility Claims, Administrative Claims (including Professional Claims) and Priority Tax Claims. In addition, the Plan classifies Claims and Interests as follows: Class 1 Other Priority Claims, Class 2 General Secured Claims, Class 3 General Unsecured Claims, Class 4 Subordinated Unsecured Claims, Class 5 Noteholder Securities Claims, Class 6 Intercompany Claims, Class 7A Interests and Class 7B Interests Securities Claims. Classes 1 and 2 are Unimpaired and Classes 3, 4, 5, 6, 7A and 7B are Impaired. Below is a summary of the distributions to be made to the holders of each Claim: DESCRIPTION OF CLAIMS OR TREATMENT INTERESTS ---------------------------- ------------------------------------------------ DIP FACILITY CLAIMS The DIP Facility Claims, including Claims resulting from draw downs on the Effective Date, are Allowed Claims against each of the Debtors. ADMINISTRATIVE CLAIMS Subject to the allowance procedures and deadlines provided in the Plan, on the Effective Date or as soon thereafter as is practicable, the holder of an Allowed Administrative Claim shall receive on account of the Allowed Administrative Claim and in full satisfaction, settlement and release of and in exchange for such Allowed Administrative Claim, (a) Cash equal to the unpaid portion of such Allowed Administrative Claim, or (b) such other treatment as to which the Debtors and the holder of such Allowed Administrative Claim have agreed upon in writing, provided, however, that Administrative Claims with respect to liabilities incurred by the Debtors in the ordinary course of business during the Chapter 11 Cases shall be paid in the ordinary course of business in accordance with the terms and conditions of any agreement or course of dealing relating thereto and Professional Claims shall be paid in accordance with Section 2.4 of the Plan. PROFESSIONAL CLAIMS Immediately prior to the Effective Date, the Debtors shall pay the Section 2.4 Professional Payments, which include all amounts owing to the Professionals for all outstanding Professional Claims relating to prior periods and for the period ending on the Effective Date (subject to a cap for each Professional equal to the cumulative budgeted amount for such Professional since the Petition Date, as determined in accordance with the budget attached to the DIP Facility Order approving Amendment No. 2 to the DIP Credit Agreement or otherwise agreed in writing between the DIP Lenders and the Debtors). Upon receipt of such payments, each Professional shall be deemed to fully and finally release and discharge any rights or claims it may have to its Carve Out (as defined in the DIP Credit Agreement) without the need for any further order of the Bankruptcy Court. The Professionals shall estimate Professional Claims due for periods that have not been billed as of the Effective Date. On or prior to the Administrative Claims Bar Date, each Professional shall File with the Bankruptcy Court its final fee application seeking final approval of all fees and expenses from the Petition Date through the Effective Date. Within ten (10) days after entry of a Final Order with respect to its final fee application, each Professional shall remit any overpayment to the Liquidating Trustee or the Liquidating Trustee shall pay any outstanding amounts owed to the Professional. PRIORITY TAX CLAIMS With respect to each Allowed Priority Tax Claim, at the sole option of the Debtors, the holder of an Allowed Priority Tax Claim shall be entitled to receive on account of such Allowed Priority Tax Claim, in full satisfaction, settlement, release and discharge of and in exchange for such Allowed Priority Tax Claim, (a) in accordance with Bankruptcy Code section 1129(a)(9)(C), equal Cash payments made on the Effective Date or as soon as practicable thereafter and on the last Business Day of every three (3) month period following the Effective Date, over a period not exceeding six (6) years after the assessment of the tax on which such Claim is based, totaling the principal amount of such Claim plus simple interest on any outstanding balance, compounded annually from the Effective Date, calculated at the interest rate available on ninety (90) day United States Treasuries on the Effective Date; (b) such other treatment agreed to by the holder of such Allowed Priority Tax Claim and the Debtors on or prior to the date ninety (90) days after the Effective Date, provided such treatment is on more favorable terms to the Debtors, as the case may be, than the treatment set forth in subsection (a) above; or (c) payment in full, in Cash to all holders of Allowed Priority Tax Claims that have not agreed to less favorable terms. CLASS 1 OTHER PRIORITY On the Effective Date, or as soon thereafter as CLAIMS: is reasonably practicable, each Allowed Other Priority Claim shall receive, in full any Claim, other than an satisfaction, settlement and release of and in Administrative Claim or a exchange for such Allowed Other Priority Claim, Priority Tax Claim, of a (a) Cash equal to the amount of such Allowed Creditor to the extent Other Priority Claim, or (b) such other such Claim is entitled to treatment as to which the Debtors and the priority pursuant to holder of such Allowed Other Priority Claim Bankruptcy Code have agreed upon in writing. section 507(a) CLASS 2 GENERAL SECURED On the Effective Date, the Allowed General CLAIMS: Secured Claims, including, without limitation, the Allowed U.S. Bank Secured Claim, and the all Secured Claims against Liens and security interests on the Debtors' the Debtors other than Assets securing such Allowed General Secured the DIP Facility Claims Claims (except for any Liens or security interests on the Unencumbered Cash, the Initial Litigation Funding Amount or any amounts properly deposited in the Litigation Fund) shall be assumed by the Liquidating Trust, and the Debtors and their Estates shall have no further liability therefor; provided, however, that any Deficiency Claims shall not constitute Class 2 General Secured Claims and shall be treated as Class 3 General Unsecured Claims under the Plan. CLASS 3 GENERAL UNSECURED After (a) satisfaction in full or satisfaction CLAIMS: in accordance with the Plan of all Allowed Administrative Claims, Professional Claims and Allowed Priority Tax Claims as provided in all Unsecured Claims Article 2 of the Plan, and (b) the treatment against the Debtors other provided in the Plan for DIP Facility Claims than the Subordinated and Allowed Claims in Classes 1 and 2, all Unsecured Claims, the remaining Available Cash (if any) shall be Intercompany Claims, the allocated Pro Rata among holders of Allowed Noteholder Securities Senior Debt Claims, Allowed Subordinated Claims and the Interests Unsecured Claims and Allowed Other Unsecured Securities Claims. Claims, including, without limitation, the Allowed U.S. Bank Unsecured Claim, subject to the redistribution provisions of Section 5.4 of the Plan. Each holder of an Allowed General Unsecured Claim, shall receive, in full satisfaction, settlement and release of and in exchange for its Allowed General Unsecured Claim, periodic distributions from the Liquidating Trust of its share of Available Cash allocable on account of its Allowed General Unsecured Claim, shared Pro Rata with the holders of other Allowed General Unsecured Claims and Allowed Subordinated Unsecured Claims, commencing on the later of (i) the Effective Date, or (ii) the first Subsequent Distribution Date after the date on which such Claim becomes an Allowed General Unsecured Claim. After (a) satisfaction in full or satisfaction CLASS 4 SUBORDINATED in accordance with the Plan of all Allowed UNSECURED CLAIMS: Administrative Claims, Professional Claims and Allowed Priority Tax Claims as provided in Article 2 of the Plan, and (b) the treatment all 7 1/2% Subordinated Notes provided in the Plan for DIP Facility Claims Claims and the 9 1/8% and Allowed Claims in Classes 1 and 2, all Subordinated Notes Claims. remaining Available Cash (if any) shall be allocated Pro Rata among holders of Allowed Senior Debt Claims, Allowed Subordinated Unsecured Claims, and Allowed Other Unsecured Claims, subject to the redistribution provisions of Section 5.4 of the Plan. Absent such redistribution provisions, each holder of an Allowed Subordinated Unsecured Claim would be entitled to receive, in full satisfaction, settlement, release and discharge of and in exchange for its Allowed Subordinated Unsecured Claim, periodic distributions from the Liquidating Trust of its share of Available Cash allocable on account of its Allowed Subordinated Unsecured Claim, shared Pro Rata with the holders of other Allowed Subordinated Unsecured Claims and Allowed General Unsecured Claims, commencing on the later of (i) the Effective Date or (ii) the First Subsequent Distribution Date after the date on which such Claim becomes an Allowed Unsecured Claim. In accordance with the terms of the 7 1/2% Subordinated Notes Purchase Agreement and the 9 1/8% Subordinated Notes Exchange Agreement, however, all distributions otherwise payable to the holders of Allowed Subordinated Unsecured Claims under the Plan shall be distributed Pro Rata among the holders of Allowed Senior Debt Claims, until the Allowed Senior Debt Claims are paid in full from the distributions made pursuant to Section 5.3 and Section 5.4 of the Plan. Thereafter, holders of Allowed Subordinated Unsecured Claims shall receive the treatment described in the second sentence of this paragraph. CLASS 5 NOTEHOLDER Holders of Noteholder Securities Claims will SECURITIES CLAIMS: not receive any distribution under the Plan on account of their Claims and, on the Effective Date, the Noteholder Securities Claims will be the Claims, including cancelled. unknown claims, demands, rights, liabilities and causes of action of any kind whatsoever, known or unknown, which have been or could be asserted in a direct, derivative or other capacity against any Debtor and/or the Indenture Trustee arising out of, relating to or in connection with (a) the purchase, sale or other decision or action made or taken, or declared, failed or refused to be made or taken, or otherwise foregone, concerning or relating to the 9 7/8% Senior Notes, 7 1/2% Subordinated Notes and 9 1/8% Subordinated Notes; (b) the purchase, ownership or sale of the 9 7/8% Senior Notes, 7 1/2% Subordinated Notes and 9 1/8% Subordinated Notes; and (c) any other claims arising out of, relating to or in connection with the 9 7/8% Senior Notes, 7 1/2% Subordinated Notes and 9 1/8% Subordinated Notes that would be subject to section 510(b) of the Bankruptcy Code. CLASS 6 INTERCOMPANY Holders of Allowed Intercompany Claims will CLAIMS: receive no distributions on account of such holders' Allowed Intercompany Claims and, on the Effective Date, all Intercompany Claims the Claims of any Debtor will be cancelled. against any other Debtor. CLASS 7A INTERESTS: Holders of Interests will receive no distributions on account of such holders' Interests. On the Effective Date, all When used in the context Interests of the Debtors will be cancelled. of holding an equity security of the Debtors (and not used to denote (i) the compensation paid for the use of money for a specified time and usually denoted as a percentage rate of interest on a principal sum of money or (ii) a security interest in property), "Interest" shall mean an interest or share in, or warrant or right asserted against, the Company of the type described in the definition of "equity security" in Bankruptcy Code section 101(16), and shall include all common stock and all warrants to purchase or subscribe to common stock issued by the Company. 7B INTERESTS SECURITIES Holders of Interests Securities Claims will CLAIMS: receive no distributions on account of such holders' Claims. On the Effective Date, all Interests Securities Claims will be cancelled. Claims, including unknown claims, demands, rights, liabilities and causes of action of any kind whatsoever, known or unknown, which have been or could be asserted in a direct, derivative or other capacity against any Debtor arising out of, relating to or in connection with (a) the purchase, sale or other decision or action made or taken, or declined, failed or refused to be made or taken, or otherwise foregone, concerning or relating to the Interests; (b) the purchase, ownership or sale of the Interests; and (c) any other claims arising out of, relating to or in connection with the Interests that would be subject to section 510(b) of the Bankruptcy Code. ITEM 5.02 DEPARTURE OF DIRECTORS The information set forth under Item 1.03 "Bankruptcy or Receivership" is incorporated herein by reference. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 2.1 - First Amended Joint Plan of Liquidation of DVI, Inc., et al. 2.2 - Order Confirming the First Amended Joint Plan of Liquidation of DVI, Inc., et al., dated November 24, 2004 99.1 - DVI Liquidation Analysis Pursuant to the Plan 99.2 - Debtors' Monthly Operating Reports for the period from October 1, 2004 through October 31, 2004 (filed with the SEC on Form 8-K on November 29, 2004 and incorporated herein by reference). 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. DVI, INC. By: /s/ Montgomery W. Cornell --------------------------- Montgomery W. Cornell Chief Restructuring Officer Dated: December 1, 2004