Doc603 amended bk plan liquidation_disclosure_2011-09-08

THIS IS NOT A SOLICITATION OF ACCEPTANCES OF THE CHAPTER 11 PLAN OF FIRSTPLUS FINANCIAL GROUP, INC. ACCEPTANCES MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT AS CONTAINING “ADEQUATE INFORMATION” WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE. THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT YET BEEN APPROVED BY THE BANKRUPTCY COURT AND IS SUBJECT TO AMENDMENT PRIOR TO SUCH APPROVAL BEING GRANTED.

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

IN RE: FIRSTPLUS FINANCIAL GROUP, INC., DEBTOR.

§ § § § §

CASE NO. 09-33918-HDH

DISCLOSURE STATEMENT FOR THE CHAPTER 11 TRUSTEE’S

FIRST AMENDED PLAN OF LIQUIDATION FOR FIRSTPLUS FINANCIAL GROUP, INC.

MATTHEW D. ORWIG Chapter 11 Trustee Peter Franklin State Bar No. 07378000 Doug Skierski State Bar No. 24008046 Erin K. Lovall State Bar No. 24032553 FRANKLIN SKIERSKI LOVALL HAYWARD, LLP 10501 N. Central Expressway, Suite 106 Dallas, Texas 75231 Telephone: (972) 755-7100 Facsimile: (972) 755-7110 Counsel for Matthew D. Orwig, Chapter 11 Trustee DATED: September 8, 2011 Dallas, Texas

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DISCLOSURE STATEMENT FOR THE TRUSTEE’S FIRST AMENDED PLAN OF LIQUIDATION FOR FIRSTPLUS FINANCIAL GROUP, INC. of 65

Table of Contents

I. INTRODUCTION .................................................................................................................................................... 5

II. GENERAL INFORMATION AND BACKGROUND ........................................................................................... 6

A. History and Overview of the Debtor ............................................................................................................. 6

1. The Demise of FPFI and Other Subsidiaries ............................................................................................ 7 2. Payment from the FPFI Liquidating Trust ................................................................................................ 8 3. Shareholder Litigation .............................................................................................................................. 9 4. Formation of Olé Auto Group, Inc. .......................................................................................................... 9 5. June 2007 Takeover ................................................................................................................................ 10 6. Acquisition of Rutgers Investment Group, LLC ..................................................................................... 15 7. Acquisition of the Globalnet Entities ...................................................................................................... 15 8. Acquisition of Premier Group LLC ........................................................................................................ 15 9. Sale of Olé .............................................................................................................................................. 16 10. Execution of FBI Search Warrant ........................................................................................................... 16 11. Operations Following the Federal Raid .................................................................................................. 23 12. Litigation in Pennsylvania and New Jersey Courts ................................................................................. 25 13. Shareholder Dispute ................................................................................................................................ 25

B. Commencement of the Chapter 11 Case...................................................................................................... 28

1. The Debtor’s “First Day” Motions ......................................................................................................... 28 2. No Committee Appointed ....................................................................................................................... 29 3. The United States Trustee’s Motion to Appoint a Trustee...................................................................... 29 4. Retention of Trustee’s Professionals ...................................................................................................... 29 5. Significant Events Since Trustee’s Appointment ................................................................................... 29 6. Claims Objections ................................................................................................................................... 31 7. Lepercq Corporate Income Fund, LP Claim and Settlement .................................................................. 33

C. Litigation ..................................................................................................................................................... 34

D. The Debtor’s Assets .................................................................................................................................... 37

III. SUMMARY OF THE CHAPTER 11 TRUSTEE’S PLAN ................................................................................. 38

A. Description of Chapter 11 ............................................................................................................................ 38

B. Classification of Claims............................................................................................................................... 38

1. Unclassified Claims ................................................................................................................................ 39 2. Classified Claims .................................................................................................................................... 39

C. Treatment Of Claims ................................................................................................................................... 40

1. Unclassified Claims ................................................................................................................................ 40

D. Means of Plan Implementation .................................................................................................................... 47

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1. Payments and Transfers by the Chapter 11 Trustee and the Liquidating Trustee on and after the Effective Date ......................................................................................................................................................... 47

2. The Liquidating Trust. ............................................................................................................................ 48 3. Setoffs. .................................................................................................................................................... 57 4. Establishment and Maintenance of Disputed Claims Reserves. ............................................................. 57 5. Minimum Distributions. .......................................................................................................................... 58 6. Cancellation of Existing Claims. ............................................................................................................ 58

E. Treatment of Disputed Claims ..................................................................................................................... 59

1. Objections to Claims. .............................................................................................................................. 59 2. Payments and Distributions on Disputed Claims. ................................................................................... 59 3. Disallowance of Claims without Further Order of the Court. ................................................................. 59

F. Releases and Injunction ............................................................................................................................... 59

1. Releases. ................................................................................................................................................. 59 2. Injunction. ............................................................................................................................................... 59 3. Exculpation. ............................................................................................................................................ 60

IV. RETENTION OF LITIGATION, RIGHTS AND CAUSES OF ACTION ......................................................... 60

V. ACCEPTANCE AND CONFIRMATION OF THE PLAN ................................................................................. 62

A. Confirmation Hearing .................................................................................................................................. 62

B. Requirements to Confirmation .................................................................................................................... 62

C. Acceptance of the Plan ................................................................................................................................ 63

D. Alternatives to Confirmation ....................................................................................................................... 64

VI. VOTING INSTRUCTIONS ................................................................................................................................ 64

A. Ballots and Voting Procedures .................................................................................................................... 64

B. Parties Entitled to Vote ................................................................................................................................ 65

C. Vote Required for Class Acceptance of the Plan ......................................................................................... 65



THIS DISCLOSURE STATEMENT IS FOR THE CHAPTER 11 TRUSTEE’S PLAN OF LIQUIDATION FOR FIRSTPLUS FINANCIAL GROUP, INC. (THE “DISCLOSURE STATEMENT”). THIS DISCLOSURE STATEMENT HAS BEEN PREPARED PURSUANT TO 11 U.S.C. § 1125 ON BEHALF OF FIRSTPLUS FINANCIAL GROUP, INC. (THE “DEBTOR”) AND DESCRIBES THE TERMS AND PROVISIONS OF THE PROPOSED PLAN OF LIQUIDATION FOR THE DEBTOR (THE “PLAN”), IN THE CASE PENDING BEFORE THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION (THE “BANKRUPTCY COURT”), UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE. A COPY OF THE PLAN IS ATTACHED HERETO AS EXHIBIT A.

ALL CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS ASSIGNED TO THEM IN ARTICLE I OF THE PLAN.

THE INFORMATION CONTAINED HEREIN HAS BEEN PREPARED BY THE CHAPTER 11 TRUSTEE IN GOOD FAITH, BASED UPON INFORMATION AVAILABLE TO THE CHAPTER 11 TRUSTEE AND HIS PROFESSIONALS. MUCH OF THE INFORMATION HAS BEEN DERIVED FROM PUBLICLY AVAILABLE DOCUMENTS, INCLUDING CERTAIN FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) BY PRIOR MANAGEMENT, AND DOCUMENTS PROVIDED TO THE TRUSTEE FROM THE DEBTOR, THE DEBTOR’S FORMER PROFESSIONALS AND VARIOUS PERSONS AND ENTITIES FAMILIAR WITH THE DEBTOR. THE INFORMATION HEREIN CONCERNING THE DEBTOR HAS NOT BEEN FULLY VERIFIED AND HAS NOT BEEN THE SUBJECT OF A VERIFIED AUDIT. THE CHAPTER 11 TRUSTEE BELIEVES THAT THIS DISCLOSURE STATEMENT COMPLIES WITH THE REQUIREMENTS OF THE BANKRUPTCY CODE.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE DATE HEREOF, UNLESS ANOTHER TIME IS SPECIFIED HEREIN, AND DELIVERY OF THIS DISCLOSURE STATEMENT SHALL NOT CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH HEREIN SINCE THE DATE OF THIS DISCLOSURE STATEMENT AND THE DATE THE FACTS RELIED UPON IN PREPARATION OF THIS DISCLOSURE STATEMENT WERE COMPILED.

THIS DISCLOSURE STATEMENT MAY NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN. NOTHING CONTAINED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY A PARTY, BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTOR OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE ADVICE ON THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON HOLDERS OF CLAIMS OR INTERESTS.

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH 11 U.S.C. § 1125 AND BANKRUPTCY RULE 3016(b) AND NOT NECESSARILY IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR ANY OTHER NON-BANKRUPTCY LAW. THE SEC HAS NEITHER APPROVED OR DISAPPROVED



THIS DISCLOSURE STATEMENT NOR HAS THE SEC OR ANY STATE SECURITIES AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING SECURITIES OF OR CLAIMS AGAINST THE DEBTOR SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED.

THE DESCRIPTION OF THE PLAN CONTAINED IN THIS DISCLOSURE STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN ITSELF, WHICH IS INCLUDED AS AN EXHIBIT HERETO. EACH PARTY IS ENCOURAGED TO READ, CONSIDER, AND CAREFULLY ANALYZE THE TERMS AND PROVISIONS OF THE PLAN. IN CASE OF ANY CONFICT BETWEEN THIS DISCLOSURE STATEMENT AND THE PLAN, THE PROVISIONS OF THE PLAN WILL CONTROL.

AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR BE CONSTRUED AS AN ADMISSION OF ANY FACT OR LIABILITY, STIPULATION OR WAIVER. THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NON-BANKRUPTCY PROCEEDING NOR SHALL IT BE CONSTRUED TO BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN AS TO HOLDERS OF CLAIMS AGAINST OR EQUITY INTERESTS IN THE DEBTOR.

I. INTRODUCTION

Purpose of this Disclosure Statement

The Debtor filed a voluntary petition under chapter 11 of the Bankruptcy Code on June 23, 2009. On or about September 8, 2011, the Chapter 11 Trustee filed the Plan. The Plan provides for the establishment of a Liquidating Trust which will pursue certain litigation and seek to collect and liquidate certain assets. This Disclosure Statement has been prepared by the Chapter 11 Trustee for the purpose of disclosing information which the Bankruptcy Court has determined is material, important, and necessary for parties entitled to vote on the Plan to arrive at an informed decision with respect to the Plan.

Confirmation of the Plan will be facilitated by the receipt of a sufficient number of votes in favor of the Plan. Accordingly, if you hold Claims or Interests in an impaired Class, your vote is important.



II. GENERAL INFORMATION AND BACKGROUND

A. History and Overview of the Debtor

The Debtor was a diversified consumer finance company that originated, serviced, and sold consumer finance receivables. At one time, its shares were listed on the New York Stock Exchange. The Debtor operated through various subsidiaries until 1998 when macroeconomic factors adversely affected financial markets and largely destroyed the industry’s access to the capital markets. Without access to working capital, the Debtor’s ability to provide consumer-based products evaporated and, like virtually all of its competitors, it saw its business liquidated to satisfy obligations.

The Debtor’s beginnings date back to the early 1990s when, under different names, it began operating as a specialty consumer finance company. After a few combinations, by 1995 it had become a formidable consumer finance company and was reorganized into a holding company format. The Debtor’s business technically became the ownership of various subsidiary entities that operated in the consumer finance market. Its primary operating entity was FirstPlus Financial Inc. (“FPFI”). Through FPFI, the Debtor offered to consumers various lending products, but its most familiar and defining one was its High Loan to Value product (“HLTV”). With a secured HLTV loan from FPFI, a consumer could consolidate debt or obtain liquidity in amounts up to 125% of the home’s value. Because FPFI enjoyed superior underwriting and servicing, default rates and timely performance by borrowers were above industry average. In addition, because the HLTV loans often had 20 year maturities and exceeded the value of the borrower’s home, prepayments were rare, thus providing the Debtor with a steady yield. The Debtor’s HLTV product allowed it to obtain and hold a dominant market position despite attempts by others to duplicate its success.

Critical to FPFI’s success was constant access to an active and competitive securitization market. From 1995-1998, approximately every quarter, FPFI would assemble the consumer loans it extended or bought and sell them to various trusts which would then securitize the loans to the investing public. As a result of each securitization, the Debtor generally received $40 to $60 million in working capital and retained an “interest only strip” in the securitization that provided the prospect of a cash flow to FPFI in the future. Wall Street financial institutions competed for the opportunity to sponsor each quarterly securitization due to the attractive financial attributes and historic performance of FPFI’s transactions. Indeed, in order to maintain relations on Wall Street, the Debtor and FPFI tended to sequence quarterly securitizations in a way that allowed each large financial institution the right to sponsor a securitization periodically without any one of them procuring an exclusive position for all securitizations.

In early 1996, the Debtor raised approximately $55 million by selling its stock in an initial public offering. Additional capital was raised, including through a secondary offering (approximately $121 million), a DRIP (approximately $50 million) and the sale of $100 million of convertible subordinated notes (of which approximately $55 million in debt was converted to equity). The capital generated in the public market and yearly profits were reinvested into the



business. No dividends were paid. At one time the Debtor’s stock traded at over $60 per share and it was highly regarded among analysts for its unique product and sound management team.

1. The Demise of FPFI and Other Subsidiaries

By 1998, the Debtor’s empire consisted of numerous subsidiaries,1 which together employed between 6,000 and 7,000 employees and had loan originations taking place throughout the entire United States. However, beginning in 1997, events in the industry began to place a drag on the Debtor’s rise. In the fall 1997, a number of specialty finance companies that did not make HLTV loans began to experience a higher rate of prepayments on their loans, thus undermining their anticipated yield. While the Debtor was not likewise experiencing unanticipated prepayments, all specialty finance companies suffered in the stock market. In addition, in 1997 a general debate over the accounting treatment for securitizations of financial products began which created great caution among the investing public. In an attempt to “get ahead” of the debate in late 1997, the Debtor announced that it would prospectively adjust its discount rate to more conservatively account for securitizations. Despite the late 1997 turbulence, the first three quarters of 1998 were largely non controversial for the Debtor. It held an Annual Meeting in March 1998 which was noteworthy for the addition of former Vice President Dan Quayle to the Board of Directors.

In October 1998, the Debtor and FPFI were hit with two jolts from which neither recovered. First, a burgeoning financial collapse hit the world financial markets. Commonly referred to as the “Asian Flu” and “Russian Ruble Crisis”, it had a profound effect on financial markets causing investors to engage in a “flight to quality.” Second, the Financial Accounting and Standards Board (“FASB”) issued a pronouncement that required companies that securitized assets to account for securitizations in a way previously not required. In light of FASB mandate, the Debtor’s auditors, Ernst & Young, required the Debtor to take a one-time adjustment from the financial results of operations which were previously reported. The Debtor agreed with Ernst & Young and was prepared to make the necessary adjustment until the SEC advised that, because the Debtor was a public company, a one-time adjustment would not suffice. Rather, the SEC required that all earlier financial reports filed by the Debtor with the SEC would have to be restated.

The Debtor found itself fighting for its survival. The worldwide financial crisis virtually eliminated the industry’s ability to securitize loans. In contrast to historically being able to generate $40-$60 million of working capital from each securitization, the only securitization opportunities available in late 1998 would have required FPFI to pay $40 million in order to securitize its loans. As the Debtor searched in vain for securitization sponsors or adequate substitutes for securitization, it continued to originate loans which required access to its warehouse lines to fund. As the crisis continued unabated, warehouse lines became fully drawn, events of default began to occur and warehouse lenders began to exercise remedies. The

1 Because the Debtor’s business was solely that of owning its subsidiaries, it generally employed only about 6 to 7 persons at any one time. Virtually all of the Debtor’s employees were executive officers. Importantly, the Debtor had no accounting staff. Rather, FPFI’s accounting staff of over 75 professionals served the Debtor’s needs to the extent they were distinct from those of FPFI.



Debtor hired Bear Stearns and Company to find a “strategic opportunity” or buyer, but was unsuccessful in finding an acquirer. Thousands of employees were terminated. From October 1998 to March 1999, the focus was on trying to avert financial collapse of the FPFI business. As a result, during this time it was unable to undertake the labor intensive task of restating its financial statements for previous years as required by the SEC. Given the pronouncement from the SEC and other securities laws requirements, the Debtor was incapable of preparing for a 1999 annual shareholders meeting.

On March 5, 1999, FPFI and an affiliate, FirstPlus Specialty Finance Company, Inc. (“Specialty”), filed Chapter 11 bankruptcy petitions in Dallas, Texas. The Debtor did not file a bankruptcy petition at that time. The Debtor faced claims from its own creditors totaling millions of dollars, but negotiated, inside and outside the bankruptcy process, for debt reduction, various other rights, and the allowance of an unsecured claim in the FPFI bankruptcy case of not less than $50 million dollars (the “Intercompany Claim”). The Intercompany Claim was classified as a Class 4 Claim and, under the terms of FPFI’s chapter 11 plan, would receive payments over time.

On April 7, 2000 FPFI’s liquidating chapter 11 plan was confirmed by the Bankruptcy Court (the “FPFI Plan”). Pursuant to the FPFI Plan, substantially all of FPFI’s assets were transferred to a creditors’ trust (the “FPFI Creditors’ Trust”) and a trustee (the “FPFI Trustee”) was appointed to administer the FPFI Creditors’ Trust. Payment of the claims against FPFI, including the Intercompany Claim in favor of the Debtor, depended upon positive long term performance by the securitization trusts in which FPFI held interest-only securities. Assuming the securitization trusts performed well, the Debtor was entitled to receive payment after creditors in the preceding classes were paid in full.

At the time that the FPFI Plan of Reorganization became effective, the Debtor still had outstanding obligations but had virtually no cash. By using the Intercompany Claim as currency, however, the Debtor subsequently reduced its obligations. In addition, because it had no cash, and no accounting staff to restate previous financials, it could not and did not take the steps required of a public company to hold an annual meeting. Primarily due to lack of funds, the Debtor was, for the most part, dormant from the time that the FPFI Plan was confirmed until 2007.

2. Payment from the FPFI Liquidating Trust

In November 2004, the FPFI Liquidating Trust started making distributions to Class 4 creditors. As a result, the Debtor began receiving millions of dollars in payments on account of the Intercompany Claim. According to records maintained by the FPFI Trustee, between November 2004 and October 2008, the FPFI Creditors’ Trust distributed approximately $45.7 million to Class 4 creditors, of which approximately $34.2 million went to the Debtor. In 2002, the Debtor created a self-settled trust, titled the FirstPlus Financial Group Inc. Grantor Trust (the “Grantor Trust”) that was supposed to receive and hold 52.4048% of the distributions from the FPFI Liquidating Trust. The Debtor was slated to receive 22% of the FPFI Liquidating Trust distributions with the remainder going to the Debtor’s creditors that received assignments of part of the Intercompany Claim to settle and resolve claims that they held against the Debtor.



Further information regarding the FPFI Liquidating Trust is available at its web site: http://www.fpficreditorstrust.com.

3. Shareholder Litigation

In March 2005, a group of the Debtor’s shareholders commenced a court action, styled Danford L. Martin, et al. v. FirstPlus Financial Group, Inc., et al., in the Second Judicial District Court for the State of Nevada (the “Nevada Action”) to compel a shareholders’ meeting and election of directors. At the time the Nevada Action was commenced, the Debtor had not had an annual meeting of shareholders since March 4, 1998. In February 2006, the Debtor filed an answer and counterclaim. The answer and counterclaim asserted claims against the plaintiffs for numerous legal violations against the Debtor, including but not limited to intentional torts, negligent torts, breaches of contract, breaches of fiduciary duties, abuse of process, infringements on trade names, perjury, and civil conspiracy.

On or about April 6, 2006, the Debtor and the Nevada Action petitioners entered into a settlement agreement (the “Settlement Agreement”) pursuant to which:

the Debtor paid $300,000 of the plaintiffs’ expenses arising from the Nevada Action;

the parties dismissed all claims and counterclaims with prejudice and exchanged mutual releases;

the petitioners agreed not to nominate an opposing slate of directors for election or interfere with or contest the Debtor’s 2006 special meeting of shareholders;

the Debtor was required to instruct the Grantor Trust to make a distribution to holders of the Debtor’s common stock on a pro rata basis as of August 3, 2006, equal to 50% of the funds received from the FPFI Creditors’ Trust (the “Initial Distribution”); and

following the Initial Distribution, the Debtor is required to instruct the Grantor Trust to make an annual distribution to holders of the Debtor’s common stock on a pro rata basis equal to 50% of the funds received by the Grantor Trust from the FPFI Creditors’ Trust.

In light of the Settlement Agreement, the Nevada Action was dismissed on April 7, 2006. Beginning in spring 2006, the Debtor disclosed the existence of the Settlement Agreement in its SEC filings. In August 2006, consistent with the terms of the Settlement Agreement, the Debtor caused the Grantor Trust to make the Initial Distribution totaling $3,618,864.

The Debtor made no distributions pursuant to the terms of the Settlement Agreement after the Initial Distribution.

4. Formation of Olé Auto Group, Inc.



Since the confirmation of the FPFI Plan in 2000, the Debtor had been dormant. In November 2006, the Debtor formed a new subsidiary named FIRSTPLUS Auto Group, Inc. (“FP Auto”). On or about November 3, 2006, FP Auto acquired a pool of motor vehicle retail installment sale contracts and security agreements (the “Notes”) from Eddie Perkins, individually and doing business as Pierce Auto Group, for $520,000. Mr. Perkins was co-President and a director of FP Auto. FP Auto was subsequently re-named Olé Auto Group, Inc. (“Olé”).

By March 31, 2007, Olé had opened three auto sales and finance locations. Revenues were generated from the auto sales and finance operations and consisted of gross revenues from auto sales of approximately $1.38 million, interest income of approximately $13,000 and other income of approximately $40,000. Olé sold 117 vehicles during its first quarter of operations for a gross profit margin of approximately 33.7% on financed sales. For these sales, Olé collected approximately $160,000 in cash down payments and recorded approximately $1.1 million in finance receivables.

5. June 2007 Takeover

Beginning in or around late 2006 or early 2007, Jack Roubinek (“Roubinek”) engaged William Maxwell (“W. Maxwell”) to advise and assist him in his efforts to obtain control of the Debtor. In March 2007, W. Maxwell advised Roubinek that because the Debtor had no creditors, all contingent litigation had been resolved and the FPFI Liquidating Trust would likely distribute even more funds, it would be prudent to take all necessary measures to acquire control of the Debtor.

Roubinek and/or W. Maxwell devised a plan pursuant to which they would solicit investors to make a $2,000,000 to $2,500,000 cash investment through several limited liability companies, with the proceeds to be used to acquire a controlling interest in the Debtor. Throughout early 2007, Roubinek solicited investments from various persons and entities, but it was not until late April or early May 2007 that an investor was identified.

According to testimony given by Reginald Anderson (“Anderson”), Roubinek approached him and his business partner, Kevin Smith, about making an investment to acquire the Debtor. Although Anderson and Kevin Smith were not in a position to make an investment, Anderson introduced Roubinek to John Ponte, who Anderson believed would be able to invest. Anderson further testified that John Ponte was not able to make the investment, but suggested to Roubinek that Salvatore Pelullo of Philadelphia, Pennsylvania (“Pellulo”) would be interested. Sometime in late April or early May 2007, Pelullo came to Dallas to meet with Roubinek, W. Maxwell and others. However, Pelullo would not proceed until he obtained advice from a securities attorney.

It appears that W. Maxwell, on behalf of Pelullo, retained the law firm of Olshan Grundman Frome Rosenzweig & Wolosky LLP (“Olshan”) to advise on Pelullo’s efforts to acquire control of FirstPlus. As early as May, 10, 2007, Olshan began having lengthy telephone calls with Pelullo and others regarding the proposed takeover. In preparation for the engagement, Olshan conducted background checks on Pelullo and other prospective members



of the Debtor’s post-takeover board of directors, including William Handley, Harold Garber, David Roberts and Robert O’Neal.

In further preparation for the takeover, W. Maxwell caused his professional corporation, William Maxwell, P.C., to enter into a Consulting Agreement with Seven Hills Management, LLC (“Seven Hills”), effective May 1, 2007 (“Seven Hills Agreement 1”). Pursuant to Seven Hills Agreement 1, Seven Hills was to “perform consulting duties…with respect to the restructuring of the management and board of directors of FirstPlus Financial Group, Inc.” Seven Hills Agreement 1 had a term of two months and provided for a flat fee payment of $100,000 to Seven Hills on or before June 30, 2007.

On June 7, 2007, the Debtor’s board of directors held a special meeting.2 The minutes from that special meeting disclose that the members of the Phillips Board discussed an “unsolicited takeover proposal” from an unidentified group of “take over parties.” The minutes further disclose that Daniel Phillips met with the “take over parties,” who had targeted the company several months earlier and indicated that the terms of the takeover could be either “hostile” or “friendly.” The Phillips Board agreed that “complying with the take over plan would be positive for the Company’s shareholders.” Prior to alerting shareholders to the wholesale reconstitution of the board, the Phillips Board increased the size of the board from five members to ten members, appointed new directors to fill the vacancies and, once the vacancies were filled, the members of the Phillips Board tendered their resignations. In exchange for their compliance, the members of the Phillips Board, excluding Daniel Phillips, each received severance and bonus packages totaling more than $400,000.

Pursuant to the actions of the Phillips Board, new Board of Directors was appointed consisting of: Harold Garber (Chairman), John Maxwell (President and Chief Executive Officer) (“J. Maxwell”), William Handley (Chief Financial Officer and Treasurer), Robert O’Neal (Vice-Chairman) (“O’Neal”) and David Roberts (Secretary) (collectively, the “Maxwell Group”).3

Immediately after the Maxwell Group took over the Debtor’s board of directors, they terminated the services of the Debtor’s independent public accounting firm, Lightfoot Guest Moore & Company, replacing it with Buckno Lisicky & Company. The Maxwell Group also hired W.Maxwell, the brother of President, Chief Executive Officer and Director John Maxwell, as the Debtor’s “special counsel” to advise the board on a range of operational and legal issues. William Handley, purportedly acting on behalf of the Debtor, executed a Legal Services Agreement effective as of June 7, 2008 (the “Legal Services Agreement”). W. Maxwell was granted “[a]ll legal authority for any matter involving the Corporation.” W. Maxwell’s duties included “vetting and review of potential acquisitions; regarding due diligence to be performed prior to the acquisition of companies … and all other actions required to assist the Board in the operation of the company.” The Legal Services Agreement also states that the Debtor is

2 The members of the board of directors as of 9:00 a.m. Central on June 7, 2007 were Daniel Phillips, John

Fitzgerald, James Roundtree, Robert Freeman and David Ward (the “Phillips Board”). 3 In August of 2007, Harold Garber died and was replaced on the Debtor’s board of directors by Roger Meek.



retained W. Maxwell in order to “hire and manage outside consultants to perform work for the company as deemed reasonably necessary to effectuate the duties under the contract.”

W. Maxwell had authority to spend the Debtor’s funds without prior board approval. He was “specifically authorized to disburse from the Corporation all such reasonable funds for the purpose of insuring [sic] the Corporation’s compliance with all Federal, state, or local law ordinance, statute, rules, and directives … to protect the Corporation from any and all civil and criminal liability.” He was also “specifically authorize[d] … to spend funds, incur legal expenses, and to expend fees in excess of Counsel’s retainer and to seek reimbursement for such excess fees on a quarterly basis.”

In consideration for his services, W. Maxwell was paid $100,000 per month, or $1.2 million per year. This was more than three times the combined salaries of J. Maxwell (as CEO) at $225,000 per year, and William Handley (as CFO) at $145,000 per year. William Maxwell was also promised a $3 million bonus (payable in cash or stock) if the Debtor was listed on the bulletin board exchange and another $2 million bonus (payable in cash or stock) if the Debtor reached a national stock exchange.

There is no indication in the Legal Services Agreement or in the Debtor’s records that the Debtor was represented in negotiating and drafting the Legal Services Agreement.

On June 15, 2007, W. Maxwell engaged Seven Hills to provide various consulting services with respect to the Debtor (“Seven Hills Agreement 2”). It appears that this consulting arrangement with Seven Hills and Pelullo’s significant involvement in the operations of the Debtor and its subsidiaries was not disclosed to the Debtor’s shareholders. On July 1, 2007, Seven Hills executed an additional consulting agreement with Learned Associates of North America, LLC (“Learned Associates”) to “perform services for [Seven Hills] with respect to the Company’s engagement with Maxwell” (the “LANC Agreement”). The LANC Agreement had a term of one year and provided Learned Associates with compensation of $33,000 per month.

Finally, on July 19, 2007, the Maxwell Board reconstituted the board of directors of its wholly-owned subsidiary Olé. The new Olé board consisted of J. Maxwell, Martin Ward and Kimberley Grasty.

Shortly after assuming control of the Debtor, the Maxwell Board formed first-tier subsidiaries Rutgers Investment Group, Inc., FirstPlus Development and FirstPlus Enterprises (the “Direct Subsidiaries”). Beginning in July 2007, the Maxwell Group approved the use of the Debtor’s cash for the purchase of various entities by the Debtor’s newly formed Direct Subsidiaries. In each transaction, Seven Hills and Learned Associates were among the sellers and thereby received a portion of the sale price.

In response to the prior disclosure statement filed by the Chapter 11 Trustee, John Maxwell and William Handley, who the Chapter 11 Trustee believes to have been heavily involved in the looting of the Debtor, filed an objection in which they purport to “correct each and every misstatement” in the prior disclosure statement (the “DS Objection”) [Dckt. No. 508]. The Chapter 11 Trustee, in the interest of giving full disclosure, includes herein the commentary from Messrs. Maxwell and Handley in the DS Objection. While the Chapter 11 Trustee does



not endorse, support or adopt the facts alleged in the DS Objection, he provides them in order to avoid future objections based upon an alleged failure to provide information. In response to the facts set forth above and hereinafter, Messrs. Handley and Maxwell offer the following in the DS Objection:

Jack Roubinek had been attempting to take over FPFG since approximately 2005. He approached William Maxwell and Robert O’Neal to attempt to obtain financial backing for that plan. Apparently, neither was willing to provide the necessary financial backing at that time. John Maxwell had previously been employed by FPFI in the late 1990’s as a Vice President in the wholesale division and knew Mr. Roubinek as a result of that employment. Other than introducing William Maxwell and Robert O’Neal to Mr. Roubinek, John Maxwell was not employed by and did not have any influence in the direction or operation of FPFG from the time of the FPFI bankruptcy in 1999 until approximately April of2007, when John Maxwell was approached by Jack Roubinek to attempt to acquire FPFG, an essentially dormant corporation.

Mr. Roubinek had been negotiating with Reginald Anderson and Kevin Smith to acquire a mortgage brokerage business or businesses in Dallas owned by those gentlemen. The plan was to acquire the company, then utilize its cash flow to acquire other companies, increase the cash flow and bottom line, and ultimately get the company stock back on NASDAQ. This accomplishment would result in the creation of jobs and profits for the shareholders of the company. Mr. Anderson and Mr. Smith recommended that a gentleman from the east coast named John Ponti might be interested in making an investment in the company. Kevin Smith paid for a plane ticket for Jack Roubinek to visit Mr. Ponti. Apparently, Mr. Ponti declined to make the investment but suggested that another gentleman named Sal Pelullo might be interested. Mr. Roubinek contacted Mr. Pelullo and made the initial visit to meet with Mr. Pelullo in Philadelphia.

Mr. Maxwell was kept somewhat aware by Mr. Roubinek of these negotiations, but did not become privy to all the details until approximately April of2007. Shortly after that, probably in May of 2007, John Maxwell met with Sal Pelullo, William Maxwell, and Mr. Roubinek (and others) at Roubinek’s suggestion at the conference room of Mr. Anderson and Mr. Smith. Mr. Pelullo promptly informed the other parties to the negotiation that he had a criminal conviction on his record, in the interest of full disclosure. The parties were all aware that Mr. Roubinek also had a criminal record.

One of the first things that Mr. Pelullo insisted on before committing to being involved in the venture was that every move would be 100% legal- and done in the open with appropriate documentation and disclosures by qualified attorneys. A plan for the acquisition had been prepared by Mr. Roubinek and was proposed to Mr. Pelullo. Mr. Pelullo asked if thc plan had been cleared as legal in all aspects by an SEC attorney. The answer was no. Mr. Pclullo insisted that he would not proceed until the acquisition procedure was approved by a qualified attorney. For that reason, the law firm of Olshan, Grundman, Frome,



Rosenzweig & Wolosky, LLP (Olshan) was retained. The Olshan firm suggested a different legal plan for the acquisition and structuring of Mr. Pelullo’s investments and the integration of those investments into the structure of FPFG. The Olshan firm also suggested that conducting a new board of directors election by the shareholders would be an appropriate method to reconstitute a new board of directors.

The disclosure filed by Trustee Orwig makes the statement, as a fact, that “in exchange for their compliance, members of the Phillips Board, excluding Phillips each received severance and bonus packages totaling more than $400,000.” This statement seems to imply that the new board was complicit with approving an improper payment to those board members. In truth and in fact, the new board (called the Maxwell board) aggressively confronted this action by the Phillips board, and Daniel Phillips, James Roundtree, and John Fitzgerald, agreed to and signed a standstill agreement on behalf of all former directors agreeing that the severance packages would not be paid. Presumably, Trustee Orwig has this document since he has access to all of the company records and should know that none of these directors ever received a penny of these alleged severance packages. Mr. Orwig should explain in reply to this response why he is filing a document indicating that members of the Phillips board “received” severance and bonus packages totaling more than $400,000 when in fact those board members did not receive any payments for severance.

William Handley was appointed as a board member and Chief Financial Officer and Treasurer because of his extensive experience in the finances of large publicly held companies. John Maxwell was appointed to the new board as Chief Executive Officer because of his prior experience and expertise at FPFI. William Maxwell was hired as FPFG’s special counsel. correspondingly, Trustee Orwig has hired his own law firm as his counsel in this bankruptcy. That counsel has billed more than half a million dollars in fees (not counting expenses) for this bankruptcy alone. That counsel has also been free to and has billed very substantial amounts to other clients during the pendency of this bankruptcy. Trustee Orwig’s disclosure paints the payments to William Maxwell as excessive to the potential voters on the plan without detailing the scope, breadth, and exclusive arrangement of the special counsel agreement with William Maxwell.

The new board, headed by John Maxwell, quickly became aware of various improprieties committed by the previous board. The previous board had not held shareholders’ meetings, as required by the corporation’s bylaws, and its SEC filings, tax returns and other filings were not current. Furthermore, the Maxwell board was investigating the diversion of funds, by Mr. Phillips, that had not been disclosed in the FPFI bankruptcy. Many of these deficiencies were cured, including, conducting an appropriate shareholders’ meeting and election and the filing of tax returns and various SEC filings.



6. Acquisition of Rutgers Investment Group, LLC

On or about June 20, 2007, the Debtor created a Texas subsidiary named Rutgers Investment Group, Inc. (“Rutgers, Inc.”). The following month, or about July 23, 2007, the Debtor entered into an agreement whereby Rutgers, Inc. purchased an entity based in New Jersey named Rutgers Investment Group, LLC (“Rutgers LLC”) (the “Rutgers Purchase Agreement”).

Rutgers LLC was owned 25% by Seven Hills and 25% by Learned Associates. The Rutgers Purchase Agreement was entered into by Rutgers, Inc. and Rutgers LLC, Seven Hills, and Learned Associates. Under the Rutgers Purchase Agreement, Rutgers, Inc. purchased the assets of Rutgers LLC for a cash payment of $1,825,000 and 500,000 shares of the Debtor’s common stock.

7. Acquisition of the Globalnet Entities

Approximately one week after the execution of the Rutgers Purchase Agreement, on or about July 30, 2007, the Debtor’s wholly owned direct subsidiaries, FirstPlus Enterprises, Inc. (“FirstPlus Enter.”) and FirstPlus Development Company (“FirstPlus Dev.”), entered into a purchase agreement whereby the subsidiaries acquired all of the limited liability company interest of Globalnet Development Co., LLC, Globalnet Facility Services Co., LLC and Globalnet Restoration Co., LLC (collectively, “Globalnet”) which, like Rutgers LLC were partly owned by Seven Hills and Learned Associates (the “Globalnet Purchase Agreement”).

Under the Globalnet Purchase Agreement, FirstPlus Enter. and FirstPlus Dev. acquired Globalnet for the purchase price of $4,540,000, consisting of $3,045,000 paid in cash at closing, and a note for the remaining amount of $1,495,000 to be paid on the second anniversary of the closing, plus 1,100,000 shares of the Debtor’s common stock. Following the acquisition, the Globalnet entities were renamed FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and FirstPlus Restoration & Facility Services Company (collectively, the “Restoration Entities”).

8. Acquisition of Premier Group LLC

On or about January 31, 2009, the Debtor’s subsidiary FirstPlus Enter. acquired a company called The Premier Group LLC (“Premier”, together with the Direct Subsidiaries and the Restoration Entities, the “East Coast Companies”), a public adjusting firm based in Miami, Florida, for the purchase price of $425,000, payable in the form of cash at closing and promissory notes to the sellers, plus 1,000,000 shares of the Debtor’s common stock (the “Premier Purchase Agreement”). Like Rutgers LLC and Globalnet, Premier was partly owned by Seven Hills and Learned Associates.

In the DS Objection, with respect to the transactions described above, Messrs. Handley and Maxwell stated as follows:

FPFG’s previous profitable subsidiaries had been involved in the lending industry. The company was faced with the decision of whether to simply collect



and parcel out distributions from the FPFI bankruptcy to shareholders as dividends or reinvest those distributions into companies that could increase the value of the shareholders' stock. The decision was made to try and grow the company. The Rutgers, Globalnet entities, and Premier Group were viewed as good fits and appropriate acquisitions after advise from attorneys and financial advisors.

9. Sale of Olé

Prior to June 7, 2007, the Debtor’s public filings indicate that Olé was a profitable subsidiary with an extensive inventory of used cars, operating three car lots in the Dallas metropolitan area. Moreover, Olé owned the real estate at which it operated its Northwest Highway lot. Notwithstanding Olé’s profitability, shortly after the Maxwell Board assumed control of the Debtor, J. Maxwell fired Olé’s management and installed Martin Ward as the new president of Olé. It also appears that shortly after their takeover, the Maxwell Board formulated plans to dismantle and liquidate Olé’s assets. First, FirstPlus Enter. created a new subsidiary, FirstPlus Acquisitions-1, into which Olé’s real estate was transferred and subsequently sold. Second, J. Maxwell negotiated the sale of Olé to Stalwart Enterprises, Inc., an entity controlled by Martin Ward, Olé’s president, in exchange for a $3.2 million note. It does not appear that any cash was received in exchange for Olé or that the note was ever paid.

In the DS Objection, with respect to the Ole transaction, Messrs. Handley and Maxwell stated as follows:

Shortly after coming into office as CEO, John Maxwell discovered financial improprieties at Ole. First, Mr. Maxwell discovered that the president was purchasing cars with Ole funds for his personal use. Second, Mr. Maxwell discovered that Phillips had approved the purchase of a package of car loans, many of which were delinquent. The goal of management under the Maxwell group was to eventually get the company stock onto NASDAQ. Ole was a company that owned car lots in the Dallas area. These car lots were of the type known as “note lots.” Although profitable, the Maxwell team felt that it would be virtually impossible to comply with SEC regulations when describing the financial status of the car lots and their note portfolios. Therefore, the company did not fit into the new direction planned for FPFG.

The exclusion of Maxwell and Handley from the management team after the FBI raid in May of 2008 prevented Mr. Maxwell and Mr. Handley from seeing that the consideration owed by Mr. Ward for the sale of Ole was ever payed to FPFG. The failure to collect those payments can be laid squarely at the feet of Robert O’Neal and the law firm (Patton Boggs) he hired after the exclusion of Handley and Maxwell from management decisions and on Trustee Orwig, for the last 18 months.

10. Execution of FBI Search Warrant



On or about May 8, 2008, as part of an ongoing organized crime investigation, the Federal Bureau of Investigation (the “FBI”) executed a search warrant at the Debtor’s office in Irving, Texas and seized extensive records from the Debtor and its subsidiaries (the “Federal Seizure”). The search warrant specifically authorized the FBI to seize the Debtor’s books and records beginning from June 2007―the time when the Maxwell Group took over the Debtor’s board of directors.

The search warrant also indicates that the grand jury’s investigation extends to most, if not all, of the transactions and acquisitions discussed above and potential criminal violations of numerous federal statutes, including the Racketeer Influenced and Corrupt Organizations Act (“RICO”).

Upon learning of the federal criminal investigation, the Debtor pledged its cooperation therewith and restructured its management to isolate from meaningful corporate authority the individuals that the Debtor understood were the targets of the federal probe. In this regard, the Debtor proposed to the Department of Justice (the “DOJ”) a written plan for the Debtor’s continued operations, and met with the DOJ to review the proposal. From the summer 2008 to the Petition Date, it appears that the Debtor operated pursuant to the plan and has continued its cooperation with the investigation. Shortly thereafter, the Debtor ceased its day-to-day operations and terminated its few remaining employees as described in the plan.

Subsequent thereto, it appears that the Debtor had utilized a small staff on an ad hoc contractual basis, which included a chief executive officer, an acting chief financial officer, and additional administrative, clerical and support staff. Roubinek presided over the Debtor as its Chief Executive Officer, and Gary Alexander served as the acting Chief Financial Officer. Leslie Bedford also worked with the Debtor in several administrative support roles before it ceased substantial operations.

Key insight into the federal investigation can be gained by reading a sentencing letter filed by Assistant U.S. Attorney Steve D’Aguanno on September 11, 2008 in a related criminal prosecution styled U.S. v. Daniel Daidone (the “Diadone Letter”). The Diadone Letter reveals how the Government’s investigation, using wiretaps and seized documents, seeks to unravel the transactions that were allegedly orchestrated by organized crime members who, the letter asserts, assumed control of the Debtor in 2007.

In very graphic terms, the Diadone Letter describes Mr. Daidone’s alleged affiliation with prominent members of the Philadelphia La Cosa Nostra, including its boss Nicodemo Scarfo, Sr. The Diadone Letter states that: “In early June 2007, a group of individuals headed by Pellulo and Nicodemo Scarfo, Jr. assumed control of a company named FIRSTPLUS FINANCIAL GROUP, INC (“FPFG”), a financial services corporation located in Dallas, Texas.” The Diadone Letter then outlines how the Debtor created Rutgers, Inc., which then entered into a transaction to purchase Rutgers LLC, an entity controlled by Pellulo and Scarfo, Jr. through two other corporate entities. Mr. D’Aguanno further states: “A review of bank records related to this transaction, as well as other transactions, has revealed that FPFG transferred several millions of dollars between June 2007 and May 2008 to corporate entities controlled by Pellulo and Scarfo, Jr., including Rutgers LLC.”



Upon information and belief, the federal criminal investigation is ongoing. Upon information and belief, J. Maxwell, William Handley and Pellulo are all targets of the federal grand jury investigation.

In the DS Objection, with respect to the FBI Search Warrant, Messrs. Handley and Maxwell stated as follows:

On or about May 8, 2008, the FBI (in an investigation spearheaded by Assistant US Attorney Steve D’ Aguanno) seized all of FPFG’ s books, records, bank accounts, and assets, essentially putting the company out of business and putting many of its day to day employees out of work. Mr. Maxwell and Mr. Handley continued feverishly to work to save the company. Early on, they retained an attorney to negotiate with Assistant US Attorney Steve D’Aguanno for the return of FPFG’s property, so that the company could continue operations. FPFG’s attorney, Gavin Lentz, obtained a concession from Mr. D’ Aguanno that a company aircraft, a Mitsubishi MU2 (with an estimated value at that time in excess of $600,000), could not be properly held and would be released to the company upon the execution of an agreed order by the appropriate federal judge. Mr. Maxwell was taking steps to obtain that order when he was excluded from the decision making processes of the company.

Trustee Orwig describes a written plan of cooperation with the DOJ by FPFG beginning on the last paragraph of page 10 of his disclosure. That plan, as evidenced by a July 31, 2008 letter authored by Jack Walsh, was concocted without the knowledge and consent of John Maxwell and William Handley and was the result of Robert O’Neal bowing to pressure from D’ Aguanno, an attempt by Mr. O’Neal to loot the carcass of the wounded company, or both. Mr. O’Neal. For whatever reason, was willing to throw Mr. Maxwell and Mr. Handley under the bus for his own purposes.

Trustee Orwig’s statement, contained in the first paragraph on page 11 of his disclosure. that. “Shortly thereafter, the debtor ... terminated its few remaining employees ... “ is incorrect. John Maxwell and William Handley had written employment contracts that require written notice of termination. Neither John Maxwell nor William Handley have ever received any written notification during the terms of their contracts that the contracts were being terminated. Furthermore, payments labeled as salary were payed to Roubinek ($100,000) and Alexander ($40,000), on information and belief, in the second quarter of 2009.

In the DS Objection, with respect to the Diadone Letter, Messrs. Handley and Maxwell stated as follows:

In this section, on page 11, Trustee Orwig refers to the Daidone Sentencing Letter and thereby purposefully introduces evidence that he knows is inadmissible and prejudicial into the voting process. Creditors object to any reference to this document because it is inadmissable on multiple grounds. The document is irrelevant and inadmissable (FRE 401 & 402). The document is not admissible because character evidence is not admissible to prove conduct (FRE 404). The document is inadmissible because it is hearsay (FRE 802).



Trustee Orwig knows (or should know if he talks to his counselor reviews her work) that each time this document has been offered at a hearing, either the Court has sustained an objection to the document, or after objection, the document has not been offered into evidence. It is very instructive that Trustee Orwig, through his counsel, places information from the Daidone Sentencing Letter into a document meant to influence voters on the Plan, when he knows said evidence is not only inadmissable, but extremely inflammatory and prejudicial (FRE 403). If this proceeding were a jury trial and this conduct had occurred in front of the jury, counsel for Creditors would ask for and would expect to be granted a mistrial and monetary sanctions. The Trustee’s conduct in submitting this affidavit is deliberate and can be read by anyone reviewing the disclosure. Even if stricken by the Court, any voters have been tainted. The only remedy would be to require the submission of a different plan naming a different Creditors Trustee who does not have Trustee Orwig’s demonstrated bias against Creditors.

In the DS Objection, with respect to the allegation (stated specifically on information and belief) that the Chapter 11 Trustee believes that Messrs. Handley and Maxwell are targets of an ongoing federal grand jury investigation (which they admit in the DS Objection) stated as follows:

In this section, on page 11, Trustee Orwig informs the voters that John Maxwell and William Handley are targets of a federal grand jury investigation. This information is inadmissable pursuant to FRE 401, 402, 403, and 404. Even more importantly if Trustee Orwig wants to talk about why John Maxwell and William Handley are targets ofthe investigation, he should be willing to provide detail accounts of all conversations between himself, Steve D’Aguanno, attorneys from Patton Boggs (counsel for the Debtor chosen by Robert O’Neal), and other members of his firm. It is readily apparent (on information and belief- which creditors believe can be substantiated if Mr. D’Aguanno, Patton Boggs, and Mr. Orwig’s firm are required to release records of all conversations between those parties) that Steve D’Aguanno is the driving force behind the retention and direction of Patton Boggs and Mr. Orwig (and his firm) as Counsel and Trustee for the Debtor. Mr. Orwig should also explain the political nature of the raid and investigation. For instance, nowhere in the disclosure is it mentioned that in spite of virtually unlimited access to information, via the raid and wiretaps, Mr. Orwig’s counsel has been unable to produce a single witness or piece of evidence to confirm the baseless charges of fraud, collusion, or other wrongdoing so freely alleged against John Maxwell and William Handley. Mr. Orwig had been unable to produce a single witness or any evidence to support these allegations despite the fact that it has been now over two and one-half years after the raid and over one and one-half years (and over a half million dollars in attorney’s fees to his firm) after he was appointed trustee.

Here are just a few of the facts concerning how John Maxwell and Mr. Handley became targets of the investigation. Steve D’Aguanno’s boss at the time of the raid, Chris Christie, was the US Attorney for New Jersey. Mr. Christie is now the governor of New Jersey. To deny that now governor Christie had political aspirations eighteen months before he was elected Governor defies



credibility. What better way to jump start a political career then to mastermind a big raid garnering big headlines involving hundreds of law enforcement personnel in five states? Never mind that now, two and one-half years later, there are no indictments. Mr. Christie is Governor and it is now someone else’s problem to clean up the bust of a bust. Fifteen hundred employees and contractors are now out of work, the United States and state governments are missing the taxes paid on over five million dollars a year in wages, but never mind, Mr. Christie is still Governor.

John Maxwell received a target letter by Fed-Ex from the FBI dated March 17, 2009. The events leading up to that target letter are instructive of the collusion between the US Attorney’s Office investigation spearheaded by D’Aguanno, the FBI, and Patton Boggs (debtor’s counsel chosen by O’Neal). Ten months had passed since the massive raid where government agents had access to every document, bank record, computer file, and email of FPFG and its officers. The government also had conducted extensive wiretaps and other surveillance. No target letter or any other indication that John Maxwell or William Handley were targets of any investigation had been issued, despite the fact that William Handley had been freely discussing all of the facts and circumstances of FPFG’s business and acquisitions without the benefit of legal counsel with FBI agent Joe Gilson, Mr. D’Aguanno, and attorneys for Patton Boggs(who were obviously in contact with the federal agents). The question arises, what happened shortly before March 17, 2009 to cause the issuance of the target letter? Well, a crime was finally conceived and perpetrated. FBI agent Gilson (presumably at the direction of the head of the investigation) decided to try to influence the testimony of John Maxwell and William Handley in a civil proceeding.

Immediately prior to the issuance of the target letters, John Maxwell and William Handley had signed affidavits which stated truthfully the factual background related to a cash loan provided by Lana Pelullo (from trust proceeds) for a bridge loan to try to keep FPFG afloat. This loan was the subject of state court litigation and the affidavits outlined the testimony that would be available from Mr. Maxwell and Mr. Handley. The testimony was simply the truth. Patton Boggs was one of the firms defending the case. Efforts were made by Patton Boggs, specifically to Mr. Handley, to attempt to change that testimony. Very shortly after the affidavits were filed, John Maxwell received a call that he would be named a target in the investigation.

William Handley had been the very picture of cooperation with Patton Boggs, the US Attorney’s office, and the FBI following the raid in May of 2008. At the very beginning of January, 2009, Patton Boggs sent Bobby Hawkins (assistant to Cass Weiland) to interview Mr. Handley. Mr. Handley spent six hours (8am-2pm) with Mr. Hawkins at which Mr. Hawkins took twenty-seven (27) pages of notes on a yellow legal pad. Mr. Handley explained everything to Mr. Hawkins regarding FPFG including (1) he signed the Lana notes, (2) FPFG got the money for the school ($200,000) and payroll ($60,000), and (3) FPFG never paid the money back. Mr. Handley never heard from Mr. Hawkins again.



During January, February, and March Mr. Handley tried to communicate with Cass Weiland of Patton Boggs, Mr. Weiland never answered any of these communications. During January of2009 Mr. Handley also spent one full day and one half day with Steve D’Aguano and Joe Gilson. Just as with Mr. Hawkins, Mr. Handley offered full cooperation and answered every question.

On or about March 16, 2009, Mr. Handley was asked these same questions by Constance Ariagno on behalf of Cass Weiland of Patton Boggs concerning the Lana Pelullo note, even though Mr. Hawkins (another lawyer in the same firm) had taken copious notes of the interview concerning that subject. The Patton Boggs firm was one of the firms representing FPFG in the litigation concerning the Lana Pelullo notes.

Mr. Handley got the distinct impression that the lawyers at Patton Boggs were not satisfied with this testimony and were searching for a way to avoid payment of what was a valid debt owed by FPFG. Mr. Handley repeatedly told the attorneys at Patton Boggs that he did not know of any legal reason to avoid paying the notes. The note was executed as an arms length transaction at a time FPFG needed the funds. The money was transferred to FPFG’s accounts. The money was utilized by FPFG for valid business purposes. FPFG absolutely owed the money. Mr. Handley told the attorneys at Patton Boggs that if they knew of any other valid legal reason not to pay the notes, utilize those reasons and quit trying to get him to say that he did not sign the notes, that FPFG did not get the money, or that the transaction was a sham (because it was not).

The very next day, on or about March 17,2009, Mr. Handley received a telephone call from Joe Gilson of the FBI. The timing and subject of this telephone call is impossible to explain unless the attorneys at Patton Boggs, Mr. D’Aguanno, and Mr. Gilson were acting in concert at the time. For several months following the raid and prior to that time, Mr. Handley met on several occasions with Mr. Gilson to discuss anything Mr. Gilson cared to discuss concerning FPFG and its acquisitions. Mr. Handley cooperated fully and truthfully. Presumably, Trustee Orwig has access to the substance of these meetings. Mr. Handley participated in these meetings without an attorney present. He did not believe one was necessary since he had absolutely nothing to hide. Important to note is the fact that Mr. Handley has never been convicted of, or even arrested or charged with, before or since, any sort of a crime. In fact, Mr. Handley was an Eagle Scout as a young man, had a Top Secret Security Clearance in the US Air Force, joined General Electric Company in their prestigious financial management program, and has spent the last 42 years managing over 200 companies in 23 countries on 6 continents with billions of dollars at his control. He has never had so much as a parking ticket. This is the man whose integrity Trustee Orwig chooses to impugn and also fails to acknowledge or even submit his breach of contract claim to the Court for a ruling.

On or about March 17, 2009, Mr. Gilson from the FBI called Mr. Handley, with agitation in his voice, without preamble or explanation, and asked



if Mr. Handley had prepared an affidavit. Mr. Handley responded “Yes.” Mr. Gilson got very upset and asked Mr. Handley if what he wanted was for “them” to get more money, if he was jumping through hoops to provide money to Philadelphia. After some initial shock, Mr. Handley’s response was that the only issue for him was to tell the truth, which he had done in the affidavit. Mr. Handley repeated the same testimony he had outlined on many occasions to the Patton Boggs firm concerning the notes. Mr. Gilson told Mr. Handley that as a result of the affidavit Mr. Handley was now a “target of the investigation” and that Mr. Handley would be receiving a letter so stating. Mr. Handley subsequently received a target letter dated March 17, 2009 by Fed-Ex. Mr. Handley is still unaware of what he allegedly is a target of since the target letter is vague and conclusory and does not allege any specific facts of wrongdoing (understandable since Mr. Handley has not done anything wrong). Mr. Gilson threatened that Mr. Handley would be going to jail, the Mr. Handley would die in jail, and Mr. Handley’s life was going to get more difficult from now on.

Mr. Handley informed Mr. Gilson that Mr. Handley’s wife was sick, with stage 4 metastatic cancer, and that even though he needed money for her treatment he would not lie. All Mr. Handley wanted was to get Mr. O’Neal (who was running the company single handedly) and Patton Boggs (Mr. O’Neal’s chosen law firm) to honor their contractual obligations, including Mr. Handley’s employment contract. Mr. Gilson concluded the conversation by repeating that “they” were going to make sure that he was going to jail for helping with the Lana Pelullo note therefore taking money out of the “company” for “Philadelphia.”

The politically motivated raid of FPFG, which has shut down a productive company, put 1500 workers out of a job, and removed millions of dollars from the economy (and the taxes owed from those dollars), has not yet produced any indictments or charges against these Creditors, to the best of their knowledge.

Not coincidentally, the FBI called Mr. Handley less than 24 hours after Mr. Handley wrote and sent the affidavits. Apparently Patton Boggs and the D’Aguanno team were acting in concert. When the fact that John Maxwell and William Handley were scheduled to testify in the state court litigation where their affidavits were filed is taken into account, the timing of these intimidation tactics do reveal that a crime which needs to be investigated may have been committed. Any of these actions which occurred in Texas would be a violation of VTCA, Penal Code § 36.05 Tampering With A Witness and §36.06 Obstruction or Retaliation. The threats by Mr. Gilson (and the target letter to Mr. Maxwell) were clearly intended to try and intimidate them from testifying in the litigation concerning the Lana Pelullo notes or to retaliate against them for doing so.

These same actions on their face seem to constitute a violation of 18 U.S.C.A. § 1512. Tampering With a Witness, Victim, or an Informant and possibly even U.S.C.A. § 1622. Subornation of Perjury. The clear intent of the



threats by Mr. Gilson and the target letters was an attempt to keep Mr. Maxwell and Mr. Handley from providing truthful testimony and/or to attempt to force them to change their testimony into something other than the truth in a legal proceeding. Perhaps the US Attorney should investigate these charges.

11. Operations Following the Federal Raid

Following the Federal Seizure, the Debtor’s board of directors went through several changes. James Steward, who had been appointed to the board on or about November 30, 2007, resigned from the board on or about May 19, 2008. As of July 23, 2008, the board of directors consisted of J. Maxwell, William Handley, Gary Alexander, Roubinek, Todd Hickman, Robert O’Neal and Paul Ballard (the “O’Neal Board”). By written consent dated July 23, 2008, the board of directors appointed an executive committee, comprised of O’Neal, Todd Hickman and Roubinek (the “Executive Committee”). The Executive Committee was appointed to expedite the Debtor’s decisions and was given authority to “exercise the powers of the Board of Director in the management of the business and affairs of the [Debtor], specifically, to deal with legal matters of the [Debtor] and shall power to authorize the seal of the [Debtor] to be affixed to all papers which may require authorization of the [Debtor].”

On July 30, 2008, the Executive Committee passed resolutions to cooperate with the federal criminal investigation and authorized the Debtor’s counsel at the time, Hulse Stucki, to send a letter to the federal government to: (i) respond to specific requests made by the government in a letter dated July 14, 2008; (ii) outline the Debtor’s business plan, and (iii) delineate the Debtor’s plan to cooperate with the federal government. On or about July 31, 2008, the Debtor sent such a letter to the Assistant United States Attorney handling the federal criminal investigation against the Debtor (the “McNulty Memorandum”).

After sending the McNulty Memorandum, the Executive Committee attempted to gather the Debtor’s books and records and information regarding the operation of the East Coast Companies. The Executive Committee also attempted to pursue a business plan for the Debtor involving the use of the distributions that the Debtor receives from the FPFI Creditors’ Trust to restart a business similar to FPFI’s former home equity mortgage business. To this end, the Debtor formed a new entity called FirstPlus Financial Inc. It does not appear that the Debtor was able to re-enter the mortgage business or that FirstPlus Financial Inc. ever operated.

During the tenure of the O’Neal Board, O’Neal provided loans to the Debtor in exchange for a security interest and stock. The Chapter 11 Trustee is analyzing these loan transactions.

In the DS Objection, with respect to operations after the federal raid, Messrs. Handley and Maxwell stated as follows:

Robert O’Neal is a business man who was a member of the board of directors of FPFG at the time all of the acquisitions of the Rutgers, Premier, and GlobalNet entities. He was privy to and had access to all meetings, documents, and advice of counsel. He, along with the rest of a unanimous board, approved these transactions. Furthermore, Mr. O’Neal sat on the compensation committee



of the company that met with FPFG counsel, Olshan Grundmun. The compensation committee recommended the employment contracts of Mr. Handley and John Maxwell. The board of directors (including Mr. O’Neal) unanimously approved those contracts. The contracts and the indemnity agreements of Mr. Handley and John Maxwell form the basis of their creditor status in this bankruptcy. Interestingly, while seeking to deny John Maxwell and William Handley their claims while running the executive committee of FPFG, O’Neal has filed a claim in this bankruptcy seeking compensation under virtually identical contracts.

Mr. O’Neal suggested that FPFG needed to obtain officers and directors E&O insurance. He explained that a change in the management was necessary to obtain such coverage after the raid, and that an Executive Committee would be appointed to streamline the procedure of dealing with the federal criminal investigation. John Maxwell and William Handley understood that the function of the Executive Committee would be to forward proposals to the full board for approval. The approval of the formation of the Executive Committee was done by telephone meeting without opportunity by Mr. Maxwell or Mr. Handley to review the minutes at that time and they voted to form the Executive Committee on that basis. Immediately after the formation of the Executive Committee pertinent and relevant information was purposefully hidden from Mr. Maxwell and Mr. Handley and they were systematically excluded from the exercise of any control over the company. After the formation of the Executive Committee, at the same time that crucial information was being hidden from them (without their knowledge that such information was being hidden) they were asked to vote as board members on various matters.

Only during the course of this bankruptcy did John Maxwell and William Handley learn of the July 31, 2008 letter sent to the AUSA. To this day, they have not seen the letter sent by the AUSA dated July 14,2008 that the July 31, 2008 John Walsh letter responded to. Apparently O’Neal perpetrated a fraud on Mr. Maxwell and Mr. Handley by proposing an Executive Committee whose purpose was to cut them out of the loop (when the purported purpose was to streamline communication with the government, and then report to the full board for approval) and throw them under the bus as a scapegoat for the federal investigation. O’Neal (and a unanimous board) approved the acquisitions. O’Neal (and a unanimous board) approved Maxwell’s and Handley’s (and O’Neal’s) employment and indemnity contracts.

With blood in the water, O’Neal, like a shark, was able by these actions, to obtain two results very beneficial to him. He ingratiated himself to the AU SA, either in an explicit or implicit agreement for immunity from prosecution or in bowing to a threat of prosecution, while at the same time positioning himself to obtain over 40% of the company’s common stock (and rights to over 40% of the future distributions from the FPFI waterfall payments).

O’Neal has obtained the rights to a major portion of the company’s common stock by providing no risk loans for an extremely short period of time



during a time when he alone controlled company funds and made sure that his debt would be the first to be repaid to the exclusion of all others. Trustee Orwig describes these self dealing transactions in the following language: “during the tenure of the O’Neal board, O’Neal provided loans to group in exchange for a security interest in stock. The Trustee is analyzing these loan transactions.”

After one and one-half years and the expenditure of vast sums of money for attorney’s fees, the Trustee has taken no steps to recover these funds or these stocks which were the result of insider dealings and clearly within the preference period.

12. Litigation in Pennsylvania and New Jersey Courts

Subsequent to the Federal Seizure, Seven Hills and others, all represented by either Arkadiy Grinshpun or Gary Freedman, Philadelphia attorneys who operate from the same office, began filing actions in Pennsylvania and New Jersey state courts against the Debtor, all of its direct and indirect subsidiaries, and members of the board of directors. As of the Petition Date, the following matters had been filed:

Seven Hills Management, LLC v. FirstPlus Financial The Debtor, Inc. and Rutgers Investment The Debtor, Inc., Case No. 002779, Court of Common Pleas, Philadelphia County;

Learned Associates of North America LLC v. FirstPlus Financial The Debtor, Inc. et al., Case No. 09-cv-2087, Court of Common Pleas, Philadelphia County

Michael Cordova v. FirstPlus Financial The Debtor, Inc., Case No. 003924, Court of Common Pleas of Philadelphia County;

L&L Holdings, LLC v. FirstPlus Financial The Debtor, Inc. et al., Case No. 2009-10421, Court of Common Pleas of Montgomery County;

L&L Holdings, LLC v. FirstPlus Development Inc. et. al., Case No. 2009-09852, Court of Common Please of Montgomery County;

L&L Holdings, LLC v. FirstPlus Financial Building Maintenance, Inc., et al., Case No. 2009-17371, Montgomery County; and

Svetlana Pellulo v. FirstPlus Financial The Debtor, Inc., Case No. 2009-04639, 151st District Court, Harris County, Texas.

13. Shareholder Dispute

Notwithstanding the Settlement Agreement requiring annual distributions to shareholders of 50% of amounts held by the Grantor Trust, the Debtor’s records show, and the Shareholders allege, that the Debtor did not make any distributions after the Initial Distribution.



In response, the Debtor’s shareholders have consistently taken steps to protect their interest. In response, the Debtor has taken steps to preclude the shareholders’ recovery.

On July 28, 2007, one of the Debtor’s shareholder, Terence Allan (“Allan”), drafted a letter to J. Maxwell (the “Allan Letter”), in his capacity as the Debtor’s President, nominating certain shareholders for election to the Debtor’s board of directors at the next shareholders meeting.4 On August 30, 2007, J. Maxwell, responded to the Allan Letter, rejecting Allan’s nominees and stating that it did not comply with the Debtor’s Amended and Restated Articles of Incorporation. After the Debtor announced that a shareholder meeting would be held on October 17, 2007, Allan again sent J. Maxwell a letter requesting that the October 17th meeting be a “special meeting” to allow Allan an opportunity to have his slate of board nominees considered at the scheduled meeting.

On October 15, 2007, the Debtor commenced an action in the District Court of Cameron County, Texas seeking declaratory relief against the Allan Nominees and John Does 1-100, Case 2007-10-005135-E (the “Cameron Action”). Specifically, the Debtor sought a declaration of the parties with respect to the Grantor’s Trust and the Debtor’s right to terminate the Grantor Trust. In connection with the Cameron Action, the Debtor also sought and obtained a temporary restraining order enjoining each of the Allan Nominees from “filing any suit, prosecuting any suit or taking any litigation action separate and apart from seeking relief herein for any matters pertaining to this litigation.” The temporary restraining order was signed on October 17, 2007.

Additionally, on October 12, 2007, the Debtor filed an action in the United States District Court for the Southern District of Texas for injunctive and declaratory relief, Case No. B-07-163 (the “Federal Action”). The Federal Action named as defendants Robert D. Davis, John Hughey, George T. Davis, Allan, Danford Martin, Khan Martin, Rupen Gulenyan, James Hanson, Robert Malnar and John Does 1-20 (collectively the “Federal Defendants”). The Federal Action alleged that the Federal Defendants violated various securities laws in that they were acting as the Debtor without making the necessary public disclosures.

On May 9, 2008 the court in the Cameron Action mailed notices that the Cameron Action was dropped from the docket. By an order dated June 4, 2008, the case was reinstated. However, on March 2, 2009, the court entered an order granting certain defendants’ plea in abatement.

On January 9, 2009 the District Court dismissed the Federal Action.

In an effort to collect the amounts owed under the Settlement Agreement, on September 17, 2008, Tom Mitchell, Ronald Miller and Welton E. Robinson, the Debtor’s stockholders (the “Petitioning Creditors”), filed an involuntary bankruptcy petition against the Debtor in the United States Bankruptcy Court for the District of Nevada. On October 9, 2008, the Nevada bankruptcy court entered an order freezing and restraining disposition of funds received by the Debtor and the Grantor Trust from the FPFI Liquidating Trust. Subsequently on December 15,

4 Allan’s nominees were: John Hughey, Rolland Keller, Robert D. Davis, George T. Davis, and himself

(collectively, the “Allan Nominees”).



2008, the Debtor and the Petitioning Creditors stipulated to the dismissal of the involuntary petition.

On February 13, 2009, James Hanson (“Hanson”), a shareholder in the Debtor, commenced an action in the Second Judicial District Court of the State of Nevada, County of Washoe, against the Debtor, Does 1-100 and Black and White Companies 101-200 for, among others things, breach of the Settlement Agreement, specific performance and the appointment of a receiver (the “Hanson Action”). On March 26, 2009, Hanson filed a Motion for Temporary Restraining Order and Preliminary Injunction seeking to enjoin the dissipation of any funds received by the Debtor or the Grantor Trust from the FPFI Liquidating Trust and to deposit any such funds in the registry of the Nevada state court. On April 10, 2009, the Nevada court entered a Preliminary Injunction enjoining the dissipation of any funds held by the Debtor and/or the Grantor Trust and ordered that any funds in their possession be immediately deposited into the Court registry. Consistent with the Nevada state court’s preliminary injunction, the Debtor remitted $1,196,402.83 to the Nevada state court’s registry.

As a consequence of the preliminary injunction in Nevada, the Debtor effectively had no source of cash.

In the DS Objection, with respect to the Shareholder Dispute, Messrs. Handley and Maxwell stated as follows:

The trustee’s statements in this section of the disclosure are a mischaracterization of the shareholder dispute. There is not a settlement agreement in existence absolutely requiring FPFG to make annual distributions to shareholders of 50% of amounts held by the Grantor’s Trust. The agreement in question provides that in lieu of the distribution to shareholders, the board of FPFG could reinvest the proceeds into the company if in the opinion of the board such reinvestment would be beneficial to shareholders. The board made that decision. The board squarely presented that issue to the shareholders at the October 2007 company shareholder’s meeting. The shareholders approved the action of the board in reinvesting rather than distributing this 50% by a large majority. John Maxwell was also reelected (after his appointment) to the board by a majority. Trustee Orwig should have the minutes (and the video tapes) of that board meeting. Why he and his counsel would choose to misrepresent the requirements of Settlement Agreement in this disclosure should cast doubt on Mr. Orwig’s qualifications to serve as trustee of the Creditors Trust.

Terrance Allan did draft a letter to John Maxwell seeking to nominate certain shareholders for election the FPFG board. Mr. Allan’s purported nominations did not meet SEC requirements or the requirements of the FPFG Articles of Incorporation and bylaws. Therefore, Mr. Allan’s slate was properly rejected. Incidentally, Robert D. Davis and George T. Davis, two of Mr. Allan’s nominees, were subsequently placed on a slate of Board Nominees and presented to Robert O’Neal and Cass Weiland for submission to a vote of the shareholders by John Maxwell. Inexplicably, O’Neal canceled the upcoming shareholders meeting.



The next paragraph of the Trustee’s disclosure simply describes a proceeding where FPFG won. It presented evidence and obtained a temporary restraining order establishing that the defendant’s actions were illegal. FPFG continued to prevail in that litigation until Robert O’Neal (while running the company single handedly) elected to discontinue prosecuting the Cameron County action and a similar federal court action.

The reference to the bankruptcy in Nevada appears inconsequential, since the bankruptcy petition was subsequently dismissed.

The Hanson litigation was another attempt to force a distribution contrary to the clear language of the original settlement agreement. FPFG management and legal advisors were confident of a victory in that case and had obtained an agreement from Hanson’s counsel to dismiss the case for a payment of $188,000 for Hanson’s legal fees. FPFG management and its counsel were prevented from finalizing this agreement due to the takeover of the company by Mr. O’Neal. The preliminary injunction and any transfer of any money to the registry of the court in the Hansen action occurred as a result of the failure to properly defend this very defensible action by O’Neal and his chosen counsel, Patton Boggs.

As with all of the other portions of the DS Objection included in this Disclosure Statement, the Chapter 11 Trustee does not endorse, support or adopt the contents, but includes it as the stated views of Messrs. Handley and Maxwell. The Chapter 11 Trustee does not purport to have included the entire DS Objection in this Disclosure Statement. These statements are included in order to satisfy certain objections and to allow creditors reviewing the Plan to understand the positions of certain parties to the case.

B. Commencement of the Chapter 11 Case

On June 23, 2009 (the “Petition Date”), the Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code.

Upon commencing this Chapter 11 Case, the Debtor had no employees and virtually no books and records.

1. The Debtor’s “First Day” Motions

After commencing the Chapter 11 Case, the Debtor, through its counsel, filed several motions seeking Court authority to extend certain time periods, approve retention of certain professionals and authorizing the Debtor to receive a loan from O’Neal. On July 2, 2009, the Court entered an order authorizing the Debtor to obtain a $20,000 loan from O’Neal [Docket No. 23]. The Court also entered orders granting other forms of relief for the Debtor. For instance, the Debtor’s time to file its schedules and statements of financial affairs was extended indefinitely [Docket No. 69] and the Debtor was authorized to limit notice to the largest creditors and those entities who file notices of appearance [Docket No. 22].



2. No Committee Appointed

With the commencement of the case in 2009, the Office of the United States Trustee is empowered to appoint creditors to one or more creditors committee and equity interest holders to one or more equity committees. As of the filing of this Disclosure Statement, no committees have been formed or are expected to be formed going forward.

3. The United States Trustee’s Motion to Appoint a Trustee

On July 14, 2009, the United States Trustee 6 filed a Motion for the Appointment of a Chapter 11 Trustee Under 11 U.S.C. § 1104 or, in the Alternative, Conversion to Chapter 7 Under 11 U.S.C. § 1112(b) (the “Trustee Motion”) [Docket No. 50]. As explained in the Trustee Motion, the Debtor admitted that the federal government seized its records as “part of an ongoing organized crime investigation” and that the FPFI Liquidating Trust distributions have “been the subject of extensive litigation and federal criminal investigation.” The Trustee Motion was ultimately unopposed and, by order of the Bankruptcy Court dated July 24, 2009, the Court appointed the Chapter 11 Trustee.

4. Retention of Trustee’s Professionals

On September 9, 2009, SNR Denton filed its Application to Employ Sonnenschein Nath & Rosenthal LLP as Counsel to the Chapter 11 Trustee [Docket No. 135].5 On February 2, 2010, after holding a full evidentiary hearing and denying a motion to disqualify SNR Denton, the Court entered an Order Granting Application to Employ Sonnenschein Nath & Rosenthal LLP [Docket No. 324].

The Trustee also sought to hire an accountant, Robbins Tapp Cobb & Associates, PLLC [Docket No. 136] and local counsel, Franklin Skierski Lovall Hayward, LLP [Docket No. 145]. On November 12, 2009, the Court entered an Order Granting Application to Employ Robbins Tapp Cobb & Associates, PLLC as Accountant [Docket No. 257]. On November 19, 2009, the Court entered an Order Granting Application to Employ Franklin Skierski Lovall Hayward LP as Local Counsel to the Chapter 11 Trustee [Docket No. 262].

5. Significant Events Since Trustee’s Appointment

Within days of the Chapter 11 Trustee’s appointment, a group of entities, who called themselves the “ad hoc creditors committee” (the “Objectors”) began an aggressive campaign to impede the Trustee’s investigation and to increase the overall costs of administering the estate.6

5 On September 30, 2010, Sonnenschein Nath & Rosenthal LLP combined with the law firm Denton Wilde

Sapte. The combined firm is now named SNR Denton US LLP (“SNR Denton”). 6 The Objectors are Seven Hills Management, LLC, Michael Cordova, LandL Holdings, LLC, Learned

Associates of North America LLC, Svetlana Pelullo Revocable Deed of Trust, W. Maxwell and William Maxwell PLLC.



On August 11, 2009, approximately two weeks after the Chapter 11 Trustee’s appointment, the Objectors filed a motion to strike his appointment and to hold an election of a Chapter 11 Trustee, together with a motion for an expedited hearing alleging, among other things, that the Chapter 11 Trustee had a conflict because he was recommended by the Debtor’s counsel, he personally had no bankruptcy experience and he was formerly a United States Attorney with alleged ties to the assistant United States Attorney who is leading the criminal investigation of the pervasive wrongdoing by the Debtor and certain of its insiders (including the Objectors) [Docket No. 99]. Finally, the Objectors complained that they were not consulted in the selection of the Chapter 11 Trustee. The Objectors demanded a meeting of creditors for purpose of electing a trustee.

Approximately four weeks after the Chapter 11 Trustee’s appointment, each of the Objectors, except W. Maxwell and William Maxwell PLLC, filed an adversary proceeding against the Debtor and each of its direct and indirect subsidiaries and, in some cases, certain of the Debtor’s former officers and directors.7

The Objectors next moved to disqualify the Chapter 11 Trustee’s counsel [Docket No. 255], sought to compel production of the Chapter 11 Trustee’s counsel’s time records [Docket No. 283] and objected to nearly every pleading the Chapter 11 Trustee filed, including innocuous submissions such as the Trustee’s limited service list. [Docket No. 110].

An eighth adversary proceeding was also filed against the Debtor on behalf of Lepercq Corporate Income Fund L.P. (“Lepercq”).

During the first few months following his appointment, the Chapter 11 Trustee had to juggle several crucial and daunting tasks. First, consistent with his statutory obligations under Section 1106, the Chapter 11 Trustee had to identify parties who could have pertinent information regarding the Debtor’s “acts, conduct, assets, liabilities and financial condition”, he had to gather such information and had to organize and process any information received. Second, while performing the aforementioned investigative tasks, the Chapter 11 Trustee had to perform his ordinary administrative and transitional tasks of obtaining control of the Debtor’s mail, bank accounts and collecting any outstanding amounts owed to the Debtor. Third, the Chapter 11 Trustee was compelled to protect the estate from an onslaught of lawsuits that raised issues and alleged facts as to which he lacked the necessary background and records. Fourth, the Chapter 11 Trustee had to defend his appointment in a hotly contested election in pursuit of which the Objectors filed several rounds of proofs of claims and amended proofs of claim.

7 The Objectors’ seven adversary proceedings (collectively, the “Pelullo Actions”) duplicated pre-petition

lawsuits brought by the Objectors in various courts in Pennsylvania and New Jersey. On August 24, 2009, Arkadiy Grinshpun filed five adversary proceedings on behalf of the so-called Svetlana Pellulo Deed of Trust (Adv. Pro. No. 09-03288), Seven Hills Management, LLC (adv. proc. no. 09-03295) and two adversaries on behalf of LandL Holdings, LLC (Adv. Pro. Nos. 09-03293 and 09-03294). On September 18, 2009, Mr. Grinshpun filed a third adversary proceeding on behalf of LandL Holdings, LLC (Adv. Pro. No. 09-03329). Gary Freedman filed two adversary proceedings: one on behalf of Learned Associates of North America, LLC (Adv. Pro. No. 09-03291), and another on behalf of Michael Cordova (Adv. Pro. No. 09-03289). In each of these adversary proceedings, the plaintiffs sued the Debtor and some or all of its non-debtor direct and indirect subsidiaries. Additionally, the two actions commenced by Mr. Freedman and the action filed by Mr. Grinshpun on behalf of Seven Hills also named certain of the Debtor’s former officers and directors.



Again, due to the Federal Seizure, the Chapter 11 Trustee did not inherit information sufficient to allow him immediately to commence the administration of the estate. Moreover, the Debtor had not filed schedules or a statement of affairs, and the estate only had approximately $27,000 in cash in its accounts. Given the aggressive actions taken by the Objectors, the Chapter 11 Trustee had to divide his attention among a number of competing interests while conserving the estate’s limited resources.

To illustrate the scale of the task facing the Chapter 11 Trustee, between June 2007 and the June 2009 Petition Date, the Debtor had employed three different accountants, at least ten different law firms, had three changes in the board of directors and had its books and records seized by federal agents as part of a criminal investigation. The Debtor’s former chief executive and chief financial officers, the ordinary source for crucial information, were cooperating with the Objectors and did not, in any event, have possession and control over the Debtor’s books and records. Moreover, given the pending federal criminal investigation and the fact that millions of dollars had virtually evaporated from the Debtor’s coffers pre-petition, many of the parties with first-hand knowledge of the Debtor’s pre-petition operations were not likely to (and did not) cooperate with the Chapter 11 Trustee’s statutorily mandated investigation. In sum, the Chapter 11 Trustee started at an extreme disadvantage.

The Chapter 11 Trustee took preemptive steps and pursued his investigative duties on parallel tracks – a cooperative track and a judicial track. As to the latter track, the Chapter 11 Trustee sought and obtained authority to conduct examinations and seek discovery pursuant to Bankruptcy Rule 2004 through the issuance of subpoenas against fourteen persons who, in the early stages of the Case, the Chapter 11 Trustee had flagged as being central to the Debtor’s pre-petition acts and conduct, and therefore, were most likely to have pertinent information regarding the Debtor’s assets, liabilities and financial condition. As to the former track, the Chapter 11 Trustee began reaching out to parties to conduct informal interviews and to collect whatever information such parties possessed. This process started with the professionals who advised the Debtor immediately prior to the Petition Date and progressed from there.

Simultaneous with the performance of the Chapter 11 Trustee’s investigative duties described above, the Chapter 11 Trustee successfully defended the estate from the Objectors’ various motions, prosecuted claims objections, negotiated the settlement of one adversary proceeding and obtained orders dismissing the remaining seven adversary proceedings.

6. Claims Objections

The bar date set in this case is October 27, 2009. In connection with the contested trustee election, the Chapter 11 Trustee examined proofs of claims before the occurrence of the bar date and immediately after his appointment. The difficulty of evaluating the claims in such a short time was compounded by the fact that the Debtor’s books and records had been seized by the federal government in connection with a criminal investigation. Information about the claims had to be reconstructed by the Chapter 11 Trustee from a number of sources.

In addition, the proofs of claims were not straightforward “account stated” type claims. A number of claims were filed incorrectly and with documentation clearly evidencing an underlying dispute. For example, on or about September 1, 2009, LandL filed Claim No. 34-1,



as a secured and priority claim, in the amount of $128,475.19 for unpaid rent, attorneys’ fees and interest. In support of the claim, LandL attached an adversary proceeding complaint (adv. proc. no. 09-03293) filed by LandL in the Debtor’s bankruptcy case, together with certain documents from a Pennsylvania state court litigation, all of which evidenced the disputed nature of the claim.

In response to the Chapter 11 Trustee’s preliminary objection, and in order to “legitimize” the claim for voting purposes, on or about September 18, 2009, LandL filed an amended claim, Claim No. 34-2, as an unsecured, non-priority claim, in the amount of $128,475.19. This time, attached to the claim were only those documents evidencing what appeared to be an undisputed claim involving a “judgment” entered by the Pennsylvania state court against the Debtor and two of its subsidiaries. After investigation of that litigation, the Chapter 11 Trustee learned that the judgment was not a judgment on the merits. Rather, it was a default judgment or confession of judgment under Pennsylvania Civil Procedure entered after apparently defective service. Moreover, none of the documents filed by LandL in support of its complaint supported the allegations that the Debtor was liable on a lease with its affiliate.

Rather than address the merits of the Chapter 11 Trustee’s claims objections, the Objectors amended each of their claims in response to the claims objections. As a result, the Objectors filed a total of 18 proofs of claim and amended claims. Thus, the process of reviewing the proofs of claim, adjudicating or investigating the underlying litigation or dispute was extended because in addition to preparing an objection, SNR Denton professionals had to also review amended claims and prepare supplemental objections each time an amendment was made.

In addition to the objections to the claims filed by the Objectors, the Chapter 11 Trustee reviewed, investigated and, where appropriate, filed objections to other claims of dubious validity. By virtue of his objections to various claims, the Chapter 11 Trustee eliminated or reduced claims against the estate by $7,321,414.52 as set forth below:

Claim No.

Creditor Name Claim Amount Allowed Amount

11 Singer Pistiner, P.C. $2,946.50 $0 30 Ajax Baron LLC $600,000.00 $0 34 L and L Holdings, LLC $128,475.19 $0 35 Learned Associates $275,000.00 $100,000 36 Michael Cordova $75,000.00 $50,000 37 Seven Hills Management,

LLC $275,000.00 $100,000

38 L and L Holdings, LLC $224,908.02 $0 50 Lepercq Corporate Income

Fund $3,800,000.00 $0

59 L and L Holdings, LLC $365,270.59 $0 102 REFI $375,000.00 $0



103 Woodson Smith The Debtor $375,000.00 $0 104 Woodson Smith The Debtor $250,000.00 $0 105 REFI $250,000.00 $0 106 ETCG $265,422.16 $0 203 El Paso County Treasurer $4,642.69 $0 204 Stroud Auto Supply, Inc. $4,749.37 $0

As of the Bar Date, the claims register showed 198 timely-filed proofs of claim. The Trustee continues to review the proofs of claim.

7. Lepercq Corporate Income Fund, LP Claim and Settlement

On September 2, 2009, Lepercq filed commenced an adversary proceeding against the Debtor by filing a Complaint for Declaratory Judgment and Other Relief (the “LePercq Complaint”) in the Bankruptcy Court as adversary case number 09-03303. In the LePercq Complaint, LePercq alleges that despite receiving various distributions from the Trust totaling approximately $45,724,000, the Debtor failed to remit the agreed-upon portion of said distributions to Lepercq. Based upon these allegations, LePercq requested declaratory relief under federal and state law, the execution of an assignment in paper form, the liquidation of Lepercq’s claim, and attorneys’ fees. The LePercq Complaint also alleged causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Texas Theft Liability Act. On November 2, 2009, the Chapter 11 Trustee filed the Trustee’s Rule 7012(b)(6) Motion to Dismiss Plaintiff’s Complaint [Adv. Dckt. No. 12] (the “Motion to Dismiss”). On March 22, 2010, the Bankruptcy Court entered an order [Adv. Dckt. No. 26] granting in part and denying in part the Motion to Dismiss. Specifically, only the claims under the Texas Theft Liability Act were dismissed. On April 5, 2010, the Chapter 11 Trustee filed its answer to the Complaint [Adv. Dckt. No. 29]. On April 21, 2010 the Bankruptcy Court entered an order [Adv. Docket No. 31] consolidating the Complaint with the Proof of Claim Objection (defined below).

On September 9, 2009, Lepercq filed a proof of claim [Claim No. 50] (the “Proof of Claim”) against the Debtor. In the Proof of Claim, Lepercq asserts that, to the extent the Debtor has converted Lepercq’s property related to distributions from the Trust, Lepercq may have a claim against the Debtor’s estate. On September 17, 2009, the Chapter 11 Trustee filed an Initial Objection to Claim Filed by [Lepercq] [Claim No. 50] [Docket No. 156] (the “Proof of Claim Objection”).

In an effort to resolve the disputes surrounding the LePercq Complaint and Proof of Claim, the Parties engaged in arm’s-length and good-faith negotiations resulting in a settlement agreement which resolved the issues between the Parties. The salient terms of the settlement (the “Lepercq Settlement”) are as follows:

Past Trust Distributions. Lepercq is entitled to payment of 7.6% of all distributions from the Trust on account of the FPFI Intercompany Claim that occurred after the Petition Date, which are valued at $190,000.00 and are being



held in escrow by counsel for the Debtor, which funds shall be paid by the Debtor to Lepercq upon the effective date of the Lepercq Settlement.

Future Trust Distributions. Lepercq shall be entitled to receive an undivided 7.6% of all future distributions from the Trust on account of the Intercompany Claim.

Dismissal of the Complaint. Upon approval of the Lepercq Settlement, the Complaint was deemed dismissed with prejudice.

Withdrawal of Proof of Claim. Upon approval of the Lepercq Settlement, the Proof of Claim was deemed to have been withdrawn with prejudice.

Mutual Releases. Other than with respect to the rights and obligations granted under the Lepercq Settlement and the Proof of Claim, as modified by the Lepercq Settlement, the Parties agree to provide mutual releases from all rights and causes of action.

Execution of Documents. The Parties agreed to execute all documents necessary to carry out the provisions of the Lepercq Settlement, including, without limitation, the execution by the Chapter 11 Trustee on behalf of the Debtor of a written assignment in paper form of the right of Lepercq to receive an undivided 7.6% of all future distributions from the FPFI Liquidating Trust on account of the Intercompany Claim.

On October 6, 2010, the Bankruptcy Court entered an order approving the Lepercq Settlement [Dckt. No. 435].

C. Litigation

Chapter 5 of the Bankruptcy Code creates certain causes of action that a trustee may pursue, including preferences, fraudulent transfers, and other avoidance actions (collectively, the “Chapter 5 Actions”). Additionally, as set forth in the Debtor’s Schedules, there are a number of causes of action belonging to the Estate that may also be pursued. The Chapter 11 Trustee is evaluating the merits of these actions to determine whether it would be beneficial to the Debtor and its creditors to incur expenses attempting to obtain monetary recoveries.

On June 21, 2011, the Chapter 11 Trustee filed a Complaint (the “Complaint”) in the Bankruptcy Court, initiating an adversary proceeding styled and numbered: Matthew D. Orwig, as Chapter 11 Trustee of FirstPlus Financial Group, Inc., Plaintiff, v. Robert Freeman; James Roundtree; Daniel Phillips; David Ward; John Fitzgerald; John Maxwell; William Handley; Dr. Robert O’Neal; Jack Roubinek; Gary D. Alexander; Roger S. Meek; David Roberts; Joseph P. Steward; William Hickman; Paul Ballard; Olshan Grundman; Frome Rosenzweig & Wolosky LLP; David Adler, Esq.; Eizen Fineburg & Mccarthy P.C.; Gary J. Mccarthy, Esq.; William T. Maxwell, Esq.; William Maxwell PLLC; William T. Maxwell, P.C.; Buckno Lisicky & Company, P.C.; Anthony Buczek, CPA; Siegal & Drossner, P.C.; Howard Drossner, CPA; Kensington Company & Affiliates, Inc.; Ken Stein; Salvatore Pelullo; Seven Hills Management, LLC; Learned Associates of North America, LLC; and Nicodemo S. Scarfo, Jr., Defendants; Adv. Pro. No. 11-03397 [Dckt. No. 577]. In the Complaint, the Chapter 11 Trustee describes, inter alia, insider transactions, improper loans, unsupportable employment and consulting



agreements, suspicious and exorbitant transactions, suspicious cash management practices, improper accounting and the like, supporting damages pursuant to causes of action sounding in8:

breach of fiduciary duties by members of the Debtor’s Board(s) of Directors for, inter alia:

o relinquishing control of the Board to a new Board without proper due diligence;

o failing to implement proper controls to ensure that the Debtor’s assets would not be left vulnerable;

o Board members seeking to protect their own interests (whether by protecting their reputations or receiving lucrative severance packages) at the expense of the Debtor;

o acting with the intent that the Board be able to perpetuate its overarching scheme to loot the Debtor;

o breaching their duties of care and loyalty to the Debtor;

o ceding effective control of the Debtor;

o rubber stamping certain purchase transactions without engaging in proper, independent due diligence;

o failing to act in the best interests of the Debtor by engaging in self-dealing and by engineering transactions primarily to benefit the Pelullo Group and William Maxwell;

o knowingly acquiescing to consulting agreements with Seven Hills and Learned Associates that provided the Pelullo Group with operational and executive control of the Debtor;

o failing to implement internal controls and otherwise monitor the Debtor’s expenditures;

o using Debtor’s funds to pay for lucrative travel, entertainment, airfare and accommodation expenses, as well as transferring significant funds to certain Board members and their families;

o purchasing an aircraft and/or paying for use of an aircraft at a time when the Debtor had trouble meeting its existing financial obligations;

o otherwise wasting corporate assets;

o acquiescing to the June 30, 2008 sham loan from O’Neal;

8 This does not purport to be a full summary of the Complaint (Dckt. No. 577, Adv. Dckt. No. 1). To the extent it is incomplete or leaves a question in the mind of any person reading it, the Chapter 11 Trustee recommends reading the full Complaint, which is on file with the Bankruptcy Court. Any capitalized terms in this section of the Disclosure Statement have the meanings ascribed to them in the Complaint.



o failing to put proper controls in place to ensure that O’Neal contributed the funds he agreed to provide;

o granting O’Neal a security interest on all property of the Debtor; and

o ceding control of the Board to the Executive Committee without effective controls;

breach of duties by certain of the Debtor’s attorneys, by, inter alia:

o placing the interests of W. Maxwell and the Pelullo Group above those of the Debtor;

o helping to create the appearance of legitimacy for the Rutgers, Globalnet and Premier transactions to cover up the sham transactions;

o failing to render a full and fair disclosure of facts material to their representation of the Debtor;

o engaging in self-dealing that pursued their own pecuniary interests above those of the Debtor;

o using their positions of trust to facilitate a plan to deplete the Debtor’s cash and assets;

o improperly using client confidences learned in the course of their representation of the Debtor to the detriment of the Debtor;

o jointly participating in the attempts to aid the Pelullo Group in taking control of the funds in the Grantors Trust and Liquidating Trust;

o breaching their duty of loyalty to Debtor; and

o breaching their duty of care to Debtor;

legal malpractice;

professional negligence and negligent misrepresentation as to certain accounting firms;

fraud and negligent misrepresentation as to certain other professional firms (the “Kensington Defendants”);

breach of fiduciary duty and legal malpractice by W. Maxwell, for, inter alia:

o allowing an allegiance to the Pelullo Group to directly conflict with the interests of the Debtor;

o failing to render a full and fair disclosure of facts material to his representation of the Debtor;

o engaging in self-dealing that pursued his own pecuniary interests above those of the Debtor;

o using positions of trust to facilitate a plan to deplete the Debtor’s cash and assets;



o improperly using client confidences learned in the course of the representation of the Debtor to the detriment of the Debtor;

o failing to act within the utmost good faith towards the Debtor;

o failing to use perfect candor, openness and honesty;

o failing to deliver funds that rightfully belonged to the Debtor;

o participating in the attempts to aid the Pelullo Group in taking control of the funds in the Grantors Trust and Creditors Trust;

o operating as a clearinghouse to front expenditures that he and others did not want reflected in the Debtor’s books and records;

o arranging for the Kensington Defendants to prepare a series of misleading valuation reports that misrepresented the value of Rutgers, Globalnet and Premier;

o helping create the appearance of legitimacy to the Rutgers, Globalnet and Premier acquisitions with the assistance of the Attorney Defendants and Accountant Defendants;

o hiring an array of professionals loyal to the Pelullo Group;

o unilaterally taking control of the Debtor’s bank accounts and transferring millions of dollars to not only himself individually, but also to members of the Maxwell Board, Maxwell family and the Pelullo Group; and

o breaching his duties of loyalty and care to the Debtor;

aiding and abetting and civil conspiracy against various defendants; and

receipt of fraudulent transfers as to various defendants.

As remedies for the various misdeeds alleged by the Chapter 11 Trustee in the Complaint, the Chapter 11 Trustee seeks remedies including, inter alia, actual damages, exemplary and punitive damages, restitution, constructive trusts, subordination and disallowance of claims.

The Chapter 11 Trustee acknowledges that most or all of the defendants named in the Complaint dispute some or all of the allegations made in the Complaint regarding their conduct and intend to defend themselves in the adversary proceeding. The summary set forth above is for information purposes and represents the Chapter 11 Trustee’s position and allegations, as set forth more fully in the Complaint, and is not intended to express the position of any one or more of the defendants named in the Complaint.

D. The Debtor’s Assets

The Debtor’s primary asset has been the Intercompany Claim. The timing and amount of future distributions is unknown; however, the Chapter 11 Trustee has requested additional information from the FPFI Liquidating Trust trustee regarding reserves and pay out estimates.

The Chapter 11 Trustee is holding cash that is property of the Debtor’s Estate.



The Chapter 11 Trustee is working to recover the aircraft purchased by Velia Charters, Inc. using the Debtor’s funds. The value of the aircraft is uncertain, but the Debtor has hired an appraiser to help him to evaluate and potentially sell the aircraft for the benefit of creditors. The amount of any recovery on the aircraft is unknown at this time.

Additionally, as disclosed in the Debtor’s Schedules, Schedule B, the Debtor has potential claims against various persons and entities, including former directors and officers and professionals and advisors. Many of these claims are described above. The Debtor may have additional claims against the named defendants and/or one or more additional defendants based upon the transactions and events described in the Complaint.

III. SUMMARY OF THE CHAPTER 11 TRUSTEE’S PLAN

The principal provisions of the Plan are summarized below. This summary is a broad outline of the Plan and is qualified in its entirely by reference to the Plan, which is attached to this Disclosure Statement as Exhibit A.

The Plan designates certain classes of claims as outlined below. All Claims are only allowed to (i) the extent the Bankruptcy Court has approved them or (ii) there is no pending Claim Objection or adversary proceeding on file with regard to that Claim by the Claim Objection Bar Date.

A. Description of Chapter 11

Once a petition in bankruptcy is filed, actions to collect pre-petition indebtedness are stayed, and other contractual obligations may not be enforced against a debtor. These protections give debtors the opportunity to restructure under court supervision and guarantee that all creditors and interest holders will receive fair and equitable treatment. After the petition date, a debtor is given the opportunity to restructure its operations and may obtain credit, sell assets, and reject executory contracts and lease obligations, all subject to court approval. A debtor may then propose a chapter 11 plan to restructure its obligations. Substantially all liabilities of a debtor as of a petition date are subject to settlement under a chapter 11 plan and are to be voted upon by all impaired classes of creditors and interest holders and approved by a bankruptcy court. The approval of a chapter 11 plan allows a debtor to emerge from bankruptcy.

B. Classification of Claims

All Claims and Interests, except Administrative Claims and Priority Tax Claims, are placed in Classes. The classification of Claims is made for purposes of voting on the Plan, making distributions under the Plan, and for ease of administration. The manner for satisfying each Claim or Interest will depend on how the Claim or Interest is classified.



1. Unclassified Claims

Unclassified claims in the Chapter 11 Case will be the Administrative Claims. Administrative Claims include certain types of Claims that arise after the Petition Date. Section 503 of the Bankruptcy Code establishes the following categories of claims that are treated as Administrative Claims:

actual and necessary costs and expenses of preserving the Debtor’s estates, including wages, salaries, and commissions for services rendered after the Petition Date;

certain taxes incurred by the Debtor’s estates; and

compensation and reimbursement for Professionals pursuant to 11 U.S.C. § 330(a).

Priority Tax Claims are Claims for taxes that are given priority under 11 U.S.C. § 507(a)(8), including income taxes, property taxes, withholding taxes, employment taxes, excise taxes, and custom duties.

2. Classified Claims

As required by the Bankruptcy Code, the Chapter 11 Trustee has divided Claims and Interests into the following Classes:

Class 1 — Priority Non-Tax Claims.

Class 1 consists of Unsecured Claims against the Debtor that are entitled to priority under 11 U.S.C. §§ 507(a)(4)–(9) but does not include Priority Tax Claims. This Class includes Claims for certain wages, salaries, or commissions earned by employees of the Debtor during the one hundred eight (180) days preceding the Petition Date, but only to the extent of the statutory cap set forth in the Bankruptcy Code for each individual.

Class 2 — Secured Claims.

Class 2 consists of all Secured Claims against the Debtor.

Class 3 — Unsecured Claims.

Class 3(a) consists of unsecured claims of all claimants other than claims classified elsewhere in the plan.

Class 3(b) consists of the claims of members of the Shareholder Class.

Class 4 — Subordinated Claims.

Class 4 consists of all Subordinated Claims, if any.



Class 5 — Equity Interests.

Class 5 consists of all Equity Interests in the Debtor.

C. Treatment Of Claims

1. Unclassified Claims

Administrative Claims.

Administrative Claims are not impaired under the Plan. Each holder of an Allowed Administrative Claim that has not been previously paid will be paid by the Liquidating Trustee in full in cash by the later of (i) within seven (7) days the Effective Date or (ii) the date that is fifteen (15) days after the date upon which upon which the Administrative Claim becomes an Allowed Administrative Claim. Notwithstanding the foregoing, any Administrative Claim that is an Ordinary Course Administrative Claim may be paid in accordance with the ordinary business terms, in accordance with the agreement giving rise to the Claim or, in the case of a Claim asserted by a governmental unit, in accordance with applicable law.

The Chapter 11 Trustee believes that the Administrative Claims in the case will be his fee (calculated pursuant to 11 U.S.C. §326(a)) and those of his professionals. As of the date of this Disclosure Statement, his retained professionals have sought fees as follows:

Professional Fees Sought Expenses Sought

Fees Approved9

Expenses Approved

Total Sought

SNR Denton $961,665.00 $70,524.59 $408,044.80 $63,208.38 $1,032,189.50

Franklin Skierski Lovall Hayward LLP

$312,295.05 $4,061.20 $142,647.50 $2,368.68 $316,356.25

Robbins Tapp Cobb & Assoc., PLLC

$148,528.75 $0.00 $88,411.40 $0.00 $148,528.75

The Chapter 11 Trustee believes that the fees for SNR Denton from the date of the Disclosure Statement to the confirmation of the Plan should be approximately $50,000. The Chapter 11 Trustee’s accountants will have additional fees, as they continue to work towards reconstructing books and records and filing the Debtor’s 2007, 2008, 2009, and 2010 tax returns. From the date of the filing of this Disclosure Statement to the Effective Date, the

9 The difference in the “Fees Sought” and the “Fees Approved” is generally the 20% holdback that bankruptcy courts generally require in interim fee applications. However, as of the date of the initial filing of this Disclosure Statement, each firm has a fee applications pending, accounting for the wide difference in fees and expenses sought and those awarded.



Chapter 11 Trustee estimates that these fees should be approximately $50,000.00. FSLH will similarly continue to have fees while negotiating any changes to the Disclosure Statement and Plan and working to overcome objections to either or both. In addition, FSLH will, before the Confirmation Hearing, file objections to the priority of certain claims, prosecute certain Rule 2004 motions and examinations, seek further assets and seek to obtain assets located. It is difficult to estimate these fees, as they are largely dependent on the responses received to the Plan, Disclosure Statement, and Claims Objections to be filed. FSLH’s fees for this period could easily exceed $100,000.

Priority Tax Claims.

Priority Tax Claims are not impaired under the Plan. Each Allowed Priority Tax Claim will be paid by the Liquidating Trust in full, in cash, within seven (7) days of the later of (i) the Effective Date or (ii) fifteen (15) days after the date upon which the Priority Tax Claim becomes an Allowed Priority Tax Claim.

The Chapter 11 Trustee believes that there is at least one claim in this category, an approximately $330,000 claim filed by the IRS. The Chapter 11 Trustee is investigating the origin, validity, and amount of the IRS claim. In addition, the Chapter 11 Trustee believes that the Debtor last filed a tax return in 2006. The Chapter 11 Trustee and his accounting professionals are working towards reconstructing the necessary records and filing the necessary returns. Based upon the information currently available, the Chapter 11 Trustee believes that during the relevant period, the Debtor received significant funds and accumulated significant Net Operating Losses; it is currently difficult to know the Debtor’s ultimate tax liability.

Classified Claims

Class 1 — Priority Non-Tax Claims.

Priority Non-Tax Claims are not impaired under the Plan.

Priority Non-Tax Claims shall be reviewed by the Chapter 11 Trustee or the Liquidating Trustee, as appropriate, and shall be objected to or not, in the discretion of the applicable Trustee. Upon becoming an Allowed Priority Claim, each holder of an Allowed Priority Claim shall receive in exchange for and in full satisfaction of such Claim: (a) the amount of such Allowed Priority Claim, in cash, on the latest of (i) seven (7) days after the Effective Date, or (ii) the date that is fifteen (15) days after such Claim becomes an Allowed Priority Claim; or (b) the time dictated by such other treatment as may be agreed upon in writing by the holder of such Claim and the Chapter 11 Trustee or the Liquidating Trustee, as applicable.

Few claims have been filed as Priority Non-Tax Claims. The Chapter 11 Trustee believes that those filings were in error and will seek to have the claims re-classified as appropriate. The Chapter 11 Trustee does not believe that there are any claims that will ultimately be found to be in this Class.

Class 2 — Secured Claims.



Secured Claims are not impaired under the Plan.

Secured Claims shall be reviewed by the Chapter 11 Trustee or the Liquidating Trustee, as appropriate, and shall be subject to objection by either of them. Upon becoming an Allowed Secured Claim, each holder of an Allowed Secured Claim shall receive in exchange for and in full satisfaction of such Claim: (a) the amount of such Allowed Secured Claim, in cash, on the later of (i) seven (7) days after the Effective Date, or (ii) the date that is fifteen (15) days after such Claim becomes an Allowed Secured Claim, but only to the extent allowed as a Secured Claim; or (b) all collateral securing such Allowed Secured Claim; or (c) such other treatment as may be agreed upon in writing by the holder of such Claim and the Chapter 11 Trustee or the Liquidating Trustee, as applicable.

Few claims have been filed as Secured. The Chapter 11 Trustee believes that those filings were in error and will seek to have the claims re-classified as appropriate. The Chapter 11 Trustee does not believe that there are any claims that will ultimately be found to be in this Class.

Class 3a — Unsecured Claims.

Unsecured Claims are impaired under the Plan.

Unsecured Claims shall be reviewed by the Chapter 11 Trustee or the Liquidating Trustee, as appropriate, and shall be subject to objection by either of them. Except to the extent that the holder agrees to less favorable treatment, each holder of an Allowed Unsecured Claim shall receive in full satisfaction, settlement, and release of and in exchange for, such Allowed Claim, such holder’s Pro Rata Share of cash distributed by the Liquidating Trust in the time and manner as set forth in the Plan and the Liquidating Trust Agreement.

Approximately $27,958,349 worth of claims have been asserted as Unsecured Claims. Of those, 18 claims, totaling approximately $12,121,408, have been objected to by the Chapter 11 Trustee in the Complaint. The outcome of that litigation will have a significant effect on both the size of the Class 3a and 3b claim pools and the funds available for distribution to holders of Allowed Unsecured Claims, and thus a large effect on the amount distributed to each such holder. In addition, the Chapter 11 Trustee or Liquidating Trustee may, upon review, object to other claims filed as unsecured. Accordingly, it is not possible at this time for the Chapter 11 Trustee to estimate the amount to be paid to holders of Allowed Unsecured Claims.

Class 3b – Unsecured Claims of Shareholders

Of the approximately $27,958.349 in Unsecured Claims filed, approximately 134, totaling approximately $10,857,842, were filed by shareholders or former shareholders of the Debtor (the “Shareholder Class”). The Chapter 11 Trustee is, as a part of the Plan, proposing and seeking approval of a settlement with certain shareholders, who the Chapter 11 Trustee believes constitute the majority (if not all) of these claimants.

In March 1999, one of the Debtor’s wholly-owned subsidiaries, FPFI, filed for reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On or about



August 13, 1999, the Debtor filed an unsecured proof of claim in an amount of approximately $133,634,581 in FPFI’s bankruptcy case.

On or about April 10, 2000, the Bankruptcy Court confirmed the FPFI Plan. Under the

FPFI Plan, the FPFI Liquidating Trust was created to, among other things, administer FPFI’s property, make payments to its creditors, and review creditor claims and object to claims if necessary. The FPFI Plan also allowed the Debtor’s unsecured claim (the “Intercompany Claim”) against FPFI in an amount not less than $50 million to be paid out of the FPFI Liquidating Trust over time. The Intercompany Claim accrues simple interest at 8.5% per annum until paid in full.

In March 2005, a group of the Debtor’s shareholders commenced a court action, styled

Danford L. Martin, et. al. v. FirstPlus Financial Group, Inc., et. al., in the Second Judicial District Court for the State of Nevada (the “Nevada Action”) to compel a shareholders’ meeting and election of directors.

On or about April 6, 2006, the Debtor and the Nevada Action petitioners entered into a

settlement agreement (the “Settlement Agreement”) pursuant to which: (i) the Debtor paid certain of the plaintiffs’ expenses arising from the Nevada Action; (ii) the parties dismissed all claims and counterclaims with prejudice and exchanged mutual releases; (iii) the Debtor was required to instruct the Grantor Trust to make a distribution to holders of the Debtor’s common stock on a pro rata basis, equal to 50% of the funds received from the FPFI Liquidating Trust (the “Initial Distribution”); and (iv) following the Initial Distribution, the Debtor is required to make annual distributions of 50% of the funds received by the Grantor Trust from the FPFI Liquidating Trust to shareholders on a pro rata basis.

In light of the Settlement Agreement, the Nevada Action was dismissed on April 7, 2006

and the Debtor’s shareholders (the “Settlement Beneficiaries”) became entitled to receive annual distributions. Beginning in spring 2006, the Debtor disclosed and affirmed the existence of the Settlement Agreement in its SEC filings. In August 2006, pursuant to the terms of the Settlement Agreement, the Debtor caused the Grantor Trust to make the Initial Distribution totaling $3,618,864.

Notwithstanding the Settlement Agreement requiring annual distributions to the

Settlement Beneficiaries of 50% of amounts received and held by the Grantor Trust, the Debtor did not make any additional distributions after the Initial Distribution. Between August 2006, when the Initial Distribution was made pursuant to the Settlement Agreement, and the June 2009 Petition Date, the Grantor Trust received more than $12 million from the FPFI Liquidating Trust. Pursuant to the terms of the Settlement Agreement, the Debtor was required to make distributions of 50% of that amount to the Settlement Beneficiaries. No such distributions were made.

On February 13, 2009, James Hanson (“Hanson”), commenced an action in the Second

Judicial District Court of the State of Nevada, County of Washoe against the Debtor, Does 1- 100 and Black and White Companies 101-200 for, among others things, breach of the Settlement Agreement, specific performance and the appointment of a receiver (the “Hanson



Action”). On March 26, 2009, Hanson filed a Motion for Temporary Restraining Order and Preliminary Injunction seeking to enjoin the dissipation of any funds received by the Debtor or the Grantor Trust from the FPFI Liquidating Trust and to deposit any such funds in the registry of the Nevada court. On April 10, 2009, the Nevada court entered a Preliminary Injunction enjoining the dissipation of any funds held by the Debtor and/or the Grantor Trust and ordered that any funds in their possession be immediately deposited into the Court registry. In ruling for Hanson, the Nevada court stated:

Okay. I don’t think I really need to hear anymore. The motion for preliminary injunction of relief is granted. The Court finds that the plaintiff has demonstrated a substantial likelihood on the merits. The Court finds that injunctive relief is necessary in this case because it is apparent to the Court that the assets of the defendant [the Debtor] obliged to pay the obligations set forth in Paragraph 7(b) of the agreement which is the subject of this lawsuit have been diverted to the extent of many millions of dollars by criminal activity on the part of officers and directors of the defendant company [the Debtor], and that as a result of the conduct of the criminal enterprise that no assets would be available to satisfy a judgment in this action.

(4/10/4009 Transcript, Hanson Action at p. 103: 1-17).

Following entry of the Nevada court’s preliminary injunction, the Debtor remitted

$1,196,402.83 to the Nevada court registry.10 Moreover, as a result of the preliminary injunction, future distributions from the FPFI Liquidating Trust were safeguarded from dissipation by the Debtor and those in control of the Debtor, thereby preserving funds for distribution to the Debtor’s rightful creditors.

On or about September 17, 2009, Hanson, as putative class representative, filed a proof

of claim on behalf of all shareholders (the “Shareholder Class”) in the amount of $8,557,689.83 for breach of the settlement agreement (the “Breach Claim”) [Claim No. 73].

In an effort to resolve the disputes surrounding the Hanson Action and the Breach

Claim, Hanson’s counsel and the Chapter 11 Trustee engaged in arm’s length and good-faith negotiations resulting in a proposed settlement (the “Proposed Settlement”), which would have resolved the Hanson Action and all issues between the Debtor and the Shareholder Class. The Chapter 11 Trustee filed a “Motion Pursuant to Section 502(a) of the Bankruptcy Code to Allow Claim for Breach of Contract and Rule 9019 of the Federal Rules of Bankruptcy Procedure to Approve Settlement and Compromise” (the “Settlement Motion”) seeking the Court’s approval of the Proposed Settlement on January 12, 2011 [Dckt. No. 515].

In the Proposed Settlement, the Chapter 11 Trustee and Shareholder Class proposed the

following: (i) the Shareholder Class would have an allowed claim in the amount of $8,557,689.83, which would be paid pari passu with other unsecured creditor claims; (ii)

10 The funds remitted to the Nevada Court registry were subsequently transferred to the Chapter 11 Trustee.



Hanson’s counsel would receive payment in the amount of $270,000 to cover the costs of the Hanson Action; (iii) the Hanson Action would be dismissed with prejudice; and (iv) the Allowed Claim would be substituted for the Breach Claim.

Objections to the Settlement Motion were filed by the Hulse Stucki law firm, William

Maxwell, PLLC, William Handley and John Maxwell. [Dckt. Nos. 525, 529, 533]. A joinder in those objections was filed by Seven Hills Management, LLC and Svetlana Pelullo Revocable Deed of Trust [Dckt. No. 540]. The Bankruptcy Court held a hearing on the Settlement Motion on March 2, 2011 (the “Settlement Hearing”).

After the Settlement Hearing, on March 29, 2011, the Bankruptcy Court entered its

“Order on Motion to Compromise” denying without prejudice approval of the Initial Settlement. [Dckt. No. 557]. The Bankruptcy Court denied the Settlement Motion because it found that there was no evidence that Hanson spoke for the Shareholder Class (or anyone other than himself) and that there was no evidence of “substantial contribution” justifying the payment of Hanson’s counsel’s fees by the Debtor’s Estate. However, the Bankruptcy Court also overruled all other objections to the Proposed Settlement and found that the Proposed Settlement was “fair and equitable.”

After the entry of the order denying the Settlement Motion, the Chapter 11 Trustee

continued discussions with Hansen in order to try to overcome the shortcomings in the Proposed Settlement. As a result of those discussions, the Chapter 11 Trustee now proposes a new compromise (the “Compromise”) regarding the Hanson Action and the Breach Claim and is cooperating with Hanson to resolve the issues with the Proposed Settlement. The Chapter 11 Trustee is seeking approval of the Compromise as a part of the Plan.

The terms of the proposed Compromise are as follows:

Agreed Lift Stay. Hanson and the Chapter 11 Trustee (the “Parties”) will file a “Joint Motion to Approve Agreement to Modify the Automatic Stay to Allow Nevada State Court to Proceed with Class Certification Matters and Allow Class Representatives to Represent the Class Members” in the Chapter 11 Case (the “Lift Stay Motion”). In the Lift Stay Motion, the Parties will request that the Bankruptcy Court lift or modify the automatic stay and approve the following agreement (the “Lift Stay Agreement”):

o Hanson may request that the Nevada Court certify the Shareholder Class and similarly situated parties as a class;

o the Shareholder Class, if certified, may request that the Nevada Court appoint Hanson and others as class representatives (the “Shareholder Representatives”);

o Hanson and the Shareholder Class may request that the Nevada Court appoint class counsel;

o the Shareholder Representatives may pursue the Breach Claim on behalf of the Shareholder Class in the Chapter 11 Case;



o the Shareholder Representatives shall establish any necessary class notice procedures;

o the Shareholder Representatives shall appoint and supervise a claims agent to receive and distribute to members of the Shareholder Class all payments made by the Liquidating Trust with respect to the Breach Claim;

o the Shareholder Representatives shall approve a class representation fee to be paid by the claims agent out of any such payments;

o the Shareholder Representatives shall conduct any and all activities necessary or appropriate to accomplish these procedural matters; and

o once the Nevada Court certifies the Shareholder Class and Shareholder Representatives, the Bankruptcy Court order that the Shareholder Representatives may receive notice for the Shareholder Class and may generally appear for the Shareholder Class and its members in the Chapter 11 Case;

Allowed Claim. The Shareholder Class shall have an allowed claim in the amount of $8,557,689.83 (the amount stated in the Breach Claim). The Breach Claim shall be classified as Class 3(b) and paid its Pro Rata Share with other Allowed Unsecured Claims in Class 3;

Substitution of Breach Claim. The Breach Claim, once allowed, will be deemed to replace and supercede all claims filed by shareholders and all other claims by other shareholders will be deemed to be Disallowed without any further action on the part of the Bankruptcy Court or any Party or other entity;

Voting on Plan. The votes of the members of the Shareholder Class will be solicited through the Plan confirmation process. Each share of stock in the Debtor shall be valued at $1 solely for the purpose of voting, allowing the Bankruptcy Court to determine whether the majority of the Shareholder Class, by both number and amount of stock held, favor the proposed Compromise. This should, for the purpose of approving the Compromise, alleviate the issue regarding whether Hanson is a Shareholder Representative, as he will not be voting on behalf of the Shareholder Class.

Deadline for Shareholder Class certification. If the Shareholder Class is not certified by the date that is 180 days after the Effective Date, then the proposed Compromise is null and void ab initio. In such an event, (i) the members of the Shareholder Class will receive the treatment proposed for all Equity Holders in the Plan (cancellation of Interests and no distribution);’ (ii) Hanson may continue to assert the Breach Claim in his own right; and (iii) the Liquidating Trustee will retain the right to object to the Breach Claim notwithstanding the Claim Objection Bar Date. In such an event, there will be no holders of Class 3(b) Claims.

The Chapter 11 Trustee anticipates filing the Lift Stay Motion shortly and anticipates Hanson beginning the process regarding class certification in the Hanson Action while the Plan



approval process is pending. The Compromise allows the Debtor’s case to move forward and cures the issues with the Proposed Settlement. The Chapter 11 Trustee asserts that the proposed Compromise is in the best interests of the Debtor’s Estate and its creditors and respectfully requests that (i) it be approved as a part of the Plan confirmation process and (ii) the approval be included in the Confirmation Order.

Class 4 — Subordinated Claims.

Subordinated Claims are impaired under the Plan.

The holders of Subordinated Claims shall most likely not receive or retain any Property, but remain eligible for distributions should the Liquidating Trustee recover sufficient funds.

The Chapter 11 Trustee does not believe that there are currently any holders of subordinated claims. However, in the Complaint, the Chapter 11 Trustee seeks to have certain claims either disallowed or subordinated, so certain claims may end up in this Class. The Chapter 11 Trustee believes that if one or more Claims are so classified, no payment would be made on those Claims.

Class 5 — Equity Interests.

Upon the Effective Date, all Equity Interests in the Debtor shall be cancelled, voided and of no further force or effect whatsoever. No distributions will be made on account of any Equity Interest in the Debtor.

There are currently 134 claims that have been filed by shareholders. Based upon the Compromise described above, the Chapter 11 Trustee believes that these claims will be Disallowed. If the Compromise is not approved, or if one or more purported Equity Interest holders do not fall within the Shareholder Class, the Interests of those Interest holders will be extinguished by operation of the Plan with no payment made on account of such Interests.

D. Means of Plan Implementation

1. Payments and Transfers by the Chapter 11 Trustee and the Liquidating Trustee on and after the Effective Date.

On the Effective Date, the Liquidating Trust Assets, expressly including the Litigation and all Other Causes of Action, shall be deemed to have been transferred by the Debtor or the Chapter 11 Trustee to the Liquidating Trust, free and clear of all liens, Claims, and encumbrances, but subject to any obligations imposed by the Plan. In satisfaction of the requirements of 11 U.S.C. § 1129(a)(16), all transfers of property under the Plan shall be deemed to have been made in accordance with any applicable provisions of non-bankruptcy law governing the transfer of property by a corporation or trust that is not a moneyed, business, or commercial corporation or trust.



On or after the Effective Date, in the time and manner set forth herein, the Liquidating Trust shall remit to the respective holders of all remaining and unpaid Allowed Administrative Expense Claims, Allowed Priority Claims, an amount in cash equal to 100% of the amount of such Allowed Claim. Subject to the foregoing, on and after the Effective Date, the Liquidating Trust shall make payments to the holders of all Allowed Class 3 and 4 Claims in the time and manner, and to the extent, set forth in Article IV of the Plan.

After the Effective Date, all remaining Allowed Administrative Claims (including Professional Fee Claims), and any and all Allowed Priority Claims against the Debtor that were not paid in full on the Effective Date shall be paid by the Liquidating Trust pursuant to the terms of the Plan.

2. The Liquidating Trust.

Execution of the Liquidating Trust Agreement. On or prior to the Effective Date, the Liquidating Trust Agreement shall be executed, and all other necessary steps shall be taken to establish the Liquidating Trust without any requirement of further action by the Chapter 11 Trustee or any governing body of the Debtor.

Purpose of the Liquidating Trust. The Liquidating Trust shall be established for the purpose of receiving, holding, liquidating and distributing the Debtor’s assets to the holders of Allowed Claims as provided in the Plan and Order confirming the Plan and to make other payments called for in the Plan, with no objective to continue or engage in the conduct of a trade or business.

The Liquidating Trust Assets. The Liquidating Trust’s res shall consist of the Liquidating Trust Assets. Any Cash or other property received following the Effective Date by the Liquidating Trust from third parties from the prosecution, settlement, or compromise of any Litigation or Other Causes of Action (including any proceeds from any insurance policies), from the sale of Property, or otherwise shall constitute Liquidating Trust Assets.

On the Effective Date or as soon as practicable thereafter, the Chapter 11 Trustee shall transfer all of the Liquidating Trust Assets to, and such assets shall vest in, the Liquidating Trust free and clear of all liens, Claims, and encumbrances, except to any extent otherwise provided in the Plan and the Liquidating Trust Agreement.

Upon the transfer of the Liquidating Trust Assets to the Liquidating Trust, the Liquidating Trustee shall be a representative of the Estate pursuant to 11 U.S.C. §§ 1123(a)(5), 1123(a)(7), and 1123(b)(3)(B) with respect to the Liquidating Trust Assets and shall be automatically deemed substitute as named Plaintiff in all pending litigation and shall have all rights, standing and interest of the Estate and Chapter 11 Trustee in that litigation. ALL LITIGATION AND OTHER CAUSES OF ACTION (INCLUDING, WITHOUT LIMITATION, ALL THE LITIGATION, ALL OTHER CAUSES OF ACTION AND ALL AVOIDANCE ACTIONS) SHALL SURVIVE CONFIRMATION AND CONSUMMATION OF THE PLAN AND THE COMMENCEMENT OR PROSECUTION OF ANY SUCH



CLAIMS SHALL NOT BE BARRED BY ANY ESTOPPEL, WHETHER JUDICIAL, EQUITABLE, OR OTHERWISE.

The Liquidating Trustee. Matthew D. Orwig, not individually, but solely as a fiduciary for the Liquidating Trust, shall be the initial Liquidating Trustee. The designation of the Chapter 11 Trustee as the initial Liquidating Trustee shall be effective on the Effective Date without the need for (i) any further order of the Bankruptcy Court or (ii) any further action by any other governing body of the Debtor. The Chapter 11 Trustee shall also continue as the governing body of the Debtor.

Role of the Liquidating Trustee. In furtherance of and consistent with the purpose of the Liquidating Trust and the Plan, after payment in full of Allowed Class 1 and 2 Claims and Allowed Administrative Claims, the Liquidating Trustee shall have the power and authority to, inter alia (as may be set forth in the Liquidating Trust Agreement): (1) manage, invest, and distribute the Liquidating Trust Assets to the Debtor which will then distribute such funds to holders of Allowed Class 3 and 4 Claims, (2) hold the Liquidating Trust Assets for the benefit of the Debtor, which will distribute such funds to the holders of Allowed Class 3 and 4 Claims, (3) hold, manage, sell, and distribute Cash or other Liquidating Trust Assets obtained through the exercise of his power and authority, (4) prosecute, settle, and otherwise resolve, in the names and on behalf of the Debtor, its Estate, or the Liquidating Trust, the Litigation and all Other Causes of Action, including the power and authority to continue and to commence Litigation or pursue any Other Causes of Action, (5) prosecute and resolve objections to any Claim (or any portion thereof) in the name and on behalf of the Debtor, or its Estate, or the Liquidating Trust, and any Disputed Administrative Expense Claims, Disputed Priority Tax Claims, or Disputed Priority Non-Tax Claims, (6) perform such other functions as are provided in the Plan and the Liquidating Trust Agreement, (7) without Bankruptcy Court oversight, retain and compensate professionals to assist him in performing the functions as provided in the Plan and the Liquidating Trust Agreement, (8) to perform or delegate such other functions and services and duties as he deems reasonably necessary or appropriate, (9) administer the closure of the Chapter 11 Case, and (10) take any and all reasonably necessary or appropriate steps to effectuate the dissolution of the Debtor pursuant to the terms of the Plan and applicable law. The Liquidating Trustee shall be responsible for all decisions and duties with respect to the Liquidating Trust and the Liquidating Trust Assets, subject to (a) the approval of the Bankruptcy Court after notice and a hearing (as appropriate), (b) the terms and conditions of the Liquidating Trust Agreement. In all circumstances, the Liquidating Trustee shall act in the best interests of the Debtor and the holders of Allowed Claims against the Debtor.

The Liquidating Trustee shall be authorized to exercise all powers regarding the Debtor’s tax matters, including filing tax returns, to the same extent as if the Liquidating Trust was the Debtor. The Liquidating Trust shall (A) complete and file, to the extent not previously filed, the Debtor’s pre- and post-petition federal, state, and local tax returns, (B) to the extent not previously requested, request an expedited determination of any unpaid tax liability of the Debtor under 11 U.S.C. § 505(b) for all tax periods starting after the Petition Date through the Effective Date as determined under applicable tax laws, and (C) represent the interests and account of the Debtor before any taxing authority in all matters, including, but not limited to, any action, suit, proceeding, or audit. The Liquidating Trustee shall also file tax returns (if any)



for the Liquidating Trust as a grantor trust under section 671 of the Internal Revenue Code and Treasury Regulation Section 1.671-4.

Cash. The Liquidating Trustee may invest cash (including any earnings thereon or proceeds therefrom) as permitted by 11 U.S.C. § 345, or other controlling authorities.

Costs and Expenses of the Liquidating Trust. The costs and expenses of the Liquidating Trust, including the fees and expenses of the Liquidating Trustee and the professionals retained in accordance with section 5.3(ix) of the Plan (including the costs and expenses incurred in connection with the pursuit of the Litigation or Other Causes of Action), shall be paid out of the Liquidating Trust Assets. All such costs and expenses shall be paid in the manner set forth in the Plan and in the Liquidating Trust Agreement.

Compensation of the Liquidating Trustee. The Liquidating Trustee shall be entitled to reasonable compensation and reimbursement of expenses without Bankruptcy Court approval upon such terms as are approved by the Bankruptcy Court.

Retention of Professionals by the Liquidating Trust. The Liquidating Trustee may retain and reasonably compensate legal counsel and other professionals to provide professional services, including in connection with the Plan or the Liquidating Trust Agreement, without the need for Bankruptcy Court approval, including in connection with the prosecution or settlement of the Litigation, all Other Causes of Action, or objections to Disputed Claims. Without limiting the generality of the foregoing, the Liquidating Trust and the Liquidating Trustee may retain any professional who previously represented any party-in-interest in this Chapter 11 Case on or prior to the Effective Date.

Distribution of the Liquidating Trust Assets. The Liquidating Trustee shall, at his discretion, make distributions of the Liquidating Trust Assets on hand commencing as soon as practicable after the Effective Date, retaining appropriate reserves for amounts that: (a) would be distributable to a holder of a Disputed Claim if such Disputed Claim had been Allowed prior to the time of such distribution (but only until such Claim is resolved), (b) are reasonably necessary to meet contingent liabilities (including with respect to any indemnification obligations owed to the Liquidating Trustee, pursuant to the terms and conditions of the Plan and the Liquidating Trust Agreement) and to maintain the value of the Liquidating Trust Assets during liquidation, (c) necessary to pay anticipated future reasonable expenses (including, but not limited to, any taxes imposed on the Liquidating Trust or in respect of the Liquidating Trust Assets) as determined by the Liquidating Trustee, and (d) are needed to satisfy other anticipated liabilities (including a reasonable reserve for unanticipated future liabilities, fees, and expenses) to be incurred by the Liquidating Trust in accordance with the Plan or the Liquidating Trust Agreement.

Final Distributions. Prior to making a final distribution, dissolving the Liquidating Trust and closing the Chapter 11 Case, the Liquidating Trustee may apply to the Bankruptcy Court for (i) an order authorizing final distribution, closing the Chapter 11 Case, and releasing the Liquidating Trustee and the Liquidating Trust from any and all claims, debts, or liabilities, including any and all claims, debts, or liabilities for taxes to any and all taxing authorities, and/or (ii) to any applicable authority, pursuant to under 11 U.S.C. § 505, for a determination of



any tax liability payable by the Debtor or the Liquidating Trust. The Liquidating Trustee shall not be required to make a final distribution unless and until the Liquidating Trustee determines that the Liquidating Trust and the Debtor have no remaining liabilities for taxes of any kind. Under no circumstances will the Liquidating Trustee have any personal liability for any taxes related to the Debtor, the Liquidating Trust or the Liquidating Trust Assets.

Beneficial Trust Interests. The Liquidating Trust Agreement provides that neither the Liquidating Trustee nor the Debtor will not make, facilitate making, or encourage any other party to make a market in the beneficial interest in the Liquidating Trust nor Claims against the Debtor. Those interests will not be listed on any securities exchange or over the counter trading service. There are no put, call, rights of first refusal, right to tender or similar rights of any party provided for in the Liquidating Trust Agreement or the Plan. It is not expected that any other person will make or facilitate making a market in the beneficial interests and there may be no or few potential purchasers of such interests and thus, they are likely to be relatively illiquid as a practical matter. There can be no assurance as to the amount or timing of recoveries into the Liquidating Trust, the costs of administering the Liquidating Trust and/or distributions from the Liquidating Trust to the trust beneficiaries or the value (if any) of beneficial interest in the Liquidating Trust or Claims against the Debtor.

None of the issuance of the beneficial interest, the single share of stock of the Debtor being issued to the Liquidating Trust, or the claims in Class 3(a) will be registered under the Securities Act of 1933, and they will not be registered under the Securities Exchange Act of 1934 (the “Exchange Act”) and will not be listed on any stock exchange or quoted on any trading service. Therefore, neither the Liquidating Trust nor the Debtor will be subject to the reporting requirements of the Exchange Act and will not file reports with the SEC thereunder or any state securities agency. The Liquidating Trustee is not authorized to facilitate the development of an active trading market for the beneficial interest, Claims against the Debtor, or (the cancelled) Interests in the Debtor and will not engage the services of any market maker or other person to facilitate the development of such a market or publish information about prices at which such interests or Claims may be transferred. No trading market in the Claims or Equity Interests exists or is likely to develop. Therefore, holders of Claims and/or Equity Interests are notified that they will be subject to substantial restrictions on transfer, and holders must be prepared to hold the Claims for an indefinite period of time.

The value of the Claims and Interests may be adversely affected by (i) the absence of publicly available information regarding the Liquidating Trust and/or the Debtor and (ii) the absence of a securities exchange or any other trading market in which to trade the Claims or Interests.

There will be a short-form annual report filed with the Bankruptcy Court. Neither the Liquidating Trust nor the Debtor intends to provide claimants or interest holders with pleadings in or summaries of developments regarding the Complaint, other litigation, distributions from the FPFI Trust or other developments beyond what it reports in the annual report filed with the Bankruptcy Court.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS



The following discussion summarizes certain material U.S. Federal income tax consequences of the implementation of the Plan to the Debtor, certain holders of Claims and the holders of Interests. The following summary generally does not address U.S. federal income tax consequences to holders whose Claims are unimpaired or otherwise entitled to payment in full in Cash under the Plan.

This summary is based upon the Internal Revenue Code of 1986, as amended (“Tax Code”), the Treasury Department regulations promulgated thereunder (“Treasury Regulations”), judicial authority and current administrative rulings and practice now in effect. These authorities are all subject to change at any time by legislative, judicial or administrative action, and such change may be applied retroactively in a manner that could adversely affect the Debtor or holders of Claims or Interests.

The federal income tax consequences to any particular holder of a Claim or Interest may be affected by matters not discussed below. For example, in general, neither the impact of the Plan on holders of Claims or Interests who are not U.S. persons as defined in the Tax Code or the Treasury Regulations nor the impact under any state or local law is discussed herein. Further, this summary generally does not address the tax consequences to Claim holders who may have acquired their Claims from the initial holders nor does it address the tax considerations applicable to Claim holders or Interest holders that may be subject to special tax rules such as financial institutions, insurance companies, dealers in securities or currencies, tax-exempt organizations or taxpayers subject to the alternative minimum tax.

No ruling will be sought from the Internal Revenue Service (“IRS”), and no opinion of counsel has been or will be sought, with respect to any of the tax aspects of the Plan. The discussion set forth below is for general information only and no assurances are given by the Debtor in this regard. This description does not cover all aspects of federal income taxation that may be relevant to the Debtor or holders of Claims or Interests. Each Claim and Interest holder is urged to consult with its own tax advisor regarding the federal, state, local and foreign tax consequences of the Plan.

IRS CIRCULAR 230 NOTICE. TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, HOLDERS OF CLAIMS AND INTERESTS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES CONTAINED HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY HOLDERS OF CLAIMS OR INTERESTS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE TAX CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING BY THE DEBTOR OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) HOLDERS OF CLAIMS OR INTERESTS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

Tax Characterization of the Liquidating Trust. The Chapter 11 Trustee believes that the

Liquidating Trust shall be considered a “grantor” trust for federal income tax purposes, and shall, therefore, not have separate liability for federal income taxes relating to, or arising from, the liquidation of the Liquidating Trust Assets. This means that for U.S. federal income tax purposes, a liquidating trust is not a separate taxable entity, but rather is treated for U.S. federal



income tax purposes as a pass-through entity whereby the grantors of the trust are considered to own a proportionate share of the assets of the liquidating trust. The Chapter 11 Trustee’s position that the Debtor is the grantor of the Liquidating Trust, and thus, the owner of the Liquidating Trust Assets. Merely establishing a trust as a liquidating trust, however, does not ensure that it will be treated as a grantor trust for U.S. federal income tax purposes.

Notwithstanding the foregoing, the IRS has announced in Rev. Proc. 94-45 that if certain

conditions are met, it will issue a ruling that a liquidating trust created pursuant to a bankruptcy plan under Chapter 11 of the Bankruptcy Code will be treated as grantor trust of which either the shareholders of the debtor or the creditors (but not the debtor) is the grantor. If the Liquidating Trust is characterized as a liquidating trust of which the holder of Allowed Claims are the grantors, then the transfer of the Debtor’s assets to the Liquidating Trust will constitute a taxable disposition of those assets by the Debtor, and any subsequent income, gain, or loss realized with respect to the Liquidating Trust Assets would be allocated to the holders of Allowed Claims, rather than to the Debtor.

The Debtor, however, does not intend to obtain a ruling from the IRS. Accordingly,

there can be no assurance that the IRS would not take a contrary position. A different classification could result in a different income tax treatment of the Liquidating Trust or a reserve within the Liquidating Trust. Such treatment could include, but is not limited to, the imposition of an entity-level tax on either the Liquidating Trust or a reserve within the Liquidating Trust. Such a tax, if imposed, could result in a material reduction in the amount that would otherwise be available for distribution to holders of Allowed Claims.

Tax Consequences to the Debtor. Under the Plan, the Debtor’s Property will be transferred to the Liquidating Trust. Because income from the Liquidating Trust Assets may only be used to pay the Debtor’s liabilities, the Chapter 11 Trustee believes that (i) the transfer of the Liquidating Trust Assets to the Liquidating Trust will not constitute a taxable disposition of the Liquidating Trust Assets and (ii) the Liquidating Trust should be classified for federal income tax purposes as a “grantor” trust of which the Debtor is the grantor. In accordance with the decision of the United States Supreme Court in Holywell Corp. v. Smith, 112 S.Ct. 1021 (1992), the Liquidating Trustee will be required to file the income tax returns that the Debtor would have filed if its assets had not been conveyed to the Liquidating Trust. Therefore, to the extent that the operation or liquidation of Liquidating Trust Assets or creates tax liability for the Debtor, the Liquidating Trust shall promptly pay such tax liability, and any such payments shall be considered costs and expenses of operation of the Liquidating Trust. The Liquidating Trustee may reserve a sum sufficient to pay any accrued or potential tax liability arising out of the operations of the Liquidating Trust.

Due to the number of unfiled prior year tax returns (last filed Federal Income Tax return

was for 2006), the condition of the Debtor’s records and uncertain tax treatment of some transactions made between 2007 and 2010, the Chapter 11 Trustee cannot be certain at this time as to the existence, or the size of, any net operating loss carryovers (“NOLs”), or other tax attributes. The Trustee believes that the Debtor should be entitled to utilize its NOLs, if any exist, to offset in whole or in part any regular tax liability that may arise as a result of the operations of the Liquidating Trust. If the IRS successfully asserts that the holders of Allowed



Claims are the grantors of the Liquidating Trust, then the Debtor would recognize gain or loss on the transfer of its assets to the Liquidating Trust in an amount equal to the difference between the fair market value of the assets transferred and the tax basis of those assets. In the event that the Debtor’s NOLs would be sufficient to offset any resulting gain for regular tax purposes, it is still possible that the Debtor might owe alternative minimum tax (“AMT”) on any such gain, as discussed below. Generally, taxpayers are entitled to carry their NOLs forward twenty years from the year the losses were incurred to offset taxable income earned in those years. The Chapter 11 Trustee has assumed that the Debtor’s NOLs, to the extent thereof, if any, will be available for regular income tax purposes to offset taxable income of the Liquidating Trust produced after implementation of the Plan. If the assumption that there are NOLs available to offset any taxable income recognized by the Liquidating Trust is incorrect, the ramifications to the holders of Allowed Claims and Interests could be material because the assets of the Liquidating Trust would be reduced by the required payment of any federal income taxes imposed on the Debtor.

Alternative Minimum Tax. Special limitations on the utilization of the NOLS would

apply if the Debtor becomes subject to the AMT. In general, AMT is imposed on a corporation’s U.S. alternative minimum taxable income (“AMTI”) at a 20% tax rate if and to the extent such tax exceeds the corporation’s regular U.S. federal income tax. For purposes of computing taxable income for AMT purposes, certain tax deductions and other beneficial allowances are modified or eliminated. For example a corporation is generally not allowed to offset more than 90% of its taxable income for AMT purposes by available NOL carry forwards (as computed for AMT purposes). Therefore, the Debtor will be required to pay AMT, at a minimum effective rate of 2% (10% of the 20% AMT rate), in any succeeding taxable year during which it has AMTI and its regular U.S. federal income tax is fully offset by NOLs. Moreover, any COD income that the Debtor may realize should be excluded from the calculation of AMTI.

Realization of Cancellation of Indebtedness Income. Generally, a taxpayer recognizes

cancellation of indebtedness (“COD”) income upon satisfaction of its outstanding indebtedness for less than it adjusted issue price. The amount of COD income is, in general, the excess of (i) the adjusted issue price of the indebtedness satisfied, over (ii) the issue price of any new indebtedness of the taxpayer issued, the amount of cash and the fair market value of any other consideration (including stock of the taxpayer) given in exchange for the indebtedness satisfied. Certain statutory or judicial exceptions can apply to limit the amount of COD income and attribute reduction, as described below (such as where the payment of the canceled indebtedness would have given rise to a tax deduction).

However, COD income is not included in gross income if the discharge occurs in a Title

11 case or the discharge occurs when the taxpayer-debtor is insolvent but rather the debtor must, first reduce the NOL for the year of discharge, then the NOLs to the year of discharge and other tax attributes, such as capital loss carryovers, after the calculation of its tax for the taxable year of discharge, and thereafter must reduce the tax basis of the assets held by the debtor on the first day of the taxable year following the discharge by the amount of COD income excluded from gross income by this exception.



Tax Consequences to Holder of Claims. Although the Chapter 11 Trustee does not believe that the conveyance of the Debtor’s assets to the Liquidating Trust will be considered a taxable event, the holders of Claims may, at some point in time, be required to recognize income or be allowed a deduction as a result of the implementation of the Plan. The exact tax treatment depends on each holder’s method of accounting, the basis of each Claim holder’s interest, the amount of distributions received, and upon whether and to what extent such creditor has taken a bad debt reduction in prior taxable years with respect to a particular debt owed to it by the Debtor. In the event that the Liquidating Trust is treated as a grantor trust for the benefit of the creditors, any income, gain or loss attributable to the ownership, operation, or disposition of the Liquidating Trust Assets would be taxable to the creditors, in accordance with their interests in the Liquidating Trust Assets, whether or not the creditor had received any cash distributions from the Liquidating Trust. Gain or loss on the subsequent disposition of Liquidating Trust Assets would be equal to the difference between the amount realized on the disposition of those assets and their tax bases in the hands of the Liquidating Trust (initially, the fair market value of the Liquidating Trust Assets at the time of the transfer to the Liquidating Trust).

Tax Consequences to Holders of Equity Interests. Equity Interests shall be cancelled

and the holders of such Interests shall not receive any property or an interest in property on account of such Interests. Each Holder of an Equity Interest shall receive a capital loss equal to the amount of tax basis it has in its Interest.

Information Reporting and Backup Withholding.

Under the IRC’s backup withholding rules, a claimant may be subject to back-up withholding with respect to distributions or payments made pursuant to the Plan unless that claimant (a) comes within certain exempt categories (which generally include corporations) and, when required, demonstrates that fact or (b) provides a correct taxpayer identification number and certifies under penalty of perjury that the taxpayer identification number is correct and that the holder is not subject to backup withholding because of a failure to report all dividend and interest income. Backup withholding is not an additional tax, but merely an advance payment that may be refunded to the extent it results in an overpayment of tax. Claimants may be required to establish exemption from backup withholding or to make arrangements with respect to the payment of backup withholding.

THE FOREGOING DISCUSSION IS NOT INTENDED AS TAX ADVICE TO THE CREDITORS AND SHAREHOLDERS REGARDING THE FEDERAL INCOME TAX CONSEQUENCES TO THEM UNDER THE PLAN. EACH CLAIMANT SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE CONSEQUENCES OF THE PLAN UNDER FEDERAL, STATE AND LOCAL TAX LAWS. FOR THESE REASONS, ALL HOLDERS OF CLAIMS AND INTERESTS SHOULD CONSULT WITH THEIR OWN TAX ADVISOR AS TO THE TAX CONSEQUENCES OF IMPLEMENTATION OF THE PLAN TO THEM UNDER APPLICABLE FEDERAL AND STATE TAX LAWS.

Closing the Liquidating Trust



The Liquidating Trust shall be responsible for payments, out of the Liquidating Trust Assets, of any taxes imposed on the Liquidating Trust or the Liquidating Trust Assets.

Prior to making a final distribution, dissolving the Liquidating Trust and closing the Debtor’s Case, the Liquidating Trustee may apply (i) to the Bankruptcy Court for an order authorizing final distribution, closing the Chapter 11 Case, and releasing the Liquidating Trustee and the Liquidating Trust from any and all claims, debts, or liabilities, including any and all claims, debts, or liabilities for taxes to any and all taxing authorities, and /or (ii) to the Bankruptcy Court, under 11 U.S.C. § 505, the IRS and/or any other taxing authority for a determination of any tax liability payable by the Debtor or the Liquidating Trust. The Liquidating Trustee shall not be required to make a final distribution unless he determines that the Liquidating Trust, the Debtor and the Liquidating Trustee have no remaining liabilities for taxes of any kind.

Dissolution. The Liquidating Trustee and the Liquidating Trust shall be discharged or dissolved, as the case may be, when: (i) all Disputed Claims have been resolved, (ii) all of the Liquidating Trust Assets have been liquidated, and (iii) all distributions required to be made by the Liquidating Trust under the Plan have been made, but in no event shall the Liquidating Trust be dissolved later than five (5) years from the Effective Date unless the Bankruptcy Court, upon notice and opportunity for a hearing, determines that one or more fixed period extensions (not to exceed five (5) years each) is necessary to facilitate or complete the recovery and liquidation of the Liquidating Trust Assets or the dissolution of the Liquidating Trust and the Debtor.

Indemnification of the Liquidating Trustee. The Liquidating Trustee and the Liquidating Trust’s agents and professionals shall not be liable for actions taken or omitted in his or their capacity as, or on behalf of, the Liquidating Trust, except upon a finding by the Bankruptcy Court that he or they acted or failed to act as the result of gross negligence, or in reckless disregard of his or their duties, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of his or their actions or inactions in his or their capacity as, or on behalf of, the Liquidating Trust, except for any actions or inactions involving gross negligence. Any indemnification claim of the Liquidating Trustee or the Liquidating Trust’s professionals or agents shall be satisfied from the Liquidating Trust Assets, subject to the approval of the Bankruptcy Court after notice and opportunity for a hearing. The Liquidating Trustee shall be entitled to rely, in good faith, on the advice of retained professionals.

Closing of the Chapter 11 Case.

When all Disputed Claims have become Allowed Claims, have been disallowed by a Final Order, or have been otherwise fully resolved, and all of the Liquidating Trust Assets have been distributed in accordance with the Plan, the Liquidating Trustee shall seek authority from the Bankruptcy Court to close the Chapter 11 Case in accordance with the Bankruptcy Code and the Bankruptcy Rules and to dissolve the Debtor; provided, however, that nothing in the Plan or the Liquidating Trust Agreement shall prevent the Liquidating Trustee from seeking authority from the Bankruptcy Court to close the Chapter 11 Case at any time prior thereto, in accordance with the Bankruptcy Code and the Bankruptcy Rules.



If at any time the Liquidating Trustee determines that the expense of administering the Liquidating Trust to make a final distribution to holder of Allowed Claims is likely to exceed the value of the Liquidating Trust Assets, the Liquidating Trustee shall apply to the Bankruptcy Court for authority to (i) reserve any amounts necessary to close the Chapter 11 Case, (ii) donate any balance to a charitable organization exempt from federal income tax under section 501(c)(3) of the Tax Code that is unrelated to any of the Debtor, the Liquidating Trustee, and any insider of the Liquidating Trustee, and (iii) close the Chapter 11 Case in accordance with the Bankruptcy Code and Bankruptcy Rules. Notice of such application shall be given electronically, to the extent practicable, to those parties who have filed requests for notices in the Chapter 11 Case and whose electronic addresses then remain current and operating.

Books and Records. Upon the Effective Date, or as soon thereafter as is reasonably practicable, the Chapter 11 Trustee shall transfer and assign to the Liquidating Trust full title to, and the Liquidating Trust shall be authorized to take possession of, all of the books and records of the Debtor or the Chapter 11 Trustee. The Liquidating Trust shall have the responsibility of storing and maintaining the books and records transferred hereunder until the later of (i) one year after the Debtor is dissolved in accordance with the Plan or (ii) the resolution of each Litigation or any Other Causes of Action that is commenced prior to or after the Effective Date, after which time such books and records may, subject to the Effective Date, be abandoned or destroyed without further order of the Bankruptcy Court. For purposes of this section, books and records include computer generated or computer maintained books and records and computer data, as well as electronically generated or maintained books and records or data. The Chapter 11 Trustee shall also transfer and assign to the Liquidating Trust all of his claims and rights in and to their books and records that are maintained by, or in possession of, third parties (including any governmental entities), wherever located.

3. Setoffs.

The Chapter 11 Trustee or the Liquidating Trustee may, but shall not be required to, set off against any Claim (for purposes of determining the Allowed amount of such Claim on which distribution shall be made), any claims of any nature whatsoever that the Debtor may have against the holder of such Claim, but neither the failure to do so nor the allowance of any Claim hereunder or under any order of the Bankruptcy Court shall constitute a waiver or release by the Debtor, the Chapter 11 Trustee or the Liquidating Trust of any such claim the Debtor may have against the holder of such Claim.

4. Establishment and Maintenance of Disputed Claims Reserves.

Administrative Claims Reserve. On the Confirmation Date, the Chapter 11 Trustee shall provide a good faith estimate of the aggregate amount of unpaid Administrative Claims and, within seven (7) days of the Administrative Claim Bar Date, shall establish an Administrative Claims Reserve in order to make the payments to holders of Administrative Claims as such Administrative Claims become Allowed.

General Distribution Provisions. Subject to Bankruptcy Rule 9010 and except as otherwise provided herein, distributions to the holders of Allowed Claims shall be made by the Liquidating Trustee at (a) the address of each holder as set forth in its filed Proof of Claim or



written change of address, if any, (b) the address of each holder as set forth in the Schedules (if no Claim was filed) or (c) the last known address of such holder if no proof of Claim was filed and the address in the Debtor’s Schedules is no longer correct.

Undeliverable or Unclaimed Distributions. In the event that any distribution to any holder of an Allowed Claim is returned as undeliverable, no further distributions shall be made to such holder unless and until the Chapter 11 Trustee or the Liquidating Trust, as the case may be, are notified of such holder’s then-current address. The Liquidating Trustee will send a letter to any holder of an Allowed Claim that does not negotiate a distribution check within ninety (90) days of the check’s issuance. If (i) there is no contact from the holder of the Allowed Claim within ninety (90) days of the sending of the Liquidating Trustee’s letter and (ii) the check is not negotiated during that ninety (90) day period, the Claim will be disallowed and the holder of the Claim shall be forever barred and enjoined from asserting the Claim against the Debtor, the Estate, the Liquidating Trust, the Liquidating Trustee or the Liquidating Trust Assets, the Chapter 11 Trustee, or the property or assets of any of them and no further distribution shall be made to the holder of that Claim, with the funds reserved for such Claim to be distributed among the remaining Allowed Claims remaining unpaid. Nothing contained in the Plan or the Liquidating Trust Agreement shall require any of the Debtor, Chapter 11 Trustee, the Liquidating Trust or the Liquidating Trustee, or any of their professionals or agents, to attempt to locate any holder of an Allowed Claim.

5. Minimum Distributions.

Notwithstanding anything herein to the contrary, if a distribution to be made to a holder of an Allowed General Unsecured Claim on any Distribution Date would be $100 or less, no such distribution is required to be made to that holder at that time. Such undistributed funds shall be held by the Liquidating Trustee for subsequent distribution to that Claim holder either (i) when further amounts become available such that the distribution to that holder will exceed $100 or (ii) when final distributions are made (this provision shall not apply to final distributions).

6. Cancellation of Existing Claims.

On the Effective Date, any document, agreement or instrument evidencing a Claim against the Debtor is and shall be deemed cancelled and of no force or effect without any further act or action under the any applicable agreement, law, regulation, order or rule and the obligations of the Debtor under such documents, instruments or agreements evidencing such Claims shall be discharged, except obligations under the Plan.

6. Termination of Shareholder (Equity Interest) Rights.

On the Effective Date, all Equity Interests in the Debtor shall cease to exist. On the Effective Date, the Debtor shall issue a single share of stock in the Debtor, which shall be issued to the Liquidating Trust and shall represent the sole ownership interest in the Debtor. Any right associated with any Equity Interest issues prior to the Effective Date will be null and void.



E. Treatment of Disputed Claims

1. Objections to Claims.

Objections to Claims shall be filed, if at all, on or before the Claim Objection Bar Date by the Chapter 11 Trustee or the Liquidating Trustee or any other entity entitled to do so. All Claims shall be subject to 11 U.S.C. § 502(d), notwithstanding the expiration of the Claim Objection Bar Date. The failure by the Chapter 11 Trustee to object to, or to examine for purposes of voting, any Claim as of the Confirmation Date shall not be deemed to be a waiver of his right or the right of the Liquidating Trustee to object to, or to re-examine, such Claim in whole or in part after the Confirmation Date.

2. Payments and Distributions on Disputed Claims.

Notwithstanding any other provision in the Plan, no distributions will be made with respect to a Disputed Claim until the resolution of such dispute by settlement or Final Order. As soon as practicable after a Disputed Claim becomes an Allowed Claim, the holder of such Allowed Claim will receive all distributions to which such holder is then entitled under the Plan. Except as provided in 11 U.S.C. § 502(d), any Person who holds both an Allowed Claim and a Disputed Claim will receive the appropriate distribution on the Allowed Claim; however, no distribution will be made on the Disputed Claim until such dispute is resolved by settlement or Final Order.

3. Disallowance of Claims without Further Order of the Court.

As of the Confirmation Date, any Claim designated as disputed, contingent or unliquidated in the Debtor’s Schedules, as amended, and for which a proof of Claim has not been filed by the Creditor, shall be deemed expunged, without further act or Order of the Bankruptcy Court.

F. Releases and Injunction

1. Releases.

The Plan and the distributions made under the Plan will be in full and final satisfaction, settlement and release as against the Debtor of any Claim, Interest, or debt that arose before the Effective Date and any debt of a kind specified in 11 U.S.C. §§ 502(g), (h) or (i), and all Claims and Interests of any nature, including any interest accrued thereon, before, on and after the Petition Date, whether or not a (i) proof of Claim or Interest based on such debt, obligation or Interest was filed or deemed filed under 11 U.S.C. §§ 501 or 1111(a); (ii) such Claim or Interest is allowed under 11 U.S.C. § 502; or (iii) the holder of such Claim or Interest has accepted the Plan.

2. Injunction.

As of the Confirmation Date, except as provided in the Plan or the Confirmation Order, all Persons that have held, currently hold, or may hold a Claim, Interest, or other debt or



liability that is addressed in the Plan are permanently enjoined from taking any of the following actions on account of any such Claim, Interest, debt or liability, other than actions brought to enforce any rights or obligations under the Plan: (i) commencing or continuing in any manner any action or other proceeding against the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; (iii) creating, perfecting or enforcing any lien or encumbrance against the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; (iv) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; and (v) commencing or continuing, in any manner or any place, any action that does not comply with, or is inconsistent with, the provisions of the Plan or the Confirmation Order.

3. Exculpation.

The Chapter 11 Trustee and his employees, representatives, legal counsel, financial advisors, consultants and agents, shall not have nor incur any liability to any Person for any act taken or omission occurring on or after the Petition Date in connection with or related to the Debtor or the Chapter 11 Case, including, but not limited to: (i) formulating, preparing, disseminating, implementing, confirming, consummating or administrating the Plan (including soliciting acceptances or rejections thereof); (ii) the Disclosure Statement; (iii) any contract, instrument, release or other arrangement entered into or any action taken or not taken in connection with the Plan or the Chapter 11 Case; or (iv) any distributions made pursuant to the Plan except for acts constituting willful misconduct, gross negligence or breach of fiduciary duty, and in all respects such parties shall be entitled to rely upon the advice of legal counsel with respect to their duties and responsibilities under the Plan.

IV. RETENTION OF LITIGATION, RIGHTS AND CAUSES OF ACTION

Preservation of Causes of Action. All Litigation, Other Causes of Action, claims, rights of setoff and other legal and equitable claims or defenses of the Debtor and/or its Estate are preserved for the benefit of the Liquidating Trust unless expressly released, waived, or relinquished in the Plan or the Confirmation Order. No Person may rely on the absence of a specific reference in the Plan or this Disclosure Statement to any cause of action against them as an indication that the Liquidating Trust will not pursue a cause of action (including, but not limited to claims, rights, defenses, third-party claims, damages, executions, demands, cross-claims, counterclaims, suits, causes of action, choses in action, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payment and claims whatsoever, whether known, unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured and whether asserted or assertable directly, indirectly or derivatively, at law, in equity or otherwise) against them. The causes of action that are preserved for the benefit of the



Liquidating Trust and for which the Liquidating Trustee shall be appointed representative of the Estate pursuant to 11 U.S.C. § 1123(b)(3)(B) shall include, but not be limited to, those causes of action described below:

(a) those set forth in the Schedules;

(b) the Other Causes of Action;

(c) those set forth in any lawsuit, court proceeding, adversary proceeding or contested matter pending filed by the Chapter 11 Trustee on or before the Effective Date, including, but not limited to, the Litigation;

(d) those set forth in the Litigation, including, but not limited to, all claims that are or could be stated in the adversary proceeding styled and numbered Matthew D. Orwig, as Chapter 11 Trustee of FirstPlus Financial Group, Inc., Plaintiff, v. Robert Freeman; James Roundtree; Daniel Phillips; David Ward; John Fitzgerald; John Maxwell; William Handley; Dr. Robert O’Neal; Jack Roubinek; Gary D. Alexander; Roger S. Meek; David Roberts; Joseph P. Steward; William Hickman; Paul Ballard; Olshan Grundman; Frome Rosenzweig & Wolosky LLP; David Adler, Esq.; Eizen Fineburg & Mccarthy P.C.; Gary J. Mccarthy, Esq.; William T. Maxwell, Esq.; William Maxwell PLLC; William T. Maxwell, P.C.; Buckno Lisicky & Company, P.C.; Anthony Buczek, CPA; Siegal & Drossner, P.C.; Howard Drossner, CPA; Kensington Company & Affiliates, Inc.; Ken Stein; Salvatore Pelullo; Seven Hills Management, LLC; Learned Associates of North America, LLC; and Nicodemo S. Scarfo, Jr., Defendants; Adv. Pro. No. 11-03397, currently pending in the Bankruptcy Court;

(e) any and all Avoidance Actions, claims, causes of action or enforceable rights of the Debtor against third parties, or assertable by the Debtor or Chapter 11 Trustee on behalf of Creditors, its Estate, or itself for recovery, turnover or avoidance of obligations, or preferential or fraudulent transfers of property or interests in property and other types or kinds of property or interests in property recoverable or avoidable pursuant to Chapter 5 or other sections of the Bankruptcy Code or any applicable law including, without limitation, 11 U.S.C. §§ 502, 510, 522(f), 522(h), 542, 543, 544, 545, 547, 548, 549, 550, 551, or 553; and

(f) any and all claims or causes of action of the Debtor or its Estate relating to any pre- or post-petition activities against the Debtor’s former officers, directors, principals or advisors; and any current or former professionals of the Debtor retained either pre- or post-petition (including, without limitation, legal, accounting, tax advisors or consultants) including, without limitation, claims or causes of action for: (i) alleged breaches of fiduciary duty; (ii) alleged fraud or fraudulent inducement; (iii) alleged negligence; (iv) alleged fraudulent or negligent misrepresentations; (v) alleged legal, accounting or other professional negligence or malpractice; (vi) alleged illegal dividends or payments received; (vii) objections to professional compensation applications as well as any other claims by the Debtor against its professionals; (viii) claims regarding any professional of the Debtor relating to or arising from any professional compensation application; (ix) alleged civil conspiracy; (x) alleged fraudulent insurance acts; (xi) alleged violations of any consumer protection act or deceptive trade practice act; (xii) alleged unjust enrichment; (xiii) alleged breach of contract; (xiv) alleged tortious interference with contracts or prospective relations; (xv) alleged deceit by misrepresentation or



concealment; or (xvi) alleged common law fraud, including, but not limited to, the claims and causes of action set forth in the Complaint.

For the avoidance of doubt, the Liquidating Trustee is being designated and appointed as the representative of the Debtor, the Estate, and the Liquidating Trust and is empowered to pursue all of the actions set forth above, pursuant to 11 U.S.C. § 1123(b)(3)(B). Further, no causes of action, claims, rights, defenses, third-party claims, damages, executions, demands, cross-claims, counterclaims, suits, causes of action, choses in action, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payment and claims whatsoever related thereto owned by the Debtor as of the Petition Date or owned by the Estate at any time prior to the Effective Date are released, waived, or otherwise abandoned as a result of the confirmation of the Plan, except any of the foregoing specifically released in the Plan or through a Court-approved settlement pursuant to Bankruptcy Rule 9019.

V. ACCEPTANCE AND CONFIRMATION OF THE PLAN

A. Confirmation Hearing

The Bankruptcy Court has scheduled a hearing on confirmation of the Plan to commence on _______, 2011 at _______ __, .m. That hearing will be held at 1100 Commerce Street, 12th Floor, Dallas, Texas 75242, before the Honorable Harlin D. Hale. At that hearing, the Bankruptcy Court will consider whether the Plan satisfies the various requirements of the Bankruptcy Code, including whether the Plan is feasible, and whether the Plan is in the best interest of the claimants. At that time, the Debtor will submit a report to the Bankruptcy Court concerning the votes for acceptance and rejection of the Plan by the parties entitled to vote.

The hearing on confirmation may be adjourned from time to time by the Bankruptcy Court without further notice, except for an announcement made at the hearing or any adjournment thereof.

Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to confirmation of the Plan. Any objections to the Plan must be made in writing and filed with the Bankruptcy Court and served on all parties required to be given notice, no later than ____________ __ , 2011, at ______ __.m., Central Time.

UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT.

B. Requirements to Confirmation

At the Confirmation Hearing, the Bankruptcy Court will determine whether the provisions of 11 U.S.C. § 1129 have been satisfied. If all of the provisions of section 1129 are met, the Bankruptcy Court may enter an order confirming the Plan. The Chapter 11 Trustee believes that the Plan satisfies all the requirements of section 1129, including that:

the Plan complies with the applicable provisions of the Bankruptcy Code (see section 1129(a)(1)), including section 1123, which specificies the mandatory



contents of a plan, and section 1122, which requires that claims and interests be placed in classes with “substantially similar” claims and interests;

the Debtor complies with the applicable provisions of the Bankruptcy Code (section 1129(a)(2));

the Chapter 11 Trustee, as the proponent of the Plan, has proposed the Plan in good faith and not by any means forbidden by law (section 1129(a)(3));

the disclosure(s) required by 11 U.S.C. § 1125 have been made;

the Plan has been accepted by the requisite votes of creditors and equity interest holders and/or cramdown is available under 11 U.S.C. § 1129(b);

the Plan is feasible and confirmation of the Plan will not likely be followed by the need for further financial reorganization of the Debtor;

the Plan is in the “best interests” of all holders of Claims or Interests in an impaired class by providing to creditors or interest holders on account of such Claims or Interests property of a value, as of the effective date of the Plan, that is not less than the amount that such holder would receive or retain in a chapter 7 liquidation, unless each holder of a claim or interest in such class has accepted the Plan;

all fees and expenses payable under 28 U.S.C. § 1930, as determined by the Bankruptcy Court, have been paid or the Plan provides for the payment of such fees; and

the disclosures required under section 1129(a)(5) concerning the identity and affiliations of persons who will serve as officers, directors, and voting trustees have been made.

The Chapter 11 Trustee believes that all of these requirements have been satisfied and urge all creditors and interest holders to support the Plan.

C. Acceptance of the Plan

A plan is accepted by an impaired class of claims if holders of at least two-thirds in dollar amount and a majority in number of claims of that class vote to accept the plan. Only those holders of Claims who actually vote (and are entitled to vote) to accept or to reject a plan count in this tabulation. In addition to this voting requirement, 11 U.S.C. § 1129 requires that a plan be accepted by each holder of a Claim or Interest in an impaired Class or that the Plan otherwise be found by the Bankruptcy Court to be in the best interests of each holder of a Claim or interest in an impaired Class.

The Bankruptcy Code contains provisions for confirmation of a plan even if it is not accepted by all impaired classes, as long as at least one impaired class of claims has accepted it. These so-called “cramdown” provisions are set forth in 11 U.S.C. § 1129(b). As indicated above, the Plan may be confirmed under the cramdown provisions if in addition to satisfying the



other requirements of section 1129 of the Bankruptcy Code, it (a) is “fair and equitable” and (b) “does not discriminate unfairly” with respect to each class of claims or interests that is impaired under, and has not accepted, the Plan, including Classes 4 and 5, which are deemed to have rejected the Plan.

Copies of the Ballot for Classes 3a and 3b, which are the only Classes entitled to vote, are attached hereto as Exhibits B and C.

D. Alternatives to Confirmation

The Chapter 11 Trustee believes that the Plan is the best option for maximizing the recovery of holders of Claims. The alternatives to the Plan are (i) a different plan of liquidation, (ii) a plan of reorganization or (iii) Chapter 7 liquidation.

Any other plan, whether proposing liquidation or reorganization, would require significant additional expense to craft. The Chapter 11 Trustee does not believe that a reorganization of the Debtor, which has no on-going business, is viable. The Chapter 11 Trustee believes that the present Plan distributes assets consistently with the Bankruptcy Code and that any other confirmable plan of liquidation would do the same, making the additional time and expense of an alternative plan of liquidation unnecessary and wasteful.

Conversion to chapter 7 would necessitate the appointment of a new trustee and the attendant expense of that trustee (and potentially new professionals) transitioning into the case and re-creating the Chapter 11 Trustee’s and his professionals’ institutional knowledge of the case, and would likely lead to a worse result for creditors because of the diminution of assets caused by the fees of the new trustee and his professionals in learning the case.

In short, the Chapter 11 Trustee believes that confirmation of the Plan is better for the Debtor’s creditors than any alternative available.

VI. VOTING INSTRUCTIONS

A. Ballots and Voting Procedures

The Plan has been distributed to you simultaneously with this Disclosure Statement. Accompanying this Disclosure Statement are also (i) a ballot and (ii) a notice of hearing on confirmation of the Plan. A hearing on acceptance and Confirmation of the Plan has been set for __________, 2011 at ____ __.m. before the Honorable Harlin D. Hale, the United States Bankruptcy Court, 1100 Commerce Street, 12th Floor, Dallas, Texas.

To vote on the Plan, indicate on the enclosed respective ballot whether you accept or reject the Plan. Return the completed ballots according to the instructions contained therein.

Ballots must be received by ________________, 2011, at ______ __.m.

ALTHOUGH YOU MAY HOLD CLAIMS IN MORE THAN ONE CLASS, YOU WILL ONLY RECEIVE A BALLOT IF YOU HAVE A CLAIM OR AN INTEREST IN AN IMPAIRED CLASS. YOU SHOULD VOTE THE BALLOT YOU RECEIVE. IF THE PLAN



IS CONFIRMED AND BECOMES EFFECTIVE, ANY PREPETITION CLAIMS WHICH YOU HELD AGAINST THE DEBTOR SHALL BE RELEASED.

B. Parties Entitled to Vote

ONLY CLAIMS IN CLASSES 3(a) AND 3(b) ARE ENTITLED TO VOTE TO ACCEPT OR REJECT THE PLAN. ALL OTHER CLASSES ARE UNIMPAIRED UNDER THE PLAN OR ARE DEEMED TO REJECT THE PLAN AND ARE THEREFORE NOT ENTITLED TO VOTE WITH RESPECT TO ACCEPTANCE OR REJECTION OF THE PLAN.

C. Vote Required for Class Acceptance of the Plan

As a condition to confirmation, the Bankruptcy Code requires that each impaired Class of Claims or Interests accept the Plan, subject to the exceptions above. At least one impaired Class of Claims or Interests must accept the Plan in order for the Plan to be confirmed.

Section 1126 of the Bankruptcy Code defines acceptance of a plan by a class of claims or interests as acceptance by holders of two-thirds in dollar amount and a majority in number of claims of that class, in both cases counting those claims which are actually voting to accept or reject the plan. Holders of claims or interests which fail to vote are not counted as either accepting or rejecting a plan.

Classes of claims or interests that are not “impaired” under a plan are deemed, as a matter of law, to have accepted the plan and therefore are not permitted to vote for such plan.

VOTES TO ACCEPT THE PLAN ARE BEING SOLICITED ONLY FROM CLASSES 3(a) AND 3(b).

Chapter 11 Trustee of Debtor, FIRSTPLUS FINANCIAL GROUP, INC. /s/ Matthew D. Orwig Matthew D. Orwig, Chapter 11 Trustee Peter Franklin State Bar No. 07378000 Doug Skierski State Bar No. 24008046 Erin K. Lovall State Bar No. 24032553 FRANKLIN SKIERSKI LOVALL HAYWARD, LLP 10501 N. Central Expressway, Suite 106 Dallas, Texas 75231 Telephone: (972) 755-7100 Facsimile: (972) 755-7110 Counsel for Matthew D. Orwig, Chapter 11 Trustee


IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS

In re:

FirstPlus Financial Group, Inc.

Debtor.

§ § § § §

Chapter 11

Case No. 09-33918 (HDH)

TRUSTEE’S FIRST AMENDED PLAN OF LIQUIDATION FOR FIRSTPLUS FINANCIAL GROUP, INC.

DATED September 8, 2011

MATTHEW D. ORWIG Chapter 11 Trustee Peter Franklin State Bar No. 07378000 Doug Skierski State Bar No. 24008046 Erin K. Lovall State Bar No. 24032553 FRANKLIN SKIERSKI LOVALL HAYWARD, LLP 10501 N. Central Expressway, Suite 106 Dallas, Texas 75231 Telephone: (972) 755-7100 Facsimile: (972) 755-7110 Counsel for Matthew D. Orwig, Chapter 11 Trustee

Case 09-33918-hdh11 Doc 603-1 Filed 09/08/11 Entered 09/08/11 10:20:35 Desc Exhibit A Page 1 of 34

TRUSTEE’S FIRST AMENDED PLAN OF LIQUIDATION FOR FIRSTPLUS FINANCIAL GROUP, INC. Page 2 of 34

Table of Contents ARTICLE I DEFINITIONS ........................................................................................................ 4 ARTICLE II CLASSIFICATION OF CLAIMS AND INTERESTS .................................... 10

2.1. Class 1 Claims – Priority Non-Tax Claims................................................................... 10 2.2. Class 2 Claims – Secured Claims. ................................................................................ 10 2.3. Class 3 Claims – Unsecured Claims ............................................................................. 10 2.4. Class 4 Claims – Subordinated Claims ......................................................................... 10 2.5. Class 5 - Equity Interests. ............................................................................................. 10

ARTICLE III TREATMENT OF UNCLASSIFIED CLAIMS ............................................. 11 3.1. Administrative Claims. ................................................................................................. 11 3.2. Administrative Claim Bar Date. ................................................................................... 11 3.3. United States Trustee Fees. ........................................................................................... 11 3.4. Professional Fee Claims. ............................................................................................... 11 3.5. Priority Tax Claims. ...................................................................................................... 11

ARTICLE IV TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS .................. 12 4.1. Class 1 - Priority Non-Tax Claims. ............................................................................... 12 4.2. Class 2 - Secured Claims. ............................................................................................. 12 4.3. Class 3 - Unsecured Claims. ......................................................................................... 12 4.4. Class 4 - Subordinated Claims. ..................................................................................... 16 4.5. Class 5 - Equity Interests .............................................................................................. 16

ARTICLE V PLAN IMPLEMENTATION ............................................................................. 16 5.1. Impairment Controversies. ............................................................................................ 16 5.2. Classes and Claims Entitled to Vote. ............................................................................ 16 5.3. Cramdown. .................................................................................................................... 16 5.4. Distributions Pursuant to the Plan................................................................................. 16 5.5. Payments and Transfers by the Chapter 11 Trustee and the Liquidating Trust on and

After the Effective Date. .................................................................................................. 17 5.6. Liquidating Trust. ......................................................................................................... 17 5.7. Setoffs. .......................................................................................................................... 22 5.8. Establishment and Maintenance of Reserves. ............................................................... 22 5.9. Minimum Distributions. ................................................................................................ 23 5.10. Cancellation of Existing Claims. .................................................................................. 23 5.11. Termination of Shareholder (Equity Interest) Rights. .................................................. 23

ARTICLE VI TREATMENT OF DISPUTED CLAIMS ....................................................... 23 6.1. Objections to Claims. .................................................................................................... 23 6.2. Distributions on Disputed Claims. ................................................................................ 24 6.3. Disallowance of Claims without Further Order of the Court. ...................................... 24

ARTICLE VII EXECUTORY CONTRACTS AND UNEXPIRED LEASES ...................... 24 7.1. Rejection of Executory Contracts. ................................................................................ 24 7.2. Rejection Claims. .......................................................................................................... 24 7.3. Bar Date for Rejection Claims. ..................................................................................... 24

ARTICLE VIII RETENTION OF LITIGATION, RIGHTS AND CAUSES OF ACTION 25 8.1. Preservation of Causes of Action. ................................................................................. 25

ARTICLE IX CONDITIONS PRECEDENT TO EFFECTIVE DATE ................................ 26 9.1 Conditions Precedent to Effectiveness.......................................................................... 26 9.2. Satisfaction of Conditions. ............................................................................................ 27



9.3. Failure of Conditions. ................................................................................................... 27 9.4. Notice of the Effective Date. ........................................................................................ 27 9.5. Plan Modification.......................................................................................................... 27

ARTICLE X RETENTION OF JURISDICTION ................................................................... 28 10.1. Retention of Jurisdiction. .............................................................................................. 28 10.2. Failure of Bankruptcy Court to Exercise Jurisdiction. .................................................. 29

ARTICLE XI RELEASES AND INJUNCTION ..................................................................... 29 11.1. Releases......................................................................................................................... 29 11.2. Injunction. ..................................................................................................................... 29 11.3. Exculpation. .................................................................................................................. 30

ARTICLE XII MISCELLANEOUS PROVISIONS. .............................................................. 30 12.1. Substantial Consummation. .......................................................................................... 30 12.2. Successors and Assigns. ................................................................................................ 30 12.3. Headings. ...................................................................................................................... 31 12.4. Binding Effect. .............................................................................................................. 31 12.5. Plan Controls. ................................................................................................................ 31 12.6. Revocation or Withdrawal. ........................................................................................... 31 12.7. Notices. ......................................................................................................................... 31 12.8. Limitations on Notice. .................................................................................................. 31 12.9. Governing Law. ............................................................................................................ 32 12.10. No Liability for Solicitation or Participation. ........................................................... 32 12.11. Term of Injunctions and Stays. ................................................................................. 32 12.12. Incorporation of Bankruptcy Rule 9019. .................................................................. 32 12.13. Incorporation of 11 U.S.C. § 363. ............................................................................. 32 12.14. Exemption from Transfer Taxes and Recording Fees. ............................................. 32 12.15. Incorporation of 11 U.S.C. § 365. ............................................................................. 33 12.16. No Admissions. ......................................................................................................... 33 12.17. Severability. .............................................................................................................. 33 12.18. Other Documents and Actions. ................................................................................. 33

ARTICLE XIII CONFIRMATION REQUEST ...................................................................... 34



ALL HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR ARE ENCOURAGED TO READ THE PLAN, THE DISCLOSURE STATEMENT AND RELATED SOLICITATION MATERIALS IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.

ARTICLE I

DEFINITIONS

1.1 Rules of Interpretation. Unless otherwise specified, all article, section, paragraph, and exhibit references in this Plan are to the respective section in, paragraph of, or exhibit to this Plan, as the same may be amended, waived or modified from time to time. The headings in this Plan are for convenience of reference only and shall not limit or otherwise affect the provisions hereof. Words denoting the singular number shall include the plural number and vice versa. In construing this Plan, the rules of construction set forth in section 102 of the Bankruptcy Code shall apply. In computing any period of time prescribed or allowed by this Plan, the provisions of Bankruptcy Rule 9006(a) shall apply. Unless the context otherwise required, any capitalized terms used and not defined herein or elsewhere in the Plan but that are defined in the Bankruptcy Code or Bankruptcy Rules will have the respective meanings set forth therein. Unless otherwise expressly stated in the Plan, the words “herein,” “hereof,” “hereto,” “hereunder” and others of similar inference refer to the Plan as a whole and not to any particular section, subsection or clause contained in the Plan. The term “including” shall not be deemed to be exclusive and shall be deemed to mean “including, without limitation.” The singular use of any word as used herein shall include the plural and the plural shall include the singular whenever appropriate, and the use of any gender shall include all genders as appropriate.

1.2 “Administrative Claim” means a Claim for any cost or expense of administration of the Bankruptcy Case under 11 U.S.C. § 503(b), including, without limitation, Professional Fee Claims and any fees or charges assessed against the Estate of the Debtor pursuant to 28 U.S.C. § 1930.

1.3 “Allowed” means: (a) any Claim against the Debtor that has been listed in the Schedules filed as liquidated in an amount greater than zero dollars and not disputed or contingent, and for which no contrary Proof of Claim has been filed and as to which no timely objection has been interposed; (b) except as provided in the Plan, any Claim (including any Administrative Claim that is not a Professional Fee Claim) as to which a Proof of Claim has been timely filed by the applicable deadline and (i) no objection to the allowance thereof has been timely interposed on or before the Claims Objection Bar Date (or, if applicable, the Administrative Claim Bar Date) and (ii) such Claim has not (as applicable) been withdrawn, paid in full (pursuant to a prior order of the Bankruptcy Court or otherwise), or otherwise deemed satisfied in full; (c) any Claim as to which any objection thereto or other motion to disallow, estimate, or expunge, in whole or in part, or any Litigation against the holder thereof, was filed or commenced (as applicable) but is no longer pending and instead has been determined by a Final Order in favor of the respective Claim holder (but solely to the extent and amount such Claim has been so determined in the applicable Final Order), or any such objection, motion to disallow, estimate, or expunge, or Litigation (as applicable) has been settled, waived through payment, or withdrawn; (d) any Claim that has otherwise been resolved, settled, or otherwise deemed allowed by a Final Order; (e) any Claim as to which, upon the lifting of the automatic



stay pursuant to 11 U.S.C. § 362, the liability of the Debtor, allowance, and the amount thereof are determined by a Final Order of a court of competent jurisdiction other than the Bankruptcy Court; or (f) any Claim that is expressly deemed an Allowed Claim under the Plan. Unless otherwise ordered by the Bankruptcy Court prior to the entry of the Confirmation Order, or as specifically provided to the contrary in this Plan with respect to any particular Claim, an “Allowed” Claim shall not include (i) any interest on such Claim to the extent accruing or maturing on or after the Petition Date, (ii) any punitive or exemplary damages, or (iii) any claims for any fine, penalty, or forfeiture. Nothing in this Plan shall prevent the Chapter 11 Trustee or the Liquidating Trust from objecting to Claims after the Confirmation Date.

1.4 “Allowed Administrative Claim” means: (i) an Administrative Claim (including a Professional Fee Claim) that has been Allowed (but only to the extent Allowed), if approval from the Bankruptcy Court is required in order to allow same; or (ii) an Administrative Claim which: (a) is incurred by the Debtor after the Petition Date in the ordinary course of its business operations or pursuant to an order entered by the Bankruptcy Court granting automatic administrative claim status; (b) is not disputed by the Debtor, the Chapter 11 Trustee, or the Liquidating Trustee; and (c) does not require approval from the Bankruptcy Court to become Allowed.

1.5 “Allowed Priority Claim” means a Priority Claim that has been Allowed (but only to the extent Allowed).

1.6 “Allowed Secured Claim” means a Secured Claim Allowed by Final Order of the Bankruptcy Court under section 506(a) of the Bankruptcy Code, but only to the extent, validity, and priority as are so Allowed.

1.7 “Avoidance Actions” means any and all rights, claims or actions which the Debtor, Chapter 11 Trustee or Liquidating Trustee may assert on behalf of the Estate under chapter 5 of the Bankruptcy Code, including actions pursuant to one or more provisions of 11 U.S.C. §§ 542, 544, 545, 546, 547, 548, 549, 550, 551 and/or 553, except to the extent that any such rights, claims, or actions are released or waived in the Plan.

1.8 “Ballot” means the ballot, the form of which has been approved by the Bankruptcy Court, accompanying the Disclosure Statement provided to each holder of a Claim entitled to vote to accept or reject the Plan.

1.9 “Bankruptcy Code” means 11 U.S.C. §§ 101, et seq., in effect as of the Petition Date and as may have been or may be amended or supplemented since, to the extent that any such amendment or supplement is automatically applicable to the Bankruptcy Case by operation of law and not by operation of any election or choice.

1.10 “Bankruptcy Court” means the United States Bankruptcy Court for the Northern District of Texas, or, if such court ceases to exercise jurisdiction over the Chapter 11 Case, the court that exercises jurisdiction over the Chapter 11 Case.

1.11 “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure promulgated under 28 U.S.C. § 2075, as amended from time to time, and the local rules of the Bankruptcy Court.



1.12 “Bar Date” means October 27, 2009, the date set by the Bankruptcy Court as the final date for filing Claims, except for governmental units. The date set for governmental units to file proofs of claim was December 26, 2009.

1.13 “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in Dallas, Texas are authorized or required by law to close.

1.14 “Chapter 11 Case” means the case under Chapter 11 of the Bankruptcy Code, commenced on June 23, 2009, captioned above, together with all of the proceedings held therein and all actions taken in connection therewith.

1.15 “Chapter 11 Trustee” means Matthew D. Orwig, in his capacity as Chapter 11 Trustee, as appointed by the United States Trustee on July 24, 2009, from the date of his appointment through the Effective Date of this Plan.

1.16 “Claim” means a claim against the Debtor, the Estate, and/or property of the Debtor or the Estate, as such term is defined in 11 U.S.C. § 101(5).

1.17 “Claim Objection Bar Date” means the deadline for filing Claim objections, which shall be the first business day that is at least ninety (90) days after the Effective Date.

1.18 “Class” means a category or group of holders of Claims or Interests as designated in Article III of this Plan pursuant to 11 U.S.C. § 1122(a)(i).

1.19 “Confirmation Date” means the date upon which the clerk of the Bankruptcy Court enters the Confirmation Order.

1.20 “Confirmation Hearing” means the hearing conducted by the Bankruptcy Court pursuant to 11 U.S.C. § 1128 and Bankruptcy Rule 3020(b) to consider confirmation of the Plan, as the same may be continued from time to time.

1.21 “Confirmation Order” means an order of the Bankruptcy Court confirming the Plan in accordance with the provisions of Chapter 11 of the Bankruptcy Code.

1.22 “Debtor” means FirstPlus Financial Group, Inc.

1.23 “Disallowed Claim” means a Claim or portion thereof that (i) has been disallowed by a Final Order; (ii) is identified in the Schedules in an amount of zero dollars or as contingent, unliquidated, and/or disputed and as to which a proof of Claim was not timely filed by the Bar Date or by the Debtor within the time prescribed by the Bankruptcy Code; or (iii) is not identified in the Schedules and as to which no proof of Claim has been filed by the Bar Date or by the Debtor within the time prescribed by the Bankruptcy Code.

1.24 “Disclosure Statement” means the Disclosure Statement with respect to this Plan, approved by the Bankruptcy Court as containing adequate information for the purpose of dissemination and solicitation of votes on confirmation of the Plan, or as it may be altered, amended or modified from time to time in accordance with 11 U.S.C. §§ 1125, 1126(b) and 1145, Bankruptcy Rules 3016 and 3017, and the Local Rules of the Bankruptcy Court.



1.25 “Disputed Claim” means any Claim, or any portion thereof, which has not become Allowed and which is not a Disallowed Claim. In the event that any part of a Claim is a Disputed Claim, such Claim in its entirety shall be deemed to constitute a Disputed Claim for purposes of distribution under the Plan unless the party responsible for the payment thereof, the objecting party, and the holder thereof agree otherwise or unless otherwise ordered by the Bankruptcy Court; provided, however, that nothing in this definition of “Disputed Claim” is intended to or does impair the rights of any holder of a Disputed Claim to pursue its rights under 11 U.S.C. § 502(c). Without limiting any of the foregoing, but subject to the provisions of the Plan, a Claim that is the subject of a pending application, motion, complaint, Litigation, objection, or any other legal proceeding seeking to disallow, limit, subordinate, or estimate such Claim shall be deemed to constitute a Disputed Claim unless and until the entry of a Final Order providing otherwise.

1.26 “Distribution Date” means any date the Plan or the Liquidating Trust shall establish for making distributions consistent with the terms of the Plan.

1.27 “Effective Date” means the first Business Day which is fifteen (15) days after the Confirmation Date, on which (a) no stay of the Confirmation Order is in effect and (b) the conditions to effectiveness specified in Article IX of this Plan have been satisfied or waived.

1.28 “Equity Interest” or “Interest” means any issued, unissued, authorized or outstanding stock, membership interest and any other equity security, as defined in 11 U.S.C. § 101(16) in the Debtor including, without limitation, and any and all (i) shares, (ii) securities, options, warrants, rights, calls, subscriptions, agreements, commitments, conversion rights, or understandings of any nature whatsoever, fixed or contingent, that directly or indirectly (a) call for the issuance, redemption, sale, pledge or other disposition of any shares of stock of the Debtor or securities convertible into, or other rights to acquire stock of the Debtor, (b) obligate the Debtor to grant, offer or enter into any of the foregoing, or (c) “phantom stock,” stock appreciation rights or other similar rights the value of which is related to or based upon the price or value of any class or series of stock of the Debtor.

1.29 “Estate” means the estate created in the Chapter 11 Case pursuant to 11 U.S.C. § 541.

1.30 “Executory Contract” means, collectively, “executory contracts” and “unexpired leases” of the Debtor as of the Petition Date, as such terms are used within 11 U.S.C. § 365.

1.31 “Final Order” means (a) an order for which the time to appeal, petition for writ of certiorari, or otherwise seek appellate review, or to move for re-argument, rehearing, or reconsideration, has expired, and as to which no appeal, petition for writ of certiorari, or other appellate review, or proceedings for re-argument, rehearing, or reconsideration, shall then be pending; (b) an order for which any right to appeal, petition for writ of certiorari, or move for re-argument or rehearing or reconsideration shall have been waived in writing by any person with such right; or (c) in the event that an appeal, writ of certiorari, or other appellate review or re-argument, rehearing, or reconsideration thereof has been sought, an order that shall have been affirmed by the highest court to which such order was appealed or from which writ of certiorari or other appellate review or re-argument, rehearing, or reconsideration was sought, and as to



which, the time to take any further appeal, to petition for writ of certiorari, to otherwise seek appellate review, or to move for re-argument, rehearing, or reconsideration shall have expired; provided, however, that the possibility that a motion under rule 59 or 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Federal Rules of Bankruptcy Procedure or the Local Rules of the Bankruptcy Court, may be filed with respect to such order shall not cause such order not to be a Final Order.

1.32 “Liquidating Trust” means the trust established under the Plan according to the Liquidating Trust Agreement for the benefit of the Debtor.

1.33 “Liquidating Trustee” means Matthew D. Orwig, in his capacity as Trustee for the Liquidating Trust, from the Effective Date of this Plan forward.

1.34 “Liquidating Trust Agreement” means the agreement governing the Liquidating Trust, dated as of the Effective Date, substantially in the form attached hereto as Exhibit 1.

1.35 “Liquidating Trust Assets” means (a) all claims or causes of action listed in the Debtor’s Schedules and/or initiated by the Chapter 11 Trustee prior to the Effective Date (including the Litigation) and the net proceeds thereof; (b) all Other Causes of Action; (c) all Cash on hand; and (d) all other Property of the Debtor and/or its Estate as of the Effective Date and the proceeds thereof that were not transferred, sold, distributed, abandoned, waived, or disposed of in any way by the Chapter 11 Trustee prior to the Effective Date.

1.36 “Litigation” means any litigation commenced by the Chapter 11 Trustee and pending on the Effective Date against any third party, including, but not limited to, the adversary proceeding styled and numbered Matthew D. Orwig, as Chapter 11 Trustee of FirstPlus Financial Group, Inc., Plaintiff, v. Robert Freeman; James Roundtree; Daniel Phillips; David Ward; John Fitzgerald; John Maxwell; William Handley; Dr. Robert O’Neal; Jack Roubinek; Gary D. Alexander; Roger S. Meek; David Roberts; Joseph P. Steward; William Hickman; Paul Ballard; Olshan Grundman Frome Rosenzweig & Wolosky LLP; David Adler, Esq.; Eizen Fineburg & Mccarthy P.C.; Gary J. Mccarthy, Esq.; William T. Maxwell, Esq.; William Maxwell PLLC; William T. Maxwell, P.C.; Buckno Lisicky & Company, P.C.; Anthony Buczek, CPA; Siegal & Drossner, P.C.; Howard Drossner, CPA; Kensington Company & Affiliates, Inc.; Ken Stein; Salvatore Pelullo; Seven Hills Management, LLC; Learned Associates of North America, LLC; and Nicodemo S. Scarfo, Jr., Defendants; Adv. Pro. No. 11-03397.

1.37 “Ordinary Course Administrative Claims” means any Unsecured Claim relating to the provision of goods or services to the Debtor or the Chapter 11 Trustee held by persons or entities with whom the Debtor or the Chapter 11 Trustee is conducting business on or after the Petition Date or entitled to administrative priority by order of the Bankruptcy Court or any Claim by a governmental unit under 11 U.S.C. §§ 503(b)(1)(B) and (C).

1.38 “Other Causes of Action” means any and all rights, claims, objections to Claims and causes of action of the Debtor, its bankruptcy Estate, whether known or unknown, in law, equity or otherwise, including Chapter 5 causes of action.



1.39 “Person” means any individual, corporation, partnership, limited liability company, association, joint stock company, joint venture, estate, trust, unincorporated organization or government or subdivision thereof or other entity.

1.40 “Petition Date” means June 23, 2009, the date on which the Debtor filed its petition under Chapter 11.

1.41 “Plan” means this Trustee’s First Amended Plan of Liquidation, either in its present form or as it may be further amended, supplemented, or modified from time to time.

1.42 “Priority Claim” means a Priority Tax Claim or a Priority Non-Tax Claim.

1.43 “Priority Non-Tax Claim” means any Claim against the Debtor to the extent entitled to priority in payment under 11 U.S.C. §§ 507(a)(4)-(7) or 507(a)(9)-(10).

1.44 “Priority Tax Claim” means any Claim against the Debtor to the extent entitled to priority in payment under 11 U.S.C. § 507(a)(8).

1.45 “Professional Fee Claim” means any Administrative Claim of a professional (representing the Chapter 11 Trustee) incurred before the Effective Date and approved by the Bankruptcy Court.

1.46 “Property” means all property of the Debtor’s Estate, as defined in 11 U.S.C. § 541, including without limitation all property rights and interests of the Debtor and all property of the Debtor’s Estate, whether tangible or intangible, real or personal, including, without limitation, all cash and cash equivalents, tax refunds, equipment and Other Causes of Action, Litigation, and all proceeds thereof and further including, without limitation, all rights, powers, claims and defenses of the Debtor, its Estate as provided in the Bankruptcy Code and any other applicable law, including, without limitation, the right to receive payments from the FPFI Liquidating Trust.

1.47 “Pro Rata Share” means the proportion that the amount of an Allowed Claim in a particular Class bears to the aggregate amount of all Allowed Claims in such Class.

1.48 “Rejection Claim” means a Claim arising under 11 U.S.C. § 502(g) as a consequence of the rejection of any Executory Contract.

1.49 “Schedules” means the Schedules of Assets and Liabilities and the Statement of Financial Affairs filed by the Debtor or the Chapter 11 Trustee in the Bankruptcy Case, as they have been or may be amended or supplemented from time to time by the Chapter 11 Trustee.

1.50 “Secured Claim” means a Claim that is alleged to be secured, in whole or in part, (i) by a lien against an asset of the Debtor or the Estate to the extent such lien is valid, perfected and enforceable under applicable non-bankruptcy law and is not subject to avoidance or subordination under the Bankruptcy Code or other applicable non-bankruptcy law; or (ii) as a result of rights of setoff under 11 U.S.C. § 553.



1.51 “Subordinated” means a Claim, including an Unsecured Note Claim, which is subordinated in whole or part for purposes of distribution to Allowed Unsecured Claims under 11 U.S.C. § 510(c).

1.52 “Unsecured Claim” means any Claim relating to the provision of goods or services to or arising from a contract with the Debtor arising prior to the Petition Date, including, without limitation, Claims related to the rejection of Executory Contracts and Unsecured Note Claims.

1.53 “Unsecured Note Claims” means any Unsecured Claim arising from or related to a note issued or guaranteed by the Debtor.

1.54 “United States Trustee Fees” means all fees and charges assessed against any Estate by the United States Trustee and due pursuant to 28 U.S.C. § 1930.

1.55 “Voting Deadline” means the date established by the Court by which all Ballots must be returned to the Chapter 11 Trustee to be counted.

1.56 “Voting Record Date” means the record date as established by the Bankruptcy Court for determining which Persons are entitled to vote with respect to the Plan.

ARTICLE II

CLASSIFICATION OF CLAIMS AND INTERESTS

The categories of Claims and Interests listed below classify Allowed Claims and Allowed Interests for all purposes, including voting, confirmation, and Plan distributions.

2.1. Class 1 Claims – Priority Non-Tax Claims.

Class 1 consists of all Priority Non-Tax Claims.

2.2. Class 2 Claims – Secured Claims.

Class 2 consists of all Secured Claims.

2.3. Class 3 Claims – Unsecured Claims

Class 3(a) consists of all General Unsecured Claims.

Class 3(b) consists of all Unsecured Claims of members of the Shareholder Class

2.4. Class 4 Claims – Subordinated Claims

Class 4 consists of all Subordinated Claims.

2.5. Class 5 - Equity Interests.



Class 5 consists of all Equity Interests in the Debtor.

ARTICLE III

TREATMENT OF UNCLASSIFIED CLAIMS

3.1. Administrative Claims.

Each holder of an Allowed Administrative Claim that has not been previously paid will be paid in full in cash on the latest of: (i) within seven (7) days of the Effective Date; (ii) within fifteen (15) days of becoming an Allowed Administrative Claim; or (iii) on such other less favorable terms as may be agreed upon by the holder of the Allowed Administrative Claim and the Chapter 11 Trustee or the Liquidating Trustee, provided, however, that any Administrative Claim that is an Ordinary Course Administrative Claim may be paid in accordance with the ordinary business terms, in accordance with the agreement giving rise to the Claim or, in the case of a Claim asserted by a governmental unit, in accordance with applicable law.

3.2. Administrative Claim Bar Date.

The Administrative Claim Bar Date shall be that date that is forty five (45) days after the date upon which the Chapter 11 Trustee or Liquidating Trustee files and serves the Notice of Effective Date as set forth in section 9.4 of this Plan. All requests for payment of Administrative Claims, other than (i) Ordinary Course Administrative Claims and (ii) United States Trustee Fees must be filed by the Administrative Claim Bar Date or such Administrative Claim shall be Disallowed and forever barred from receiving a distribution. The Chapter 11 Trustee is not aware of any Ordinary Course Administrative Claims.

3.3. United States Trustee Fees.

United States Trustee Fees payable pursuant to 26 U.S.C. § 1930(a)(6) shall be paid within seven (7) days of the Effective Date by the Chapter 11 Trustee. Any such fees accruing after the Effective Date but prior to the closing of the Chapter 11 Case shall be paid by the Liquidating Trust as they become due.

3.4. Professional Fee Claims.

Each holder of a Professional Fee Claim seeking compensation for services rendered or reimbursement of expenses incurred through and including the Effective Date pursuant to 11 U.S.C. §§ 330, 331 and 503(b)(2) shall file their respective final applications for allowances of compensation for services rendered and reimbursement of expenses incurred through the Effective Date by the Administrative Claim Bar Date. Any fees or expenses approved by the Bankruptcy Court shall be paid in full in cash by the Liquidating Trust within fifteen (15) days of the date of allowance.

3.5. Priority Tax Claims.

Any Allowed Priority Tax Claim will be paid in full in cash by the Debtor or the Liquidating Trust by the latest of: (i) seven (7) days after the Effective Date; or (ii) fifteen (15) days of becoming an Allowed Priority Tax Claim.



ARTICLE IV

TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

The categories of Claims and Interests listed below classify Allowed Claims and Allowed Interests for all purposes, including voting, confirmation, and Plan distributions.

4.1. Class 1 - Priority Non-Tax Claims.

(i) Treatment. Priority Claims shall be reviewed by the Chapter 11 Trustee or the Liquidating Trustee, as appropriate, and shall be objected to or not, in the discretion of the applicable Trustee. Upon becoming an Allowed Priority Claim, each holder of an Allowed Priority Claim shall receive in exchange for and in full satisfaction of such Claim: (a) the amount of such Allowed Priority Claim, in cash, by the latest of (i) seven (7) days after the Effective Date or (ii) the date that is fifteen (15) days after such Claim becomes an Allowed Priority Claim; or (b) the time dictated by such other treatment as may be agreed upon in writing by the holder of such Claim and the Chapter 11 Trustee or the Liquidating Trustee, as applicable.

(ii) Voting. Class 1 is unimpaired and the holders of Class 1 Claims are conclusively deemed to have accepted the Plan.

4.2. Class 2 - Secured Claims.

(i) Treatment. Secured Claims shall be reviewed by the Chapter 11 Trustee or the Liquidating Trustee, as appropriate, and shall be subject to objection by either of them. Upon becoming an Allowed Secured Claim, each holder of an Allowed Secured Claim shall receive in exchange for and in full satisfaction of such Claim: (a) the amount of such Allowed Secured Claim, in cash, on or as soon as practicable after the latest of (i) seven (7) days after the Effective Date, or (ii) the date that is fifteen (15) days after such Claim becomes an Allowed Secured Claim; (b) all collateral securing such Allowed Secured Claim; or (c) such other treatment as may be agreed upon in writing by the holder of such Claim and the Chapter 11 Trustee or the Liquidating Trustee, as applicable.

(ii) Voting. Class 2 is not impaired and the holders of Allowed Secured Claims are conclusively deemed to have accepted the Plan.

4.3. Class 3 - Unsecured Claims.

(i) Class 3(a) Treatment. Class 3(a) Unsecured Claims shall be reviewed by the Chapter 11 Trustee or the Liquidating Trustee, as appropriate, and shall be subject to objection by either of them. Each holder of an Allowed Unsecured Claim shall receive in full satisfaction, settlement, and release of and in exchange for such Allowed Claim, such holder’s Pro Rata Share of cash distributed by the Liquidating Trust to the holders of Allowed Unsecured Claims pursuant to the terms of this Plan.

(ii) Class 3(a) Voting. Class 3(a) is impaired and the holders of Allowed Class 3(a) Claims are entitled to vote to accept or reject the Plan.



(iii) Class 3(b) Treatment. If the Chapter 11 Trustee’s proposed settlement with the proposed Shareholder Class is approved by the Bankruptcy Court, distributions shall be made to the Shareholder Representative based upon the breach of contract claim asserted by the Shareholder Class. The Shareholder Representative shall receive, on behalf of the holders of Shareholder Claims, in full satisfaction, settlement, and release of and in exchange for such Allowed Claims, a Pro Rata Share of cash distributed by the Liquidating Trust for payment to holders of Allowed Unsecured Claims based upon the proof of claim filed by James Hansen, as putative representative of the proposed Shareholder Class. All other proofs of claim filed by members of the Shareholder Class shall be disallowed and no distribution shall be made on account of those Interests. If the compromise is not approved, the members of the Shareholder Class shall be deemed to be holders of Class 5 Equity Interests and shall be accorded treatment as such.

In March 2005, a group of the Debtor’s shareholders commenced a court action, styled Danford L. Martin, et. al. v. FirstPlus Financial Group, Inc., et. al., in the Second Judicial District Court for the State of Nevada (the “Nevada Action”) to compel a shareholders’ meeting and election of directors.

On February 13, 2009, James Hanson (“Hanson”), commenced an action in the Second

Judicial District Court of the State of Nevada, County of Washoe against the Debtor, Does 1- 100 and Black and White Companies 101-200 for, among others things, breach of the Settlement Agreement, specific performance and the appointment of a receiver (the “Hanson Action”). On March 26, 2009, Hanson filed a Motion for Temporary Restraining Order and Preliminary Injunction seeking to enjoin the dissipation of any funds received by the Debtor or the Grantor Trust from the FPFI Liquidating Trust and to deposit any such funds in the registry of the Nevada court. On April 10, 2009, the Nevada court entered a Preliminary Injunction enjoining the dissipation of any funds held by the Debtor and/or the Grantor Trust and ordered that any funds in their possession be immediately deposited into the Court registry.

Following entry of the Nevada court’s preliminary injunction, the Debtor remitted

$1,196,402.83 to the Nevada court registry.1 Moreover, as a result of the preliminary injunction, future distributions from the FPFI Liquidating Trust were safeguarded from dissipation by the Debtor and those in control of the Debtor, thereby preserving funds for distribution to the Debtor’s rightful creditors.

On or about September 17, 2009, Hanson, as putative class representative, filed a proof of

claim on behalf of all shareholders (the “Shareholder Class”) in the amount of $8,557,689.83 for breach of the settlement agreement (the “Breach Claim”) [Claim No. 73].

In an effort to resolve the disputes surrounding the Hanson Action and the Breach Claim,

Hanson’s counsel and the Chapter 11 Trustee engaged in arm’s length and good-faith negotiations resulting in a proposed settlement (the “Proposed Settlement”), which would have resolved the Hanson Action and all issues between the Debtor and the Shareholder Class. The Chapter 11 Trustee filed a “Motion Pursuant to Section 502(a) of the Bankruptcy Code to Allow Claim for Breach of Contract and Rule 9019 of the Federal Rules of Bankruptcy Procedure to

1 The funds remitted to the Nevada Court registry were subsequently transferred to the Chapter 11 Trustee.



Approve Settlement and Compromise” (the “Settlement Motion”) seeking the Court’s approval of the Proposed Settlement on January 12, 2011 [Dckt. No. 515].

After the Settlement Hearing, on March 29, 2011, the Bankruptcy Court entered its

“Order on Motion to Compromise” denying without prejudice approval of the Initial Settlement. [Dckt. No. 557]. The Bankruptcy Court denied the Settlement Motion because it found that there was no evidence that Hanson spoke for the Shareholder Class (or anyone other than himself) and that there was no evidence of “substantial contribution” justifying the payment of Hanson’s counsel’s fees by the Debtor’s Estate. However, the Bankruptcy Court also overruled all other objections to the Proposed Settlement and found that the Proposed Settlement was “fair and equitable.”

After the entry of the order denying the Settlement Motion, the Chapter 11 Trustee

continued discussions with Hansen in order to try to overcome the shortcomings in the Proposed Settlement. As a result of those discussions, the Chapter 11 Trustee now proposes a new compromise (the “Compromise”) regarding the Hanson Action and the Breach Claim and is cooperating with Hanson to resolve the issues with the Proposed Settlement. The Chapter 11 Trustee is seeking approval of the Compromise as a part of the Plan.

The terms of the proposed Compromise are as follows:

Agreed Lift Stay. Hanson and the Chapter 11 Trustee (the “Parties”) will file a “Joint Motion to Approve Agreement to Modify the Automatic Stay to Allow Nevada State Court to Proceed with Class Certification Matters and Allow Class Representatives to Represent the Class Members” in the Chapter 11 Case (the “Lift Stay Motion”). In the Lift Stay Motion, the Parties will request that the Bankruptcy Court lift or modify the automatic stay and approve the following agreement (the “Lift Stay Agreement”):

o Hanson may request that the Nevada Court certify the Shareholder Class and similarly situated parties as a class;

o the Shareholder Class, if certified, may request that the Nevada Court appoint Hanson and others as class representatives (the “Shareholder Representatives”);

o Hanson and the Shareholder Class may request that the Nevada Court appoint class counsel;

o the Shareholder Representatives may pursue the Breach Claim on behalf of the Shareholder Class in the Chapter 11 Case;

o the Shareholder Representatives shall establish any necessary class notice procedures;

o the Shareholder Representatives shall appoint and supervise a claims agent to receive and distribute to members of the Shareholder Class all payments made by the Liquidating Trust with respect to the Breach Claim;

o the Shareholder Representatives shall approve a class representation fee to be paid by the claims agent out of any such payments;



o the Shareholder Representatives shall conduct any and all activities necessary or appropriate to accomplish these procedural matters; and

o once the Nevada Court certifies the Shareholder Class and Shareholder Representatives, the Bankruptcy Court order that the Shareholder Representatives may receive notice for the Shareholder Class and may generally appear for the Shareholder Class and its members in the Chapter 11 Case;

Allowed Claim. The Shareholder Class shall have an allowed claim in the amount of $8,557,689.83 (the amount stated in the Breach Claim). The Breach Claim shall be classified as Class 3(b) and paid its Pro Rata Share with other Allowed Unsecured Claims in Class 3;

Substitution of Breach Claim. The Breach Claim, once allowed, will be deemed to replace and supersede all claims filed by shareholders and all other claims by other shareholders will be deemed to be Disallowed without any further action on the part of the Bankruptcy Court or any Party or other entity;

Voting on Plan. The votes of the members of the Shareholder Class will be solicited through the Plan confirmation process. Each share of stock in the Debtor shall be valued at $1 solely for the purpose of voting, allowing the Bankruptcy Court to determine whether the majority of the Shareholder Class, by both number and amount of stock held, favor the proposed Compromise. This should, for the purpose of approving the Compromise, alleviate the issue regarding whether Hanson is a Shareholder Representative, as he will not be voting on behalf of the Shareholder Class.

Deadline for Shareholder Class certification. If the Shareholder Class is not certified by the date that is 180 days after the Effective Date, then the proposed Compromise is null and void ab initio. In such an event, (i) the members of the Shareholder Class will receive the treatment proposed for all Equity Holders in the Plan (cancellation of Interests and no distribution);’ (ii) Hanson may continue to assert the Breach Claim in his own right; and (iii) the Liquidating Trustee will retain the right to object to the Breach Claim notwithstanding the Claim Objection Bar Date. In such an event, there will be no holders of Class 3(b) Claims.

The Chapter 11 Trustee anticipates filing the Lift Stay Motion shortly and anticipates Hanson beginning the process regarding class certification in the Hanson Action while the Plan approval process is pending. The Compromise allows the Debtor’s case to move forward and cures the issues with the Proposed Settlement. The Chapter 11 Trustee asserts that the proposed Compromise is in the best interests of the Debtor’s Estate and its creditors and respectfully requests that (i) it be approved as a part of the Plan confirmation process and (ii) the approval be included in the Confirmation Order.

(iv) Voting. Class 3(b) is impaired and the holders of Allowed Class 3(b)

Claims are entitled to vote to accept or reject the Plan. Solely for the purpose of voting, each Shareholder Class claim shall be valued at $1 per share held in order to determine whether 2/3 in value of Class 3(b) shall have accepted the Plan.



4.4. Class 4 - Subordinated Claims.Treatment. Each holder of an Allowed Subordinated Claim (except any holder that agrees to a lesser or otherwise different treatment), in exchange for and in full satisfaction of such Claim, shall be paid its Pro Rata Share of the Liquidating Trust Assets, if any exist, after payment in full of all Allowed Administrative Claims and all Allowed Claims in Classes 1, 2, and 3. Any such payments will be made on the later of (i) within fifteen (15) days of a Subordinated Claim of the date upon which such Subordinated Claim becomes an Allowed Claim or (ii) the date upon which all claims in Classes 1-3 and all unclassified claims have been satisfied in full. The Chapter 11 Trustee does not believe that there are any claimants currently in Class 4. The Chapter 11 Trustee does not anticipate that any distribution will be made on account of any Class 4 Claims that may arise.

(ii) Voting. Class 4 is impaired and because the holders of Class 4 claims are unlikely to receive or retain any Property, the holders of Allowed Class 4 are deemed to have rejected the Plan.

4.5. Class 5 - Equity InterestsTreatment Upon the Effective Date, all Equity Interests in the Debtor shall be cancelled, voided and of no further force or effect whatsoever. No distributions will be made on account of any Equity Interest in the Debtor.

(ii) Voting. Class 5 is impaired. Because holders of Equity Interests in Class 5 will not receive or retain any distribution or Property under the Plan on account of their Equity Interests, the holders are deemed to have voted to reject the Plan.

ARTICLE V

PLAN IMPLEMENTATION

5.1. Impairment Controversies.

If a controversy arises as to whether any Class of Claims is impaired under this Plan, such Class shall be treated as specified in this Plan unless the Bankruptcy Court shall determine such controversy differently upon motion of the party challenging the characterization of a particular Class of Claims under this Plan. In such an event, the Chapter 11 Trustee hereby moves the Bankruptcy Court to allow him to amend the Plan.

5.2. Classes and Claims Entitled to Vote. Holders of Claims in Classes 3 through 5 are impaired. Class 4 is unlikely to receive any

distribution under the Plan and may have no creditors in it and is deemed to reject the Plan. Class 5 will receive no distributions and is deemed to reject the Plan. Class 3 creditors are the only creditors entitled to vote on this Plan.

5.3. Cramdown.

This section of the Plan constitutes the Chapter 11 Trustee’s request pursuant to 11 U.S.C. § 1129(b) that the Bankruptcy Court confirm the Plan.

5.4. Distributions Pursuant to the Plan.



Within seven (7) days of the Administrative Claims Bar Date, the Liquidating Trustee shall make, or shall make adequate reserves for (in the case of Claims that are not Allowed Claims on the Effective Date), the distributions required to be made under this Plan to holders of Allowed Secured Claims, Allowed Administrative Claims, Allowed Priority Claims.

5.5. Payments and Transfers by the Chapter 11 Trustee and the Liquidating Trust on and After the Effective Date.

(i) On the Effective Date, the Liquidating Trust Assets, expressly including the Litigation and all Other Causes of Action, shall be deemed to have been transferred by the Debtor or the Chapter 11 Trustee to the Liquidating Trust, free and clear of all liens, Claims, and encumbrances, but subject to any obligations imposed by this Plan. In satisfaction of the requirements of 11 U.S.C. § 1129(a)(16), all transfers of property under this Plan shall be deemed to have been made in accordance with any applicable provisions of non-bankruptcy law governing the transfer of property by a corporation or trust that is not a moneyed, business, or commercial corporation or trust.

(ii) On or after the Effective Date, in the time and manner set forth herein, the Liquidating Trust shall remit to the respective holders of all remaining and unpaid Allowed Administrative Expense Claims, Allowed Priority Claims, an amount in Cash equal to 100% of the amount of such Allowed Claim. Subject to the foregoing, on and after the Effective Date, the Liquidating Trust shall satisfy all Allowed Class 3 and 4 Claims in the time and manner, and to the extent, set forth in Article IV.

(iii) After the Effective Date, all remaining Allowed Administrative Claims (including Professional Fee Claims), and any and all Allowed Priority Claims against the Debtor that were not paid in full on the Effective Date shall be paid by the Liquidating Trust.

5.6. Liquidating Trust.

(i) Signature of the Liquidating Trust Agreement. On or prior to the Effective Date, the Liquidating Trust Agreement shall be signed, and all other necessary steps shall be taken to establish the Liquidating Trust without any requirement of further action by the Chapter 11 Trustee or any governing body of the Debtor. This section 5.6 sets forth certain of the rights, duties, and obligations of the Liquidating Trust and the Liquidating Trustee. In the event of any conflict between the terms of this Plan and the terms of the Liquidating Trust Agreement, the terms of this Plan shall govern.

(ii) Purpose of the Liquidating Trust. The Liquidating Trust shall be established for the purpose of receiving, holding, liquidating and distributing the Debtor’s assets to the holders of Allowed Claims as provided in the Plan and Confirmation Order and to make other payments called for in the Plan, with no objective to continue or engage in the conduct of a trade or business.

(iii) The Liquidating Trust Assets.

(a) The Liquidating Trust’s res shall consist of the Liquidating Trust Assets. Any Cash or other property received following the Effective Date by the Liquidating Trust from



third parties from the prosecution, settlement, or compromise of any Litigation or Other Causes of Action (including any proceeds from any insurance policies), from the sale of Property, or otherwise shall constitute Liquidating Trust Assets. The Liquidating Trust Assets shall also include a single share of stock in the Debtor, which shall be issued to the Liquidating Trust on the Effective Date and shall be the sole ownership interest in the Debtor.

(b) On the Effective Date or as soon as practicable thereafter, the Chapter 11 Trustee shall transfer all of the Liquidating Trust Assets to, and such assets shall vest in, the Liquidating Trust free and clear of all liens, Claims, and encumbrances, except to any extent otherwise provided in the Plan and the Liquidating Trust Agreement.

(c) Upon the transfer of the Liquidating Trust Assets to the Liquidating Trust, the Liquidating Trustee shall be a representative of the Estate pursuant to 11 U.S.C. §§ 1123(a)(5), 1123(a)(7), and 1123(b)(3)(B) with respect to the Liquidating Trust Assets and shall be automatically deemed substitute as named Plaintiff in all pending litigation and shall have all rights, standing and interest of the Estate and Chapter 11 Trustee in that litigation. ALL LITIGATION AND OTHER CAUSES OF ACTION (INCLUDING, WITHOUT LIMITATION, ALL THE LITIGATION, ALL OTHER CAUSES OF ACTION AND ALL AVOIDANCE ACTIONS) SHALL SURVIVE CONFIRMATION AND CONSUMMATION OF THE PLAN AND THE COMMENCEMENT OR PROSECUTION OF SAME SHALL NOT BE BARRED BY ANY ESTOPPEL, WHETHER JUDICIAL, EQUITABLE, OR OTHERWISE.

(iv) The Liquidating Trustee. Matthew D. Orwig, not individually, but solely as a fiduciary for the Liquidating Trust, shall be the initial Liquidating Trustee. The designation of the Chapter 11 Trustee as the initial Liquidating Trustee shall be effective on the Effective Date without the need for (i) any further order of the Bankruptcy Court or (ii) any further action by any other governing body of the Debtor.

(v) Role of the Liquidating Trustee.

(a) In furtherance of and consistent with the purpose of the Liquidating Trust and the Plan, after payment in full of Allowed Class 1 and 2 Claims and Allowed Administrative Claims, the Liquidating Trustee shall have the power and authority to, inter alia (as may be set forth in the Liquidating Trust Agreement): (1) manage, invest, and distribute the Liquidating Trust Assets to the holders of Allowed Class 3 and 4 Claims, (2) hold, manage, sell, and distribute Cash or other Liquidating Trust Assets obtained through the exercise of his power and authority for the benefit of the Debtor, (3) prosecute, settle, and otherwise resolve, in the names and on behalf of the Debtor, its Estate, or the Liquidating Trust, the Litigation and all Other Causes of Action, including the power and authority to continue and to commence Litigation or pursue any Other Causes of Action, (4) prosecute and resolve objections to any Claim (or any portion thereof) in the name and on behalf of the Debtor, or its Estate, or the Liquidating Trust, and any Disputed Administrative Expense Claims, Disputed Priority Tax Claims, or Disputed Priority Non-Tax Claims, (5) perform such other functions as are provided in the Plan and the Liquidating Trust Agreement, (6) without Bankruptcy Court oversight, retain and compensate professionals to assist him in performing the functions as provided in the Plan and the Liquidating Trust Agreement, (7) to perform or delegate such other functions and services and duties as he deems reasonably necessary or appropriate, (8) administer the closure of the Chapter 11 Case, and (9)



take any and all reasonably necessary or appropriate steps to effectuate the dissolution of the Debtor pursuant to the terms of the Plan and applicable law. The Liquidating Trustee shall be responsible for all decisions and duties with respect to the Liquidating Trust and the Liquidating Trust Assets, subject to (a) the approval of the Bankruptcy Court after notice and a hearing (as appropriate), (b) the terms and conditions of the Liquidating Trust Agreement. In all circumstances, the Liquidating Trustee shall act in the best interests of the Debtor and the holders of Allowed Claims against the Debtor.

(b) The Liquidating Trustee shall be authorized to exercise all powers regarding the Debtor’s tax matters, including filing tax returns, to the same extent as if the Liquidating Trust was the Debtor. The Liquidating Trustee (A) shall complete and file, to the extent not previously filed, the Debtor’s pre- and post-petition federal, state, and local tax returns, (B) may, to the extent not previously requested, request an expedited determination of any unpaid tax liability of the Debtor under 11 U.S.C. § 505(b) for all tax periods starting after the Petition Date through the Effective Date as determined under applicable tax laws, and (C) shall represent the interests and account of the Debtor before any taxing authority in all matters, including, but not limited to, any action, suit, proceeding, or audit. The Liquidating Trustee shall also file tax returns (if any) for the Liquidating Trust as a grantor trust under section 671 of the Internal Revenue Code and Treasury Regulation Section 1.671-4.

(vi) Cash. The Liquidating Trustee may invest cash (including any earnings thereon or proceeds therefrom) as permitted by 11 U.S.C. § 345, or other controlling authorities.

(vii) Costs and Expenses of the Liquidating Trust. The costs and expenses of the Liquidating Trust, including the fees and expenses of the Liquidating Trustee and the professionals retained in accordance with section 5.3(ix) of this Plan (including the costs and expenses incurred in connection with the pursuit of the Litigation or Other Causes of Action), shall be paid out of the Liquidating Trust Assets. All such costs and expenses shall be paid in the manner set forth in this Plan and in the Liquidating Trust Agreement.

(viii) Compensation of the Liquidating Trustee. The Liquidating Trustee shall be entitled to reasonable compensation and reimbursement of expenses without subsequent Bankruptcy Court approval upon such terms as are approved by the Bankruptcy Court at or after the Confirmation Hearing.

(ix) Retention of Professionals by the Liquidating Trust. The Liquidating Trustee may retain and compensate legal counsel and other professionals to provide professional services, including in connection with the Plan or the Liquidating Trust Agreement, without the need for any Bankruptcy Court approval, including in connection with the prosecution or settlement of the Litigation, all Other Causes of Action, or objections to Disputed Claims. Without limiting the generality of the foregoing, the Liquidating Trust and the Liquidating Trustee may retain any professional who previously represented any party-in-interest in this Chapter 11 Case on or prior to the Effective Date.

(x) Distribution of the Liquidating Trust Assets. The Liquidating Trustee shall, at his discretion, make distributions of the Liquidating Trust Assets on hand commencing as soon as practicable after the Effective Date, retaining appropriate reserves for amounts that: (a) would be distributable to a holder of a Disputed Claim if such Disputed Claim had been Allowed prior to



the time of such distribution (but only until such Claim is resolved), (b) are reasonably necessary to meet contingent liabilities (including with respect to any indemnification obligations owed to the Liquidating Trustee, pursuant to the terms and conditions of the Plan and the Liquidating Trust Agreement) and to maintain the value of the Liquidating Trust Assets during liquidation, (c) necessary to pay anticipated future reasonable expenses (including, but not limited to, any taxes imposed on the Liquidating Trust or in respect of the Liquidating Trust Assets) as determined by the Liquidating Trustee, and (d) are needed to satisfy other anticipated liabilities (including a reasonable reserve for unanticipated future liabilities, fees, and expenses) to be incurred by the Liquidating Trust in accordance with this Plan or the Liquidating Trust Agreement.

(xi) Federal Income Tax Treatment of the Liquidating Trust. The Liquidating Trust shall be considered a “grantor” trust for federal income tax purposes, created by the Debtor to liquidate its assets to pay Allowed Claims, and shall therefore not have separate liability for federal income taxes relating to, or arising from, the transfer of Liquidating Trust Assets from the Debtor or the liquidation of the Liquidating Trust Assets. As such, for federal income tax purposes, the Debtor will be treated as the owner of the Liquidating Trust Assets. In accordance with the decision of the United States Supreme Court in Holywell Corp. v. Smith, 112 S.Ct. 1021 (1992), the Liquidating Trustee shall be required to file the income tax returns that the Debtor would have filed if its assets had not been conveyed to the Liquidating Trust and the Liquidating Trust will promptly pay any tax liability created by the liquidation of the Liquidating Trust Assets. The Liquidating Trustee shall reserve a sum sufficient to pay any accrued or potential Debtor tax liability arising from the liquidation of Liquidating Trust Assets.

(xii) Final Distributions. Prior to making a final distribution, dissolving the Liquidating Trust and closing the Chapter 11 Case, the Liquidating Trustee may apply to the Bankruptcy Court for (i) an order authorizing final distribution, closing the Chapter 11 Case, and releasing the Liquidating Trustee and the Liquidating Trust from any and all claims, debts, or liabilities, including any and all claims, debts, or liabilities for taxes to any and all taxing authorities, and/or (ii) to any applicable authority, pursuant to under 11 U.S.C. § 505, for a determination of any tax liability payable by the Debtor or the Liquidating Trust. The Liquidating Trustee shall not be required to make a final distribution unless and until the Liquidating Trustee determines that the Liquidating Trust and the Debtor have no remaining liabilities for taxes of any kind. Under no circumstances will the Liquidating Trustee have any personal liability for any taxes related to the Debtor, the Liquidating Trust or the Liquidating Trust Assets.

(xiii) The Liquidating Trust and Liquidating Trustee shall not make or encourage others to make any trading market in Claims against or cancelled Equity Interests in the Debtor. The Liquidating Trustee will not engage the services of any market maker or other person to facilitate the development of such a market or publish information about prices at which Claims against or cancelled Equity Interests may be transferred.

(xiv) Other than the reporting provided for in Section 3.3 of the Liquidating Trust Agreement, it is not anticipated that Claims against or cancelled Equity Interests in the Debtor will be listed on any securities exchange or quoted on any over the counter trading service or that the Liquidating Trust will make any additional reporting of any nature, including, without



limitation, press releases, service of pleadings or periodic reporting with the Securities and Exchange Commission (“SEC”) or any other governmental body or regulatory agency.

(xv) Dissolution. The Liquidating Trustee and the Liquidating Trust shall be discharged or dissolved, as the case may be, when: (i) all Disputed Claims have been resolved, (ii) all of the Liquidating Trust Assets have been liquidated, and (iii) all distributions required to be made by the Liquidating Trust under the Plan have been made, but in no event shall the Liquidating Trust be dissolved later than five (5) years from the Effective Date unless the Bankruptcy Court, upon notice and opportunity for a hearing, determines that one or more fixed period extensions (not to exceed five (5) years each) is necessary to facilitate or complete the recovery and liquidation of the Liquidating Trust Assets or the dissolution of the Liquidating Trust and the Debtor.

(xvi) Indemnification of the Liquidating Trustee. The Liquidating Trustee and the Liquidating Trust’s agents and professionals shall not be liable for actions taken or omitted in his or their capacity as, or on behalf of, the Liquidating Trust, except upon a finding by the Bankruptcy Court that he or they acted or failed to act as the result of gross negligence, or in reckless disregard of his or their duties, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of his or their actions or inactions in his or their capacity as, or on behalf of, the Liquidating Trust, except for any actions or inactions involving gross negligence, or in reckless disregard of his or their duties. Any indemnification claim of the Liquidating Trustee or the Liquidating Trust’s professionals or agents shall be satisfied from the Liquidating Trust Assets, subject to the approval of the Bankruptcy Court after notice and opportunity for a hearing. The Liquidating Trustee shall be entitled to rely, in good faith, on the advice of retained professionals.

(xvii) Closing the Chapter 11 Case.

(a) When all Disputed Claims have become Allowed Claims, have been disallowed by a Final Order, or have been otherwise fully resolved, and all of the Liquidating Trust Assets have been distributed in accordance with this Plan, the Liquidating Trustee shall seek authority from the Bankruptcy Court to close the Chapter 11 Case in accordance with the Bankruptcy Code and the Bankruptcy Rules and to dissolve the Debtor; provided, however, that nothing in this Plan or the Liquidating Trust Agreement shall prevent the Liquidating Trustee from seeking authority from the Bankruptcy Court to close the Chapter 11 Case at any time prior thereto, in accordance with the Bankruptcy Code and the Bankruptcy Rules.

(b) If at any time the Liquidating Trustee determines that the expense of administering the Liquidating Trust to make a final distribution to holder of Allowed Claims is likely to exceed the value of the Liquidating Trust Assets, the Liquidating Trustee shall apply to the Bankruptcy Court for authority to (i) reserve any amounts necessary to close the Chapter 11 Case, (ii) donate any balance to a charitable organization exempt from federal income tax under section 501(c)(3) of the Tax Code that is unrelated to any of the Debtor, the Liquidating Trustee, and any insider of the Liquidating Trustee, and (iii) close the Chapter 11 Case in accordance with the Bankruptcy Code and Bankruptcy Rules. Notice of such application shall be given electronically, to the extent practicable, to those parties who have filed requests for notices in the Chapter 11 Case and who hold unpaid Allowed Claims or Disputed Claims.



(xviii) Books and Records. Upon the Effective Date, or as soon thereafter as is reasonably practicable, the Chapter 11 Trustee shall transfer and assign to the Liquidating Trust full title to, and the Liquidating Trust shall be authorized to take possession of, all of the books and records of the Debtor or the Chapter 11 Trustee. The Liquidating Trust shall have the responsibility of storing and maintaining the books and records transferred hereunder until the later of (i) one year after the Debtor is dissolved in accordance with this Plan or (ii) the resolution of each Litigation or any Other Causes of Action that is commenced prior to or after the Effective Date, after which time such books and records may, subject to the Effective Date, be abandoned or destroyed without further order of the Bankruptcy Court. For purposes of this section, books and records include computer generated or computer maintained books and records and computer data, as well as electronically generated or maintained books and records or data. The Chapter 11 Trustee shall also transfer and assign to the Liquidating Trust all of his claims and rights in and to their books and records that are maintained by, or in possession of, third parties (including any governmental entities), wherever located.

5.7. Setoffs.

The Chapter 11 Trustee or the Liquidating Trust may, but shall not be required to, set off against any Claim (for purposes of determining the Allowed amount of such Claim on which distribution shall be made), any claims of any nature whatsoever that the Debtor may have against the holder of such Claim, but neither the failure to do so nor the allowance of any Claim hereunder or under any order of the Bankruptcy Court shall constitute a waiver or release by the Debtor, the Chapter 11 Trustee or the Liquidating Trust of any such claim the Debtor may have against the holder of such Claim.

5.8. Establishment and Maintenance of Reserves.

(i) Administrative Claims Reserve. On the Confirmation Date, the Chapter 11 Trustee shall provide a good faith estimate of the aggregate amount of unpaid Administrative Claims and, within seven (7) days of the Administrative Claim Bar Date, shall establish an Administrative Claims Reserve in order to make the payments to holders of Administrative Claims as such Administrative Claims become Allowed.

(ii) General Distribution Provisions. Subject to Bankruptcy Rule 9010 and except as otherwise provided herein, distributions to the holders of Allowed Claims shall be made by the Liquidating Trustee at (a) the address of each holder as set forth in its filed Proof of Claim or written change of address, if any, (b) the address of each holder as set forth in the Schedules (if no Claim was filed) or (c) the last known address of such holder if no proof of Claim was filed and the address in the Debtor’s Schedules is no longer correct.

(iii) Undeliverable or Unclaimed Distributions. In the event that any distribution to any holder of an Allowed Claim is returned as undeliverable, no further distributions shall be made to such holder unless and until the Chapter 11 Trustee or the Liquidating Trust, as the case may be, are notified of such holder’s then-current address. The Liquidating Trustee will send a letter to any holder of an Allowed Claim that does not negotiate a distribution check within ninety (90) days of the check’s issuance. If (i) there is no contact from the holder of the Allowed Claim within ninety (90) days of the sending of the Liquidating Trustee’s letter and (ii) the check is not negotiated during that ninety (90) day period, the Claim will be disallowed and the holder



of the Claim shall be forever barred and enjoined from asserting the Claim against the Debtor, the Estate, the Liquidating Trust, the Liquidating Trustee or the Liquidating Trust Assets, the Chapter 11 Trustee, or the property or assets of any of them and no further distribution shall be made to the holder of that Claim, with the funds reserved for such Claim to be distributed among the remaining Allowed Claims remaining unpaid. Nothing contained in this Plan or the Liquidating Trust Agreement shall require any of the Debtor, Chapter 11 Trustee, the Liquidating Trust or the Liquidating Trustee to attempt to locate any holder of an Allowed Claim.

5.9. Minimum Distributions.

Notwithstanding anything herein to the contrary, if a distribution to be made to a holder of an Allowed General Unsecured Claim on any Distribution Date would be $100 or less, no such distribution is required to be made to that holder at that time. Such undistributed funds shall be held by the Liquidating Trustee for subsequent distribution to that Claim holder either (i) when further amounts become available such that the distribution to that holder will exceed $100 or (ii) when final distributions are made (this provision shall not apply to final distributions).

5.10. Cancellation of Existing Claims.

On the Effective Date, any document, agreement or instrument evidencing a Claim against or an Interest in the Debtor is and shall be deemed cancelled and of no force or effect without any further act or action under the any applicable agreement, law, regulation, order or rule and the obligations of the Debtor under such documents, instruments or agreements evidencing such Claims shall be discharged, except obligations under the Plan. For the avoidance of doubt, Allowed Class 3 Claims and Allowed Class 4 Claims will be discharged as payments (if any) are made from the Liquidating Trust to a holder of an Allowed Class 3 or Class 4 Claim.

5.11. Termination of Shareholder (Equity Interest) Rights.

On the Effective Date, all Equity Interests in the Debtor shall cease to exist. On the Effective Date, the Debtor shall issue a single share of stock in the Debtor, which shall be issued to the Liquidating Trust and shall represent the sole ownership interest in the Debtor. Any right associated with any Equity Interest issues prior to the Effective Date will be null and void.

ARTICLE VI

TREATMENT OF DISPUTED CLAIMS

6.1. Objections to Claims.

Objections to Claims shall be filed on or before the Claim Objection Bar Date by the Chapter 11 Trustee or the Liquidating Trustee or any other entity entitled to do so. All Claims shall be subject to 11 U.S.C. § 502(d), notwithstanding the expiration of the Claim Objection Bar Date. The failure by the Chapter 11 Trustee to object to, or to examine for purposes of voting, any Claim as of the Confirmation Date shall not be deemed to be a waiver of his right or the right



of the Liquidating Trustee to object to, or to re-examine, such Claim in whole or in part after the Confirmation Date.

6.2. Distributions on Disputed Claims.

Notwithstanding any other provision in this Plan, no distributions will be made with respect to a Disputed Claim until the resolution of such dispute by settlement or Final Order. As soon as practicable after a Disputed Claim becomes an Allowed Claim, the holder of such Allowed Claim will receive all distributions to which such holder is then entitled under the Plan. Except as provided in 11 U.S.C. § 502(d), any Person who holds both an Allowed Claim and a Disputed Claim will receive the appropriate distribution on the Allowed Claim, although no distribution will be made on the Disputed Claim until such dispute is resolved by settlement or Final Order.

6.3. Disallowance of Claims without Further Order of the Court.

As of the Confirmation Date, any Claim designated as disputed, contingent or unliquidated in the Debtor’s Schedules, as amended, and for which a proof of claim has not been filed by the Creditor, shall be deemed expunged, without further act or Order of the Bankruptcy Court.

ARTICLE VII

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

7.1. Rejection of Executory Contracts.

Except as otherwise set forth herein, on the Effective Date, all Executory Contracts of the Debtor will be deemed to have been rejected in accordance with 11 U.S.C. §§ 365 and 1123, unless expressly assumed as identified on a list that the Chapter 11 Trustee may file with the Bankruptcy Court, if at all, on or before the Confirmation Date. Entry of the Confirmation Order by the clerk of the Bankruptcy Court shall constitute approval of such assumptions and rejections pursuant to 11 U.S.C. §§ 365 and 1123.

7.2. Rejection Claims.

Allowed Claims arising from rejection of any Executory Contract of the Debtor pursuant to this Plan shall be treated as Class 3(a) Unsecured Claims.

7.3. Bar Date for Rejection Claims.

A proof of Claim with respect to any Claim arising from rejection of any Executory Contract of the Debtor pursuant to the Plan shall not be timely filed unless it is filed with the Bankruptcy Court and served so that it is received within thirty (30) calendar days after the date upon which the Chapter 11 Trustee or Liquidating Trustee files the Notice of Effective Date described in section 9.4 of this Plan. The holder of any such Claim not timely filed and served shall be forever barred from asserting such Claim against the Debtor or its Estate and the Debtor’s Estate shall be discharged from such Claims and the Liquidating Trust shall not be obligated to pay any such Claim.



ARTICLE VIII

RETENTION OF LITIGATION, RIGHTS AND CAUSES OF ACTION

8.1. Preservation of Causes of Action.

All Litigation, Other Causes of Action, claims, rights of setoff and other legal and equitable defenses of the Debtor and/or its Estate are preserved for the benefit of the Liquidating Trust unless expressly released, waived, or relinquished in this Plan or the Confirmation Order. No Person may rely on the absence of a specific reference in the Plan or the Disclosure Statement to any cause of action against them as an indication that the Liquidating Trust will not pursue a cause of action (including, but not limited to claims, rights, defenses, third-party claims, damages, executions, demands, cross-claims, counterclaims, suits, causes of action, choses in action, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payment and claims whatsoever, whether known, unknown, reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured and whether asserted or assertable directly, indirectly or derivatively, at law, in equity or otherwise) against them. The causes of action that are preserved for the benefit of the Liquidating Trust and for which the Liquidating Trustee shall be appointed representative of the Estate pursuant to 11 U.S.C. § 1123(b)(3)(B) shall include, but not be limited to, those causes of action described below:

(a) those set forth in the Schedules;

(b) the Other Causes of Action;

(c) those set forth in any lawsuit, court proceeding, adversary proceeding or contested matter pending filed by the Chapter 11 Trustee on or before the Effective Date, including, but not limited to, the Litigation;

(d) those set forth in the Litigation, including, but not limited to, all claims that are or could be stated in the adversary proceeding styled and numbered Matthew D. Orwig, as Chapter 11 Trustee of FirstPlus Financial Group, Inc., Plaintiff, v. Robert Freeman; James Roundtree; Daniel Phillips; David Ward; John Fitzgerald; John Maxwell; William Handley; Dr. Robert O’Neal; Jack Roubinek; Gary D. Alexander; Roger S. Meek; David Roberts; Joseph P. Steward; William Hickman; Paul Ballard; Olshan Grundman; Frome Rosenzweig & Wolosky LLP; David Adler, Esq.; Eizen Fineburg & Mccarthy P.C.; Gary J. Mccarthy, Esq.; William T. Maxwell, Esq.; William Maxwell PLLC; William T. Maxwell, P.C.; Buckno Lisicky & Company, P.C.; Anthony Buczek, CPA; Siegal & Drossner, P.C.; Howard Drossner, CPA; Kensington Company & Affiliates, Inc.; Ken Stein; Salvatore Pelullo; Seven Hills Management, LLC; Learned Associates of North America, LLC; and Nicodemo S. Scarfo, Jr., Defendants; Adv. Pro. No. 11-03397, currently pending in the Bankruptcy Court;

(e) any and all Avoidance Actions, claims, causes of action or enforceable rights of the Debtor against third parties, or assertable by the Debtor or Chapter 11 Trustee on behalf of Creditors, its Estate, or itself for recovery, turnover or avoidance of obligations, or preferential or fraudulent transfers of property or interests in property and other types or kinds of property or interests in property recoverable or avoidable pursuant to Chapter 5 or other sections of the



Bankruptcy Code or any applicable law including, without limitation, 11 U.S.C. §§ 502, 510, 522(f), 522(h), 542, 543, 544, 545, 547, 548, 549, 550, 551, or 553; and

(f) any and all claims or causes of action of the Debtor or its Estate relating to any pre- or post-petition activities against the Debtor’s former officers, directors, principals or advisors; and any current or former professionals of the Debtor retained either pre- or post-petition (including, without limitation, legal, accounting, tax, or valuation advisors or consultants) including, without limitation, claims or causes of action for: (i) alleged breaches of fiduciary duty; (ii) alleged fraud or fraudulent inducement; (iii) alleged negligence; (iv) alleged fraudulent or negligent misrepresentations; (v) alleged legal, accounting or other professional negligence or malpractice; (vi) alleged illegal dividends or payments received; (vii) objections to professional compensation applications as well as any other claims by the Debtor against its professionals; (viii) claims regarding any professional of the Debtor relating to or arising from any professional compensation application; (ix) alleged civil conspiracy; (x) alleged fraudulent insurance acts; (xi) alleged violations of any consumer protection act or deceptive trade practice act; (xii) alleged unjust enrichment; (xiii) alleged breach of contract; (xiv) alleged tortious interference with contracts or prospective relations; (xv) alleged deceit by misrepresentation or concealment; or (xvi) alleged common law fraud.

For the avoidance of doubt, the Liquidating Trustee is being designated and appointed as the representative of the Debtor, the Estate, and the Liquidating Trust and is empowered to pursue all of the actions set forth above, pursuant to, inter alia, 11 U.S.C. § 1123(b)(3)(B). Further, no causes of action, claims, rights, defenses, third-party claims, damages, executions, demands, cross-claims, counterclaims, suits, causes of action, choses in action, controversies, agreements, promises, rights to legal remedies, rights to equitable remedies, rights to payment and claims whatsoever related thereto owned by the Debtor as of the Petition Date or owned by the Estate at any time prior to or on the Effective Date are released, waived, or otherwise abandoned as a result of the confirmation of the Plan, except any of the foregoing specifically released in the Plan or through a Court-approved settlement pursuant to Bankruptcy Rule 9019.

ARTICLE IX

CONDITIONS PRECEDENT TO EFFECTIVE DATE

9.1 Conditions Precedent to Effectiveness.

This Plan shall not become effective unless and until the following conditions are satisfied or waived by the Chapter 11 Trustee in accordance with this Article.

(a) The Bankruptcy Court shall have entered the Confirmation Order which is, in form and substance, satisfactory to the Chapter 11 Trustee;

(b) No stay of the Confirmation Order shall be in effect at the time the other conditions set forth in this section of the Plan are satisfied or waived;



(c) The Liquidating Trust Agreement and all documents, instruments and agreements provided for under, or necessary to implement, the Plan shall have been executed and delivered by the parties thereto, in form and substance satisfactory to the Chapter 11 Trustee, unless such execution or delivery has been waived by the parties benefited thereby and all such documents, instruments and agreements shall be effective on the Effective Date.

9.2. Satisfaction of Conditions.

Any actions required to be taken on the Effective Date shall occur, or shall be deemed to have occurred, simultaneously, and no such action shall be deemed to have occurred prior to the taking of any other such action.

9.3. Failure of Conditions.

In the event that one or more of the conditions precedent set forth in section 9.1 of this Plan cannot be satisfied and the occurrence of such conditions is not waived by the Chapter 11 Trustee on or before the date that is 180 days after the Confirmation Date, then the Chapter 11 Trustee shall file a notice of the failure of the Effective Date with the Bankruptcy Court and (i) the Confirmation Order shall be vacated by the Bankruptcy Court, (ii) the Plan shall be null and void in all respects, and no distributions under the Plan shall be made, (iii) the Chapter 11 Trustee, Debtor, and all holders of Claims and Equity Interests shall be restored to the status quo ante as of the day immediately preceding the Confirmation Date as though the Confirmation Date had never occurred, and (iv) the Debtor’s obligations with respect to Administrative Expenses, Claims and Equity Interest shall remain unchanged and nothing contained in the Plan shall constitute or be deemed a waiver or release of any Claims or Equity Interests by or against the Debtor or any other Person or shall prejudice in any manner the rights of the Debtor or any Person in any further proceedings involving the Debtor.

9.4. Notice of the Effective Date.

As soon as reasonably practicable after the occurrence of the Effective Date, but no later than fifteen (15) days thereafter, the Liquidating Trustee shall file with the Bankruptcy Court and serve upon all Persons served with a copy of the Disclosure Statement a notice of: (a) the occurrence of the Effective Date; (b) the deadline established under this Plan for the filing of Administrative Claims; (c) the procedures for changing an address; and (d) other matters as the Liquidating Trustee deems appropriate.

9.5. Plan Modification.

The Chapter 11 Trustee may alter, amend, or modify the Plan pursuant to 11 U.S.C. § 1127 and Bankruptcy Rule 3019 at any time before the Confirmation Date without an additional vote if the Bankruptcy Court finds, after notice and a hearing, that the proposed modification does not adversely change the treatment of any Class, or the Claim of any holder who has not accepted the modification in writing. After the Confirmation Date and before substantial consummation of this Plan, the Chapter 11 Trustee has the right to amend or modify the Plan in accordance with the Bankruptcy Code, if circumstances warrant amendment or modification and if, after notice and hearing, the Bankruptcy Court confirms the Plan as amended or modified.



ARTICLE X

RETENTION OF JURISDICTION

10.1. Retention of Jurisdiction.

The Bankruptcy Court will retain and have exclusive jurisdiction over the Chapter 11 Case for the following purposes:

(a) to consider Claims or the allowance, disallowance, classification, priority, estimation, subordination or payment of any Claim and any and all objections thereto;

(b) to determine motions for the rejection or assumption of Executory Contracts to which the Debtor is a party or with respect to which the Debtor may be liable, and to hear and determine, and if need be to liquidate, any and all Claims arising therefrom;

(c) to hear, determine, and resolve all applications, motions, Litigation and contested or litigated matters including, without limitation, those related to all causes of action preserved by the Plan, whether pending on the Effective Date or commenced thereafter, provided, however, that this section does not purport to confer on the Bankruptcy Court jurisdiction that it does not otherwise have under applicable law;

(d) to determine or otherwise resolve any and all matters under 11 U.S.C. § 505 with respect to any tax, fine, penalty or addition to tax asserted against the Debtor, its Estate, or the Liquidating Trust;

(e) to consider any Plan modifications, to cure any defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court;

(f) to determine matters involving the Debtor or Chapter 11 Trustee in connection with actions taken or not taken by the Debtor or the Chapter 11 Trustee prior to Confirmation of the Plan and matters involving the Chapter 11 Trustee or in connection with implementation and effectuation of the Plan, or the Confirmation Order;

(g) to determine all controversies, suits and disputes that may arise in connection with the interpretation, implementation, effectuation or consummation of the Plan or the Liquidating Trust or the obligations under the Plan or the Liquidating Trust Agreement;

(h) to determine such other matters as may be set forth in the Confirmation Order or as may arise in connection with the Plan, the Confirmation Order, or the Liquidating Trust Agreement;

(i) to hear, determine and resolve any matters or issues arising with respect to or relating to any Orders entered by the Bankruptcy Court in the Chapter 11 Case;

(j) to hear and determine any disputes arising in connection with the interpretation, implementation or enforcement of the Plan, the Liquidating Trust, the Confirmation Order or the Liquidating Trust Agreement;



(k) to determine any and all applications for allowance of Professional Fee Claims and any other fees and expenses authorized to be paid or reimbursed under the Bankruptcy Code or the Plan;

(l) to enforce holders’ rights to payments and to the delivery of money to which holders of Allowed Claims may be entitled under the Plan or the Liquidating Trust Agreement;

(m) to determine matters related to the Liquidating Trust, the Liquidating Trustee, and the Liquidating Trust Assets, including, without limitation, the determination of all controversies and disputes arising under or in connection with the Liquidating Trust Agreement, as would exist if the Liquidating Trustee were a trustee appointed under Chapter 7 of the Bankruptcy Code, and the Liquidating Trust Assets were property of the estate in such Chapter 7 case created pursuant to 11 U.S.C. § 541;

(n) to issue injunctions, enter and implement other orders or to take such other actions as may be necessary or appropriate to restrain interference by any Person with consummation, implementation or enforcement of the Plan or the Confirmation Order;

(o) to issue orders in aid of execution of the Plan to the extent authorized by 11 U.S.C. § 1142 or otherwise; and

(p) to enter a final decree closing the Chapter 11 Case.

10.2. Failure of Bankruptcy Court to Exercise Jurisdiction.

If the Bankruptcy Court abstains from exercising or declines to exercise jurisdiction, or is otherwise without jurisdiction, over any matter arising under, arising in or related to the Chapter 11 Case, including with respect to the matters set forth above in this Plan, section 10.1 of this Plan shall not prohibit or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such subject matter.

ARTICLE XI

RELEASES AND INJUNCTION

11.1. Releases.

This Plan and the distributions made under this Plan will be in full and final satisfaction, settlement and release as against the Debtor of any Claim or debt that arose before the Effective Date and any debt of a kind specified in 11 U.S.C. §§ 502(g), (h) or (i), and all Claims and Interests of any nature, including any interest accrued thereon, before, on and after the Petition Date, whether or not a (i) proof of Claim or Interest based on such debt, obligation or Interest was filed or deemed filed under 11 U.S.C. §§ 501 or 1111(a); (ii) such Claim or Interest is allowed under 11 U.S.C. § 502; or (iii) the holder of such Claim or Interest has accepted the Plan.

11.2. Injunction.



As of the Confirmation Date, except as provided in the Plan or the Confirmation Order, all Persons that have held, currently hold, or may hold a Claim, Interest, or other debt or liability that is addressed in the Plan are permanently enjoined from taking any of the following actions on account of any such Claim, Interest, debt or liability, other than actions brought to enforce any rights or obligations under the Plan: (i) commencing or continuing in any manner any action or other proceeding against the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; (ii) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order against the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; (iii) creating, perfecting or enforcing any lien or encumbrance against the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; (iv) asserting a setoff, right of subrogation or recoupment of any kind against any debt, liability or obligation due to the Debtor, the Chapter 11 Trustee, the Liquidating Trust, the Liquidating Trustee, Property of the Estate, or the Liquidating Trust Assets; and (v) commencing or continuing, in any manner or any place, any action that does not comply with, or is inconsistent with, the provisions of the Plan or the Confirmation Order.

11.3. Exculpation.

The Chapter 11 Trustee and his employees, representatives, legal counsel, financial advisors, consultants and agents, shall not have nor incur any liability to any Person for any act taken or omission occurring on or after the Petition Date in connection with or related to the Debtor or the Chapter 11 Case, including, but not limited to: (i) formulating, preparing, disseminating, implementing, confirming, consummating or administrating the Plan (including soliciting acceptances or rejections thereof); (ii) the Disclosure Statement; (iii) any contract, instrument, release or other arrangement entered into or any action taken or not taken in connection with the Plan or the Chapter 11 Case; or (iv) any distributions made pursuant to the Plan except for acts constituting willful misconduct, gross negligence or breach of fiduciary duty, and in all respects such parties shall be entitled to rely upon the advice of legal counsel with respect to their duties and responsibilities under the Plan.

ARTICLE XII

MISCELLANEOUS PROVISIONS.

12.1. Substantial Consummation.

On or after the Effective Date and upon transfer of the Liquidating Trust Assets to the Liquidating Trust, the Plan shall be deemed to be substantially consummated under 11 U.S.C. §§ 1101 and 1127(b).

12.2. Successors and Assigns.

All the rights, benefits, and obligations of any person named or referred to in the Plan shall be binding on, and shall inure to the benefit of, the heirs, executors, administrators, successors, or assigns of such person.



12.3. Headings.

Headings are used in the Plan for convenience and reference only, and shall not constitute a part of the Plan for any other purpose.

12.4. Binding Effect.

The Plan shall be binding upon and inure to the benefit of the Debtor, the holders of Claims and Equity Interests and their respective successors and assigns.

12.5. Plan Controls.

To the extent the Plan is inconsistent with the Disclosure Statement or the Liquidating Trust Agreement, the provisions of the Plan shall control.

12.6. Revocation or Withdrawal.

(a) Right to Revoke. The Chapter 11 Trustee reserves the right to revoke or withdraw the Plan prior to the Effective Date.

(b) Effect of Withdrawal or Revocation. If the Chapter 11 Trustee revokes or withdraw the Plan prior to the Effective Date, the Plan shall be deemed null and void ab initio. In such event, nothing contained herein shall be deemed to constitute a waiver or release of any claims by or against the Debtor, the Chapter 11 Trustee, or any other Person or to prejudice in any manner the rights any further proceedings involving the Debtor, its Estate or the Chapter 11 Trustee.

12.7. Notices.

Any notice required or permitted to be provided under the Plan or Disclosure Statement to the Chapter 11 Trustee shall be in writing and served by either (1) certified mail, return receipt requested, postage prepaid, (2) hand delivery with evidence of receipt, or (3) reputable overnight delivery service, delivery prepaid, to be addressed as follows:

FRANKLIN SKIERSKI LOVALL HAYWARD LLP 10501 N. Central Expy, Suite 106

Dallas, Texas 75231 Attn: Peter A. Franklin III

SNR DENTON

2000 McKinney Avenue, Suite 1900 Dallas, TX 75201-1858 Attn: Matthew D. Orwig

12.8. Limitations on Notice.

From and after the Effective Date, notices of appearance and demands for service filed with the Bankruptcy Court shall no longer be effective. Except as specified herein, no further notice shall be required to be served on any Person based upon such notices of appearance or



demands for service unless the Person files with the Bankruptcy Court a renewed request for service of pleadings.

12.9. Governing Law.

Unless a rule of law or procedure is supplied by federal law (including the Bankruptcy Code and Bankruptcy Rules), the internal laws of the State of Texas shall govern the construction and implementation of the Plan and any agreements, documents, and instruments executed in connection with the Plan.

12.10. No Liability for Solicitation or Participation.

Pursuant to 11 U.S.C. § 1125(e), Persons that solicit acceptances or rejections of this Plan and/or that participate in the offer, issuance, sale, or purchase of securities offered or sold under this Plan, in good faith and in compliance with the applicable provisions of the Bankruptcy Code, shall not be liable, on account of such solicitation or participation, for violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of this Plan or the offer, issuance, sale, or purchase of securities offered or sold under this Plan.

12.11. Term of Injunctions and Stays.

Unless otherwise provided, all injunctions or stays provided for in the Chapter 11 Case pursuant to 11 U.S.C. § 105 or 362, or otherwise and in effect on the Confirmation Date, shall remain in full force and effect until the Effective Date of the Plan as to the Chapter 11 Trustee, Debtor and the Estate and all Property; provided, however, that any injunction issued pursuant to this Plan and the Confirmation Order shall not be subject to the foregoing and shall be perpetual.

12.12. Incorporation of Bankruptcy Rule 9019.

In order to effectuate and implement any releases or compromises contained herein, including without Limitation the Shareholder Compromise regarding Class 3(b), the Plan is a motion pursuant to Bankruptcy Rule 9019, seeking the Bankruptcy Court’s approval of all of the compromises and releases contained herein.

12.13. Incorporation of 11 U.S.C. § 363.

The vesting of the Debtor’s Property in the Liquidating Trust shall be free and clear of all liens, claims, interests, and encumbrances under 11 U.S.C. § 363(f) except as specifically provided for herein, and the Liquidating Trust shall be entitled to the full protections of 11 U.S.C. §§ 363(m) and 363(n). To the extent necessary to effectuate and implement the vesting, assumptions or transfers contained herein, the Plan shall be deemed to constitute a motion filed by the Debtor under 11 U.S.C. § 363, seeking the Bankruptcy Court’s approval of the transfers contained herein as transfers made in good faith and for fair value.

12.14. Exemption from Transfer Taxes and Recording Fees.

In accordance with 11 U.S.C. § 1146(a), none of the issuance, transfer or exchange of any securities under this Plan, the release of any mortgage, deed of trust or other lien, the making, assignment, filing or recording of any lease or sublease, the vesting or transfer of title to or



ownership of any of the Debtor’s interests in any Property, or the making or delivery of any deed, bill of sale or other instrument of transfer under, in furtherance of, or in connection with this Plan, including the releases of liens contemplated under this Plan, shall be subject to any document recording tax, stamp tax, conveyance fee, sales or use tax, bulk sale tax, intangibles or similar tax, mortgage tax, stamp act, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee or other similar tax or governmental assessment in the United States. The Confirmation Order shall direct the appropriate federal, state and/or local governmental officials or agents to forgo the collection of any such tax or governmental assessment and to accept for filing and recordation any of the foregoing instruments or other documents without the payment of any such tax or governmental assessment.

12.15. Incorporation of 11 U.S.C. § 365.

To the extent necessary to effectuate and implement the terms of this Plan, this Plan shall be deemed to constitute a motion to assume or reject Executory Contracts filed by the Debtor pursuant to 11 U.S.C. § 365 as set forth in section 7.1 of this Plan.

12.16. No Admissions.

Notwithstanding anything herein to the contrary, nothing contained in this Plan shall be deemed an admission by the Debtor, Chapter 11 Trustee, the Liquidating Trust or the Liquidating Trustee with respect to any matter set forth herein including, without limitation, liability on any Claim or the propriety of any classification of any Claim.

12.17. Severability.

Should the Bankruptcy Court determine, on or prior to the Confirmation Date, that any provision of this Plan is either illegal or unenforceable on its face or illegal or unenforceable as applied to any Claim, the Bankruptcy Court, at the request of the Debtor, shall have the power to alter and modify such provision to make it valid and enforceable to the maximum extent practicable consistent with the original purpose of such provision. Notwithstanding any such determination, interpretation, or alteration, the remainder of the terms and provisions of this Plan shall remain in full force and effect.

12.18. Other Documents and Actions.



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Doc603 amended bk plan liquidation_disclosure_2011-09-08

Economy & Finance

Transcript of Doc603 amended bk plan liquidation_disclosure_2011-09-08