Case ID: br_101/html/0866-01.html
Source: Caselaw Access Project
Author: {"author": "WILLIAM T. BODOH, Bankruptcy Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re GILLETTE ASSOCIATES, LTD., Charles Ervin Stein, Debtors.
    Bankruptcy Nos. B87-00769-Y, B87-00770-Y.
    United States Bankruptcy Court, N.D. Ohio.
    June 7, 1989.
    
      Michael A. Gallo, Youngstown, Ohio, for debtors.
    Frederick S. Coombs, III, Youngstown, Ohio, for Official Bondholders Committee.
    Joseph C. Winner, Columbus, Ohio, for Bancohio Nat. Bank, Indenture Trustee.
   MEMORANDUM OPINION

WILLIAM T. BODOH, Bankruptcy Judge.

INTRODUCTION

Two issues are before the Court for resolution. The first involves the Proof of Claim filed by BANCOHIO and the second is the confirmation of a plan of reorganization of the Debtors.

GILLETTE ASSOCIATES, LTD., (“GILLETTE”) and CHARLES ERVIN STEIN (“STEIN”) (collectively “Debtors”) filed petitions for reorganization under Chapter 11 of Title 11 in 1987. When Debtors failed to file a plan within the exclusivity period, BANCOHIO NATIONAL BANK (“BANC-OHIO”) filed a plan providing for liquidation of Debtors. Debtors later filed a plan of reorganization. The Debtors’ Plan consists of the following writings:

1. First Amended Plan of Reorganization filed December 16, 1988.
2. Modification of Plan filed February 22, 1989.
3. Modification of Plan filed March 31, 1989.

BANCOHIO’s Plan is comprised of two (2) documents:

1. Second Amended Plan filed November 23, 1988.
2. Post-Balloting Modification of Second Amended Plan, filed February 23, 1989.

A joint confirmation hearing was held by the Court on February 24, 1989. Post-hearing memoranda have been submitted by both Plan proponents and THE OFFICIAL BOND HOLDERS COMMITTEE.

This is a core proceeding pursuant to 28 U.S.C. Sec. 157(b)(2)(A), (B), (K), and (L).

BACKGROUND

In October 1984, Trumbull County, Ohio, issued industrial revenue bonds to finance the acquisition of land and construction of a 100-bed intermediate nursing care nursing home facility located at 3310 Elm Road, NE, Warren, Ohio 44484 (“GILLETTE ASSOCIATES NURSING HOME PROJECT”, or “PROJECT”). TONN & BLANK, INC., was the prime contractor for the project. BANCOHIO is the indenture trustee for the holders of Two Million, Six Hundred Ten Thousand & 00/100 Dollars ($2,610,-000.00) of the Trumbull County, Ohio industrial development first mortgage revenue bonds, 13% percent, Series 1984 (“Bonds”).

GILLETTE is an Ohio limited partnership. STEIN is the sole general partner of GILLETTE. KENNETH R. EVERSOLE (“EVERSOLE”) was the sole limited partner of GILLETTE, but his interests were purchased pre-Petition by STEIN.

A loan agreement was executed between Trumbull County and GILLETTE. GILLETTE also executed a promissory note, which was secured by an open-end mortgage and security agreement. A Trust Indenture was executed between Trumbull County and BANCOHIO pursuant to which, inter alia, Trumbull County assigned the loan agreement, note and open-end mortgage and security agreement to BANCOHIO for the benefit of the bond holders. The bond issue closed on October 31, 1984, and construction commenced.

Under the terms of the note and loan agreement, GILLETTE was obliged to make monthly payments to BANCOHIO for the benefit of the bond holders. Between October 1984 and October 1987, GILLETTE was only obliged to pay the interest accruing on outstanding bonds and was entitled to a credit for earnings on the bond monies held by BANCOHIO pursuant to the loan agreement and Trust Indenture. The Trust Indenture required BANCOHIO to deposit, from proceeds of bond sales, the sum of Two Hundred Ninety-Five Thousand & 00/100 Dollar ($295,000.00) into a Debt Service Reserve Fund. Funds in the Debt Service Reserve Fund were restricted to use “to prevent any default in the payment of principal, of interest, and premium, if any, on the bonds, if monies in the Bond Fund are insufficient to pay the same as they become due.” Trust Indenture, See. 4.04(b), p. 17-18. GILLETTE met its first interest payment, due on November 25, 1985, but failed to meet additional payments. BANCOHIO made withdrawals from the Debt Service Reserve Fund to pay interest due to bond holders on April 1, 1986 and October 1, 1986. The Trust Indenture provided for the replenishment of the Debt Service Reserve Fund in the following manner:

Pursuant to the Loan Agreement [Sec. 2.1(c)(1), p. 13] in the event that monies in the Debt Service Reserve Fund are used for any purpose authorized by this Indenture (other than payment at maturity), Debt Service Reserve deposits shall be made by depositing into the Debt Service Reserve Fund on the twenty-fifth day of each of the next succeeding twelve months after such withdrawal one-twelfth (V12) of the amount of such withdrawal (after allowance for investment earnings).

(Trust Indenture Sec. 4.04(b), p. 18). BANCOHIO notified GILLETTE of its default. GILLETTE failed to cure, and BANCOHIO exercised its option to accelerate future payments.

TONN & BLANK ceased construction activity in December, 1985. Mechanic’s liens were filed. Tonn and Blank’s lien was for Five Hundred Twenty-Two Thousand, Eight Hundred Forty-Three & 70/100 Dollars ($522,843.70). Ten subcontractors of Tonn & Blank filed liens total-ling Four Hundred Thirty Thousand, One Hundred Seventy-Four & 98/100 Dollars ($430,174.98). The nursing home was only partially completed and without patients.

On March 18, 1986, TONN & BLANK filed a complaint in The United States District Court for the Northern District of Ohio against GILLETTE, EVERSOLE, STEIN, BANCOHIO, and others, claiming liens on the project. (Tonn & Blank, Inc., v. Gillette Assoc., Case C86-1041-Y). BANCOHIO filed its Answer, Counterclaim and Crossclaims seeking, among other things:

1. A joint money judgment against GILLETTE and STEIN in the principal sum of Two Million, Six Hundred Ten Thousand Dollars ($2,610,000.00), plus interest; and
2. Foreclosure of the mortgage and sale of the project.

On April 10, 1987, the District Court entered summary judgment against STEIN, EVERSOLE and GILLETTE, jointly and severally, in favor of TONN & BLANK in the principal amount of Seven Hundred Thousand Dollars ($700,000.00). None of the parties appealed the judgment. On April 20, 1987, the District Court entered summary judgment in favor of BANC-OHIO against GILLETTE and STEIN, jointly, in the amount of Two Million, Five Hundred Forty-Five Thousand, One Hundred Seventy-One & 62/100 Dollars ($2,545,171.62), plus interest from August 15, 1986.

Shortly after commencement of the District Court suit, subcontractors of TONN & BLANK, filed suits in Trumbull County Court of Common Pleas. (Polivka Paving v. Tonn & Blank, Inc., Case 86-CV-398); Firefoe v. Tonn & Blank, Inc., Case 86-CV-1390).

Among STEIN’s personal assets was a partnership interest in POST LAND COMPANY. The sum of One Million, One Hundred Fifty-Eight Thousand, Four Hundred Ninety-Five & 59/100 Dollars ($1,158,-495.59) was about to be disbursed to STEIN from POST LAND COMPANY from the sale of another nursing home facility. On May 5, 1987, the Trumbull County Court of Common Pleas issued a Charging Order in favor of BANCOHIO making STEIN’s interest in the POST LAND COMPANY subject to the judgment in favor of BANCOHIO. Subsequently, TONN & BLANK and CORTLAND SAYINGS & BANKING COMPANY, another creditor of STEIN, challenged BANC-OHIO’s attachment of STEIN’s partnership interest. The Common Pleas Court ordered that the POST LAND COMPANY monies be deposited with the Clerk of the Court until the priorities were determined. On June 5, 1987, the Common Pleas Court entered an Order directing that the entire amount of money deposited with the Court be disbursed to BANCOHIO. On June 10, 1987, TONN & BLANK filed a Notice of Appeal of the decision and a Motion for a stay of the judgment pending appeal. The Court of Appeals granted TONN & BLANK’S stay of the judgment pending appeal. On June 19, 1987, both GILLETTE and STEIN filed Chapter 11 Petitions in the United States Bankruptcy Court for the Northern District of Ohio. At the time of the Petition filings, Debtor had managed to complete construction of the project and had 17 patients.

After filing the Petitions for Reorganization under Chapter 11, STEIN sought Bankruptcy Court authority to use a portion of the POST LAND COMPANY funds on deposit with the Trumbull County Court to assist in Debtors’ reorganizational efforts. On June 23, 1987, we determined that BANCOHIO’s claim was adequately secured by the GILLETTE nursing home and ordered the POST LAND COMPANY funds transferred to a debtor-in-possession interest-bearing account at BANK ONE OF EASTERN OHIO, N.A. (“BANK ONE”). Further, the STEIN estate was authorized to loan up to Eighty Thousand & 00/100 Dollars ($80,000.00) of the POST LAND COMPANY funds to the GILLETTE estate for operating expenses of the nursing home. Subsequently, STEIN was also permitted to use portions of the POST LAND COMPANY funds for personal living expenses. After establishment of the BANK ONE account, additional POST LAND COMPANY funds amounting to approximately Two Hundred Fifty Thousand & 00/100 Dollars ($250,000.00) were deposited to the account.

In September 1987, GILLETTE and STEIN filed with this Court an Application to borrow money and compromise controversy. The Application proposed a settlement of the claim of TONN & BLANK, and included the releases of all subcontractor claims and liens against the GILLETTE project. On November 2, 1987, this Court approved the Application under the following conditions:

1. STEIN was authorized to lend to GILLETTE from the POST LAND COMPANY funds, and GILLETTE was authorized to borrow from STEIN, the sum of Five Hundred Ninety-Five Thousand & 00/100 Dollars ($595,000.00). STEIN was granted an administrative expense priority for this amount.
2. STEIN was directed to pay counsel for TONN & BLANK, as escrow agent, the sum of Five Hundred Ninety-Five Thousand & 00/100 Dollars ($595,000.00), which constituted full satisfaction of all claims between TONN & BLANK and the Debtors. (A mutual release was executed by both TONN & BLANK and the Debtors).
3. TONN & BLANK was required to release its liens on all property of the Debtors and cause the discharge of liens of all subcontractors of TONN & BLANK against the Debtors and indemnify the Debtors against any judgment or cause regarding any subcontractor lien which was not discharged.
4. Upon payment of the sum of Five Hundred Ninety-Five Thousand & 00/100 Dollars ($595,000.00), TONN & BLANK was required to assign to the Debtors all of its rights to all claims which are or may be owed or claimed to be owed to TONN & BLANK by STEIN, EVERSOLE and/or GILLETTE.

At the present time, construction of the project is complete. The nursing home is filled to capacity and has a waiting list of prospective patients. GILLETTE has accumulated at least Six Hundred Fifty Thousand & 00/100 Dollars ($650,000.00) over and above its operating costs.

THE PLANS

A. Plan of BancOhio. BANCOHIO’s “reorganization” plan is actually a plan to liquidate both GILLETTE and STEIN. Confirmation of the BANCOHIO Plan would approve a sale of the GILLETTE ASSOCIATES nursing home project to WARREN GENERAL HEALTH CARE PROPERTIES, an Ohio general partnership (“WARREN GENERAL”) for Three Million & 00/100 Dollars ($3,000,000.00). To implement the BANCOHIO Plan, the Court would require Debtors to deliver to WARREN GENERAL:

1. Full possession of the project land, buildings, and structures and fixtures with good and marketable title.
2. All tangible personal property used by Debtors in the operation of the project, including supplies and inventory, with good and marketable title.
3. Authority to operate under the Certificate of Need granted to Debtors by the State of Ohio Health Planning Development Agency.
4. Debtors’ consent to the transfer and surrender of Debtors’ Medicaid provider number to WARREN GENERAL.
5. Debtors’ consent to WARREN GENERAL (and/or its lessee) to operate under Debtors’ license to operate as a 100-bed intermediate care nursing home.
6. All other permits, licenses, franchises, consents, and other authorizations necessary for operation of the project.
7. Such service and maintenance and executory contracts as WARREN GENERAL may elect.
8. A guarantee that Debtors will be responsible for correcting any deficiencies resulting from a change of ownership inspection by the State of Ohio.

It is unclear whether applicable Ohio law requires the personal consent of the permit holder to insure continued validity of the assigned or transferred licenses and permits. That STEIN would voluntarily consent to his own involuntary liquidation is questionable. If he would not, the use of contempt powers to force those acts, espe-dally with the factual background here found, would seem at the very least to be harsh, Sec. 1142 notwithstanding. BANC-OHIO projected sources of funding for its Plan as follows:

SOURCE AMOUNT
Net proceeds from sale of GILLETTE nursing home facility to WARREN GENERAL $ 390,000.00
Cash from GILLETTE operations after payment of post-Petition operating expenses 680,000.00
Remainder of STEIN’s POST LAND COMPANY funds 813,800.00
Sale of Horses owned by STEIN 49,000.00
Veres Judgment 155,000.00
TOTAL FUNDS AVAILABLE $2,087,800.00

The BANCOHIO Plan projects disbursement of Two Million, Six Hundred Ten Thousand Dollars ($2,610,000.00) as bond principal and other disbursements of One Million, Nine Hundred Ninety-Six Thousand, Six & 97/100 Dollars ($1,996,006.97), plus an unknown amount to satisfy administrative expenses. The BANCOHIO Plan proposes to pay 100 percent (100%) on all claims, including the following amounts to itself:

1. Principal and interest owing to BANCOHIO as indenture trustee for the bond holders as of June 19, 1987 in the amount of Two Million, Eight Hundred Sixty-Three Thousand, Three Hundred Eighty-Six & 96/100 Dollars ($2,863,386.96).
2. Post-Petition interest of Five Hundred Twenty-One Thousand, Five Hundred Five & 72/100 Dollars ($521,505.72) to bond holders.
3. Fees and expenses of the indenture trustee as of June 19, 1987, totalling Thirty-Three Thousand, Seven Hundred Forty-Six & 33/100 Dollars ($33,746.33).
4.Fees and expenses of the attorney for the indenture trustee as of June 19, 1987, of One Hundred Thousand, Eighty & 29/100 Dollars ($100,-080.29).
5. Expenses incurred in United States District Court Case C86-1041-Y to-talling Thirty Thousand, Three Hundred Ninety-Seven & 28/100 Dollars ($30,397.28).
6. A projected and estimated administrative claim of One Hundred Fifteen Thousand & 00/100 Dollars ($115,-000.00).

B. Plan of Debtors. Debtors’ Plan also provides for a 100 percent payment to all allowed claims. Debtors set forth the source of funding for their Plan as follows:

Gillette- Cash accumulated from $ 650,000.00 post-Petition earnings
Stein-Cash on hand at Bank One 744,000.00
Cortland Savings & Banking Co. 275,000.00
Stein Equity in Business Real Estate (Noble Romans & Long John Silvers) 200,000.00
Veres Judgment 155,000.00
$2,024,000.00

BANCOHIO concluded in its Post-Hearing Brief that Debtors would require One Million, Four Hundred Ninety-Nine Thousand, Two Hundred Seventy-Three & 46/100 Dollars ($1,499,273.46) at confirmation to implement its Plan. The Official Bond Holders Committee estimated the figure at One Million, Five Hundred Seventeen Thousand, Two Hundred Seventy-Three & 86/100 Dollars ($1,517,273.86) in its March 6,1989 Brief and One Million, Six Hundred Nineteen Thousand, Seven Hundred Eight Dollars ($1,619,708.00) in its March 16, 1989 Brief. Whether using Debtors’ figures, BANCOHIO’s figures, or the Bond Holder’s Committee’s figures, Debtors appear to have sufficient funds to implement their Plan.

DISCUSSION

Chapter 11 is designed to accommodate confirmation of both consensual Plans and those which do not receive the acceptance of all the various classes. To qualify as confirmable, a plan must satisfy all the requirements of 11 U.S.C. Sec. 1129. That section provides two means by which a plan may be confirmed. The first requires satisfaction of all subsection (a) requirements, including (a)(8), which necessitates acceptance of the plan by all impaired classes of claims or interests. The second means, in addition to incorporating all requirements of subsection (a), except for (a)(8), requires the plan not unfairly discriminate, that it be fair and equitable with respect to each class of impaired claims or interests that has not accepted the plan, and that with respect to unsecured claims, no claims junior to unsecured creditors receive an interest in property under the Plan. 11 U.S.C. Sec. 1129(b).

Sec. 1129 lists twelve (12) prerequisites to the confirmation of a Chapter 11 plan. The first of these is that “the plan complies with the applicable provisions of this Chapter.” 11 U.S.C. Sec. 1129(a)(1). The drafters envisioned that “paragraph (1) requires that the plan comply with the applicable provisions of Chapter 11, such as Secs. 1122 and 1123, governing classification and contents of plan.” H.R.Rep. No. 595, 95th Cong., 1st Sess. 412 (1977), S.Rep. No. 989, 95th Cong., 2d Sess. 126 (1978), U.S. Code & Admin.News, 1978, pp. 5787, 5912, 6368; see also 5 Collier on Bankruptcy, para. 1129. — 02[1] (15th ed. 1987). Title 11 U.S.C. Sec. 1122 addresses classification of claims and provides, in pertinent part:

(a) ... A plan may place a claim or an interest in a particular class only if such claim or interest is substantially similar to the other claims or interests of such class.

Classification is a method of recognizing a difference in rights of creditors which calls for a difference in treatment. The focus of classification is the legal character of the claim as it relates to the assets of the debtor. J. P. Morgan & Co. v. Missouri Pacific Railroad, 85 F.2d 351, 352 (8th Cir.1936), cert. denied 299 U.S. 604, 57 S.Ct. 230, 81 L.Ed. 445 (1936).

Unlike the Debtors’ Plan, the BANCOHIO Plan lumps together the claims of the bond holders with the claims of the indenture trustee. Claims of the indenture trustee include entitlement to post-Petition interest, fees and expenses and advances, along with attorney’s fees. This classification is inconsistent with the requirements of 11 U.S.C. Sec. 1122(a). The claims of the bond holders are a matter of contract and are not subject to alteration by the Court. As the court stated in U.S. Truck Co., Inc., 42 B.R. 790, 796 (Bankr.E.D.Mich.1984):

Pre-petition claims arising out of ordinary contractual relationships are closed — they have occurred and the damages are measurable (or estimatable).

The language used by the U.S.Truck court aptly describes the claims of the bond holders here. However, the indenture trustee’s claims, even though arguably arising under the same contract, are not closed. They are what the U. S. Truck court termed “open ended” in character. The fees and expenses of the indenture trustee and its attorneys continue to accrue in these proceedings. Unlike the claims of the bondholders, the fees and expenses of the indenture trustee, both pre- and post-Petition, are subject to the review of this Court and are of a substantially different legal character than the claims of the bond holders. Perhaps the difference in the interests of the indenture trustee and of the bond holders in the assets of the Debtors is most evident when one considers the standard of review which the indenture trustee’s entitlement to the Debtors’ assets will be judged. The Court will consider the claim of the indenture trustee to attorney fees in light of the extent to which the services rendered were contemplated by contract and the extent to which they benefitted the Debtors’ estate. This standard of review is inappropriate with respect to the interests of the bond holders. Because the BANC-OHIO Plan contains a classification which is not internally homogeneous, the Plan is nonconfirmable for having failed to meet the requirements of 11 U.S.C. Sec. 1129(a)(1).

The remainder of this Opinion will deal mainly with an analysis of how the Debtors’ Plan meets the requirements for confirmation contained in 11 U.S.C. Sec. 1129. Since a reviewing court may disagree with our holding striking the BANCOHIO Plan on the basis of an improper classification, we consider the other reasons why the Debtors’ Plan is to be preferred to the BANCOHIO Plan. Thus, a reviewing court will have before it this Court’s reasoning on all aspects of confirmation.

11 U.S.C. Sec. 1129(a)(2) requires that the proponent of the Plan comply with the applicable provisions of Chapter 11. Both Plan proponents appear to comply with this requirement.

11 U.S.C. Sec. 1129(a)(3) requires that the Plan be proposed in good faith and not forbidden by law. Both parties here have complained of a lack of good faith on the part of the other. The term “good faith” is left undefined by the Code. However, in the context of a Chapter 11 reorganization, a plan is considered to be in good faith “if there is a reasonable likelihood that the plan will achieve a result consistent with the standards prescribed under the Code.” In re Toy & Sports Warehouse, Inc., 37 B.R. 141, 149 (Bankr.S.D.N.Y.1984); accord In re White, 41 B.R. 227, 229 (Bankr.M.D.Tenn.1984). BANCOHIO does not violate the good faith requirement solely because it has proposed a liquidation plan. There has been no evidence that BANCOHIO does not have a reasonable belief that the Debtors’ liquidation is in the Bank’s best interest. See 5 Collier on Bankruptcy, 1129.02[3] (15th ed. 1987). We find that both plans are proposed in good faith.

There appears to be no issue with respect to 11 U.S.C. Sec. 1129(a)(4), (5) and (6).

11 U.S.C. Sec. 1129(a)(7) raises an issue for determination. It provides:

(7) With respect to each impaired class of claims or interests—
(A) Each holder of a claim or interest of such class—
(i) has accepted the plan; or
(ii) will receive or retain under the plan on account of such claim or interest property of a value, as of the effective date of the plan, that is not less than the amount that such holder would so receive or retain if the debtor were liquidated under chapter 7 of this title on such date.

There are three ways in which a plan can meet the requirements of Sec. 1129(a)(7):

(1) Under this section and Sec. 1126(f), all members of an unimpaired class are deemed to accept the plan; or
(2) All members of a class may affirmatively vote to accept the plan; or
(3) Each nonaccepting member of the class receives at least as much as would be received in a Chapter 7 liquidation of the Debtor.

In determining whether the Plans meet the specifications of Sec. 1129(a)(7), we examine the Plans from the perspective of each of these three requirements.

First, we must determine which classes are “unimpaired” under the Debtors’ Plan and may be deemed to have affirmatively accepted. Class A consists of administrative expenses entitled to priority pursuant to 11 U.S.C. Sec. 507(a). As this is a class required by statute to be paid in full on confirmation, the class is unimpaired. Class B-l consists of the allowed secured claim of BANCOHIO on behalf of the bond holders, excluding any portion of the claim provided for in Class B-2. Debt- or proposes to cure in full any default which occurred before or after the commencement of this case, without acceleration; to reinstate the maturity of such claims as they existed prior to default and to compensate the holders for damages incurred as a result of the default within ten (10) days of confirmation. Debtors allot that this arrangement will leave unaltered the legal, equitable and contractual rights to which the bond holders are entitled. THE OFFICIAL BOND HOLDERS COMMITTEE and BANCOHIO complain that the Debtors’ failure to provide for the complete replenishment of the Debt Service Reserve Fund results in leaving Class B-l impaired.

The concept of “impairment of a claim or interest under a debtor’s plan of reorganization” is defined in 11 U.S.C., Sec. 1124. This section provides that a claim is impaired under a plan of reorganization unless the plan (1) does not alter any of the claimants’ contractual rights; (2) cures any default; (3) reinstates the maturity of a claim to its pre-default status; and (4) compensates the claimants for damages incurred due to their reasonable reliance on a particular contractual provision or applicable law. The Trust Indenture and Loan Agreement require Debtors to begin repayment to the Debt Service Reserve Fund in the month following the month of default. The repayment is scheduled to take place over the course of a year in equal monthly installments. See Trust Indenture, Sec. 4.04(b) and Loan Agreement, Sec. 2.1(c)(1). Debtors propose to deposit a sum equal to one-twelfth (Vi2th) of the Two Hundred Sixty-Two Thousand Dollars ($262,000.00) required to bring the Debt Service Reserve Fund to its required balance of Two Hundred Ninety-Five Thousand Dollars ($295,-000.00) at confirmation and to pay the remainder due in eleven further installments.

In a widely followed opinion, In re Tad deo, 685 F.2d 24 (2d. Cir.1982), the Second Circuit established that the concept of curing defaults under Sec. 1124 necessarily includes the power not only to “deaccelerate” and reinstate the original terms of a debt, but also to restore the relative positions of the parties to their pre-default state. A default is an event in a debt- or/creditor relationship which triggers certain consequences — here, acceleration.

Curing a default commonly means taking care of the triggering event and returning to pre-default conditions. The consequences are, thus, nullified. This is the concept of 'cure’ used throughout the Bankruptcy Code.

Id. at 26-27. Although the creditors’ rights arising out of acceleration are, in fact, affected by cure and reinstatement, they are deemed unimpaired. See, e.g., In re Forest Hills Assoc., 40 B.R. 410, 414 (Bankr.S.D.N.Y.1984); In re Madison Hotel Assoc., 29 B.R. 1003, 1006 (Bankr.W.D.Wis.1983); In re Masnorth Corp., 28 B.R. 892, 894; In re Barrington Oaks General Partnership, 15 B.R. 952 (Bankr.D.Utah 1981).

It is, thus, clear that Code See. 1124(2) provides the debtor-in-distress with the statutory tools necessary to effect a total healing of the scars of contractual default by placing the parties into the same position as they were immediately before the default occurred. This healing is accomplished by paying the creditor whatever he would have received under the contract had the debtor not defaulted. The creditor is nevertheless rightfully categorized as unimpaired, for he is returned to the same position he was in immediately prior to the default and is thereby given the full benefit of his original bargain.

THE OFFICIAL BOND HOLDERS COMMITTEE and BANCOHIO next complain that the Debtors’ conveying of a second mortgage against the project assets to CORTLAND impairs the bond holders’ class. They opine that the Trust Indenture and Loan Agreement preclude a second mortgage on the property. However, these instruments do not preclude a second mortgage where the indenture trustee agrees to a second mortgage. 11 U.S.C. Sec. 1123(a)(5)(E) provides that “a plan shall provide adequate means for its execution, such as satisfaction or modification of any lien.” Collier explains that “the plan may propose such actions notwithstanding non-bankruptcy law or agreements.” 5 Collier, para. 1123.01[5] at 1123-10 (15th ed. 1987). 11 U.S.C. Sec. 1142 provides for plan implementation by directing the debt- or and any other necessary party to:

execute or deliver or to join in the execution or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to perform any other act, ... that is necessary for the consummation of the plan.

Thus, it is permissible under the Code for the contract provision permitting a modification to be effectuated. The bond holders have little cause to complain where they are to receive full repayment of all sums due and owing. Permitting the second mortgage neither alters, diminishes, nor enhances rights under the contract. Under these circumstances, the second mortgage does not constitute an impairment.

THE OFFICIAL BOND HOLDERS COMMITTEE further argues that the seventh-year balloon payment to CORTLAND BANK serves to impair the interests of the bond holders. THE OFFICIAL BOND HOLDERS COMMITTEE could not describe in particular how this served as an impairment, and the Court declines to speculate.

Debtors’ Classes B-2, C, F, and G are proposed to be satisfied in full within forty-five (45) days of the effective date of the Plan or, in the event of an objection to a claim in one of these classes, payment is to be made within twenty (20) days of the allowance of such claim by final Order of the Court. These classes do not appear to be impaired and no objections have been made with respect to these classes. The remaining class, Class D, consists of STEIN. As an insider, STEIN’s acceptance is immaterial with respect to satisfying the requirements of Sec. 1129(a)(7).

Since we have determined there are no impaired classes under the provisions of Sec. 1129(a)(7), the Plan meets the requirements of Sec. 1129(a)(8), which requires that each class of claims or interests accept the plan or be found to be not impaired under the plan. Secs. 1129(a)(9) and (10) are not relevant to our discussion here.

CLAIM OF BANCOHIO

A. Positions of the Parties. BANC-OHIO filed its Proof of Claim on September 28,1987. Debtors objected to the claim on December 7, 1988, on the following bases:

(1) The amount of the claim is in excess of that owed by debtors and a full and detailed accounting with respect to all credits and debits upon charges assessed against debtors has not been provided.
(2) Included in such claims are charges for penalties, service fees, and attorney fees which are excessive, not allowable as provided by applicable provisions of law, or the underlying contractual relationship between debtors and claimant.

BANCOHIO responded to the Objection on January 23, 1989. By Order of March 8, 1989, we directed the parties to submit whatever supplementation the parties deemed necessary on the issue of BANC-OHIO’s Proof of Claim prior to the close of business on March 14, 1989. Thereafter, the Court would consider the matter on the papers filed. Both parties made supplemental filings; Debtors filed a brief on March 14, 1989, and BANCOHIO responded to it on March 16, 1989.

In its January 23, 1989 response, BANC-OHIO clarified that it is relying upon Sec. 506(b) of the Bankruptcy Code to support its claim for pre-petition fees and expenses. Sec. 506(b) provides:

(b) To the extent that an allowed secured claim is secured by property, the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided for under the agreement under which such claim arose.

Sec. 2.1(C)(ii) of the Loan Agreement set forth the contractual terms under which GILLETTE might be obliged for fees and expenses, as follows:

(C) To the Trustee [BANCOHIO], the reasonable fees, charges and expenses of the trustee as Trustee, bond registrar, and paying agent, and of any other paying agent on the Bonds under the Indenture; all as provided in the Indenture, as and when the same become due; provided that the Company may, without creating a default hereunder, contest in good faith the necessity of any Extraordinary Services and Extraordinary Expenses as such terms are defined in the Indenture, and the reasonableness of any such fees, charges, or expenses.

The open-end mortgage and security agreement provided for securing BANC-OHIO’s fees with the first mortgage. The loan agreement specifically provided that attorney’s fees and expenses incurred by BANCOHIO are “expenses” of the trustee.

With respect to post-Petition fees and expenses, BANCOHIO asserts an entitlement to allowance of an administrative claim. BANCOHIO relies on Sec. 503(b)(3)(D) and Sec. 503(b)(4) in this regard. These provisions of Sec. 503 provide as follows:

(b) After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under Sec. 502(f) of this title, including— ******
(3) the actual, necessary expenses, other than compensation and reimbursement specified in paragraph (4) of this subsection, incurred by—
******
(D) a creditor, an indenture trustee, equity security holder, or a committee representing creditors or equity security holders other than a committee appointed under Sec. 1102 of this title, in making a substantial contribution in a case under chapter 9 or 11 of this title;
(4) reasonable compensation for professional services rendered by an attorney or an accountant of an entity whose expenses allowable under paragraph (3) of this subsection, based on the time, the nature, the extent, and the value of such services, and the cost of comparable services other than in a case under this title, and reimbursement for actual, necessary expenses incurred by such attorney or accountant.

B. Amounts Claimed by BANCOHIO. BANCOHIO set forth the “four basic components” to its claim.

1. Principal and interest owing to the bond holders.
2. Unreimbursed advances totalling Eight Thousand, Nine Hundred Twenty-Nine & 25/100 Dollars ($8,929.25) made by BANCOHIO pursuant to October 3, 1986 Order of Judge Dowd.
3. The fees and expenses of BANC-OHIO for the services it has rendered in administering the bond issue and responding to the bond default.
4. The attorney’s fees and expenses incurred by BANCOHIO as a result of the bond default.

Each of these components is discussed separately below.

1. The portion of the claim seeking principal and interest owing to the bond holders is not in dispute. Debtors’ Plan provides for full payment of interest arrearag-es and for replenishment of the Debt Service Reserve Fund pursuant to the terms of the agreement between the parties. Accordingly, this portion of the claim is allowed.

2. The portion of the claim relating to unreimbursed advances made by BANC-OHIO, purportedly pursuant to an Order of Judge Dowd, is disallowed. The Proof of Claim set forth a lump-sum figure of Thirty Thousand, Three Hundred Ninety-Seven & 29/100 Dollars ($30,397.29). In response to Debtors’ objections seeking a detailed breakdown of the items paid, BANCOHIO reduced the amount due to Eight Thousand, Nine Hundred Twenty-Nine & 25/100 Dollars ($8,929.25). BANCOHIO explained, “[sjince the Proofs of Claim were filed, adjustments have been made for additional debits and credits.” None of the exhibits submitted by BANCOHIO contains a list of the items which constitute the Thirty-Thousand, Three Hundred Ninety-Seven & 29/100 Dollars ($30,397.29), nor accounts for the “credits”, nor does any set out BANCOHIO’s authority to apply credits to the amount claimed. The claim fails for lack of proof.

3. The third component of the claim relates to fees and expenses incurred by BANCOHIO, other than attorneys’ fees and expenses. BANCOHIO contends, and the Court agrees, that its claim for pre-Petition fees and expenses is governed by 11 U.S.C. Sec. 506(b). We find that the estate has a value greater than the pre-Petition amounts claimed. Therefore, the Court may consider the pre-Petition fees and expenses based on their reasonableness in light of the contract between the parties. “Ordinary Services” and “Ordinary Expenses” total Ten Thousand, Three Hundred Sixty-Five & 57/100 Dollars ($10,-365.57). The charges are detailed in Exhibit 3 to BANCOHIO’s January 23, 1989 Response Brief and are not disputed. This portion of the claim is allowed as reasonable fees and expenses contemplated by the parties’ contract. The portion of the claim relating to Extraordinary Fees and Expenses is disallowed. The Trust Indenture specifies that:

If such Extraordinary Services or Extraordinary Expenses are occasioned by the neglect or misconduct of the Trustee, it shall not be entitled to compensation or reimbursement therefor.

As BANCOHIO pointed out, ‘Allowance of reasonable fees and expenses pursuant to Sec. 506(b) is a matter of federal, not state, law.’

The burden of proof to show entitlement to fees is always on the applicant. In re Lindberg Products, Inc., 50 B.R. 220, 221 (Bankr.N.D.Ill.1985); In re Harman Supermarket, Inc., 44 B.R. 918, 920 (Bankr.W.D.Va.1984); In re Horn & Hardart Baking Co., 30 B.R. 938, 939 (Bankr.E.D.Pa.1983). Since every dollar expended on legal fees results in a dollar less that is available for distribution to the creditors or for use by the debtor, this burden is not to be lightly regarded. In re Hotel Assoc. Inc., 15 B.R. 487, 488 (Bankr.E.D.Pa.1981). Here, Debtors raised serious allegations concerning misapplication of bond proceeds. Debtors alleged that BANCOHIO did not adhere to the procedures outlined in Item 4.4 of the Loan Agreement in making disbursements. Because of this breach, Debtors lacked sufficient funds to allow a timely completion of construction. Debtors particularly raised questions and requested substantiating documentation for the following disbursements:

1. $52,762.60 on 10/31/84 to International Construction Company.
2. $50,000.00 on 01/14/85 to International Furnishings Corporation.
3. $125,000.00 on 01/23/85 to International Furnishings Corporation.
4. $27,950.00 on 04/22/85 to International Furnishings Corporation.
5. $38,536.66 on 05/29/85 to International Furnishings Corporation.
6. $15,806.00 on 07/23/85 to International Construction Corporation.
7. $31,688.00 on 07/11/85 to International Construction Corporation.
8. $35,000.00 on 08/22/85 to Health Resources Management Corporation.
9. $15,500.00 on 08/29/85 to Kenneth Eversole.
10. $30,000.00 on 09/25/85 to Kenneth Eversole.

In spite of the seriousness of these allegations, BANCOHIO provided no information to Debtors or the Court concerning the propriety of its disbursements, or the manner in which the disbursements were made. As discussed earlier, even when faced with what one would expect to be a simple matter of itemizing the advances it claimed to have made, BANCOHIO chose to rest on responding with a different figure, also with no verification. Patently, BANC-OHIO has failed to carry its burden to show entitlement to Extraordinary Fees and Extraordinary Expenses under its agreements with GILLETTE.

Even if we had found that the record supported a finding that the Bank met its burden of proof on the issue of neglect or misconduct in its disbursements, we would still be compelled to disallow the claim for Extraordinary Fees. Under Sec. 506(b), BANCOHIO is only entitled to those fees, costs, or other charges this Court deems “reasonable”. The only documentation concerning the fees is contained in Exhibit 3 to the January 23, 1989 Response Brief. That Exhibit contains insufficient information for the Court to make a determination as to the reasonableness of the charges. The Exhibit is devoid of information concerning the dates on which time was spent or the nature of the activity. The standards which this Court is obliged to follow, on the “reasonableness” issue were clearly set out in the cases which BANCOHIO itself cited to the Court. We can only guess why BANCOHIO did not supply the documentation required for a “reasonableness” determination and we decline to render judgments based on guesses.

4. The last component of BANCOHIO’s claim consists of its demand for pre-Petition attorney fees and expenses under 11 U.S.C. Sec. 506(b). Sec. 9.4 of the Loan Agreement (quoted infra at f. 25) provides that BANCOHIO is entitled to “reasonable” attorney’s fees and expenses incurred as a result of a default by GILLETTE. BANCOHIO’s burden under this Section appears to be less than its burden under Sec. 7.02 of the Trust Indenture. Sec. 9.4 contains no requirement that BANCOHIO demonstrate that it was not neglectful nor guilty of misconduct. Debtors chose not to submit evidence on this issue. Therefore, we proceed with an analysis of the reasonableness of the pre-Petition attorney fees and expenses. Even though BANCOHIO has maintained that its entitlement to pre-petition fees and expenses is governed by Sec. 506(b), and its entitlement to post-Petition fees and expenses is governed by Sec. 503(b)(3)(D) and Sec. 503(b)(4), BANCOHIO has not provided the Court with a document containing a breakdown of the amounts sought for pre-Petition fees and expenses and those sought for post-Petition expense fees and expenses. Rather, it is necessary to combine the Proof of Claim filed September 28, 1987, and the breakdowns of charges in the Response Brief filed January 23, 1989. The Proof of Claim provides lump-sum figures through June 19, 1987, which are presumably the pre-Petition figures. By subtracting these figures from figures contained in the January 23, 1989 Response Brief, purporting to be totals through December 31, 1988, we arrive at the post-Petition claim. The breakdown is as follows:

Fees and Expenses at 06/19/87 Fees and Expenses at Post-Petition 12/31/88 Claim
(Proof of Claim filed 09/28/87) (Brief Filed 01/23/89)
Attorney Fees 137,477.57 226,911.83 89,434.26.

BANCOHIO did not provide a breakdown of the hourly rates charged for those performing services. By dividing the total hours reported (1,922) into the total fees charged ($209,805.00), we determined the blended average rate to be $109.16 per hour for work performed by both professional and para-professional personnel. Based on the type of work performed, we conclude that an average hourly rate of $109.16 is reasonable. We have reviewed the detailed bills submitted by BANC-OHIO’s attorneys on a line-by-line basis. Appendix 1 contains the Court’s determination of hours disallowed and the Court’s reason for each such disallowance. In summary, a total of 979.1 hours were charged for services through June 19,1987. We have- disallowed 193.3 of these hours. The Court deducted as unreasonable all time which appeared to be charged for the attorneys within the law firm talking with one another where the need for multi-attor-ney conference is not shown or where the attorneys’ time charges for the same conference are differing. These are denoted on Appendix 1 as “interoffice communication.” Approximately one-half of the hours charged for paralegals was deducted, as an hourly rate of $109.16 is believed excessive for paralegal activity. Further, we have reduced the travel time charges, finding that $109.16 is excessive for travel. Deductions are made where it is impossible to determine whether the charge was reasonable from the description provided, or where two attorneys or more appeared to charge for identical work and no explanation of the need for two or more attorneys was provided.

Expenses charged through the time of the filing of the Petition appear to be in the neighborhood of $8,500.00. These expenses are disallowed in their entirety. BANCOHIO is represented by sophisticated counsel who cited the appropriate cases and standards to be applied by this Court. Well-settled case law indicates that a court cannot merely rubberstamp charges as reasonable where no indication of the amounts charged is provided. For example, we were not advised why outside professional services were needed, or what they were. We are unadvised concerning the necessity for delivery services and computer-assisted research. We do not know what court fees were paid, or where, or the amounts charged for copies, telecopies, or the rate of charges for telephone and travel. As we noted earlier, the burden is on the applicant. BANCOHIO has not carried its burden.

With respect to BANCOHIO’s claim to entitlement to administrative expenses under 11 U.S.C. Sec. 503, the claim is denied in its entirety. The burden of proving entitlement to an administrative expense is on the claimant and the standard of proof is a preponderance of the evidence. In re 1 Potato 2, Inc., 71 B.R. 615 at 618 (Bankr.D.Minn.1987) (citing Matter of Patch Graphics, 58 B.R. 743, 746 (Bankr.W.D.Wisc.1986). Section 503 requires a showing of a “substantial contribution” to the bankruptcy estate. BANCOHIO has made no such showing. We agree with the analysis and conclusions reached by the court in In re Rockwood Computer Corp., 61 B.R. 961 (Bankr.S.D.Ohio 1986). There, fees of the indenture trustee were disallowed because the court found that the indenture trustee did not make a “substantial contribution” as required under Sec. 503. The court stated:

... We do not believe that the ‘substantial contribution’ required by Sec. 503(b)(4) is to be found in connection with the performance of the normal tasks required of counsel representing the proponent of a Chapter 11 plan. The formulation of a disclosure statement and plan, of course, falls into this category. Where the disclosure statement and plan are presented by the debtor which is represented by an attorney appointed by the court pursuant to Sec. 330, that attorney is entitled to compensation for that work. Another attorney who contributes to these matters is merely performing an activity [which] amounts to the performance of some function or duty of the trustee, debtor-in-possession, or other officer of the estate, and compensation should not be awarded to such a claimant.

Here, both the Debtors and the bond holders are represented by counsel appointed by the Court pursuant to 11 U.S.C. Sec. 330. The Indenture Trustee did not seek appointment under Sec. 330. It has not and cannot demonstrate that its services were of a benefit to the Debtors’ estate or to the other creditors. Its opposition to use of the POST LAND COMPANY funds and to the compromise with TONN & BLANK increased both the Debtors’ and TONN & BLANK’S expenses. It appears the services were performed primarily for the benefit of BANCOHIO and did not make a substantial contribution in this case.

In addition to reasons already discussed, there are other reasons for preferring Debtor’s Plan over that proposed by BANCOHIO. Because some of these reasons also serve to support our conclusion that BANCOHIO did not make a substantial contribution to this case, we believe a brief articulation of these reasons is appropriate.

The Debtors’ Plan is consistent with the purpose of Chapter 11, which provides an alternative to liquidation. As the Supreme Court acknowledged in NLRB v. Bildisco and Bildisco, 465 U.S. 513, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984), the Bankruptcy Court is a court of equity, but in performing its equitable duties the Court must focus on the ultimate goal of Chapter 11. In the Supreme Court’s view,

The fundamental purpose of reorganization is to prevent a debtor from going into liquidation, with an attendant loss of jobs and possible misuse of economic resources. See H.R.Rep. No. 95-595, p. 220 (1977).

465 U.S. at 527-28, 104 S.Ct. at 1196-97 (1984). This view was reinforced in United States v. Whiting Pools, Inc., 462 U.S. 198 at 203, 103 S.Ct. 2309 at 2312-13, 76 L.Ed.2d 515, where the court stated:

... By permitting reorganization, Congress anticipated that the business would continue to provide jobs, to satisfy creditors’ claims, and to produce a return for its owners. H.R.Rep. No. 95-595, p. 220 (1977). Congress presumed that the assets of the debtor would be more valuable if used in a rehabilitated business than if ‘sold for scrap.’

A harmonizing view was expressed by the Sixth Circuit in Matter of Winshall Settlor’s Trust, 758 F.2d 1136, 1137 (6th Cir.1985). There, the court stated:

The purpose of Chapter 11 reorganization is to assist financially distressed business enterprises by providing them with breathing space in which to return to a viable state.

See also Vanston Bondholders Protective Committee v. Green, 329 U.S. 156, 67 S.Ct. 237, 91 L.Ed. 162 (1946); In re Nite Lite Inns, 17 B.R. 367 (Bankr.S.D.Cal.1982) (Liquidation plans should be secondary concerns unless debtor chooses such a course or the necessities of justice require it).

Debtors’ Plan is fair and equitable. It proposes to pay all creditors in full. BANCOHIO’s proposal to liquidate both GILLETTE and STEIN is not fair and equitable to these Debtors. Liquidation would deprive STEIN of the opportunity to recoup his investment of time, close to 1.4 million dollars in advances, and his lifetime savings and livelihood. Further, STEIN testified to the receipt of offers for the GILLETTE facility of 3.1 million, 3.2 million, 3.3 million, and 3.7 million dollars. WARREN GENERAL, the very buyer proposed in BANCOHIO’s liquidation plan, made an offer of 3.2 million dollars prior to the time the facility was in operation. Our Memorandum Opinion of November 2, 1987 found “[t]he 3.1 million dollar offer for the facility represents a minimum evaluation.” It is curious that now that the facility is completed, is filled to capacity and has a waiting list of patients, and is showing a profit, BANCOHIO would propose a plan to liquidate GILLETTE and surrender its Certificate of Need and licenses to WARREN GENERAL for a lower 3 million-dollar offer.

FEASIBILITY OF DEBTORS’ PLAN

11 U.S.C. Sec. 1129(a)(ll) provides:

Confirmation of the plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan, unless such liquidation or reorganization is proposed in the plan.

The standards to be utilized by courts examining the feasibility of plans are set forth in In re Cherry, 84 B.R. 134, 138 (Bankr.N.D.Ill.1988), thusly:

... When examining the feasibility of a business operation, the court should consider the adequacy of the capital structure, the earning power of the business, the economic conditions, the abilities of management, the continuity of the present management, and other matters which determine the prospects of the sufficiently successful business operation. In re Clarkson, 767 F.2d 417 (8th Cir. 1985). The plan must offer a reasonable prospect of success and [be] worka-ble_ ‘Success need not be guaranteed.’ In re Monnier Bros., 755 F.2d 1336, 1341 (8th Cir.1985) (quoting United Properties, Inc. v. Emporium Department Stores, Inc., 379 F2d. 55, 64 (8th Cir.1967).

See also In re U. S. Truck Co., Inc., 800 F.2d 581, 589 (6th Cir.1986); Federal Land Bank of Columbia v. Cheatham, 91 B.R. 377 (E.D.N.C.1988).

First, we find that the continuation of present management would benefit all parties in interest. Debtors’ problems stemmed from a lack of funds to complete construction, not from mismanagement of the facility. Once construction of the facility was complete, Debtors were able to begin operations and to maintain the operations in an exemplary fashion. Evidence of management’s ability is evident in Debtors’ payment of all operating expenses and accumulation of more than Six Hundred Fifty Thousand Dollars ($650,000.00) for distribution on pre-Petition debts. Based on the filings of the parties, the testimony adduced at hearing, and the monthly reports filed by Debtors, we find that the Debtors reasonably can be expected to have future net earnings and cash flow sufficient in amount to meet the restructured obligations.

Second, we find that Debtors’ proposed new capital structure, including the relationship of debt to equity, is sound.

For the foregoing reasons and on the authorities cited, the Debtors’ Plan is confirmed. An appropriate Order shall issue.

ORDER

For reasons set forth in the Court’s Memorandum Opinion entered of even date, the claim of BANCOHIO NATIONAL BANK for principal and interest owing to the bond holders through April 1, 1989, is allowed in full. The claim of BANCOHIO NATIONAL BANK for Ordinary Services and Expenses is allowed in the amount of Ten Thousand, Three Hundred Sixty-Five & 57/100 Dollars ($10,365.57). The claim of BANCOHIO NATIONAL BANK for pre-Petition attorney fees incurred as a result of the bond default is allowed in the amount of Eighty-Five Thousand, Seven Hundred Seventy-Seven & 93/100 Dollars ($85,777.93). The remainder of BANC-OHIO NATIONAL BANK’S Proof of Claim, and its claim for administrative expenses, is disallowed.

Debtors’ First Amended Plan of Reorganization, as modified, is confirmed. Debtors’ counsel shall prepare an appropriate Order and submit it to the Court within seven days of entry of this Order.

IT IS SO ORDERED. 
      
      . The two payments totalled $353,562.00. The payments reduced the Debt Service Reserve Fund to approximately Thirty-Three Thousand & 00/100 Dollars ($33,000.00).
     
      
      . Both cases were removed to this Court.
     
      
      . Case Number JLD No. 56, Page 300, Trumbull County Court of Common Pleas.
     
      
      .The appeals were removed to the Bankruptcy Court with consent of all parties on August 6, 1987.
     
      
      . WARREN GENERAL is an Ohio general partnership formed by Warren General Health Care Enterprises, Inc., and Mr. Robert VanSickle. Warren General Health Care Enterprises, Inc., is an affiliate of Warren General Hospital. Mr. VanSickle is a principal of AMCARE HEALTH, INC., a creditor in these Chapter 11 proceedings. BANCOHIO’s Disclosure Statement represented that another company in which Mr. Van-Sickle has an interest, Vanesco, Inc., will, in all probability, manage the GILLETTE facility for WARREN GENERAL.
     
      
      . 11/23/88 Disclosure Statement accompanying the Second Amended Combined Plan of Reorganization submitted by BANCOHIO.
     
      
      . This sum is determined by subtracting the assumed bond debt from the total purchase price.
      ($3,000,000.00 - $2,610,000.00 = $390,000.00).
     
      
      . Projected from August 31, 1988 through November 30, 1988 at $50,090.00 per month.
     
      
      . Projected from March 31, 1988 to November 30, 1988; balance on March 31, 1988 was $782,-000.00; additional interest projected at 6.1 percent (6.1%) per annum.
     
      
      . Any additional sums needed may be obtained, BANCOHIO explains, by liquidating STEIN's real estate interests. The Plan makes no acknowledgement of the approximately $33,-000.00 or accrued interest which BANCOHIO is holding in the Debt Service Reserve Fund.
     
      
      . See Proof of Claim of BANCOHIO filed 09/28/87, p. 1.
     
      
      . See 11/23/88 Disclosure Statement, p. 28 (amount to a projected closing date of 11/30/88).
     
      
      . See Proof of Claim of BANCOHIO filed 09/28/87, p. 2.
     
      
      . Id.
     
      
      . Id.
     
      
      . See Disclosure Statement of 11/23/89, p. 29; BANCOHIO has submitted to the Court a statement for professional fee charges through December 30, 1988, in the amount of $226,911.83. It is unclear what portion, if any, of these fees are included in the above-projected disbursements.
     
      
      . Second Modification to Debtors’ First Amended Plan, filed 03/31/89.
     
      
      . Cash is accumulating at the rate of some $50,000 per month over operating expenses.
     
      
      . Stein is proposing to loan this sum to Gillette to be repaid on a monthly basis as funds are available. In the event Gillette defaults on a payment of its secured obligation to the bond holders or Cortland Savings & Banking Co., the monthly payment to Stein is to be suspended until the default is cured.
     
      
      .Cortland has agreed to loan Debtors $525,-000.00 at 1114 percent interest per annum, secured by a second mortgage on the nursing home facility. The loan is' repayable on a monthly basis upon a 20-year amortization schedule with a seven-year balloon payment.
     
      
      
        . 1129(a)(4), (5) and (6) provide:
      (4) Any payment made or to be made by the proponent by the debtor, or by a person issuing securities or acquiring property under the plan, for services or for costs and expenses in or in connection with the case, or in connection with the plan and incident to the case, has been approved by, or is subject to the approval of, the court as reasonable;
      (5)(A)(i) The proponent of the plan has disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the plan, as a director, officer, or voting trustee of the debtor, an affiliate of the debtor participating in a joint plan with the debtor, or a successor to the debtor under the plan; and
      (ii) the appointment to, or continuance in, such office of such individual, is consistent with the interests of creditors and equity security holders and with public policy; and
      (B) the proponent of the plan has disclosed the identity of any insider that will be employed or retained by the reorganized debtor, and the nature of any compensation of such insider.
      (6) Any governmental regulatory commission with jurisdiction, after confirmation of the plan, over the rates of the debtor has approved any rate change provided for in the plan, or such rate change is expressly conditioned on such approval.
     
      
      . In re Centre Court Apartments, Ltd., 85 B.R. 651 (Bankr.N.D.Ga.1988); In re Entz-White Lumber & Supply, Inc., 850 F.2d 1338 (9th Cir.1988); In re Manville Forest Products Corp., 43 B.R. 293 (Bankr.S.D.N.Y.1984); In re Forest Hills Assoc., 40 B.R. 410 (Bankr.S.D.N.Y.1984); In re Masnorth Corp., 36 B.R. 335 (Bankr.N.D.Ga.1984); In re Rainbow Forest Apartments, 33 B.R. 576 (Bankr.N.D.Ga.1983); Valente v. Savings Bank of Rockville, 34 B.R. 362, 363; (D.Conn.1983).
     
      
      . 11 U.S.C. Secs. 1129(a)(9) and (10) provide: (9) Except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that—
      (A) with respect to a claim of a kind specified in section 507(a)(1) or 507(a)(2) of this title, on the effective date of the plan, the holder of such claim will receive on account of such claim cash equal to the allowed amount of such claim;
      (B) with respect to a class of claims of a kind specified in section 507(a)(3), 507(a)(4), 507(a)(5), or 507(a)(b) of this title, each holder of a claim of such class will receive—
      (i) if such class has accepted the plan, deferred cash payments of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or
      (ii) if such class has not accepted the plan, cash on the effective date of the plan equal to the allowed amount of such claim; and
      (C)with respect to a claim of a kind specified in section 507(a)(7) of this title, the holder of such claim will receive on account of such claim deferred cash payments, over a period not exceeding six years after the date of assessment of such claim, of a value, as of the effective date of the plan, equal to the allowed amount of such claim.
      (10) If a class of claims is impaired under the plan, at least one class of claims that is impaired under the plan has accepted the plan, determined without including any acceptance of the plan by any insider.
     
      
      . See also Sec. 6.04 at p. 24 and Sec. 7.02 at p. 28-29 of the Trust Indenture, providing:
      Sec. 6.04. Payments to Trustee.
      
      Pursuant to the provisions of the Loan Agreement, the Company has agreed to pay to the Trustee, continuing until the outstanding bond shall have been fully paid and discharged in accordance with the provisions of the Indenture, the reasonable fees, charges, and expenses of the Trustee, as trustee (for Ordinary and Extraordinary Services and Expenses), Bond Registrar and Paying Agent, as and when the same became due; provided, that the Company may, without creating a default thereunder, contest in good faith the necessity for any such Extraordinary Services and Extraordinary Expenses and the reasonableness of any such fees, charges, or expenses.
      Sec. 7.02 Fees, Charges, and Expenses of Trustee.
      
      Subject to the provisions of Sec. 6.04 hereof, the Trustee shall be entitled to payment and/or reimbursement for reasonable fees for its Ordinary Services rendered hereunder and all advances, counsel fees, and other Ordinary Expenses reasonably and necessarily made or incurred by the Trustee in connection with such Ordinary Services and, in the event that it should become necessary that the Trustee perform Extraordinary Services, it shall be entitled to reasonable extra compensation therefor, and to reimbursement for reasonable and necessary extraordinary expenses in connection therewith;
     
      
      . Sec. 22 at page 10 of the Mortgage provides:
      22. Security for Loan.
      
      This Mortgage is intended to secure, as a first mortgage, the principal amount outstanding on the project bonds and premium, if any, and interest thereon and Additional Payments and other payments to be made under the Loan Agreement, the Note, the Indenture, or this Mortgage relating thereto.
      
        See also Sec. 8.06 of the Trust Indenture, providing that BANCOHIO is to receive its fees and expenses ahead of other distributions. BANC-OHIO also asserts the following as security for its fees and expenses: (1) POST LAND COMPANY funds; (2) judgment lien against real estate holdings of STEIN; (3) assignment of judgment lien against Dr. Frank G. Veres.
     
      
      . Sec. 9.4 of the Loan Agreement, at p. 44, provides:
      Sec. 9.4. Agreement to Pay Attorneys' Fees and Expenses.
      
      In the event the Company should default under any of the provisions of this Loan Agreement and the Issuer [Trumbull County] or the Trustee should employ attorneys or incur other expenses for the collection of Loan Payments or the enforcement of performance or observance of any obligation or agreement on the part of the Company contained in this Loan Agreement, the Company shall, on demand therefor, reimburse the reasonable fee of such attorneys, to the extent permitted by law, and such other expenses so incurred.
     
      
      . See 01/23/89 Response of BANCOHIO, p. 9, ftnote 1.
     
      
      . See January 23, 1989 Response Brief, p. 2.
     
      
      . See January 23, 1989 Response, p. 4, and Exhibit 2 to that Response.
     
      
      . See p. 882, infra, discussing valuation of GILLETTE facility.
     
      
      . Sec. 7.02, p. 29, Trust Indenture.
     
      
      . See January 23, 1989 Response Brief, p. 9, citing Unsecured Creditors Committee v. Walter E. Heller, 768 F.2d 580, 585 (4th Cir.1985); Joseph F. Sanson Investment Co. v. 268 Ltd., 789 F.2d 674, 675 (9th Cir.1986); Blackburn-Bliss 
        
        Trust v. Hudson Shipbuilders, Inc., 794 F.2d 1051 (5th Cir.1986).
     
      
      . Exhibit 2 to BANCOHIO’s Brief of March 16, 1989.
     
      
      . See ftnote 31.
     
      
      
        .See March 14, 1989 Brief of Debtors at p. 6, where the Debtors state,
      Debtor has proposed and is prepared to pay the claim of the individual bond holders, with reservation of such rights against BANCOHIO as it may be entitled to assert by virtue of, and in the event that a correlation between the construction shortfall and the method by which BANCOHIO disbursed bond proceeds is found to exist.
     
      
      . The breakdown of attorney’s charges was submitted as Exhibit 4 of BANCOHIO’s January 23, 1989 Response Brief. A copy is annexed here as "Appendix 1”.
     
      
      . In making these determinations, we have generally applied the standards of 11 U.S.C. Sec. 330 and the common law which has evolved therefrom.
     
      
      . See January 23, 1989 Response Brief, p. 9.