**DISCLOSURE STATEMENTS**

The United States Trustee is charged with the responsibility of
monitoring and commenting on disclosure statements in Chapter 11 cases
pursuant to 28 USC Sec. 586(a)(3)(B). The following is information that
the United States Trustee believes should generally appear in disclosure
statements. The list of items is neither exclusive nor exhaustive.
Depending upon the size and nature of the debtor and the complexity of
the plan, the actual requirements to satisfy the adequate information
standard of 11 USC Sec. 1125(a)(1) may very considerably.

1\. **[Purpose of the disclosure statement]{.underline}**. The
disclosure statement should indicate that its purpose is to provide
Aadequate information@ of a kind, and in sufficient detail, as far as is
reasonably practicable in light of the nature and history of the debtor
and the condition of the debtor=s books and records, that would enable a
hypothetical reasonable investor typical of holders of claims
(creditors) or interests (shareholders or other) of the relevant class
to make an informed judgment concerning the plan. {See 11 USC Sec.
1125(a).} The disclosure statement should not resort to Aboilerplate@
language found in [Colliers]{.underline} that disclaims all of the
assumptions and dollar amounts contained in the statement.

2\. **[Vote required for approval]{.underline}**. The disclosure
statement should briefly indicate the vote required for approval of the
plan and should clearly indicate that creditors or interest holders have
a choiceBthey can either vote for or against the plan. It should also
state that creditors have accepted the plan if voting creditors of each
class holding at least two-thirds in amount and more than one-half in
number of the allowed claims voting, have voted for the plan. {See 11
USC

Sec. 1126(c).} The disclosure statement should also state that a class
of interests has accepted the plan if voting members of that class
holding at least two-thirds in amount of the allowed interests voting,
have voted for the plan. {See 11 USC Sec. 1126(d).} The disclosure
statement should also make it clear that the foregoing percentage
requirements are determined entirely from those creditors or interest
holders that actually vote.

3\. **[Description of the plan]{.underline}**. The disclosure statement
should give a description of the major provisions of the plan, including
an estimated date by which creditors could expect to receive payment, an
expected percentage return on their claims, and a summary of the
treatment of various classes under the plan. Further, the summary should
contain a description of each class of creditors and the approximate
dollar amount of the claims in each class.

4\. **[Means of effectuating the plan]{.underline}**. The disclosure
statement should indicate how the debtor intends to accomplish the goals
of the planBi.e. whether by infusion of cash by an investor, sale of
real or personal property, continued business operations, issuance of
stock or otherwise. If an investor is to provide funds, relevant
information regarding the investor=s financial ability and legal
obligation to provide such funds should be included. If the sale of
property is contemplated under the plan, the statement should indicate
what efforts the debtor has made since the filing to market its
properties that are currently for sale, including the identity of the
listing agent, the listing price, any offers received or anticipated,
pending litigation which might affect the sale of the property, the
equity in the property (including the source of the valuation), and any

alternatives for marketing the property in the future. If the debtor
plans to issue stock under the plan, the statement should indicate
compliance with 11 USC Sec. 1145.

5\. **[Cash requirements]{.underline}**. The disclosure statement should
indicate the amount of cash to be paid upon confirmation of the plan and
the expected source of such cash. If the debtor expects a cash infusion
from an outside source or from principals which is to be repaid in the
future, then the identity of the source as well as the repayment terms
should be disclosed. Similarly, the effect of such infusions (i.e.
principal and interest payments) should be reflected in the projections.
Furthermore, since the Bankruptcy Code contemplates payment of
administrative claims in cash upon confirmation, any waiver by
administrative claim holders of this requirement should be disclosed.

6\. **[Administrative expenses and quarterly fees]{.underline}**. The
disclosure statement should indicate all administrative expenses that
have accrued, including but not limited to the debtor=s attorney fees,
which must be paid at the time of confirmation, or over the course of
the plan if the party to whom the expenses are owed has consented to an
alternative treatment. {See 11 USC Sec. 1129(a)(9)(A).} Such disclosure
should include the expected amounts owed, the identity of the claimants,
and the source of the funds from which they will be paid. In addition,
the disclosure statement should provide that quarterly fees due to the
United States Trustee under

28 USC Sec. 1930(a)(6) shall be paid in full on or before the effective
date of the plan, as required under 11 USC Sec. 1129(a)(12), and provide
an estimate of the amount of any quarterly fees remaining to be paid.

7\. **[History of the debtor]{.underline}**. The disclosure statement
should describe the debtor=s business, if appropriate, including those
factors which may be unusual or peculiar to the business, such as
seasonal cycles and unique products lines. The disclosure statement
should contain a brief narrative description of the reasons for the
debtor=s financial difficulties and the steps taken to alleviate the
situation since the inception of the case.

8\. **[Valuation of assets]{.underline}**. The disclosure statement
should indicate, possibly in a separate schedule, the debtor=s estimate
of current values of assets, liens attaching to those assets, and the
source of such estimated values (i.e. cost or appraisals).

9\. **[Historical and current financial information]{.underline}**. The
disclosure statement should include historical and current financial
data such as cash flow statements, income statements, and balance sheets
to give creditors some perspective on both the debtor=s current
financial situation and prospects under the plan.

10\. **[Liquidation analysis]{.underline}**. A creditor cannot make an
informed judgment regarding a plan without information as to available
alternatives. Consequently, there should be some analysis as to what
creditors would receive in a Chapter 7 liquidation. The disclosure
statement should clearly indicate the difference between treatment
accorded in the plan and that which creditors would receive under a
Chapter 7 liquidation. {See 11 USC Sec. 1129(a)(7)(A)(ii).} Such a
comparison might indicate the percentage return to creditors under each
alternative and might include assumptions regarding liquidation values,
administrative costs, etc. Any assumptions utilized by management in
formulating a liquidation alternative should be disclosed. It is
insufficient to merely indicate that the plan will provide a better
return than liquidation without any support information. A simple
tabular presentation setting forth estimated administrative expenses,
priority expenses, secured and unsecured claims, together with the
debtor=s estimated asset values (including sources of such values) is
appropriate.

11\. **[Projections]{.underline}**. Projections are critical to a
creditor=s ability to assess the viability of the plan, especially where
the plan calls for deferred payments to creditors and is based upon
future earnings. The disclosure statement should include projections as
far into the future as is practicable, including assumptions used by the
debtor in formulating the projections, such as expected sales levels,
gross and net profit levels, and inventory acquisition. At a minimum,
the period covered by the projections should be commensurate with the
period of payment deferral under the plan. Use of spreadsheets is
encouraged.

12\. **[Post-petition events]{.underline}**. The disclosure statement
should indicate whether any major post-petition events have occurred
which might affect the case.

13\. **[Legal proceedings]{.underline}**. The disclosure statement
should briefly describe all material legal proceedings to which the
debtor is a party, proceedings which the debtor contemplates
instituting, and legal proceedings which are known to be threatened
against the debtor. The information should include the court in which
the litigation is pending, its present status, the relief sought, the
debtor=s prognosis for the outcome, and the effect, if any, on the plan.

14\. **[Management compensation]{.underline}**. The disclosure statement
should disclose the identities of top management, a description of their
qualifications, and their salary levels after confirmation of the plan.
{See 11 USC Sec. 1129(a)(5).} Further, this disclosure should include
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 the identity
of any insider who will be employed or retained by the reorganized
debtor and the compensation for such insider.

15\. **[Insider and affiliate claims]{.underline}**. The disclosure
statement should disclose the claims asserted by insiders as defined by
11 USC Sec. 101(30). This disclosure should include the identity of the
claimant, the affiliation of the insider with the debtor, the
circumstances giving rise to the claim, the amount of any claims the
insider is asserting as a creditor and/or whether any or all of his
claims have been or will be subordinated.

16\. **[Tax consequences]{.underline}**. The disclosure statement should
describe the probable tax consequences to the estate if the plan is
confirmed. If there are no tax consequences, it should contain an
affirmative statement of that fact.

(Revised 6/93)