Digerati files Chapter 11 plan and statement, meets court's deadline

By Jim Witters

Wilmington, Del., Sept. 30 - Digerati Technologies, Inc. filed a Chapter 11 plan of reorganization and related disclosure statement on Sept. 27, ahead of the deadline established by the U.S. Bankruptcy Court for the Southern District of Texas.

The court ordered the company to file a plan and disclosure statement on or before Sept. 30 or provide proof that its case should not be dismissed or converted to Chapter 7.

"The debtor has a strong core business in a growing market and intends to reorganize around that streamlined business, which, together with certain other operational improvements, is expected to be the basis for a viable reorganization plan," the disclosure statement said.

Creditor treatment

Under the proposed plan, treatment of creditors includes the following:

• Holders of allowed non-tax administrative claims shall be paid in cash in full from the net sales proceeds on the later of 30 days after the closing date or the date such claim becomes an allowed administrative claim;

• Holders of allowed administrative tax claims resulting from the sale of Hurley Enterprises, Inc. or Dishon Disposal, Inc., will be paid in full from the relevant sales proceeds in the manner set forth in the plan;

• Holders of allowed priority claims will be paid in cash in full on the later of 30 days from the confirmation date or when allowed to the extent cash is available; otherwise, they will be paid from the net sales proceeds, along with simple interest at a rate of 5%, after payment in full of Class 1 or Class 2 allowed claims;

• The allowed Class 1 secured claim of Terry Dishon will be paid in full on the closing date from the net sales proceeds of the Dishon sale;

• Holders of allowed Class 2 secured claims of Hurley Fairview LLC and Sheyenne Hurley will be paid in full on the closing date from the net sales proceeds of the Hurley sale;

• Holders of allowed Class 3 general unsecured claims of $1,000 or less shall be paid in full within 30 days of the confirmation date, to the extent cash is available; otherwise, they will be paid from the net sale proceeds of either Dishon or Hurley, whichever occurs first, after payment in full of Class 1 or 2 and the allowed priority claims, along with simple interest at a rate of 5%;

• Holders of allowed Class 4 general unsecured claims in excess of $1,000 shall be paid in full, with simple interest at a rate of 5%, from the net sale proceeds of either Dishon or Hurley, whichever occurs first, after payment in full of Class 1 or 2 allowed priority claims and Class 3 claims;

• Holders of allowed Class 5 subordinated unsecured claims arising out of disputed rights to Preferred Series A interests will receive, after Classes 1-4 are paid in accordance with the plan, proportional shares of the surplus net sales proceeds in exchange for any claim to any rights arising out of the Preferred Series A interests;

• Holders of super voting rights that may have arisen out of the disputed rights to Preferred Series E interests of Oleum Capital, LLC will be rescinded and receive no distribution;

• Holders of allowed equity interests of Digerati common stock will retain their common stock in the reorganized debtor.

After payments set forth in the plan, the reorganized debtor, on behalf of these equity interests, will receive 5% of the remaining surplus net sales proceeds; and

• Options and warrants issued by Digerati prior to the filing date will be canceled.

No hearing has been scheduled for consideration of the disclosure statement.

Digerati, a Stafford, Texas-based diversified holding company with operating subsidiaries in the oil field services and cloud communications industries, filed for bankruptcy on June 3. The Chapter 11 case number is 13-22364.

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