South Town by 4M - Chapter 11 Plan Terms

Plan Terms

Overview

• South Town by 4M, LLC (the “Debtor” or “South Town”) filed a Combined Chapter 11 Plan of Reorganization and Disclosure Statement (the “Plan”) on July 27, 2026, in the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, before Judge Lisa S. Gretchko (Case No. 26-40805), which the Debtor states will allow it to exit chapter 11 and complete the Development.
  • The Plan provides for full payment of all allowed secured claims, non-priority unsecured claims, super-priority administrative expenses, administrative expenses and priority claims, other than the secured claim of Prentice Partners of Ann Arbor, LLC (“Prentice”), which will be converted to equity.
  • The Effective Date is the day that is 14 days after entry of the Confirmation Order, or, if a stay of the Confirmation Order is then in effect, the day after the stay expires or is terminated, with these periods calculated as provided in Bankruptcy Rule 9006(a)(1). The “Payment Disbursement Date” is a date not later than 20 days after the Effective Date.
  • The Amended Case Management Order scheduled the confirmation hearing for Sept. 25, 2026, at 1:00 p.m.
• The Debtor identifies four significant postpetition events in the case: (i) the designation of the case as a single asset real estate case upon the motion of County National Bank (“CNB”); (ii) Court approval of postpetition secured financing from Heidi Caroline Poscher (“Ms. Poscher”); (iii) the Debtor’s motion to extend the Plan-filing deadline and exclusivity periods; and (iv) the negotiation of two separate alternative exit transactions, either of which will provide payment in full of all Claims.
• South Town is a Michigan limited liability company formed to realize the vision of Dr. Margaret Poscher (“Dr. Poscher”) to fund and create a strategic 1.66-acre mixed-use, multi-family real estate project.
  • The Debtor holds title to ten individual lots comprising a city block in Ann Arbor. The Development encompasses approximately 237,366 square feet and will ultimately feature 300 apartment units, with one side fronting South State Street directly across from the University of Michigan Golf Course and kitty-corner to the University of Michigan field hockey stadium, football practice facilities, Crisler Arena and the University of Michigan football stadium.
  • Each of the lots was improved with either an individual home or a low-rise apartment building.
  • The Development comprises four distinct revenue-driven improvements: (1) leasing of 70% of the 300 apartment units as long-term rentals; (2) operation of a short-term rental business (VRBO, Air BNB, etc.) utilizing 30% of the units; (3) development and ownership of first-floor retail businesses; and (4) construction and operation of a MicroGrid to deliver electrical power to the apartment, retail and common areas, to be sold to the captive tenants, with a secondary revenue source generated from the creation of carbon credits.
  • The Debtor has site plan approval for construction of the Development. The assemblage of the ten lots occurred from 2019 to 2022 at an acquisition cost of $18,982,170, with an additional $5,152,297 in fees and closing costs.
• Dr. Poscher, the Debtor’s original sole member, passed away in mid-October 2025, after which the Poscher Estate was opened. Ms. Poscher, Dr. Poscher’s wife, was named personal representative of the Poscher Estate and serves as the Responsible Person for the Debtor.
  • Dr. Poscher was a community leader in Ann Arbor who previously developed a 12-unit ground-up townhouse complex and Venue by 4M, a 35,000-square-foot dining, events and entertainment space, before forming South Town. The Debtor states that Dr. Poscher’s passing delayed the ongoing development and funding of the Development; Ms. Poscher, who had primarily assisted with coordination for placement of the MicroGrid, has since taken on the remaining portions of the work.
  • Neither Dr. Poscher nor Ms. Poscher has earned a salary or received compensation for services to South Town prior to or during the pendency of the case, and Ms. Poscher will continue to receive no compensation or fringe benefits through the Effective Date.
• The Debtor financed the lot assemblage through CNB, which asserts a lien position of $16,863,513.64, and Brownstone Realty Advisors, LLC (“Brownstone”), which asserts a subordinate position of $7,794,566.33, with an additional $8.5 million mortgage position held by Prentice.
  • Prior to her death, Dr. Poscher modified an existing Brownstone loan to borrow additional funds for Development costs, CNB loan-extension fees and CNB interest payments. Following closure of the modification in June 2025, Brownstone advanced funds for Development costs but refused to release approximately $1.0 million escrowed for CNB loan-extension and interest payments, leaving the Debtor behind on prepetition loan payments to the Secured Lenders.
  • CNB initiated a foreclosure proceeding in early November 2025 and adjourned it until early January 2026 based on the Debtor’s transition issues. The Debtor brought forward a third party to acquire the participants’ interest in CNB’s facility, but the participants refused to engage, leaving chapter 11 as the Debtor’s only option in light of an impending foreclosure by advertisement sale date. The Debtor filed its petition on Jan. 27, 2026.

SARE Designation and Interest-Only Payments

• CNB filed the SARE Motion on Feb. 13, 2026; the Debtor objected, CNB replied, and following a March 12, 2026, hearing the Court entered the SARE Order, unpersuaded by the Debtor’s arguments in opposition.
  • As a result, the Debtor was required either to file its Plan within 90 days of the Petition Date or to commence interest-only payments to secured creditors under section 362(d)(3) in order to maintain the automatic stay. The Debtor elected to make the Interest-Only Payments to the City of Ann Arbor, CNB and The Albert M. Higley Co., LLC (“Higley”). Brownstone and Prentice waived their right to interest payments.
  • The Debtor has made Interest-Only Payments in the following regular monthly amounts: Ann Arbor, $1,601.97; CNB, $113,320.62; and Higley, $4,306.42.
    • The April payment to Ann Arbor was $8,009.84, including a 4% late charge of $6,407.87 calculated from the full amount due under the Ann Arbor Tax Claim; the May payment to CNB was $117,097.98, including a $3,777.36 per diem charge for the additional day in May, and a $117,097.98 payment was also made to CNB in June.

Transfers Outside the Ordinary Course

• The Debtor has paid Quarterly Fees of $350 and a $95 service fee for its Chase DIP bank account in June. To date, the Debtor has made a total of $327,094.62 in transfers outside the ordinary course in accordance with the DIP Budgets, and no other transfers outside the ordinary course.
• Ms. Poscher paid a $150,000 due diligence fee to WhiteHawk Capital Partners L.P. (“WhiteHawk”) out of her own funds, but the Debtor has no arrangement with Ms. Poscher for repayment of that amount.

DIP Financing

• Ms. Poscher, in her personal and individual capacity, provided $650,000 in postpetition financing to the Debtor to fund primarily the Interest-Only Payments and other incidental costs should they arise. The Debtor has no business operations.
  • The Court first entered the Interim DIP Financing Order authorizing interim borrowings of up to $133,000 under the Revised DIP Note.
  • Following a final hearing on May 18, 2026, the Court entered the Final DIP Financing Order on May 22, 2026, on stipulation of the parties, authorizing borrowings of up to an aggregate principal amount of $400,000 under the Amended DIP Note to fund the Interest-Only Payments and U.S. Trustee fees as set forth in the DIP Budget.
  • Following a July 24, 2026, hearing on the Amended DIP Motion and related Amended DIP Stipulation, the Court entered the Amended DIP Financing Order on July 27, 2026, authorizing an additional $250,000 in borrowings and increasing the aggregate principal amount of the DIP Facility to $650,000 under the Second Amended DIP Note. The purpose of the increase was to continue making Interest-Only Payments and quarterly U.S. Trustee fees as set forth in the Amended DIP Budget.
• In exchange for the Initial DIP Loan, Ms. Poscher, as DIP Lender, was granted an allowed superpriority administrative expense claim with priority over all administrative expenses of the kind specified in sections 503(b) and 507(b), but only to the extent of amounts actually borrowed under the Final DIP Financing Order.
  • As security, the DIP Lender was granted (i) a lien under section 364(c)(2) on all property of the estate not otherwise subject to a lien and (ii) a junior lien under section 364(c)(3) on all property of the estate subject to a lien, in each case perfected automatically upon entry of the Interim DIP Financing Order without the necessity of filing a financing statement.
  • The DIP Liens are in all instances subject to the existing mortgage liens in favor of CNB, Prentice and Brownstone, the construction lien in favor of Higley, and Permitted Third Party Liens (i.e., liens senior by operation of law, including liens securing real property taxes).
  • The DIP Liens and superpriority claim expressly exclude (i) Avoidance Claims (defined as claims under sections 502(d), 544, 545, 547, 548, 549, 550, 551 or 553), (ii) any proceeds or property recovered in connection with the successful prosecution or settlement of any Avoidance Claims, (iii) intercompany claims, and (iv) any claims against the estate of Dr. Poscher, Prentice, or any entity or estate in which Ms. Poscher has a direct or indirect interest, and no superpriority, administrative or other priority claim under the Final DIP Financing Order shall be payable from or have recourse to any of the foregoing.
  • The DIP Liens under the Amended DIP Financing Order retain the same lien priority and exclusions.

Plan Deadline and Exclusivity Extensions

• Concurrent with the DIP Motion, the Debtor filed its Motion to Extend on April 9, 2026. The Court addressed the motion at the initial DIP financing hearing, where the Debtor indicated it was holding off on the requested relief until it could obtain greater clarity as to its plan and the Exit Financing.
  • The Court entered the Interim Order Regarding Plan Deadline Extension, requiring the Debtor to supplement the Motion to Extend on or before May 12, 2026, provide a detailed update on Exit Financing lender negotiations, and setting the motion for hearing on May 18, 2026.
  • On May 12, 2026, the Debtor filed a supplement to the Motion to Extend, attaching the RAM Term Sheet and the WhiteHawk Term Sheet. (The Plan’s defined term “Supplement” refers to a separate, later supplement to the Amended DIP Motion at ECF No. 150.)
  • Following the May 18, 2026, hearing, the Court entered the Plan Extension Order on May 20, 2026, (i) extending the Plan Deadline and Plan Exclusivity Period to July 27, 2026, and (ii) extending the Solicitation Exclusivity Period to Sept. 25, 2026.
  • The Court held a status conference on May 22, 2026, and subsequently entered the Amended Case Management Order, which amended other case deadlines, restated the Plan Deadline and the exclusivity periods, and scheduled the confirmation hearing.

Restructuring Transactions and Alternative Equity Transactions

• On the Effective Date, the Debtor will transfer its ownership interest in all assets of the estate to a Delaware special purpose entity (the “SPE”) in exchange for 100% of the equity in the SPE, making the Debtor the parent of the SPE. Thereafter, the equity in the Debtor will be addressed through one of two alternative transactions. (Article 3.10 places the asset transfer on the Effective Date, while Article 7 provides that the conveyance to the SPE occurs on the Payment Disbursement Date; the Plan does not reconcile the two.)
• Equity Transaction A: a newly formed entity (“Newco”) will acquire 100% of the equity interests in the Debtor from the Poscher Estate for a multiple of a seven-figure amount, resulting in Newco becoming the 100% member of the SPE, with the SPE in turn holding title to all assets of the Debtor.
  • Newco will be owned 59% by Agile Solar Group, LLC (“Agile”) or its affiliate and 41% by The Finn Development Group, LLC (the “Finn Group”).
• Equity Transaction B: 59% of the equity in the Debtor will continue to be held by the Poscher Estate, and the remaining 41% will be issued to the Finn Group.
• Under either alternative, the Plan states that the Finn Group will be owned as follows: Prentice, 5% (conversion of its debt position to equity); Blue Phoenix 19 LLC (“Blue Phoenix”), 22%; Steven Pullins, 2% (equity exercisable upon completion of vertical construction); American Platinum Builders (“APB”), 5%; Nathan Vohwinkle, 2% (equity exercisable upon completion of vertical construction); and Louis J. Reynolds IV (“Reynolds”), 5%. The listed percentages total 41% rather than 100%, corresponding to the Finn Group’s 41% block of the equity in the Debtor (or in Newco under Equity Transaction A).
  • Blue Phoenix is an affiliate of Ms. Poscher, and Prentice is owned fully by Dr. Poscher, whose interest presumably now sits in the Poscher Estate. Pullins, Vohwinkle, APB and Reynolds are not affiliates of Ms. Poscher.
  • Classes 4 and 10 are the only classes designated as impaired and entitled to vote, and both are insider-held: Prentice is owned by Dr. Poscher (now the Poscher Estate), and the Poscher Estate holds 100% of the Debtor’s equity. All other classes are designated as unimpaired and cannot vote.
• Both Equity Transaction A and Equity Transaction B will be brought before the probate court with governance over the Poscher Estate prior to the confirmation hearing to obtain conditional approval, subject only to confirmation of the Plan (the “Probate Court Approval”).
• The Debtor prefers Equity Transaction A over Equity Transaction B, as there is an interest cost associated with Equity Transaction B based on the need for Exit Financing, which is not necessary under Equity Transaction A.
  • The Debtor also states that Equity Transaction A would likely be more attractive to the Poscher Estate, as it monetizes the estate’s interest in the Debtor rather than requiring the estate to await completion of vertical construction and a liquidity event.
  • The Debtor has arranged for Equity Transaction B and the Exit Financing in the event Equity Transaction A and Agile’s participation therein is somehow revoked.

Exit Alternatives

• On April 14, 2026, the Debtor and Reynolds Asset Mgmt, LLC (“RAM”) executed the RAM Term Sheet, under which the Debtor is to obtain exit takeout financing to: (a) satisfy amounts due to pay all secured and unsecured creditors in full who will not otherwise convert their existing debt to equity; (b) pay chapter 11 administrative expenses; (c) cover carrying costs to vertical construction; and (d) pay the expenses of the Exit Financing.
  • Upon confirmation, RAM is to receive a 5% membership interest in the Debtor, in exchange for which Reynolds, who owns RAM, is to provide the credit enhancement required of the Exit Financing Lender (under Equity Transaction B) and of the Vertical Financing Lender. RAM will also bring extensive construction project management expertise. (The Plan’s equity schedules instead attribute a 5% interest to Reynolds individually as part of the Finn Group.)
  • The Debtor and WhiteHawk executed the WhiteHawk Term Sheet on May 4, 2026; WhiteHawk has since declined to proceed under that term sheet after engaging in further due diligence.
• On July 16, 2026, the Debtor and Agile executed an Amended Commitment Letter, pursuant to which Agile agreed, on the Payment Disbursement Date, to: (a) enable Newco to acquire 100% of the membership interest in the Debtor held by the Poscher Estate for an amount in a multiple of seven figures; and (b) provide an additional amount, not to exceed $41 million, as an equity infusion into Newco and then by Newco into the Debtor, in an amount sufficient to provide for payment in full of all allowed Claims and other post-confirmation working capital requirements of the Debtor.
• On July 27, 2026, the Debtor and The Provizia Organization Inc. (“Provizia”), as Exit Financing Lender, entered into a Commitment Letter, pursuant to which Provizia agreed, under Equity Transaction B, to provide Exit Financing on the Payment Disbursement Date in an amount sufficient to provide for payment in full of all allowed Claims and other post-confirmation working capital requirements of the Debtor.
  • In conjunction with the Exit Financing, Reynolds shall execute a Guaranty Fee Agreement with the Debtor and the Exit Financing Lender on the Payment Disbursement Date, pursuant to which Reynolds shall provide credit enhancement to the Exit Financing Lender with respect to the Exit Financing, on terms acceptable to Reynolds, the Debtor and the Exit Financing Lender.
  • As security for the Exit Financing, the SPE will grant the Exit Financing Lender a first-priority lien on the assets of the SPE pursuant to the Exit Financing Agreements.

Means of Implementation

• The Plan will be implemented through the following transactions:
  • On or prior to the confirmation hearing, the Debtor shall have obtained the Probate Court Approval.
  • On the Payment Disbursement Date, the Debtor shall convey its interest in all of its assets to the SPE, and the equity in the Debtor shall be sold as specified in Equity Transaction A or re-allocated as specified in Equity Transaction B. If re-allocated, the Debtor shall enter into an Operating Agreement among its members reflecting the Equity Transaction B allocations.
  • If the equity is sold under Equity Transaction A, Agile shall make a capital contribution into Newco, and Newco in turn shall make a capital contribution into the Debtor, in an amount sufficient to pay in full the allowed amount of all Claims, with any necessary funds placed in the Contested Claims Reserve.
  • If the equity is re-allocated under Equity Transaction B, the Debtor shall close on and obtain the Exit Financing in an amount sufficient to pay in full the allowed amount of all Claims, with any necessary funds placed in the Contested Claims Reserve.
  • On the Payment Disbursement Date, the Debtor shall make the payments provided for under the Plan to all creditors holding Allowed Claims, with any disputed Claims to be paid from the Contested Claims Reserve to the extent later allowed. Any balance remaining in the Contested Claims Reserve and other cash not necessary to pay allowed Claims shall revert to the Reorganized Debtor.
  • On the Payment Disbursement Date, RAM and Blue Phoenix shall enter into a Co-Development Agreement with the Debtor, pursuant to which they shall assume various duties on a post-Effective Date basis with respect to the Development.
• Under either Equity Transaction A or Equity Transaction B, coupled with either the Agile equity infusion or the Exit Financing, all Claims will be fully satisfied on the Payment Disbursement Date; the Debtor therefore states that projections are not relevant to Plan confirmation. The Plan attaches as Exhibit A the Sources and Uses, reflecting the proceeds to be received by the Debtor to fund Plan payments from either the Newco capital contribution funded by Agile or the Exit Financing.
• Ms. Poscher will remain as the responsible person post-confirmation, and the Debtor’s post-confirmation operations will involve continuation of the work necessary to complete the Development.

Treatment of Claims and Interests

• Class 1 – Secured Claim of the City of Ann Arbor ($169,080.67): Unimpaired, not entitled to vote. The Ann Arbor Tax Claim is secured by a tax lien against the Properties for unpaid 2025 real property taxes which, under applicable Michigan law, is afforded statutory priority and primes all prior recorded liens and encumbrances regardless of recording date. To be paid in full on the Payment Disbursement Date.
• Class 2 – Secured Claim of CNB ($16,863,513.64): Unimpaired, not entitled to vote. Secured by a mortgage against the Properties for money loaned. The allowed amount will be paid in full on the Payment Disbursement Date.
• Class 3 – Secured Claim of Brownstone ($7,794,566.33): Unimpaired, not entitled to vote. Secured by a mortgage against the Properties for money loaned. The allowed amount will be paid in full on the Payment Disbursement Date.
• Class 4 – Secured Claim of Prentice ($8,500,000 principal): Impaired, entitled to vote. Secured by a mortgage against the Properties for money loaned. On the Payment Disbursement Date, the Claim shall be converted to a 3% equity interest in the Reorganized Debtor. (The Plan’s Finn Group ownership schedule separately attributes 5% to Prentice as the “conversion of its debt position to equity”; the Plan does not reconcile the 3% and 5% figures.)
• Class 5 – Secured Claim of Higley ($948,115): Unimpaired, not entitled to vote. Construction lien claim for services performed, to be paid in full on the Payment Disbursement Date pursuant to joint checks reflecting the claims of various Higley subcontractors:
  • Higley and BDS: $129,898.00
  • Higley and Blue Star, Inc.: $243,215.00
  • Higley and Eagle Excavation: $68,280.58
  • Higley and Industrial Fence & Landscaping, Inc.: $34,911.00
  • Balance to Higley: $471,810.42
• Class 6 – Secured Claim of SmithGroup ($508,139): Unimpaired, not entitled to vote. Construction lien claim for services performed, to be paid in full on the Payment Disbursement Date. The total SmithGroup Claim is $902,726.45, the balance of which is a general unsecured Class 9 Claim of $394,587.45.
• Class 7 – Secured Claim of Building Decommission Services, LLC (“BDS”) ($129,898): Unimpaired, not entitled to vote. Construction lien claim for services performed, to be paid in full on the Payment Disbursement Date pursuant to a joint check with Higley.
• Class 8 – Secured Claim of Synecdoche Design Studio, LLC (“Synecdoche”) ($822,140.96): Unimpaired, not entitled to vote. Disputed and unliquidated construction lien claim for services performed.
  • The Synecdoche Claim will be the subject of an adversary proceeding and claim objection seeking disallowance of the claim and repayment of amounts owing to the Debtor.
  • If not resolved prior to the Payment Disbursement Date, the gross amount of the claim will be escrowed until the amount, if any, is determined; once determined, the Allowed Synecdoche Claim will be paid in full from the Contested Claims Reserve.
• Class 9 – General Unsecured Claims: Unimpaired, not entitled to vote. Class 9 consists of eight claims: Graybar/Schneider ($122,310.04); Heidi Caroline Poscher ($1,985,012); Bill Me Later, Inc./PayPal, Inc. ($105,404.92); G2 ($26,425.00); Learfield ($180,000.00); Newmark Valuation Advisory, LLC ($10,500.00); SmithGroup ($394,587.45); and Resilient Solar of East Tennessee LLC ($0).
  • The allowed amount of all Class 9 Claims will be paid in full on the Payment Disbursement Date; any Contested Claims will be paid in accordance with Article V of the Plan. The Plan also states within Class 9 that the BDS Claim will be paid pursuant to the joint check with Higley, although BDS is not among the eight enumerated Class 9 claims. The largest Class 9 claim, that of Ms. Poscher for $1,985,012, is an insider claim to be paid in full.
• Class 10 – Equity Interests: Impaired, entitled to vote. The Poscher Estate holds 100% of the equity interests in the Debtor, to be addressed through Equity Transaction A or Equity Transaction B.
• The estimated value of collateral for each secured class is stated as $61 million.
• The Plan defines “Post-Petition Liens” as certain construction liens recorded against the Property after the Petition Date, but does not classify, treat or otherwise address them elsewhere.

Unclassified Claims

• Super-priority administrative expense Claims consist of the Claim of Ms. Poscher, as Responsible Person, in an amount equal to all amounts advanced prior to confirmation consistent with the Final DIP Financing Order, the DIP Budget and any amendments thereto.
• Administrative Expenses consist of the Legal Expenses owing to Taft Stettinius & Hollister LLP, counsel to the Debtor, and UST Quarterly Fees of $350. Under Article 4, allowed administrative expense claims will be paid in full in cash upon the later of court approval and the Payment Disbursement Date, or on such other terms as may be agreed between the holder and the Debtor; Article 2 separately provides that approved Legal Expenses will be paid on or prior to the Payment Disbursement Date.
  • As of the filing of the Plan, Legal Expenses incurred by Counsel were approximately $480,000, with additional Legal Expenses to be incurred through the Effective Date. Payment is subject to Court approval.
  • Ms. Poscher has personally advanced Retainer Deposits of $100,000 on behalf of the Debtor. To the extent the Debtor has insufficient funds to pay approved Legal Expenses, they shall be paid from the Retainer Deposits, in which case Ms. Poscher shall be subrogated to the rights of Counsel and entitled to repayment on the Payment Disbursement Date. Any excess Retainer Deposits shall be returned to Ms. Poscher.
  • UST Quarterly Fees are being paid under the Final DIP Financing Order and the DIP Budget, with any remaining balance paid on the Payment Disbursement Date.
• Priority tax Claims consist solely of the unsecured portion of the City of Ann Arbor’s claim for unpaid real property taxes represented by the July 1, 2026, tax bill in the amount of $28,888.29, which becomes due and payable on or prior to Sept. 15, 2026, and shall be paid in full on the Payment Disbursement Date.

Contested Claims Reserve

• No distribution will be made on account of a Contested Claim unless and until it becomes an Allowed Claim, and the Debtor retains the power and authority to settle and compromise any Contested Claim with court approval and compliance with Bankruptcy Rule 9019.
• On the Effective Date, the Reorganized Debtor shall establish and maintain the Contested Claims Reserve, consisting of segregated and escrowed funds equal to the aggregate distributions that would have been made on account of all Contested Claims had they been Allowed Claims in their full asserted amounts as of the Effective Date.
  • Funds shall not be distributed to a holder of a Contested Claim until the later of (a) the date the claim becomes an Allowed Claim pursuant to a Final Order or (b) the Payment Disbursement Date.
  • Upon disallowance of a Contested Claim by Final Order, the amount reserved on account of such claim shall be released from the reserve and revert to the Reorganized Debtor.

Retained Causes of Action

• The Debtor has one known cause of action, which it intends to pursue through an adversary proceeding against Synecdoche, which was retained as an architect for the Development and claims a construction lien against the Property.
  • The Debtor asserts substantial defenses to the amount claimed, contending that it overpaid Synecdoche for failed work product and overbillings, and that its undisputed prepetition termination of Synecdoche excuses it from any residual payments.
  • The Debtor will place into the reserve an amount sufficient to pay Synecdoche should its claim be allowed in full as filed.
• The Debtor intends to file certain unsecured claim objections and expressly reserves all other potential claims, avoidance actions and causes of action, whether now existing or hereafter arising, known or unknown, including those arising under sections 502, 510, 541, 542, 543, 544, 545, 547, 548, 549, 550, 551 and 553 of the Bankruptcy Code or any other applicable provision, whether or not specifically identified in the Plan.
  • Upon entry of the Confirmation Order, all such causes of action shall vest in the Reorganized Debtor, which shall retain full authority to prosecute, settle or otherwise resolve such claims. Nothing in the Plan or Confirmation Order shall be deemed a waiver, release or relinquishment of any such claims.
  • The Debtor is not aware of any other avoidance actions or causes of action available to the estate at this time other than the Synecdoche action, but reserves all rights with respect thereto.
• As of the Petition Date, the Debtor was party to two state court matters in the Circuit Court for Washtenaw County, Michigan: a receivership action initiated by CNB and a foreclosure and receivership action initiated by Brownstone, both stayed under section 362 upon the filing.

Executory Contracts

• The Debtor is party to executory contracts with DMC Real Estate Services (development advisory services); Graybar/Schneider (MicroGrid feasibility study); Nederveld (civil engineering plans and site plan approval strategies); Learfield (marketing services); Newmark Valuation Advisory, LLC (market revenue study and valuation guidance); Resilient Solar of East Tennessee LLC (energy market analysis); and Higley (construction and advisory services).
  • To the extent not terminated or concluded prior to the Petition Date, the Debtor rejects each such contract on the Payment Disbursement Date pursuant to section 365, with each rejection stated to be effective upon the Effective Date — a date the Plan elsewhere fixes as up to 20 days earlier.
  • The Debtor reserves the right to amend the Plan prior to confirmation to assume any of the foregoing contracts.

Effect of Confirmation; Injunction

• Upon the Effective Date, the Plan shall bind the Debtor, the Reorganized Debtor, all holders of Claims and Equity Interests, all Persons acquiring property under the Plan, and all other parties in interest, together with their respective agents, attorneys, representatives, heirs, successors and assigns, to the fullest extent permitted under sections 1141(a) and 1142, whether or not such parties voted on or had a right to vote on the Plan, hold Impaired or Unimpaired Claims, hold Allowed, Contested or disallowed Claims, filed proofs of claim or interest, or are entitled to receive a distribution.
• Upon the Effective Date, all property of the estate, including the Properties, all causes of action and all rights, claims and defenses of the Debtor and the estate, shall vest in the Reorganized Debtor free and clear of all liens, claims, charges, encumbrances and interests of creditors and equity interest holders, except as otherwise expressly provided in the Plan or Confirmation Order.
  • From and after the Effective Date, the Reorganized Debtor may operate its business and use, acquire and dispose of property and settle and compromise claims and interests without Bankruptcy Court supervision or approval and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules, except as otherwise provided in the Plan or Confirmation Order.
• Except as otherwise expressly provided in the Plan or Confirmation Order, on and after the Effective Date all Persons who have held, hold or may hold Claims or Equity Interests are permanently enjoined, pursuant to sections 524 and 1141, from (a) commencing or continuing any action or proceeding against the Debtor, the Reorganized Debtor or their property on account of such Claim or Equity Interest; (b) enforcing, attaching, collecting or recovering any judgment, award, decree or order against the Debtor, the Reorganized Debtor or their property; (c) creating, perfecting or enforcing any lien or encumbrance against the Debtor, the Reorganized Debtor or their property; (d) asserting any right of setoff, subrogation or recoupment against any obligation due from the Debtor, the Reorganized Debtor or their property; and (e) commencing or continuing any action in respect of any Claim or Equity Interest treated, classified, discharged or otherwise addressed under the Plan.
  • All such Persons shall be required to pursue satisfaction of their Claims and Equity Interests solely through the distribution mechanisms provided under the Plan.
  • Upon entry of the Confirmation Order, CNB and Brownstone shall be permanently enjoined from pursuing or continuing their state court actions against the Debtor or its assets, and such actions shall be dismissed, based on payment in full having been received under the Plan.
• If the Plan is confirmed, its terms are binding on the Debtor, all creditors, members and other parties in interest regardless of whether they accepted the Plan and, except as provided in the Plan, in the case of a limited liability company that is reorganizing and continuing business, all claims and interests will be discharged and creditors and members will be prohibited from asserting their claims against or interest in the Debtor or its assets.

Events of Default

• Any creditor remedies allowed by section 1112(b)(4)(N) shall be preserved to the extent otherwise available at law.
• In addition to any rights specifically provided to a claimant under the Plan, a failure by the Debtor to make a payment pursuant to the terms of the Plan shall be an event of default as to such payment if not cured within 10 days after mailing of written notice of default from such creditor to the Debtor. Any default notice, inquiry or other formal communication under the Plan must be sent by certified mail, return receipt requested, to the Debtor c/o Ms. Poscher, with a copy to Counsel, at 27777 Franklin Road, Suite 2500, Southfield, MI, 48034

Guarantors

• The CNB and Brownstone mortgage loans are both guaranteed by parties related to the Debtor.
  • The alleged guarantors of the CNB loan are AHFLP, LLC, an affiliate of the Debtor; Prentice; Dr. Poscher and Ms. Poscher, jointly and severally; and the Margaret E. Poscher Revocable Trust dated Jan. 23, 1998.
  • The alleged guarantors of the Brownstone loan are Dr. Poscher; Ms. Poscher; the Margaret E. Poscher Revocable Trust dated Jan. 23, 1998; AHFLP, LLC; Prentice; the Debtor; and Debtor affiliates Fourth Ave, LLC, 815 Brookwood LLC, 823 Sylvan LLC and 1700 Packard LLC, of which Prentice is the sole member.
  • Other than as set forth in the Plan, the Debtor is not aware of any other guaranty obligations outstanding as of the Petition Date, but reserves the right to amend or supplement the disclosure.

Valuation and Liquidation Analysis

• The Properties have been the subject of three valuations:
  • The CBRE Appraisal, performed July 7, 2023, in connection with CNB’s loan, reflected an “As Is (Land Value)” of $15.8 million and an “As Entitled (Land Value)” of $29.5 million, the latter including then in-place early-stage enhancements through site preparation and site plan application.
  • The Colliers BOV, dated May 20, 2024, valued the Development, with then in-place entitlements, at $45.8 million, reflecting additional architectural, engineering and site plan approval work.
  • The Colliers 2025 Appraisal, issued Nov. 25, 2025, valued the Development, with then in-place entitlements, at $61.3 million, reflecting the additional development work over the intervening 18 months.
  • The Debtor attributes the increase in valuation to the detailed and approved Development plans and entitlements now attached to the Property, which allow for construction of the various Development components.
  • The Colliers 2025 Appraisal indicated a good rating for both accessibility and exposure, moderate and minimal flood risk, no adverse easements or encumbrances, and no presence or signs of hazardous waste, summarizing that “[o]verall, the [Development’s] location is rated as good/excellent … there are no known factors that would limit the site’s development according to its highest and best use.” (Colliers 2025 Appraisal, p. 25.)
• Against these valuations, the Plan states that the secured, unsecured, superpriority and administrative Claims identified in Article 3 exceed $34 million in the aggregate if allowed in full; the claim amounts actually scheduled in Article 3 total approximately $38.6 million (about $38.4 million net of the Class 7 BDS claim, which is duplicated within the Class 5 Higley joint-check schedule), or roughly $39.6 million including the $650,000 DIP superpriority claim, approximately $480,000 of Legal Expenses and the $28,888.29 priority tax claim. The Plan provides for payment in full of all allowed Claims other than the conversion of Prentice’s secured claim to equity.
  • Based on the appraisals, it would appear that all creditors would be paid in full in a liquidation; however, it is unknown what value the Property and other assets would bring in a forced liquidation setting relative to the appraised values.
  • If the entitlements are deemed to have no value — based on a purchaser’s abandonment of the same in favor of a different or modified use of the Property — or a lesser value than appraised, the value obtained in a forced liquidation could approximate the $18,982,170 acquisition cost of the Property, which would be insufficient to satisfy creditor Claims in full and would likely cover only the Claims of Ann Arbor, allowed construction lien claims and a portion of the CNB indebtedness.

Financial Summary

• The Debtor’s historical results are as follows:
  • 2023: income of $545,110 against expenses of $2,047,289, for a net loss of $1,502,179.
  • 2024: income of $254,807 against expenses of $5,543,212, for a net loss of $5,288,405.
  • 2025: income of $152,785.50 against expenses of $3,303,000, for a stated net loss of $3,150,241.50 (the stated figure does not tie to the income and expense amounts, which yield a net loss of $3,150,214.50).
  • 2026 through the Petition Date: no income against expenses of $84,921, for a net loss of $84,921.
• Prepetition income was derived from residential rental income from the Property during completion of the land assemblage and prior to demolition of the previously occupied structures, while prepetition expenses comprised rental property management costs and development and demolition costs, including design, permitting, rezoning, site-plan approval and other costs to facilitate the Development.
• The Debtor has had no postpetition operating revenues, and its only expenses were the DIP Loan proceeds used to fund the Interest-Only Payments and the Administrative Expenses. All Legal Expenses remain subject to Bankruptcy Court approval and are to be paid pursuant to the Sources and Uses if not paid from the Retainer Deposits.

Tax Matters

• The Plan contemplates a conveyance of the Property to the SPE in exchange for a 100% equity interest — described in the Plan’s tax discussion as “a 100% interest in Newco,” although Article 3.10 provides that the Debtor receives 100% of the equity in the SPE — which the Debtor does not believe will result in a taxable event to the Debtor.
• The Debtor will have no debt forgiveness income related to the Plan, as the Plan provides for 100% payment of all allowed Claims on the Payment Disbursement Date.
• No ruling has been sought or obtained from the IRS with respect to any tax aspects of the Plan and no opinion of counsel has been obtained; no representations or assurances are being made with respect to federal income tax consequences, and certain types of claimants and interest holders may be subject to special rules not addressed. The Debtor recommends that creditors consult their own tax specialists.

Voting and Confirmation

• Only classes of claims or equity interests that are impaired under the Plan are entitled to vote; unimpaired classes are not entitled to vote. Creditors holding claims in more than one impaired class are entitled to vote separately in each class and will receive a separate ballot for each.
• Votes will be counted only with respect to claims (a) listed on the Debtor’s Schedules other than as disputed, contingent or unliquidated, or (b) for which a proof of claim was filed on or before the applicable bar date, except for certain claims expressly excluded from that bar date or allowed by Court order.
  • Any vote by a holder of a claim will not be counted if the claim has been disallowed or is the subject of an unresolved objection, absent an order allowing such claim for voting purposes under section 502 and Bankruptcy Rule 3018.
  • Ballots are to be returned by mail to the Debtor’s attorney by the deadline previously established by the Court, and replacement ballots may be obtained by written request to the Debtor’s attorney. Ballots that do not appropriately indicate acceptance or rejection, or that are not received by the deadline, will not be counted.
  • The Bar Date in this case is May 27, 2026, or Aug. 25, 2026, as to claims of governmental agencies or units.
• An impaired class of claims accepts the Plan upon acceptance by holders of at least two-thirds in dollar amount and more than one-half in number of the claims of that class that actually cast ballots; an impaired class of equity interests accepts upon acceptance by holders of at least two-thirds in number of the equity interests of that class that actually cast ballots. If no creditor or interest holder in an impaired class votes, that class has not accepted the Plan.
• The Plan notes that section 1129(a) establishes numerous conditions for confirmation, among them that each impaired class of claims and interests must accept the Plan and that either each holder of a claim or interest in a class accepts the Plan or the Plan provides at least as much value as would be received upon a liquidation under chapter 7. The Plan states that these conditions are too numerous and detailed to be fully explained and encourages parties to seek independent legal counsel regarding the chapter 11 process.
• The Debtor reserves the right to modify or withdraw the Plan at any time before confirmation.

Governing Law and Retention of Jurisdiction

• Unless a rule of law or procedure is supplied by federal law, including the Bankruptcy Code or the Federal Rules of Bankruptcy Procedure, the laws of the State of Michigan govern the Plan and any agreements, documents and instruments executed in connection therewith, except as otherwise provided in the Plan.
• The Bankruptcy Court may exercise jurisdiction to the full extent necessary to administer the case after confirmation and to adjudicate any related adversary proceedings or contested matters, including those concerning the Plan’s construction, implementation or modification, without limiting or expanding the jurisdiction authorized by title 28 of the United States Code.
• If any provision of the Plan is determined to be unenforceable, that determination will in no way limit or affect the enforceability and operative effect of any other provision.