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CARDINAL TRUSTEE FILES PLAN OF REORGANIZATION TO BRING COMPANY OUT OF BANKRUPTCY

 CARDINAL TRUSTEE FILES PLAN OF REORGANIZATION
 TO BRING COMPANY OUT OF BANKRUPTCY
 COLUMBUS, Ohio, April 15 /PRNewswire/ -- Court-appointed operating trustee Jay Alix submitted his plan of reorganization for Cardinal Industries today to the U.S. Bankruptcy Court here. If approved, creditors will become the principal shareholders of a new publicly held company that will emerge from Chapter 11 reorganization this summer.
 The comprehensive, 250-page plan submitted by Alix to U.S. Bankruptcy Court Judge Barbara J. Sellers leaves financial information blank in most instances, but was submitted to provide the court with additional time to review its structure for a May 14 disclosure statement hearing. Financial specifics will be completed within the next couple of weeks, the trustee said.
 Under the trustee's proposed plan, which is subject to creditor vote and court approval, Cardinal will emerge from reorganization with:
 -- General partnership and property management agreements with affiliated limited partnerships owning apartment complexes;
 -- A nine-member board of directors and new chief executive officer selected to work with the five current senior managers in directing the publicly held company;
 -- Tax benefits from past losses that potentially could reduce the reorganized company's federal income taxes in future years;
 -- Provision for full payment of administrative claims, priority tax claims, secured claims, except for those in which collateral is turned over to satisfy claims, and priority unsecured claims, and funding for post-confirmation working capital requirements; and
 -- General unsecured debt, including affiliated partnership claims, exchanged for common stock in the reorganized company, placing ownership of virtually all of the shares of the new company with the creditors. All pre-bankruptcy stock and other interests held by Cardinal founder, majority stockholder and former CEO Austin Guirlinger and others will be canceled under the plan.
 The trustee has proposed that the plan be funded by $36.6 million in financing from The Huntington National Bank. That proposal has not been fully reviewed by the entire creditors' committee.
 The plan of reorganization comes a little more than two years after Judge Sellers approved the appointment of Alix to try to rescue the then-near-collapse, eight-month-old reorganization of what had been the nation's largest modular housing manufacturer and one of the largest apartment and motel developers and syndicators of limited partnerships, with more than 1,000 properties at one time in 20 states east of the Mississippi River.
 Upon creditor and court approval of the plan, and approval and execution of the Huntington financing, Alix will have completed one of the most complex turnarounds in bankruptcy history, and charted the course for the reorganizations of another 250 affiliated limited partnership Chapter 11 cases. The interrelated cases have involved the restructuring of more than $1.8 billion in secured mortgage debt held by 275 financial institutions and the disallowance or settlement of more than $2 billion in claims.
 The case was considered so complex that in October 1990 Judge Sellers approved the trustee's motion for "substantive consolidation," a rarely invoked remedy that merged the assets and liabilities of Cardinal Industries and all but two of its 33 subsidiaries for bankruptcy purposes.
 "Our plan will allow Cardinal and its consolidated companies to emerge from reorganization with a viable capital structure as a general partner and property manager focused on maximizing value for both the new smate recoveries of all creditor groups on a fair and equitable basis and settles other claims on terms I believe are reasonable."
 Alix said unsecured creditors would receive nothing if the company was liquidated. Only the secured claims and administrative claims would be paid, according to liquidation analysis estimates that a "quick" hypothetical Chapter 7 liquidation of Cardinal's $184.3 million in assets would realize a little more than 20 percent of book value, or about $37.4 million.
 The trustee's plan of reorganization calls for Cardinal to maintain partnership agreements as general or co-general partner of, and manager of apartment complexes owned by, a core group of an unspecified number of affiliated limited partnerships. It also seeks Judge Sellers' approval for a six-month extension period beyond the effective date of emergence during which the reorganized Cardinal may assume or reject partnership agreements associated with other affiliated partnerships that Alix believes have a "reasonable likelihood" of being stabilized during that period.
 Under bankruptcy provisions allowing the rejection of executory contracts while a company is in reorganization, Cardinal plans to reject the partnership agreements of the remaining affiliated partnerships, which the plan says have "little likelihood" of successfully restructuring their first mortgage debt to permit stable, ongoing operations.
 The proposed Huntington financing will fund Cardinal's plan and post-confirmation working capital requirements and will be used to reimburse affiliated partnerships. The secured loans include a $14.6 million term loan and a $22 million revolving line of credit. The financing commitment resolves all remaining disputes between the companies and is contingent on a number of issues, including financial projections acceptable to the bank.
 "The Huntington has a long-standing relationship with Cardinal," Alix said. "This financing commitment shows that the Huntington is prepared to continue the relationship as Cardinal emerges as a reorganized company. The bank has been very responsive during these negotiations, and the relationship with the Huntington is very positive."
 When Cardinal emerges from reorganization, it plans to operate through 14 subsidiaries providing general partner and property management services to apartment complexes owned by affiliated partnerships, as well as operate subsidiary businesses in renter's insurance, leased furniture and mortgage services to affiliated partnerships.
 At the time of Cardinal's filing for court protection from creditors almost three years ago, it listed assets of $85.6 million and $94.5 million in liabilities. Cardinal also was general partner then of 903 affiliated limited partnerships with more than $1.8 billion of assets, of which 556 were syndicated partnerships, which owned apartment complexes, Knights Inn and Arborgate Inn motels and retirement villages.
 Alix permanently closed the company's five manufacturing facilities shortly after he was appointed trustee, and sold its motel and retirement village management businesses to focus the company's operations on its general partnership and apartment property management businesses. The company is now pursuing the sale of its remaining interests in the motels and retirement villages.
 -0- 4/15/92
 /CONTACT: Don Durocher, 313-614-755-6416, or Mike Chapp, 313-259-7414, both of Durocher & Co., for Cardinal Industries, Inc./ CO: Cardinal Industries, Inc. ST: Ohio IN: SU: RCN BCY


SM-JG -- DE026 -- 8890 04/15/92 16:14 EDT
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