Case dd Doc 92 Filed 10/30/09 Entered 10/30/09 17:29:07 Desc Main Document Page 1 of 20 UNITED STATES BANKRUPTCY COURT

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1 Document Page 1 of 20 UNITED STATES BANKRUPTCY COURT DISTRICT OF SOUTH CAROLINA IN RE: ) CHAPTER 11 ) StarTrans Inc. ) Case No.: dd ) Debtor. ) DISCLOSURE STATEMENT Filed by the Debtor-in-Possession On October 30, 2009 Table of Contents Page I. Introduction II. History and Events Leading to Bankruptcy III. Post-Petition Activity IV. Property of the Debtor V. Proposed Sale VI. Summary of Proposed Plan VII. Liquidation Analysis VIII. Feasibility of Plan IX. Tax Consequences X. Conclusion

2 Document Page 2 of 20 DISCLOSURE STATEMENT I. INTRODUCTION StarTrans Inc. (the Debtor ) provides this Disclosure Statement to all of its known creditors in order to disclose information considered by the Debtor to be important, material and necessary for the creditors to make a reasonably informed decision in exercising their right to vote on the Plan of Reorganization of the Debtor (the Plan ) which has been summarized herein and will be filed with this Disclosure Statement in the United States Bankruptcy Court for the District of South Carolina. This Disclosure Statement must provide such information, as far as practicable, that would enable a hypothetical reasonable investor typical of the holders of claims to make an informed judgment about the Plan. The Debtor feels that the information provided in this Disclosure Statement gives information which is adequate for an investor to make such a decision. The United States Bankruptcy Court will set a hearing to determine if this Disclosure Statement provides adequate information and conforms to the requirements of the Bankruptcy Code (11 U.S.C. 101 et seq.). The United States Bankruptcy Court will set a date at a later time for a hearing on the acceptance of the Plan or may combine the Disclosure Statement and Plan hearing. Notice of the hearing will be mailed to all holders of claims, and upon receiving the Notice of Hearing, holders of claims may vote on the Plan by completing the ballot mailed with the Plan and Notice of Hearing and then returning the ballot to the Bankruptcy Court. The Notice of Hearing will specify a time within which the ballots must be returned. The vote of all creditors and holders of claims is very important. The Plan will be confirmed by the Court if it is accepted by the holders of two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the creditors or holders of claims in each class voting on the Plan, and two-thirds (2/3) in number of the holders of allowed interests voting on the Plan. In the event the requisite number of acceptances are not obtained, the Court may still confirm the Plan if the Court finds the Plan accords fair and equitable treatment to those classes rejecting the Plan. The Plan represents a legally binding arrangement and should be read in its entirety, rather than relying on the summary in this Disclosure Statement. Approval of the Disclosure Statement by the United States Bankruptcy Court does not constitute approval by the Bankruptcy Court on the merits of the Plan. There is no unsecured creditors committee in this case. EXCEPT WHERE SPECIFICALLY STATED OTHERWISE, THE DISCLOSURE

3 Document Page 3 of 20 STATEMENT HAS BEEN PREPARED BY THE DEBTOR AND HAS BEEN PREPARED BASED ON INFORMATION AVAILABLE TO THE DEBTOR. NO REPRESENTATIONS CONCERNING THE DEBTOR (PARTICULARLY THE VALUE OF THE ASSETS OF THE DEBTOR) ARE AUTHORIZED OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT. THE INFORMATION CONTAINED HEREIN HAS NOT BEEN SUBJECT TO A CERTIFIED AUDIT. THOUGH GREAT EFFORT HAS BEEN MADE TO BE ACCURATE, THE DEBTOR IS UNABLE TO WARRANT OR REPRESENT THE INFORMATION CONTAINED HEREIN IS WITHOUT ANY INACCURACY. II. HISTORY OF THE DEBTOR AND EVENTS LEADING TO THE FILING OF BANKRUPTCY The Debtor is a South Carolina corporation based in Holly Hill, SC with approximately 370 employees. Debtor operates a trucking business, providing specialized logistical dry bulk delivery to over 200 customers. In furtherance of its service, the Debtor also operates terminals at several locations throughout the United States, namely: Calera, Alabama; Tampa, Florida; Mableton, Georgia; Macon, Georgia; Portage, Indiana; Maysville, Kentucky; Baton Rouge, Louisiana; Dundee, Michigan and Winston-Salem, North Carolina. The Debtor was founded in 2000 by experienced transportation executives who identified the need for additional construction support services for cement companies. From 2000 through 2007, the Debtor experienced rapid growth and expansion commensurate with the uptick in the construction industry. The Debtor secured longterm contracts with the leading cement producers in the world and diversified into hauling bulk limestone in dry bulk tanks. In 2008, the Debtor s growth strategy collided with a severe decline in the construction industry. This downturn in construction led to a reduction in activity for the Debtor s core cement customers. As a result the Debtor found itself with excess equipment requiring debt service. The Debtor and its creditors have been working together to reduce the fleet size and the corresponding debt load for the past eighteen months. However, the falling resale rates in the used equipment market and continued decline in cement usage nationally have resulted in a cash-flow shortage impairing the Debtor s ability to service its remaining debt. Given the current conditions and the contractual debt loads, removing

4 Document Page 4 of 20 excess equipment from the fleet often requires a cash payment in excess of the value of the equipment. The debtor, quite literally, cannot give the equipment away. Due to key remaining contracts, the Debtor still is able to generate positive cash flow prior to debt service, but is unable to meet debt obligations. Faced with falling behind ninety days with important secured creditors and facing repossession of revenuegenerating equipment necessary to maintain its status as a going concern, the Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code on October 5, 2009 in order to effectuate a reorganization or sale of its business operations. III. POST-PETITION ACTIVITY A. Bankruptcy Filing and First Day Motions The Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code on October 5, Since that time, the Debtor has managed its assets as a debtor in possession pursuant to 1107(a) and 1108 of the Bankruptcy Code. On October 5, 2009, the first day of the case, the Debtor filed an emergency motion for an order under 11 U.S.C. Sections 105(a) and 363 authorizing the treatment of Comdata as a Critical Vendor. The Debtor proposed to pay the prepetition claims of Comdata in order to continue to receive the essential credit and payment services Comdata provided. A hearing was held on the motion on October 8, 2009, and the Court entered an order authorizing the payment of prepetition claims of the Critical Vendor on October 8, On October 5, 2009, the first day of the case, the Debtor filed an emergency motion for an order under 11 U.S.C. Section 105(a), 363(b) and 507(a) authorizing the payment of employee wages, benefits and equipment insurance premiums. The Debtor proposed to pay the prepetition claims noted herein in order to ensure the continuing viability of the business, retain employees and protect equipment serving as collateral. A hearing was held on the motion on October 8, 2009, and the Court entered an order authorizing the payment of these prepetition claims October 8, On October 5, 2009, the first day of the case, the Debtor filed an emergency motion for an order under 11 U.S.C. Section 366 authorizing the payment of adequate assurance to utility providers. The Debtor proposed to provide adequate assurance

5 Document Page 5 of 20 payments to utility providers in exchange for the continued provision of utility services. A hearing was held on the motion on October 8, 2009, and the Court entered an order authorizing the payment of adequate assurance to utilities on October 8, On October 5, 2009, the first day of the case, the Debtor filed an emergency motion for an order under 11 U.S.C. Section 105(a), 361, 363(c)(2), 363(e) and Bankruptcy Rules 4001(b) and 9014 requesting the use of Cash Collateral. The Debtor proposed to utilize the cash collateral provided by Financial Federal Credit Inc. ( FFCI ) to ensure payment of post-petition operating expenses. A hearing was held on the motion on October 8, 2009, and the Court entered an interim order authorizing the use of Cash Collateral on October 8, A final hearing was held October 27, 2009 and a final Cash Collateral Order was entered October 28, B. Motions for Relief from Stay The Debtor s Sale Motion contemplates the return of certain assets to secured creditors. Pursuant to the return of these assets, certain creditors have filed motions for relief from stay or Bankruptcy Rule 4001(d) notices for consensual relief from stay. Orders have not yet been entered with respect to those motions and notices. C. Sale of Assets On October 5, 2009, the Debtor filed a motion for an order authorizing the sale of its assets free and clear of all liens, claims, encumbrances, and other interests pursuant to 11 U.S.C. 363 to Trimac Dry Bulk Transport Inc. ( Trimac ) for a purchase price of $24,995,667. On October 5, 2009, the Debtor filed its motion to approve the sale of its assets and also filed a bid procedures motion, requesting an expedited hearing in these matters. On October 8, the Debtor filed an amended motion, and on October 28, the Debtor filed an addendum to the motion. The Court entered a bid procedures order and set the Sale Motion for final hearing on November 3, Details of the proposed sale are set out in more detail below. Included in the addendum to Debtor s sale motion, filed October 28, 2009, were assertions relating to an employee benefit program requiring a cash distribution from Debtor to employees on or about November 15, This distribution is now scheduled to be made at closing.

6 Document Page 6 of 20 D. Leases Included in the addendum to Debtor s sale motion, filed October 28, 2009, were assertions that certain leases would be assumed and an explanation of the disposition of the interests of parties to leases that would not be assumed. IV. PROPERTY OF THE DEBTOR Debtor s assets consist primarily of cash, tractors and bulk haulers, equipment, parts, accounts receivable, and goodwill. The goodwill of the Debtor s business is a significant asset because the Debtor has been in the business of transporting construction materials throughout the Southeast United States since 2000 and has built a significant customer base and reputation. The Debtor is in the process of reviewing its financial records with regard to whether the Debtor has any causes of action pursuant to 11 U.S.C. 547, 548, 549, and 550. At this time, the Debtor is not aware of any such actions. As set forth herein below, the Debtor is proposing to sell to Trimac or the highest bidder substantially all of its non-returned assets excepting cash and possible avoidance actions. V. PROPOSED SALE OF THE PROPERTY On October 1, 2009, the Debtor and Trimac entered into an Asset Purchase Agreement for the Purchase of substantially all of the Debtor s Assets (said agreement shall hereinafter be referred to as the Sale Agreement ). The Debtor filed its Sale Motion on October 5, 2009, amended it October 8 and supplied it with an addendum October 28. A final hearing on the approval of the Sale Agreement has been set for November 3, Pursuant to the Sale Agreement, Trimac has offered to pay the following prices for the Debtor s personal property (collectively hereinafter referred to as the Assets ) which aggregate approximately $24,995, ( Purchase Price ): Assumption of Debt for Rolling Stock $10,982, Cash Paid for Rolling Stock 2,821, Replacement Vehicle Leases 6,962, Service Vehicle Leases 207,691.00

7 Document Page 7 of 20 Assumption of Other Operating Liabilities 3,279, Goodwill 742, Key assets being transferred include 289 tractors, 492 trailers, 22 service vehicles, accounts receivable, tires, fuel and assumed contracts. Specifically not included in the Sale Agreement are the Debtor s cash and any potential avoidance actions pursuant to 11 U.S.C. 547, 548, 549, and 550. In connection with the proposed sale, the Debtor will transfer the terminal lease agreements to Trimac. The terminals are owned by Star Properties, an entity related to the Debtor by virtue of common ownership. These terminals are leased to the Debtor on terms favorable to those produced by arms length bargaining, and such terms will continue after the sale. At closing, FFCI debt will be assumed and secured debts will be paid and assumed as set forth in Article VI below. Thereafter, secured creditors in classes 2-15 will be paid, have their equipment returned, or enjoy an assumption of debt by Trimac as set forth in Article VI. The Debtor anticipates remaining sales proceeds and cash on hand available for distribution to the unsecured creditors of the estate. After approval and distribution of the sales proceeds as set forth herein, FFCI, CCGI, Paccar, PCLC, Navistar, and Synovus have agreed to waive any rights to participate in any distributions to the unsecured creditors of the Debtor s estate. The remaining proceeds will be distributed pro rata to the remaining unsecured creditors of the estate only upon further order of the Court and upon the Debtor successfully obtaining a confirmed plan of reorganization. The Debtor currently estimates a distribution to general unsecured creditors in Class 24 of approximately twenty percent (20%) of total substantiated claims. VI. SUMMARY OF PROPOSED PLAN Debtor s Plan is a liquidating plan and the allowed claims of creditors will be paid as described herein below and in the Plan. The Debtor s Plan calls for the sale of substantially all of its assets and distribution of the sales proceeds to creditors as set out in the classifications below. Class 1. Financial Federal Credit, Inc. Secured, unimpaired. Financial Federal Credit, Inc. ( FFCI ) provided the Debtor with cash collateral and equipment financing and asserts a lien on substantially all assets of the Debtor. FFCI asserts a

8 Document Page 8 of 20 secured claim in the approximate amount of $11,024, as of October 5, FFCI s debt is being assumed in full by Trimac. Post-petition, FFCI has received court-approved monthly adequate protection payment(s) in the monthly amount of $247,613, and is entitled to the monthly prorated portions of additional equivalent payments through the sale closing date. Upon closing, FFCI s debt will be assumed by Trimac in its entirety, and FFCI shall no longer have any claims against the Debtor or its estate. Upon sale closing, FFCI shall not have any remaining liens, encumbrances or other interests in or to any of the Debtor s remaining assets, including interests regarding any cash and cash collateral remaining in the estate. Class 2. Commercial Credit Group, Inc.. Secured, unimpaired. Commercial Credit Group, Inc. ( CCGI ) provided the Debtor with financing for revenue-generating equipment, and CCGI asserts a lien on 4 trailers and a claim in the approximate amount of $90, In connection with the proposed sale, Debtor will transfer to Trimac, free and clear of all liens, claims, encumbrances and other interests, the 4 trailers in which CCGI asserts a security interest in exchange for a one-time cash payment at sale closing to CCGI in the amount of $115, Thus, the CCGI claim will be paid in full upon closing of the sale, and CCGI will have no further claims against the estate. Class 3. Paccar Financial Corp. Secured, impaired. Paccar Financial Corp. ( Paccar ) provided the Debtor with financing for revenue-generating equipment, and Paccar asserts a lien on 20 tractors and a claim in the approximate amount of $2,948, Pursuant to an Order of the Court, Paccar has received a one time postpetition adequate protection payment in the amount of $43,786. In connection with the proposed sale, Debtor will transfer to Trimac, free and clear of all liens, claims, encumbrances and other interests, the 20 tractors in which Paccar asserts a security interest in exchange for a one time cash payment to Paccar of $1,250,000. In exchange for the payments and agreements set forth herein and in the Sale Motion, Paccar has agreed to release its liens on the assets being sold to Buyer. Paccar has agreed to waive any and all remaining deficiency claims against Debtor, but Paccar specifically reserves its rights against any guarantors of its debt.

9 Document Page 9 of 20 Class 4. Key Equipment Finance Inc. Secured, unimpaired. Key Equipment Finance Inc. ( Key ) provided the Debtor with financing for revenuegenerating equipment, and Key asserts a lien on 24 tractors and 26 trailers and a claim in the approximate amount of $2,907, In connection with the proposed sale, Debtor will return to Key 24 tractors and 24 trailers and will transfer to Trimac, free and clear of all liens, claims, encumbrances and other interests, 2 of the 26 trailers in which Key retains a security interest in exchange for a one-time cash payment at sale closing to Key of $86,000. In exchange for the payments and agreements set forth herein and in the Sale Motion, Key has agreed to release its liens on the assets being sold to Buyer. Pursuant to the Debtor s schedules, it appears that Key may assert a remaining deficiency claim against the Debtor in an amount of approximately $640,000. Any such remaining unsecured deficiency claims of Key are unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 5. People s Capital and Leasing Corp. Secured, impaired. People s Capital and Leasing Corp. ( PCLC ) provided the Debtor with financing for revenuegenerating equipment, and PCLC asserts a lien on 7 tractors and 39 trailers and a claim in the approximate amount of $1,625, In connection with the proposed sale, Debtor will transfer to Trimac, free and clear of all liens, claims, encumbrances and other interests, the 7 tractors and 39 trailers in which PCLC retains a security interest to Trimac in exchange for Trimac assuming debt in the amount of $1,635,000. PCLC has specifically agreed to waive any and all remaining claims it may have against the estate and any guarantors. Class 6. Regions Financial Corporation Secured, unimpaired. Regions Financial Corporation ( Regions ) provided the Debtor with financing for revenue-generating equipment, and Regions asserts a lien on 5 tractors and a claim in the approximate amount of $120, In connection with the proposed sale, Debtor will return the 5 tractors in which Regions asserts a security interest to Regions. The Debtor asserts Regions is an oversecured creditor, and, as such, will have no remaining claims against the estate. To

10 Document Page 10 of 20 any extent Regions is determined to have remaining claims, such claims would be unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 7. Navistar Financial Corporation Secured, impaired. Navistar Financial Corporation ( Navistar ) provided the Debtor with financing for revenuegenerating equipment, and Navistar asserts a lien on 187 tractors and 12 trailers and a claim in the approximate amount of $11,986, In connection with the proposed sale, Debtor proposes to return 14 of the 187 tractors to Navistar. Navistar and Trimac have agreed to enter into new replacement lease arrangements for 173 of the 187 tractors and the 12 trailers. The debt essentially being assumed at closing by Trimac is believed to have a net present value of approximately $6,962,057, and the debt essentially being assumed based on the new trailer leases has a net present value of approximately $497,375. In exchange for the payments and agreements set forth herein and in the Sale Motion, Navistar has specifically agreed to waive any and all remaining deficiency claims against Debtor s estate and any guarantors thereunder. Class 8. Synovus Capital Finance Secured, impaired. Synovus Capital Finance ( Synovus ) provided the Debtor with financing for revenue-generating equipment, and Synovus asserts a lien on 21 tractors and 10 trailers and a claim in the approximate amount of $1,717, In connection with the proposed sale, Debtor will transfer to Trimac, free and clear of all liens, claims, encumbrances and other interests, the 21 tractors and 10 trailers in which Synovus asserts a security interest in exchange for a one-time cash payment to Synovus of $1,250,000. In exchange for the payments and agreements set forth herein and in the Sale Motion, Synovus has agreed to release its liens on the assets being sold to Buyer. Synovus has specifically agreed to waive any and all remaining claims it may have against the estate and any guarantors. Class 9. All Points Capital Corp. in connection with Jules and Associates Secured, unimpaired. All Points Capital Corp., in connection with Jules and Associates ( All Points ) provided the Debtor with financing for revenue-generating equipment, and

11 Document Page 11 of 20 All Points asserts a lien on 5 tractors and 14 trailers and a claim in the approximate amount of $789, In connection with the proposed sale and pursuant to further order of the Court, Debtor will return to All Points its collateral. Pursuant to the Debtor s schedules, it appears that All Points may assert a remaining deficiency claim against the Debtor in an amount of approximately $91,000. Any such remaining unsecured deficiency claims of All Points are unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 10. Center Capital Corporation Secured, unimpaired. Center Capital Corporation ( Center ) provided the Debtor with financing for revenue-generating equipment, and Center asserts a lien on 7 tractors and a claim in the approximate amount of $1,842, In connection with the proposed sale and pursuant to further order of the Court, Debtor will return to Center all of its collateral. Pursuant to a motion for relief from stay filed by Center in this matter, it appears that Center may assert a remaining deficiency claim against the Debtor in an amount of approximately $351,000. Any such remaining unsecured deficiency claims of Center are unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 11. Bank of the West in connection with Trinity Corp. Secured, unimpaired. Bank of the West, in connection with Trinity Corp. ( Bank West ) provided the Debtor with financing for revenue-generating equipment, and Bank West asserts a lien on 15 tractors and 19 trailers and a claim in the approximate amount of $1,535, In connection with the proposed sale and pursuant to further order of the Court, Debtor will return to Bank West all of its collateral. Pursuant to the Debtor s schedules, it appears that Bank West may assert a remaining deficiency claim against the Debtor in an amount of approximately $128,000. Any such remaining unsecured deficiency claims of Bank West are unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 12. Ford Credit Corporation Secured, unimpaired. Ford Credit Corporation ( Ford ) provided the Debtor with financing for service vehicles, and Ford

12 Document Page 12 of 20 asserts a lien on 1 passenger car and 5 trucks and a claim in the approximate amount of $52, In connection with the proposed sale, Trimac has offered to assume the current obligations of the Debtor to Ford in full. At this time, Trimac and Ford have not yet been able to reach a final agreement as to the assumption of this debt. If the Ford debt is assumed in full by Trimac, Ford will have no remaining claim against the estate. If Trimac and Ford are unable to reach such an agreement prior to the sale hearing in this matter, the Debtor will return to Ford all of its collateral. The Debtor asserts Ford is an oversecured creditor, and, as such, will have no remaining claims against the estate after the return or sale of its vehicles. To any extent Ford is determined to have remaining claims, such claims would be unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 13. General Motors Acceptance Corporation Secured, unimpaired. General Motors Acceptance Corporation ( GMAC ) provided the Debtor with financing for service vehicles, and GMAC asserts a lien on 2 passenger cars and a claim in the approximate amount of $21, In connection with the proposed sale, Trimac has offered to assume the current obligations of the Debtor to GMAC in full. At this time, Trimac and GMAC have not yet been able to reach a final agreement as to the assumption of this debt. If the GMAC debt is assumed in full by Trimac, GMAC will have no remaining claim against the estate. If Trimac and GMAC are unable to reach such an agreement prior to the sale hearing in this matter, the Debtor will return to GMAC all of its collateral. The Debtor asserts GMAC is an oversecured creditor, and, as such, will have no remaining claims against the estate after the return or sale of its vehicles. To any extent GMAC is determined to have remaining claims, such claims would be unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 14. Infinity Finance Corporation Secured, unimpaired. Infinity Finance Corporation ( Infinity ) provided the Debtor with financing for service vehicles, and Infinity asserts a lien on 3 passenger cars and a claim in the approximate amount of $84, In connection with the proposed sale, Trimac has offered to assume the current

13 Document Page 13 of 20 obligations of the Debtor to Infinity in full. At this time, Trimac and Infinity have not yet been able to reach a final agreement as to the assumption of this debt. If the Infinity debt is assumed in full by Trimac, Infinity will have no remaining claim against the estate. If Trimac and Infinity are unable to reach such an agreement prior to the sale hearing in this matter, the Debtor will return to Infinity all of its collateral. The Debtor asserts Infinity is an oversecured creditor, and, as such, will have no remaining claims against the estate after the return or sale of its vehicles. To any extent Infinity is determined to have remaining claims, such claims would be unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 15. South Carolina Bank and Trust Secured, unimpaired. South Carolina Bank and Trust ( SCBT ) provided the Debtor with financing for service vehicles, and SCBT asserts a lien on 1 passenger car and 3 trucks and a claim in the approximate amount of $40, In connection with the proposed sale, Trimac has offered to assume the current obligations of the Debtor to SCBT in full. At this time, the Trimac and SCBT have not yet been able to reach a final agreement as to the assumption of this debt. If the SCBT debt is assumed in full by Trimac, SCBT will have no remaining claim against the estate. If Trimac and SCBT are unable to reach such an agreement prior to the sale hearing in this matter, the Debtor will return to SCBT all of its collateral. The Debtor asserts SCBT is an oversecured creditor, and, as such, will have no remaining claims against the estate with regard to this secured vehicle financing claim once its vehicles are returned. To any extent SCBT is determined to have remaining claims, such claims would be unsecured, non-priority claims that will be treated as a part of the Class 24 unsecured claims. Class 16. Great West Casualty Company ( GWCC ). Secured, unimpaired. GWCC provides the Debtor with various insurance coverages, including coverage for general liability, physical damage, workers comp, and tractor/trailer accident and cargo damage coverage. Debtor s obligations under the GWCC policies include payments for premiums under a Worker s Compensation policy and under a Commercial Auto policy. Debtor s obligations under the GWCC policies also include payments for Self Insured Retention amounts (SIR).

14 Document Page 14 of 20 Prepetition premiums remain due and outstanding to GWCC. Postpetition, the Debtor is paying its premiums as they come due through the date of sale closing. Premium amounts due under the policies are secured by a total of $247,000 in Premium Deposits held by GWCC (Debtor asserts that an additional $15,000 Premium Deposit was paid pre-petition, but AJG Risk Management Services, the agent on this account, asserts that those funds were applied pre-petition to other amounts due from Debtor.). SIR payment and deductible amounts due GWCC are secured by a total of $95, in Loss Trust Funds on deposit with GWCC, and by a Letter of Credit from JP Morgan Chase (or FFCI) in the amount of $1,275,000. GWCC further asserts that it holds a South Carolina Bank & Trust Letter of Credit (SCB&T LOC) for an additional $200, The Debtor believes that the SCB&T LOC was or should have been cancelled prepetition, but GWCC asserts otherwise. At closing, pursuant to an agreement between Trimac and GWCC, Trimac will replace the JP Morgan Chase/ FFCI letter of credit with a cash deposit of $1,275,000, which cash deposit will be used by GWCC as a claim reserve for the Debtor s policy and will act as a replacement for the FFCI letter of credit. Trimac will be assuming no obligations whatsoever in respect of the SCB&T LOC. The Loss Trust Funds and the Premium Deposit are Assets to be purchased by Trimac as a Non-Cash Asset pursuant to the APA, subject to the lien of GWCC and Gallagher for amounts secured thereby. Pursuant to agreements between Trimac, the Debtor and GWCC, any and all prepetition amounts due GWCC shall be offset against the deposits and letters of credit, as appropriate. Because GWCC will obtain payment in full for all of its claims against the Debtor s estate from non-estate assets and assets being transferred to Trimac, GWCC will have no remaining claims against the estate. Class 17. Administrative Claims. Priority, unimpaired. This class consists of the administrative claims of the Debtor s attorneys and other professionals, quarterly fees of the United States Trustee, and any unpaid post-petition operating expenses. Professional fees incurred through the date of confirmation will be paid only after court approval. After court approval, where necessary, these expenses will be paid in full from the proceeds of the sale. Class 18. State and Local Domestic Support Obligations ( DSO ).

15 Document Page 15 of 20 Priority, unimpaired. State and local governments and agencies assert Domestic Support Obligation ( DSO ) claims against certain of the Debtor s employees wages in the approximate cumulative. Any and all such asserted amounts have been paid in the ordinary course of business out of Court approved and post-petition payrolls. These state and local government entities have no remaining claims against the Debtor for DSO s of the Debtor s employees. Class 19. Internal Revenue Service ( IRS ). Priority, unimpaired. The IRS asserts a claim for income taxes in the approximate amount of $14,713.38, a claim for FICA employment taxes in the approximate amount of $32,485.30, a claim for FUTA taxes in the approximate amount of $1, and a 941 penalty claim in the approximate amount of $3, The aggregate amount of the IRS claim is $51, The Debtor will pay the unsecured, priority portion of such claims in full on the Effective Date of this Plan. Any and all unpaid and remaining unsecured, non-priority claims of the IRS will be treated as a part of the Class 24 unsecured claims. Class 20. State and Local Business Tax Withholding and Unemployment. Priority, unimpaired. Debtor owes 9 state government creditors outside South Carolina, namely Alabama, Georgia, Indiana, Kentucky, Louisiana, Michigan, Mississippi, North Carolina and Ohio, business taxes aggregating approximately $10, These creditors also assert unemployment tax claims in the aggregate amount of approximately $8, Claims of these creditors total approximately $19,298.42, and will be paid in full on the Effective Date of this Plan. Class 21. South Carolina Department of Revenue ( SCDOR ). Priority, unimpaired. SCDOR asserts a claim for property taxes in the approximate amount of $80,232.16, a withholding claim in the approximate amount of $3,317.53, an unemployment claim in the approximate amount of , and a claim for administrative enforcement of the International Fuel Tax Agreement in the approximate amount of $10, The aggregate amount of the SCDOR claim is $94, The Debtor will pay such claim in full on the Effective Date of this Plan. Class 22. Traffic Enforcement Agencies Priority, unimpaired. State law enforcement agencies in Louisiana, South Carolina, Florida and Georgia, respectively, assert aggregate claims for prepetition traffic or safety violations in the approximate

16 Document Page 16 of 20 amount of $ The Debtor will pay such claims in full on the Effective Date of this Plan. Class 23. StarTrans Legacy Employees ( Employees ). Priority, unimpaired. Substantially all Employees will become employees of Trimac upon closing of the sale, without any meaningful interruption of work schedule or pay schedule. As of the petition date, Employees asserted a claim in the approximate amounts of $306,585 for wages payable, $192,750 for accrued vacation pay and $60,767 for Christmas Club contributions. During the period between filing of the petition and closing of the sale, unpaid wages earned prepetition and post-petition have been paid or will be paid pursuant to Court Order or in the ordinary course of the Debtor s business. Pursuant to the Debtor s Sale Motion, Christmas Club contributions will be repaid to Employees by the Debtor from cash proceeds at sale closing. Accrued vacation liabilities will be assumed by Trimac for all employees in full upon closing of the sale. Therefore, the Employees have been or will be paid their entire priority wage and benefit related claims in full. Any and all unpaid and remaining unsecured, non-priority claims of the Employees will be treated as a part of the Class 24 unsecured claims. Class 24. General Unsecured Creditors. Unsecured, impaired. This class consists of all general unsecured creditors of the Debtor, including any contract rejection claims and the remaining deficiency claims of unsecured creditors. Debtor estimates that the aggregate amount of known claims is approximately $3,800,000. This class does not include any unsecured deficiency claims of FFCI, PCLC, CCGI, Navistar, Paccar, or Synovus as such creditors have specifically agreed to waive any rights to participate in the distribution to the unsecured creditors of the Debtor s estate. All remaining cash in the estate from the sale proceeds and liquidation of remaining assets will be set aside for distribution to this class. These proceeds will be distributed pro rata to the remaining general unsecured creditors of the estate upon the Debtor successfully obtaining a confirmed plan of reorganization and only after the final determination of such claims. The Debtor reserves the right to object to any claim prior to the closing of the case. The Debtor also reserves its right to bring any potential avoidance actions pursuant to 11 U.S.C. 547, 548, 549, and 550. The Debtor currently estimates that members of this class will receive a payout of approximately 20% of their

17 Document Page 17 of 20 claims. Class 25. Victor Thompson and Robert Williamson. Equity Holders, impaired. Victor Thompson and Robert Williamson (collectively the Equityholders ) are each 50% shareholders of the Debtor. The Equityholders equity interests in the Debtor will be extinguished at confirmation, and the Debtor s estate will be making no distribution to members of this class for any equity claims. Trimac believes that the continued efforts of the Equityholders as managers of the business will add significant value to the ability of the purchased assets to generate value. To this end, pursuant to the Asset Purchase Agreement, Trimac has entered into employment agreements with the Equityholders for employment by Trimac after the sale closing. VII. LIQUIDATION AND OTHER ALTERNATIVES TO PLAN CONFIRMATION There are three possible consequences if the Plan is rejected or if the Bankruptcy Court refuses to confirm the Plan: (a) the Bankruptcy Court could dismiss the Debtor s Bankruptcy Case; (b) the Bankruptcy Court could consider an alternative plan of reorganization or orderly liquidation filed by some other party, or (c) the Debtor s Bankruptcy Case could be converted to a liquidation case under Chapter 7 of the Bankruptcy Code. These alternatives are described briefly below. Dismissal Were the Debtor s Bankruptcy Case dismissed, the Debtor would no longer have the protection of the Bankruptcy Court and the applicable provisions of the Bankruptcy Code. Any secured creditors would be expected to immediately exercise their rights as secured creditors to foreclose and seize the Debtor s assets. Dismissal would force a race among secured creditors and other creditors to take over and dispose of any remaining property of the Debtor. Furthermore, a dismissal of the Chapter 11 case would potentially upset the settlements between the Debtor and the secured creditors in classes Upon information and belief, the Debtor believes that FFCI would enforce its lien against all assets of the Debtor, leaving the estate with few assets.

18 Document Page 18 of 20 Confirmation of an Alternative Plan If the Plan is not confirmed, the Debtor or any other party-in-interest could attempt to formulate a different plan. If an alternative plan were proposed, it would more than likely be substantially similar to the current Plan in that it would propose to aggressively settle deficiencies with secured creditors. It would also contemplate the liquidation of the Debtor s few remaining Assets and the distribution of cash to creditors of descending priority. The Debtor believes that the Plan described herein enables the Creditors and all parties-in-interest to realize the best payout under the circumstances and any other alternative plan would not likely provide any greater return to Claimants. Chapter 7 Liquidation The primary advantage of the Plan over Chapter 7 liquidation is that holders of allowed general unsecured Claims in Class 24 are likely to receive distributions, which would not likely be available in a Chapter 7 case. Because the Plan contemplates that: (i) the Bankruptcy Court's involvement will diminish substantially after the Effective Date and (ii) the Debtor s counsel and Financial Advisor, who are already familiar with the Assets of and Claims against the Estate, shall continue the process of Claims resolution, without the necessity for additional investigation by a Chapter 7 Trustee and his/her separate new professionals, there will not be an additional layer of administrative expenses. In addition to the sale proceeds available through the Plan, the Plan also offers the opportunity of avoiding additional administrative costs and delays that would result from a Chapter 7 liquidation. At a minimum, a Chapter 7 Trustee would retain his/her own counsel, who would ordinarily need to devote a substantial amount of time reviewing the status of Claims and getting up to speed on various matters. Such review would include a substantial amount of time duplicating tasks previously performed by other Professionals in the case, thereby increasing both the costs and the time necessary to liquidate the Estate. Also, the statutory fee paid to the Chapter 7 Trustee would further deplete the Estate. If this case were converted to a Chapter 7 proceeding, dividend distributions, if any, would be delayed for months because the Bankruptcy Court is required to establish

19 Document Page 19 of 20 an additional bar date for filing proofs of Claim against the Estate. Upon conversion to Chapter 7, unsecured creditors are given additional time to file Claims and governmental authorities are provided even longer to file their additional proofs of Claim. Upon expiration of the Chapter 7 bar dates, particularly given the high number of creditors in this case, the Chapter 7 Trustee and/or his attorney would likely require considerable time to review the Claims and undertake the Claims resolution process. Thus, not only would any dividends paid to creditors suffer because Chapter 7 professional fees would be paid at the expense of these Claims, but unsecured creditors would actually have to wait months longer for any distribution. Consequently, the Debtor believes that the Plan's lower total administrative costs and the more expeditious process of remaining in a Chapter 11 combine to result in higher recovery for creditors than a Chapter 7 liquidation could ever offer. VIII. FEASIBILITY OF THE PLAN It is provided in 11 U.S.C. 1129(a)(11) that in order for a Plan of Reorganization to be confirmed, it must be demonstrated that the Plan of Reorganization is not likely to be followed by a liquidation or the need for further reorganization of the Debtor or any successor of the Debtor under the Plan unless the liquidation or reorganization is proposed in the Plan of Reorganization. The Debtor is selling substantially all of its assets to a third party to be approved by the Court, and the Plan is a plan of liquidation. The net sales proceeds will be distributed to creditors according to this Plan of Reorganization. The Plan is feasible because a sale date has been set, a purchaser has been identified, that purchaser has secured financing to fund the purchase, and those funds will be available for Debtor and purchaser to effect performance under the terms of the sale. Though creditors and parties in interest should contact their own tax and financial advisors, the Debtor does not believe this Plan has any adverse tax consequences that are known at this time. IX. TAX CONSEQUENCES The Debtor believes there are no adverse tax consequences to the Debtor or its creditors as a result of the bankruptcy and the provisions of the Plan but all creditors and parties in interest should consult their respective accountants and/or tax attorneys. X. CONCLUSION

20 Document Page 20 of 20 The Creditors and readers of this Disclosure Statement are directed to the Plan of Reorganization for specific treatment of their particular claims against the Debtor. The provisions of the Plan satisfy all undisputed claims against the Debtor. RESPECTFULLY SUBMITTED on this the 30 th day of October, 2009, at Columbia, South Carolina. MCCARTHY LAW FIRM LLC BY: /s/ Daniel J. Reynolds, Jr. G. William McCarthy, Jr., I.D. #2762 Sean P. Markham I.D. #10145 Daniel J. Reynolds, Jr. I.D.#9232 Attorneys for the Debtor 1715 Pickens Street (29201) Post Office Box Columbia, South Carolina Tele: (803) Fax: (803)