ava l. schoen tonkon torp llp

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DEBTORS' SECOND AMENDED PLAN OF REORGANIZATION (OCTOBER 29, 2009)

TONKON TORP LLP Attorneys at Law

888 S.W. Fifth, Suite 1600 Portland, Oregon 97204-2099

Telephone (503) 802-5715

Albert N. Kennedy, OSB No. 821429 (Lead Attorney) Direct Dial: (503) 802-2013 Facsimile: (503) 972-3713 E-Mail: [email protected]

Timothy J. Conway, OSB No. 851752 Direct Dial: (503) 802-2027 Facsimile: (503) 972-3727 E-Mail: [email protected]

Ava L. Schoen, OSB No. 044072 Direct Dial: (503) 802-2143 Facsimile: (503) 972-3843 E-Mail: [email protected]

TONKON TORP LLP 1600 Pioneer Tower 888 S.W. Fifth Avenue Portland, OR 97204

Attorneys for Debtors

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF OREGON

In re Renaissance Custom Homes, LLC, et al., Debtors.

Case No. 08-35023-tmb11 (Jointly Administered with Case No. 08-35025-tmb11 and Case No. 08-35026-tmb11) DEBTORS' SECOND AMENDED PLAN OF REORGANIZATION (October 29, 2009)

Case 08-35023-tmb11 Doc 532 Filed 10/30/09

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Page i of i - DEBTORS' SECOND AMENDED PLAN OF REORGANIZATION (OCTOBER 29, 2009)



Telephone (503)802-5715

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS ....................................................................................................1

ARTICLE 2 UNCLASSIFIED CLAIMS.................................................................................9

ARTICLE 3 CLASSIFICATION...........................................................................................10

ARTICLE 4 TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS......................13

ARTICLE 5 DISPUTED CLAIMS; OBJECTIONS TO CLAIMS .......................................25

ARTICLE 6 MEANS FOR EXECUTION OF PLAN ...........................................................27

ARTICLE 7 EXECUTORY CONTRACTS AND UNEXPIRED LEASES..........................32

ARTICLE 8 EFFECT OF CONFIRMATION .......................................................................33

ARTICLE 9 RETENTION OF JURISDICTION...................................................................34

ARTICLE 10 ADMINISTRATIVE PROVISIONS...............................................................35

ARTICLE 11 MISCELLANEOUS PROVISIONS................................................................36


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Tonkon Torp LLP 888 SW Fifth Avenue, Suite 1600

Portland, Oregon 97204 503-221-1440

Page 1 of 39- DEBTORS' SECOND AMENDED PLAN OF REORGANIZATION (OCTOBER 29, 2009)

Renaissance Custom Homes, LLC ("RCH"), Renaissance Development Corporation

("RDC"), and The Lakes at Fishers Landing, LLC ("The Lakes"), as debtors and

debtors-in-possession, propose the following Joint Plan of Reorganization (the "Plan")

pursuant to Section 1121(a) of Title 11 of the United States Code.

This Plan provides for the repayment of the Companies' obligations to its Creditors.

The Plan provides that the assets and liabilities of RCH, RDC and The Lakes will be

transferred and merged into a single entity. The Plan provides for payment to Secured

Creditors in the full amount of their Secured Claim as properties are sold or the transfer of

assets securing their Claim to them in full satisfaction of their Secured Claim. General

Unsecured Creditors will receive pro-rata distributions based upon 35% of EBITDA

generated by the Reorganized Debtor for five (5) years. A Disclosure Statement is enclosed

herewith to assist you in understanding this Plan and making an informed judgment

concerning its terms.

ARTICLE 1

DEFINITIONS

Definitions of certain terms used in this Plan are set forth below. Other terms are

defined in the text of this Plan or the text of the Disclosure Statement. In either case, when a

defined term is used, the first letter of each word in the defined term is capitalized. Terms

used and not defined in this Plan or the Disclosure Statement shall have the meanings given

in the Bankruptcy Code or Bankruptcy Rules, or otherwise as the context requires. The

meanings of all terms shall be equally applicable to both the singular and plural, and

masculine and feminine, forms of the terms defined. The words "herein," "hereof," "hereto,"

"hereunder," and others of similar import, refer to the Plan as a whole and not to any

particular section, subsection or clause contained in the Plan. Captions and headings to

articles, sections and exhibits are inserted for convenience of reference only and are not

intended to be part of or to affect the interpretation of the Plan. The rules of construction set


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forth in Section 102 of the Bankruptcy Code shall apply. In computing any period of time

prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.

Any capitalized term that is not defined herein but is defined in the Bankruptcy Code shall

have the meaning ascribed to such term in the Bankruptcy Code.

1.1 "Administrative Expense Claim" means any Claim entitled to the priority

afforded by Sections 503(b) and 507(a)(2) of the Bankruptcy Code.

1.2 "Allowed" means, when used to modify the term Claim or Administrative

Expense Claim, either a proof of which has been properly Filed or, if no Proof of Claim was

so Filed, which was or hereafter is listed on the Schedules as liquidated in amount and not

disputed or contingent or an Administrative Expense Claim that the Debtors have received

by the applicable bar date, and, in each case, a Claim or Administrative Expense Claim as to

which no objection to the allowance thereof, or motion to estimate for purposes of allowance,

shall have been Filed on or before any applicable period of limitation that may be fixed by

the Bankruptcy Code, the Bankruptcy Rules and/or the Bankruptcy Court, or as to which any

objection, or any motion to estimate for purposes of allowance, shall have been so Filed, to

the extent (a) such objection is resolved between such Claimant and either the Debtors or the

Reorganized Debtor or (b) such claim is allowed by a Final Order.

1.3 "Allowed Secured Claim" means an Allowed Claim that is secured by a lien,

security interest or other charge against or interest in property in which the Debtors have an

interest or that is subject to setoff under Section 553 of the Bankruptcy Code, to the extent of

the value (as set forth in the Plan, or if no value is specified, as determined in accordance

with Section 506(a) of the Bankruptcy Code or, if applicable, Section 1111(b) of the

Bankruptcy Code) of the interest of the holder of such Claim in Debtors' interest in such

property or to the extent of the amount subject to setoff, as the case may be.

1.4 "Allowed Unsecured Claim" means an Allowed Claim that is not an Allowed

Secured Claim or an Allowed Administrative Expense Claim.


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1.5 "Avoidance Actions" means, without limitation, any and all actions, causes of

action, liabilities, obligations, rights, suits, debts, sums of money, damages, judgments,

claims and demands whatsoever, whether known or unknown, in law (including, without

limitation, sections 506(c), 510, 542, 544, 547, 548, 549, 550 and 553 of the Bankruptcy

Code or equivalent provisions of applicable non-bankruptcy law), equity or otherwise.

1.6 "Bankruptcy Cases" mean the cases under Chapter 11 of the Bankruptcy Code

with respect to Debtors, pending in the District of Oregon, administered as In re Renaissance

Custom Homes, LLC. et al; , Case No. 08-35023-tmb11 (Jointly Administered with Case

Nos. 08-35025-tmb11 and 08-35026-tmb11.

1.7 "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended

from time to time, set forth in Sections 101 et seq. of Title 11 of the United States Code.

1.8 "Bankruptcy Court" means the United States Bankruptcy Court for the

District of Oregon, or such other court that exercises jurisdiction over the Bankruptcy Case

or any proceeding therein, including the United States District Court for the District of

Oregon, to the extent that the reference to the Bankruptcy Case or any proceeding therein is

withdrawn.

1.9 "Bankruptcy Rules" means, collectively, the Federal Rules of Bankruptcy

Procedure, as amended and promulgated under Section 2075, Title 28, of the United States

Code, and the local rules and standing orders of the Bankruptcy Court.

1.10 "Banner" means Banner Bank.

1.11 "Business Day" means a day other than a Saturday, Sunday, any legal holiday

as defined in Bankruptcy Rule 9006(a), or other day on which banks in Portland, Oregon are

authorized or required by law to be closed.

1.12 "Cash" means lawful currency of the United States of America and

equivalents, including, without limitation, checks, wire transfers and drafts.


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1.13 "Claim" means (a) any right to payment from Debtors arising before the

Effective Date, whether or not such right is reduced to judgment, liquidated, unliquidated,

fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or

unsecured; or (b) any right to an equitable remedy against Debtors arising before the

Effective Date for breach of performance if such breach gives rise to a right of payment from

Debtors, whether or not such right to an equitable remedy is reduced to judgment, fixed,

contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

1.14 "Class" means one of the classes of Claims defined in Article 3 hereof.

1.15 "Collateral" means any property in which Debtors have an interest that is

subject to a lien or security interest securing the payment of an Allowed Secured Claim.

1.16 "Columbia" means Columbia River Bank.

1.17 "Committee" means the official Unsecured Creditors Committee appointed in

the Chapter 11 cases of In re Renaissance Custom Homes, LLC, In re Renaissance

Development Corporation, and In re The Lakes at Fishers Landing, LLC, by the United

States Trustee pursuant to Section 1102 of the Bankruptcy Code, as reconstituted by the

addition or removal of members from time to time.

1.18 "Confirmation Date" means the date on which the Confirmation Order is

entered on the docket by the Clerk of the Bankruptcy Court.

1.19 "Confirmation Order" means the order of the Bankruptcy Court confirming

the Plan in accordance with the provisions of Chapter 11 of the Bankruptcy Code.

1.20 "Creditor" means any entity holding a Claim against Debtors.

1.21 "Debtors" means Renaissance Custom Homes, LLC, Renaissance

Development Corporation and The Lakes at Fishers Landing, LLC as Debtors and

Debtors-in-Possession in the Bankruptcy Case.

1.22 "Deficiency Claim" means the portion of a Secured claim that is unsecured.


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1.23 "Disclosure Statement" means Debtors' Disclosure Statement as amended,

modified, restated or supplemented from time to time, pertaining to the Plan.

* * *

1.24 "Disputed Claim" means a Claim with respect to which a Proof of Claim has

been timely Filed or deemed timely Filed under applicable law, and as to which an objection,

timely Filed, has not been withdrawn on or before the Effective Date or any date fixed for

filing such objections by order of the Bankruptcy Court, and has not been denied by a Final

Order and which Claim has not been estimated or temporarily allowed by the Bankruptcy

Court on timely motion by the holder of such Claim. If an objection related to the allowance

of only a part of a Claim has been timely Filed or deemed timely Filed, such Claim shall be a

Disputed Claim only to the extent of the objection.

1.25 "EBITDA" means earnings before interest, taxes, depreciation and

amortization, provided, however, the following expenses will not be included in calculating

EBITDA for use in connection with this Plan: (a) the 6% pre-tax income bonus earned by

Mr. Breedlove allowed for in Section 6.11; and (b) payments made by Reorganized Debtor to

non-debtor affiliates, newly created affiliates or insiders, excluding existing market based

payments to Renaissance Realty for real estate commissions and to Renaissance Ventures for

rent.

1.26 "Effective Date" means January 1, 2010 or the 10th day following entry of the

Confirmation Order, whichever is later.

1.27 "Entity" shall have the meaning ascribed to it by Section 101(15) of the

Bankruptcy Code.

1.28 "Filed" means filed with the Bankruptcy Court in the Bankruptcy Case.

1.29 "Final Order" means an order or judgment entered on the docket by the Clerk

of the Bankruptcy Court or any other court exercising jurisdiction over the subject matter and

the parties that has not been reversed, stayed, modified or amended and as to which the time


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for filing a notice of appeal, or petition for certiorari or request for certiorari, or request for

rehearing shall have expired.

* * *

1.30 "First Horizon" means First Horizon Home Loans, a division of First

Tennessee National Bank Association.

1.31 "General Unsecured Claim" means an Unsecured Claim that is not a Small

Unsecured Claim.

1.32 "HomeStreet" means HomeStreet Bank.

1.33 "Insider" shall have the meaning ascribed to it by Section 101(31) of the

Bankruptcy Code.

1.34 "Intercompany Claims" means (a) any account reflecting intercompany book

entries by one Debtor with respect to any other Debtor, or (b) any claim not reflected in such

book entries that is held by a Debtor against any other Debtor.

1.35 "Interests" means all rights of the owners including the issued and outstanding

shares of common stock or membership interests of any Debtor.

1.36 "Lakes" means The Lakes at Fishers Landing, LLC.

1.37 "Merger Documents" mean any agreement and plan of merger, articles of

merger, and all other documents effectuating the merger of RCH, RDC and The Lakes.

1.38 "Other Priority Claim" means any Claim for an amount entitled to priority in

right of payment under Section 507(a)(3), (4), (5) (6) or (7) of the Bankruptcy Code.

1.39 "Petition Date" means September 25, 2008, the date on which the petitions

commencing these Bankruptcy Cases were Filed. "Plan" means this Plan of Reorganization,

as amended, modified, restated or supplemented from time to time.

1.40 "Priority Tax Claim" means a Claim of a governmental unit of the kind

entitled to priority under Section 507(a)(8) of the Bankruptcy Code or that would otherwise

be entitled to priority but for the secured status of the Claim.


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1.41 "Pro Rata" means a proportionate share, so that the ratio of (a) the amount of

property distributed on account of any Allowed Claim, or retained on account of a Disputed

Claim, in a Class, to (b) the amount distributed on account of all Allowed Claims, or

allocated to on account of all disputed claims, in such Class, is the same as the ratio (x) such

claim bears to (y) the total amount of all claims (including Disputed Claims in their

respective Disputed claim Amounts) in such Class.

1.42 "RCH" means Renaissance Custom Homes, LLC.

1.43 "RDC" means Renaissance Development Corporation.

1.44 "Rejection Claim" means a Claim entitled to be filed as a result of a Debtor

rejecting an executory contract in these Bankruptcy Cases.

1.45 "Reorganized Debtor" means Debtors as a single merged entity from and after

the Effective Date.

1.46 "Restated Articles of Incorporation" means the restated articles of

incorporation of the Debtors, which shall modify and amend Debtors' Articles of

Incorporation to prohibit the issuance of non-voting equity securities to the extent required

by Section 1123(a)(6) of the Bankruptcy Code.

1.47 "Restated Bylaws" means the restated bylaws which shall modify and amend

Debtors' prior bylaws and govern the Reorganized Debtor.

1.48 "Retained Project" means any real property of the Debtors that, on the

Effective Date, has not been previously surrendered to a Secured Creditor or intended to be

surrendered to a Secured Creditor pursuant to the terms of the Plan or agreement of the

parties or that Debtors intend to retain under its Plan.

1.49 "Schedules" means the Schedules of Assets and Liabilities and the Statement

of Financial Affairs Filed by Debtors pursuant to Section 521 of the Bankruptcy Code, as

amended, modified, restated or supplemented from time to time.


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1.50 "Scheduled Amounts" means the Claim amounts as set forth in Debtors'

respective Bankruptcy Schedules.

1.51 "Sebastian" means Randal S. Sebastian.

* * *

1.52 "Secured Claim" means any Claim against Debtors held by any entity,

including, without limitation, an affiliate or judgment creditor of Debtors, to the extent such

Claim constitutes a secured Claim under Sections 506(a) or 1111(b) of the Bankruptcy Code.

The unsecured portion, if any, of such Claim shall be treated as an Unsecured Claim.

1.53 "Small Unsecured Claims" means Unsecured Claims that are equal to or less

than $20,000 or Claimants electing to reduce their Unsecured Claim to $20,000.

1.54 "Sterling" means Sterling Savings Bank.

1.55 "Subordinated Claim" means any Claim: (a) subordinated for purposes of

distribution pursuant to section 510(c) of the Bankruptcy Code, (b) for any fine, penalty or

forfeiture, or for multiple, exemplary or punitive damages, to the extent that such Claims are

not compensation for actual pecuniary loss, and (c) the Allowed Unsecured Claim of

Sebastian.

1.56 "Umpqua" means Umpqua Bank.

1.57 "Unsecured Claim" means a Claim that is not an Administrative Claim, a

Secured Claim, a Tax Claim, an Other Priority Claim or an Intercompany Claim.

1.58 "Unsecured Creditor" means a holder of an Allowable Unsecured Claim.

1.59 "Unsecured Creditors' Proceeds" mean thirty-five percent 35% of EBITDA

generated by Reorganized Debtor for each calendar quarter from and after the Effective Date

through five full years commencing on January 1, 2010 or until claims have been paid in full,

whichever is earlier, without accounting for future or past quarterly performance by

Reorganized Debtor.


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1.60 "Utility Deposits" means deposits with utilities made by Debtors after the

Petition Date pursuant to Section 366(b) of the Bankruptcy Code.

1.61 "Washington Federal" means Washington Federal Savings Bank.

* * *

* * *

ARTICLE 2

UNCLASSIFIED CLAIMS

2.1 Administrative Expense Claims. Each holder of an Allowed Administrative

Expense Claim shall be paid by Debtors in full in Cash on the later of (a) the Effective Date

or (b) the date on which such Claim becomes Allowed, unless such holder shall agree to a

different treatment of such Claim (including, without limitation, any different treatment that

may be provided for in any documentation, statute or regulation governing such Claim);

provided, however, that Administrative Expense Claims representing obligations incurred in

the ordinary course of business by Debtors during the Bankruptcy Case shall be paid by

Debtors or Reorganized Debtor in the ordinary course of business and in accordance with

any terms and conditions of the particular transaction, and any agreements relating thereto.

2.2 Priority Tax Claims. Each holder of an Allowed Priority Tax Claim (other

than a Class 13 property tax claim) shall be paid by Debtors, commencing on the 25th day of

the first full month following the Effective Date or the date the Claim is Allowed, the full

amount of its Allowed Priority Tax Claim as allowed by 11 USC § 1129(a)(9)(C) and (D) in

equal amortizing monthly payments of principal and interest at the non-default rate

determined under applicable non-bankruptcy law or, if there is no such defined rate, then at a

rate equal to the prime rate plus 1% fixed as of the Confirmation Date, or such other rate as

determined by the Bankruptcy Court, or the date the claim is Allowed, over a period ending

September 25, 2013.


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2.3 Bankruptcy Fees. Fees payable by Debtors under 28 USC § 1930, or to the

Clerk of the Bankruptcy Court, will be paid in full in Cash on the Effective Date. After

confirmation, Reorganized Debtor shall continue to pay quarterly fees of the Office of the

United States Trustee and to file quarterly reports with the Office of the United States

Trustee until this case is closed by the Court, dismissed or converted except as otherwise

ordered by * * *

the Court. This requirement is subject to any amendments to 28 USC § 1930(a)(6) that

Congress makes retroactively applicable to confirmed Chapter 11 cases.

2.4 Professional Fees. Professional Fees will be paid when Allowed as

Administrative Expense Claims within fifteen (15) days after entry of a final Order

approving the amount of the fees.

ARTICLE 3

CLASSIFICATION

For purposes of this Plan, Claims (except those treated under Article 2) are classified

as provided below. A Claim is classified in a particular Class only to the extent that such

Claim qualifies within the description of such Class, and is classified in a different Class to

the extent that such Claim qualifies within the description of such different Class.

3.1 Class 1 (Other Priority Claims). Class 1 consists of all Allowed Other Priority

Claims.

3.2 Class 2 (Sterling Savings Bank). Class 2 consists of the Allowed Secured

Claim of Sterling Savings Bank.

3.3 Class 3 (Banner Bank). Class 3 consists of the Allowed Secured Claim of

Banner Bank.

3.4 Class 4 (HomeStreet Bank). Class 4 consists of the Allowed Secured Claim

of HomeStreet Bank. Class 4A consists of the Allowed Secured Claim of HomeStreet which

is secured by a deed of trust on real property and improvements located in Bend, Oregon and


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known as "Shevlin Pines" (the "HB Oregon Property"). Class 4B consists of the real

property (excluding the completed single family residential structures which are treated as

Class 4C) secured by real property and improvements located in Vancouver, Washington and

known as the "Hiddenbrook" development and the "Lakes at Fisher's Landing" development

(the "HB Washington Land"). Class 4C consists of the completed single family residential

structures and each of the underling lots located in the "Hiddenbrook" and "Lakes at Fisher's

Landing" developments (the "HB Washington Finished Homes"). Class 4D consists of the

Allowed Secured Claim and Administrative Expense Claim for repayment of the debtor-in-

possession advances made by HomeStreet Bank under the post-petition financing order

entered into by HomeStreet and the Debtors.

3.5 Class 5 (Columbia River Bank). Class 5 consists of the Allowed Secured

Claim of Columbia River Bank.

3.6 Class 6 (First Horizon). Class 6 consists of the Allowed Secured Claim of

First Horizon.

3.7 Class 7 (Umpqua Bank). Class 7 consists of the Allowed Secured Claim of

Umpqua Bank.

3.8 Class 8 (Washington Federal Savings Bank). Class 8 consists of the Allowed

Secured Claim of Washington Federal Savings Bank.

3.9 Class 9 (West Coast Bank). Class 9 consists of the Allowed Secured claim of

West Coast Bank.

3.10 Class 10 (Oregon Construction Lien Claims). Class 10 consists of the

Allowed Secured Claims that are secured by a statutory lien under Oregon construction lien

laws on the Debtors' property, in each case, to the extent such Claim is valid and enforceable

under applicable law and under the provision of the Bankruptcy Court's Order Establishing

Procedures for the Resolution and Payment of Construction Lien Claims. Each such Claim


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shall be deemed placed in a separate subclass for plan voting purposes and confirmation

under 11 U.S.C. § 1129(b).

3.11 Class 11 (Washington Construction Lien Claims). Class 11 consists of the

Allowed Secured Claims that are secured by a statutory lien under Washington construction

lien laws on the Debtors' property, in each case, to the extent such Claim is valid and

enforceable under applicable law and under the provision of the Bankruptcy Court's Order

Establishing Procedures for the Resolution and Payment of Construction Lien Claims. Each

such Claim shall be deemed placed in a separate subclass for plan voting purposes and

confirmation under 11 U.S.C. § 1129(b).

3.12 Class 12 (Crawford). Class 12 consists of the Allowed Secured Claim of Mrs.

Helen Crawford and any heir of Mr. John Crawford who may have acquired his interest in

this Claim.

3.13 Class 13 (Property Tax Lien Claims). Class 13 consists of the Allowed

Secured Claims of any governmental units for ad valorem property taxes or similar

impositions that are secured by statutory liens on any of the Debtors' property (real or

personal).

3.14 Class 14 (Surety Bond Claims). Class 14 consists of all Allowed Claims of

sureties that, in each case, arose or arise under a surety, maintenance or performance bond

with respect to a Retained Project.

3.15 Class 15 (Ford). Class 15 consists of the Allowed Secured Claim of Ford

Motor Credit Corporation ("Ford").

3.16 Class 16 (GMAC). Class 16 consists of the Allowed Secured Claim of

General Motors Acceptance Corporation ("GM").

3.17 Class 17 (Small Unsecured Claims). Class 17 consists of all Allowed Small

Unsecured Claims.


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3.18 Class 18 (General Unsecured Claims). Class 18 consists of all Allowed

Unsecured Claims not otherwise classified and treated under the Plan.

3.19 Class 19 (Subordinated Claims). Class 19 consists of all Allowed

Subordinated Claims.

3.20 Class 20 (Interests). Class 20 consists of the Interests.

* * *

* * *

* * *

ARTICLE 4

TREATMENT OF CLASSIFIED CLAIMS AND INTERESTS

4.1 Class 1 (Other Priority Claims). Class 1 is unimpaired. Each holder of an

Allowed Class 1 Claim will be paid in full in Cash the amount of its Allowed Class 1 Claim,

on the latter of (a) the Effective Date or (b) the date on which such Claim becomes allowed,

unless such holder shall agree or has agreed to a different treatment of such Claim (including

any different treatment that may be provided for in any documentation, agreement, contract,

statute, law or regulation creating and governing such Claim).

4.2 Class 2 (Sterling Savings Bank). Class 2 is impaired. Sterling, as holder of

the Class 2 Claims, has elected treatment under 11 USC Section 1111(b)(2) as to its Class 2

Claims. The Class 2 Claims are secured by first-priority liens and security interests

encumbering certain real property that is property of the estate, and a security interest in two

vehicles that are also property of the estate. Except as otherwise provided herein or in the

Confirmation Order, all legal, equitable and contractual rights of the holder of the Class 2

Claims shall remain unaltered, and such holder may exercise all rights and remedies

available to it under the agreements under which such claims arose and under applicable law.

As soon as practicable after the Effective Date, Debtors shall execute non-merger deeds in

lieu of foreclosure in form satisfactory to Sterling transferring Debtors' interests in all of the


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real property securing the Class 2 Claims to Sterling in full satisfaction of its Class 2 Claims.

Sterling shall wait for 90 days after the Effective Date before recording the deed related to

the Crawford property.

4.3 Class 3 (Banner Bank). Class 3 is impaired. The Class 3 Claim of Banner

Bank is secured by a security interests in Debtors' real property known as Rosemont Pointe.

The Class 3 Claim shall be paid as agreed by the Class 3 Claimant and Debtors as follows.

With respect to existing unsold lots and homes, the Class 3 Claim shall be paid the full

amount of its Allowed Class 3 Claim with interest at the rate of prime plus .75% per annum

from and after the Effective Date. Monthly payments shall not be made to the Class 3

Claimant. The Class 3 Claim will be paid as properties are sold pursuant to a payoff and

release schedule agreed to between Reorganized Debtor and the Class 3 Claimant. The

Class 3 Claimant has also agreed to provide construction financing for lots 17 and 43 of

Rosemont Pointe which will be based on a 30-year fixed rate of 4.875% with a 1.5% loan

origination fee. The construction loans will be fully assumable by a home buyer.

4.4 Class 4 (HomeStreet Bank). Class 4 is impaired. HomeStreet shall retain all

pre-petition liens, deeds of trust and security interests which secure the Allowed Secured

Claims of HomeStreet Bank. For Class 4A treatment, upon the Effective Date, the Debtors

will execute and deliver a non-merger deed in lieu agreement in a form satisfactory to

HomeStreet conveying all right, title and interest of the Debtors in and to the HB Oregon

Collateral. For Class 4B treatment, upon the Effective Date, the Debtors will execute and

deliver a non-merger deed in lieu agreement in a form satisfactory to HomeStreet conveying

all right, title and interest of the Debtors in and to the HB Washington Land. For Class 4C

treatment, the Debtors shall retain title to the HB Washington Finished Homes, subject to the

existing HomeStreet deeds of trust and subject to the following: (1) the Debtors will seek to

sell the HB Washington finished Homes and all such sales shall be free and clear of

Washington Construction Lien Claims which are junior in priority to HomeStreet and have


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no value under 11 U.S.C. § 506(a), with all net cash proceeds from such sales (less

reasonable and customary closing costs, an amount to fund a warranty reserve as described

below, real estate commission as described below, and the management fee described below)

to be paid to HomeStreet for application to its Class 4C Allowed Secured Claim; (2) from the

closing proceeds, there shall be paid an amount equal to 0.5% to a warranty reserve to be

maintained in a blocked funds control account with HomeStreet with funds therefrom

advanced to Debtors upon written draw requests supported by appropriate documentation

(which reserve funds shall be released to HomeStreet free and clear of any interest of

Debtors if not used for warranty claims within 18 months of each applicable home closing);

(3) the Debtors shall be entitled to a management fee related to the HB Washington Finished

Homes equal to 2% of the gross sales price of each HB Washington Finished Home sold;

(4) HomeStreet agrees that listing real estate agent including those related to or affiliated

with Debtors will be entitled to a 2% listing commission to be paid on closing of an HB

Washington Finished Home; (5) the Debtors shall retain title to the HB Washington Finished

Homes for three months following the Effective Date, and the management fees and other

benefits of ownership as set forth in this Section 4.4, and provided, that the Debtors close on

the sale of at least two HB Washington finished Homes within such time period, the Debtors

and HomeStreet shall continue such arrangement on a rolling three-months basis; (6) in its

sole and absolute discretion, HomeStreet shall provide non-recourse protective advances to

or for the benefit of the Debtors not to exceed $300,000 in the aggregate, including any prior

post-petition advances, for the purposes of paying real property taxes, maintenance,

supervision, and marketing, as well as other costs necessary for preserving and protecting the

HB Washington finished Homes, funding an advance of the management fees payable to the

debtors in the amount of $100 per month/per unsold HB Washington Finished Home (which

shall be credited against and reduce the 2% management fee payable to the Debtors on

closing of sales of such homes). For the Class 4D Allowed Secured Claims and


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Administrative Claim of HomeStreet, Debtors shall pay in cash on the Effective Date the

total of post-petition advances made by HomeStreet to Debtors less the amount paid to

HomeStreet post-petition on account of accrued interest on HomeStreet's Allowed Secured

Claim. The Class 4 Claimant shall not have an unsecured Claim against Debtor for any

deficiency. The Class 4 Claimant waives and releases any claim on its personal guaranties.

4.5 Class 5 (Columbia River Bank). Class 5 is impaired. The Class 5 Claim of

Columbia River Bank is secured by a variety of security interests in Debtors' real property.

The Class 5 Claim shall be paid as agreed by the Class 5 Claimant and Debtors prior to

confirmation. If no agreement is reached, Debtors will elect to either A) deed certain of the

properties securing the Allowed Class 5 Claim to the Class 5 Claimant in full satisfaction of

its Claim or B) keep certain of the property as a Retained Project and treated with respect to

new construction and sales of existing inventory homes as described below. In the event

Debtors elect to keep property as a Retained Project, the Class 5 Claimant will retain its

security interest in and liens upon that property with the same priority and to the same extent

such security interest and liens had as of the Petition Date. The Class 5 Claimant will be an

Allowed Class 5 Claim up to the value of the property securing the Claim. The value of the

collateral will be determined in accordance with 11 USC § 506(a)(1). The Allowed Secured

Claim will accrue interest from and after the Effective Date at a fixed rate equal to the prime

rate plus 1% as of the Effective Date, or such other rate as determined by the Bankruptcy

Court.

A. New Construction

With respect to new home construction on existing finished lot inventory, the

Reorganized Debtor will continue to maintain, market, and sell each Retained Project for a

period of five (5) years. As compensation and reimbursement to the Reorganized Debtor for

its costs, expenses, services and value delivered in maintaining and selling the Retained

Project, Reorganized Debtor shall be entitled to an amount equal to 15% of the gross sales


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price to be paid out of the closing from the proceeds of the sale and prior to payment of any

Allowed Secured Claim. At any time during the marketing period, the Debtor may, at its

option, deed the collateral to the Class 5 Claimant in full satisfaction of its Claim.

The Class 5 Claimant will offer construction financing to the Reorganized

Debtor on the Retained Projects at current market rates or better. If the Class 5 Claimant

fails or refuses to provide construction financing, then the Reorganized Debtor may obtain

construction financing from other lenders and such financing shall be entitled to a priming

lien on the Retained Project to the extent of the value of the improvements to such property

resulting from the construction financing. Alternatively, the Class 5 Claimant and

Reorganized Debtor may agree to mothball (stop all construction activity) a development, in

which event the Class 5 Claimant shall be responsible for payment of all associated costs and

expenses related thereto until such time as the parties agree to market the property for sale as

a Retained Project as set forth above.

B. Sale of Existing Home Inventory

With respect to sales of existing homes which Debtors elect to keep as a

Retained Project, the Reorganized Debtor shall receive a 3% listing/selling commission and a

charge for warranty expense of .8% of the sales price, to be paid out of the proceeds from

closing. Reorganized Debtor shall receive a project management fee equal to 2.0% per

annum of the outstanding loan balance on the loan securing each home. The project

management fee shall be paid by the Class 5 Claimant to the Reorganized Debtor on a

monthly basis or otherwise deducted from payments to be made by Reorganized Debtor to

the Class 5 Claimant. All direct expenses associated with carrying and maintaining the

unsold homes shall be paid by the Class 5 Claimant. If the Class 5 Claimant refuses to pay

such direct expenses, the Reorganized Debtor may advance such expenses and then deduct

them from the proceeds of a sale that would otherwise be paid to the Class 5 Claimant. The

Class 5 Claimant and Reorganized Debtor shall work together with respect to determining


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the pricing of the remaining inventory, expenditures for marketing, and advertising, and the

maintenance of any model homes.

4.6 Class 6 (First Horizon). Class 6 is impaired. The Class 6 Claim of First

Horizon is secured by a variety of security interests in Debtors' real property. The Class 6

Claimant will retain its security interest in and liens upon its collateral with the same priority

and to the same extent such security interest and liens had as of the Petition Date. The

Class 6 Claimant will be an Allowed Class 6 Claim up to the value of the property securing

* * *

the Claim. The Allowed Secured Claim shall be non-recourse and will accrue interest from

and after the Effective Date at a fixed rate equal to 3.50%.

A. Vista Pointe

With respect to the bare lots at Vista Pointe in Camas, Washington, the Debtor

shall deposit what the parties agree are sufficient funds, in an account controlled by the

Class 6 Claimant, to complete the remaining "punchlist" items, including landscaping,

fencing and street lights, to obtain final plat approval from the city and allow building

permits on the finished lots. Debtor will be responsible for managing this work, which shall

be completed within 60 days of the Effective Date.

The finished lots will be maintained, marketed and sold by the Reorganized

Debtor for a period of 180 days after the Effective Date of the Plan. Sales at a price less than

the agreed release price must be approved by the Class 6 Claimant. All sales of finished lots

shall be free and clear of Washington Construction Lien Claims which are junior in priority

to First Horizon and have no value under 11 USC § 506(a), with all net cash proceeds from

such sales (less the allowance for closing costs and real estate commissions as described

below) to be paid to First Horizon for application to its Class 6 Allowed Secured Claim. The

Class 6 Claimant will allow Debtor to withhold 9% from the sale proceeds for each lot to

cover all closing costs and commissions. Debtor may submit offers for purchase of one or


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more of the lots. At the end of 180 days, the Class 6 Claimant may demand or the Debtor

may, at its option, deed the collateral to the Class 6 Claimant, or the parties may mutually

agree to allow the Debtor to continue marketing the lots. If the Debtor is unable to sell one

or more of the lots, and deeds those back to the Class 6 Claimant, the deed shall be a non-

merger deed in lieu of foreclosure.

B. Sale of Existing Home Inventory

With respect to sales of existing homes – Lot 128 of Renaissance Pointe #3 in

Beaverton, Lot 11 of Renaissance Meadows in Ridgefield, Washington, and the existing

home in Hunter's Crest - Debtors will retain each of these as an "Unsold Home". The

Reorganized Debtor shall receive a 3% listing/selling commission and a charge for warranty

expense of .8% of the sales price, to be paid out of the proceeds from closing of sales of the

Unsold Homes. The Class 6 Claimant shall approve the sales price for each home. The

Class 6 Claimant and Reorganized Debtor shall work together with respect to determining

the pricing of the Unsold Homes, and expenditures for marketing and advertising.

C. Unsecured Claim

The Class 6 Claimant shall not have an unsecured claim against the Debtor for

any deficiency after the sale or disposition of the lots and Unsold Homes. The Class 6

Claimant may be entitled to an Unsecured Claim to the extent of any amounts that it pays to

Creagan Excavating to settle or paid to satisfy a judgment in favor of Creagan on Creagan's

contract claim against the Class 6 Claimant. The Class 6 Claimant waives and releases any

claim on its personal guaranties.

4.7 Class 7 (Umpqua Bank). Class 7 is impaired. The Class 7 Claim of Umpqua

Bank is secured by a security interest in an unplatted 6-lot subdivision adjacent to Rosemont

Pointe. The Debtor shall execute and deliver a Non-Merger Estoppel Deed to the Class 7

Claimant in full satisfaction of its Claim.


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4.8 Class 8 (Washington Federal Savings Bank). Class 8 is impaired. The

Class 8 Claim of Washington Federal Savings Bank is secured by security interests in a

house in Lake Oswego. The Class 8 Claim shall be paid the full amount of its Allowed

Class 8 Claim with interest accruing at the rate of prime plus 1% per annum from and after

the Effective Date. Monthly payments of interest only shall be made to the Class 8 Claimant

on or before the 10th of each month from and after the Effective Date. The Class 8 Claim

will be paid the principal amount of its Class 8 Claim when the property securing the Class 8

Claim is sold.

* * *

4.9 Class 9 (West Coast Bank). Class 9 is impaired. The Class 9 Claim of West

Coast Bank is secured by a security interest in two homes in Camas, Washington. The

Reorganized Debtor shall deed the property back to the Class 9 Claimant in full satisfaction

of its Claim or continue to maintain and market the property securing the Class 9 Claim for

the benefit of the Class 9 Claimant. If Reorganized Debtor elects to retain the property, the

Reorganized Debtor shall receive a 3% listing/selling commission and a charge for warranty

expense of .8% of the sales price, to be paid out of the proceeds at closing. Reorganized

Debtor shall also receive a project management fee equal to 2.0% per annum of the

outstanding loan balance on the loan securing each home. The project management fee shall

be paid by the Class 9 Claimant to the Reorganized Debtor on a monthly basis or otherwise

deducted from payments to be made by Reorganized Debtor to the Class 9 Claimant. All

direct expenses associated with carrying and maintaining the unsold homes shall be paid by

the Class 9 Claimant. If the Class 9 Claimant refuses to pay such direct expenses, the

Reorganized Debtor may advance such expenses and then deduct them from the proceeds of

a sale that would otherwise be paid to the Class 9 Claimant. The Class 9 Claimant and

Reorganized Debtor shall work together with respect to determining the pricing of the


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remaining inventory, expenditures for marketing, and advertising, and the maintenance of

any model homes.

4.10 Class 10 (Oregon Construction Lien Claims). Class 10 is impaired. A

Class 10 Claimant is free to exercise and pursue its state law rights and remedies with respect

to any liens on property no longer retained by the Reorganized Debtor as of the Effective

Date. With respect to liens on Retained Projects, the Class 10 Claims shall be paid the full

amount of their Allowed Class 10 Claim in Cash from the proceeds of the Collateral securing

such Claim on the closing of a sale of the Collateral. To the extent the Allowed Amount of a

Class 10 Claimant has not been determined as of the closing of a sale of the Collateral

securing such claim, sufficient proceeds from the sale of such closing shall be set aside in a

segregated escrow account until such time as the Allowed Amount of such Claim can be

determined. Any disputes as to the allowance of Class 10 Claims may be determined by the

claims objection process or by following the procedures described in the order Establishing

Procedures for the Resolution and Payment of Construction Lien Claims. A determination

shall be made by the Bankruptcy Court of the extent of any lien in accordance with 11 U.S.C.

§ 506 and such determination shall be binding and enforceable and relied upon by any title

company in providing clear title to the affected property. Each Creditor holding an Allowed

Class 10 Claim will retain its lien with the same priority such lien had on the Petition Date.

The Allowed Class 10 Claim will be paid in full, together with interest accruing from and

after the Effective Date at the rate of 3.25% per annum or such other rate determined by the

Bankruptcy Court at the Confirmation Hearing, from the proceeds of the sale of the property

subject to the lien. To the extent a lien applies to more than one property, the lien shall be

prorated among all of the affected properties. Each Class 10 Claimant will be treated as a

subclass of Secured Claims for voting purposes and confirmation under 11 U.S.C. § 1129(b).

To the extent a valid Claim is not an Allowed Secured Claim it shall be treated as a Class 17


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or Class 18 Claim only if a proof of claim is timely filed in accordance with Section 5.2 of

this Plan.

4.11 Class 11 (Washington Construction Lien Claims). Class 11 is impaired. Each

holder of a Claim secured by a perfected construction lien in Washington will retain their

liens and be treated as a Secured Claim only to the extent of any value securing the lien. To

the extent the value of the property subject to a Washington construction lien is insufficient

to pay such lien, the holder will be treated as a Class 17 Small Unsecured Claim or a

Class 18 General Unsecured Claim, as applicable, only if such Claimant timely files a

deficiency claim in accordance with Section 5.2 of this Plan. The holder of an Allowed

Class 11 Claim shall be paid from the proceeds from the sale of the property subject to the

lien after payment of all closing costs and Secured Claims with priority over the applicable

Class 11 Claimant's Claim. A fully secured Class 11 Claim will be entitled to interest up to

the value of the Collateral at the rate of 3.25% per annum or such other rate determined by

the Bankruptcy Court at the Confirmation Hearing from and after the Effective Date. Any

Unsecured Claim shall not exceed the difference between the Claim on the Petition Date and

the proceeds from the sale of Collateral from and after the Petition Date without allowance

for interest, costs, or other charges accrued from and after the Petition Date. Any disputes

regarding the allowance of Class 11 Claims may be determined by the claims objection

process or by following the procedures described in the Order Establishing Procedures for

the Resolution and Payment of Construction Lien Claims. A determination shall be made by

the Bankruptcy Court of the extent of any lien in accordance with 11 U.S.C. § 506 and such

determination shall be binding and enforceable and relied upon by any title company in

providing clear title to the affective property. A Class 11 Claimant is free to exercise and

pursue its state law rights and remedies with respect to any liens on property no longer

retained by the Reorganized Debtor. Each Class 11 Claimant will be treated as a subclass of

Secured Claims for voting purposes and confirmation under 11 U.S.C. § 1129(b).


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4.12 Class 12 (Crawford). Class 12 is impaired. The Class 12 Claim of

Mrs. Helen Crawford ("Crawford") is secured by a security interest in certain of Debtor's real

estate located in Clackamas County. At the option of Mrs. Crawford, the property securing

the Class 12 Claim shall either be deeded back to the Class 12 Claimant in full and complete

satisfaction of its Claim or the Reorganized Debtor shall sell the property securing the

Class 12 Claimant's Claim in order to satisfy the prior secured claim of Sterling with

remaining net proceeds distributed to Mrs. Crawford. The sale of the property shall be on

such terms and conditions as are approved by Mrs. Crawford. The Reorganized Debtor shall

be entitled to a 3% sales commission upon the closing of the sale.

4.13 Class 13 (Property Tax Lien Claims). Class 13 is impaired. Class 13

Claimants will retain any security interests they have with the same priority to which they are

entitled by law. The Allowed Class 13 Claimant shall be paid the full amount of its Allowed

Secured Claims as permitted by 11 USC § 1129(a)(9)(D) in full upon sale of the property

securing such Claim but in no event later than September 25, 2013. Class 13 Claimants shall

be entitled to interest at the non-default rate provided by applicable non-bankruptcy law.

They shall not be entitled to any post-petition penalties.

4.14 Class 14 (Surety Bond Claims). Class 14 is not impaired. The Class 14

Claimants shall retain the rights to which they had as of the Petition Date and shall remain

unaltered by the Plan with respect to any of the Retained Projects. Bonds on any projects

that are not Retained Projects shall be rejected and transferred to the applicable lender to

perform any remaining obligations. Any monies owing under such obligations against

Debtor shall be an Unsecured Claim.

4.15 Class 15 (Ford). Class 15 is impaired. The Class 15 Claimant will be paid the

full amount of its Allowed Class 15 Claim with interest at the rate of 3.25% per annum, or

such other rate as determined by the Bankruptcy Court at the confirmation hearing, from and

after the Effective Date in equal amortizing monthly payments. Payments shall commence


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on the 10th day of the first month following the Effective Date or the date the Claim is

Allowed, whichever is later, and on the 10th day of each month thereafter for 48 months.

The secured amount of the Class 15 Claim shall be agreed upon by the parties or as

determined by the Bankruptcy Court in accordance with 11 U.S.C. § 506(a). If the parties

can not agree upon a value or the value set by the Bankruptcy Court is not acceptable to

Reorganized Debtor, then the collateral will be surrendered in full satisfaction of the Class 15

Claim.

4.16 Class 16 (GM). Class 16 is impaired. The Class 16 Claimant will be paid the

full amount of its Allowed Class 16 Claim with interest at the prime rate (currently 3.25%

per annum), or such other rate as determined by the Bankruptcy Court at the confirmation

hearing, from and after the Effective Date in equal amortizing monthly payments. Payments

shall commence on the 10th day of the first month following the Effective Date or the date

the Claim is Allowed, whichever is later, and on the 10th day of each month thereafter for 48

months. The secured amount of the Class 16 Claim shall be agreed upon by the parties or as

determined by the Bankruptcy Court in accordance with 11 U.S.C. § 506(a). If the parties

can not agree upon a value or the value set by the Bankruptcy Court is not acceptable to

Reorganized Debtor, then the collateral will be surrendered in full satisfaction of the Class 16

Claim.

4.17 Class 17 (Small Unsecured Claims). Class 17 is impaired. Each holder of a

Class 17 Claim will paid in Cash an amount equal to 25% of their Allowed Claim on or

before thirty (30) days after the Effective Date or the date their Claim becomes an Allowed

Claim, whichever is later. Creditors may elect to reduce their Allowed Claims in order to be

treated as a Class 17 Claimant and such election shall be honored on the basis that such

Claim is deemed fully paid and satisfied (including any guarantor obligations) upon such

election and payment under the terms hereof. Any Entity holding a General Unsecured


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Claim not wishing to have its Claim be deemed satisfied should not elect to have its Claims

classified as a Class 17 Claim.

4.18 Class 18 (General Unsecured Claims). Class 18 is impaired. Holders of

Allowed Class 18 Claims will be paid a Pro Rata share of Unsecured Creditors' Proceeds,

which will be set aside and reserved by Reorganized Debtor. In addition, holders of Allowed

General Unsecured Claims shall receive a Pro Rata share of the net proceeds of any

Avoidance Action recoveries.

4.19 Class 19 (Subordinated Claims). Class 19 is impaired. Holders of

Subordinated Claims will be paid a Pro Rata share of all remaining Unsecured Proceeds after

Holders of Allowed Class 19 Claims have been paid in full.

* * *

* * *

4.20 Class 20 (Interests). Class 20 is impaired. All existing equity interests shall

be cancelled and extinguished as of the Effective Date, and the interest holders shall not

receive or retain anything on account of their prior equity interests.

ARTICLE 5

DISPUTED CLAIMS; OBJECTIONS TO CLAIMS

5.1 Disputed Claims; Objections to Claims. Only Claims that are Allowed shall

be entitled to distributions under the Plan. Debtors reserve the right to contest and object to

any Claims and previously Scheduled Amounts, including, without limitation, those Claims

and Scheduled Amounts that are specifically referenced herein, are not listed in the

Schedules, are listed therein as disputed, contingent and/or unliquidated in amount, or are

listed therein at a different amount than the Debtors currently believe is validly due and

owing. Unless otherwise ordered by the Bankruptcy Court, all objections to Claims and

Scheduled Amounts (other than Administrative Expense Claims) shall be Filed and served

upon counsel for Debtors and the holder of the Claim objected to on or before the later of


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(a) forty-five (45) days after the Effective Date or (b) sixty (60) days after the date (if any) on

which a Proof of Claim is Filed in respect of a Rejection Claim or Deficiency Claim. The

last day for filing objections to Administrative Expense Claims shall be set pursuant to a

further order of the Bankruptcy Court. All Disputed Claims shall be resolved by the

Bankruptcy Court, except to the extent that (a) Debtors may otherwise elect consistent with

the Plan and the Bankruptcy Code or (b) the Bankruptcy Court may otherwise order.

5.2 Deficiency Claims. On or before fifteen (15) days after the entry of the

Confirmation Order unless otherwise provided for under the Plan, any party holding an

alleged Secured Claim in Classes 2 through 16 under the Plan will file and serve the

Reorganized Debtors with a proof of claim asserting the amount that their Claim is an

Unsecured Claim. Creditors who fail to file a proof of claim by the date established in this

* * *

Section 5.2 shall be forever barred and estopped from asserting an Unsecured Claim and

from receiving distributions as a Class 17 or 18 Claimant.

5.3 Reserve Account. On or before the Effective Date, Reorganized Debtor will

establish and maintain reserve accounts for (a) all Unsecured Creditors’ Proceeds;

(b) Administrative Expense Requests and Priority Claims, including, without limitation,

professional fee claims; and (c) Disputed Claims. The reserve for all Disputed Claims will

equal an amount needed to make distributions to all Disputed Claims, including without

limitation, all Disputed Administrative Expense Requests, Disputed Priority Tax Claims,

Disputed Other Priority Claims in an amount equal to what would be distributed to holders of

such Disputed Claims if their Disputed Claims would be deemed Allowed Claims on the

Effective Date. Cash held by Reorganized Debtor in any reserve account shall be invested in

the manner described in Bankruptcy Code section 345(a) or as otherwise permitted by a final

order of the Bankruptcy Court.


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5.4 Subsequent Allowance of Disputed Claims. The holder of a Disputed Claim

that becomes Allowed in full or in part subsequent to the Effective Date shall receive Cash

distributions on the next distribution date following the allowance of such Disputed Claim.

5.5 Distributions. The Reorganized Debtor will make initial distributions as

required by the Plan on the Effective Date, or as soon thereafter as is practicable, and make

further distributions, including Pro Rata distributions to holders of Allowed General

Unsecured Claims on the First Business Day of the next calendar quarter from the date such

Claims are Allowed. Subsequent distributions shall be made on the First Business Day of

each calendar quarter until the later of (a) all Avoidance Actions, if any, commenced by

Debtors or Reorganized Debtor have been resolved by Court order, agreement by the parties

or have been withdrawn; (b) the obligation to reserve Unsecured Creditors’ Proceeds has

expired and all distributions to Allowed Claim holders have been made, and (c) all Disputed

Claims have been resolved. No Cash or other property shall be distributed under the Plan on

account of any Disputed Claim, or a portion of any such Claim, unless and until such

Disputed Claim becomes an Allowed Claim.

5.6 De Minimis Post-Effective Payments. If a Cash payment to be made to a

holder of an Allowed Claim after the Effective Date, other than to the holder of a Small

Unsecured Claim, would be $20 or less in the aggregate, no such payment will be made to

the holder of such Claim, unless and until the aggregate distribution on account of such

Claim would be at least $20 at a subsequent distribution date.

ARTICLE 6

MEANS FOR EXECUTION OF PLAN

6.1 Merger/Consolidation of Assets and Liabilities. After the Confirmation Date,

Renaissance Development Corporation and Renaissance Custom Homes will merge into

Renaissance Development Corporation which will also receive an assignment of all the

assets and liabilities of The Lakes at Fishers Landing, LLC. Following the assignment and


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merger, The Lakes at Fishers Landing, LLC will be dissolved and the separate existence of

Renaissance Custom Homes, LLC will cease, with Renaissance Development Corporation

becoming the surviving corporation, organized and governed by the laws of the state of

Oregon. The surviving corporation will possess all the rights, privileges, immunities and

franchises of each of the constituent corporations, and (a) all assets and liabilities of all

Debtors shall be treated as though they were merged into and with the assets and liabilities of

the surviving corporation without further act or deed; (b) all guaranties of the Debtors of the

obligations of any other Debtor shall be deemed eliminated so that any Claim against any

Debtor and any obligation or guaranty executed by any other Debtor and any joint or several

liability of any of the Debtors shall be deemed one obligation of the Debtors; and (c) each

Claim filed in the Chapter 11 Case of any of the Debtors shall be deemed filed against the

Debtors, and shall be deemed a claim against and obligations of the Debtors. Subject to the

occurrence of the Effective Date, the Debtors shall be deemed consolidated for all purposes

related to the Plan, including for purposes of voting, confirmation, distribution to creditors

and equity security holders, and administration.

6.2 Intercompany Claims. On the Effective Date, Intercompany Claims shall be

discharged or deemed satisfied, at the option of the Debtors, by contributions, distributions or

otherwise as determined by the Debtors.

6.3 Sebastian Ownership and Release. On the Effective Date, all Interests of all

Debtors then outstanding shall be cancelled. Simultaneously with such cancellation,

Sebastian will be issued one (1) share of common stock for each dollar of Sebastian's post-

petition Administrative Expense Claims arising from the assignment to Debtors of

Sebastian's rights to tax refunds received in 2008 and 2009. In addition, Sebastian will pay

Pro Rata those Claimants who hold the personal guarantees of Sebastian additional sums

over time from his Unsecured Claim distributions received from the Reorganized Debtor or

from such other personal assets in sufficient amounts equal to the present liquidation value of


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his personal assets that would be available to his creditors in a personal bankruptcy

proceeding valued as of the Confirmation Date. In exchange for such contribution, Sebastian

shall be deemed released of all personal liability on any personal guarantees for any of

Debtors' obligations. If such release is not voluntarily granted and Sebastian nevertheless

elects to make such contributions, then Sebastian shall be entitled to the injunction set forth

in Section 8.2 below. If any Creditor who holds a personal guaranty objects to this provision

of the Plan and such objection is upheld by the Bankruptcy Court, then Sebastian will not be

required to contribute such additional funds to those Claimants.

6.4 Restated Articles of Incorporation. Reorganized Debtor shall be deemed to

have adopted Restated Articles of Incorporation and Restated Bylaws on the Effective Date

and shall promptly thereafter cause the Restated Articles of Incorporation to be filed with the

Secretary of State of the State of Oregon. After the Effective Date, Reorganized Debtor may

amend the Restated Articles of Incorporation and may amend its bylaws in accordance with

the Restated Articles of Incorporation, in accordance with such bylaws and applicable state

law.

6.5 Board of Directors. Upon the occurrence of the Effective Date, the board of

directors of the Reorganized Debtor shall consist of Mr. Randy Sebastian.

6.6 Tax Election. The Reorganized Debtor will make and retain its election to be

treated as an S corporation.

6.7 Setoffs. Debtors may, but shall not be required to, set off against any Claim

and the distributions to be made pursuant to the Plan in respect of such Claim, any claims of

any nature whatsoever which Debtors may have against the holder of such Claim, but neither

the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or

release of any such claim Debtors may have against such holder.

6.8 Corporate Action. Upon entry of the Confirmation Order by the Clerk of the

Bankruptcy Court, all actions contemplated by the Plan shall be authorized and approved in


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all respects (subject to the provisions of the Plan), including, without limitation, the

following: (a) the adoption and filing with the Secretary of State of the State of Oregon the

Restated Articles of Incorporation, and (b) the execution, delivery and performance of all

documents and agreements relating to the Plan and any of the foregoing. On the Effective

Date, the appropriate officers of Reorganized Debtor are authorized and directed to execute

and deliver the agreements, documents and instruments contemplated by the Plan and the

Disclosure Statement in the name of and on behalf of Reorganized Debtor.

6.9 Utility Deposit. All utilities holding a Utility Deposit shall immediately after

the Effective Date return or refund such Utility Deposit to Reorganized Debtor. At the sole

option of Reorganized Debtor, Reorganized Debtor may apply any Utility Deposit that has

not been refunded to Reorganized Debtor in satisfaction of any payments due or to become

due from Reorganized Debtor to a utility holding such a Utility Deposit.

* * *

6.10 Annual Reporting. During the term the Reorganized Debtor has an obligation

to make distributions to General Unsecured Creditors, it will prepare an annual report by

forty-five (45) days after the close of each preceding calendar year detailing its financial

performance, and will make such report available to all holders of Allowed Claims

requesting a copy. Such reports shall include variances from Reorganized Debtor’s budget

for the preceding period and for each reporting period: the status of Avoidance Actions,

gross revenue; EBITDA, including each component made up in such calculation,

extraordinary expenses, management compensation or other employee benefits, incentive

compensation and any other information considered pertinent by Reorganized Debtor.

6.11 Management Compensation. Sebastian shall continue as President of the

Reorganized Debtor. Mr. Timothy Breedlove shall continue as Vice President and Chief

Operating Officer of the Reorganized Debtor. Sebastian shall be entitled to an initial base

salary of $30,000 per month plus incentive compensation equal to $1,500 per house closing.


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Mr. Breedlove shall be entitled to an initial base salary of $20,000 per month plus incentive

compensation equal to $500 per house closing plus 6% of pretax income. The 6% of pre-tax

income shall not be included as an expense item in calculating EBITDA payments to

Class 18 Claimants.

6.12 Plan Commitment. Sebastian shall provide his best efforts to the success of

the Reorganized Debtor and shall not engage in any business or activity in the Portland,

Oregon metropolitan and surrounding areas inconsistent therewith.

6.13 Event of Default; Remedy. Any material failure by Reorganized Debtor to

perform any term of this Plan, which failure continues for a period of ten Business Days

following receipt by Reorganized Debtor of written notice of such default from the holder of

an Allowed Claim to whom performance is due, shall constitute an event of Default. Upon

the occurrence of an Event of Default, the holder of an Allowed Claim to whom performance

is due shall have all rights and remedies granted by law, this Plan or any agreement between

the holder of such Claim and Debtors or Reorganized Debtor. An Event of Default with

respect to one Claim shall not be an Event of Default with respect to any other Claim.

6.14 Conditions Precedent to Effectiveness of Plan. The following conditions must

occur and be satisfied for the Plan to become effective, notwithstanding the Effective Date:

(a) Sebastian will have reached agreement or obtained releases from all

persons holding personal guaranties or otherwise waive this as a condition.

(b) The Bankruptcy Court shall have entered the Confirmation Order, in

the form and substance reasonably satisfactory to the Debtor, which shall, among other

things, (i) find that the Plan complies with all applicable requirements of the Bankruptcy

Code, (ii) decree that the Confirmation Order shall supersede any court orders issued prior to

the Confirmation Date that may be inconsistent therewith, (iii) decree that, except as

otherwise provided in the Plan or Confirmation Order, all transfers of property contemplated

under the Plan shall be free and clear of all claims, security interests, liens, encumbrances,


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and other interests of holders of Claims and equity interest; (iv) provide that any and all

executory contracts and unexpired leases that are assumed and/or assigned pursuant to the

Plan shall remain in full force and effect for the benefit of the Reorganized Debtor, in each

case, notwithstanding any provision in any such contract or lease or in applicable law

(including those described in Sections 365(b)(2) and (f) of the Bankruptcy Code) that

prohibits, restricts or conditions such transfer or that enables or requires termination or

modification of such contract or lease; and (v) appropriate notice and opportunity for hearing

has been given and the injunction set forth in paragraph 8.2 of the Plan shall be valid,

binding and fully enforceable in any court of law.

(c) All documents, instruments and agreements, each in form and

substance satisfactory to the Debtor, provided for or necessary to implement this Plan shall

have been executed and delivered by the parties thereto, unless such execution or delivery

has been waived by the party to be benefited thereby.

ARTICLE 7

EXECUTORY CONTRACTS AND UNEXPIRED LEASES

7.1 Assumption and Rejection. Except as may otherwise be provided, all

executory contracts and unexpired leases of Debtors which are not otherwise subject to a

prior Bankruptcy Court order or pending motion before the Bankruptcy Court are rejected by

Reorganized Debtor on the Effective Date except for homeowner warranties for homes sold

by Debtors within one year prior to the Effective Date, which contracts are deemed assumed

by the Reorganized Debtor. The Confirmation Order shall constitute an order authorizing the

assumption of all home warranties for homes sold within one year prior to the Effective Date.

The Confirmation Order shall constitute an order authorizing rejection of all other executory

contracts and unexpired leases except those otherwise specifically assumed or otherwise

provided for or subject to other Court Order or pending motion. Reorganized Debtor shall

promptly pay all amounts required under Section 365 of the Bankruptcy Code to cure any


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defaults for executory contracts and unexpired leases being assumed by performing its

obligations from and after the Effective Date in the ordinary course of business.

7.2 Assignment. To the extent necessary, all assumed executory contracts and

unexpired leases shall be deemed assigned to Reorganized Debtor as of the Effective Date.

The Confirmation Order shall constitute an order authorizing such assignment of assumed

executory contracts and unexpired leases, and no further assignment documentation shall be

necessary to effectuate such assignment.

7.3 Rejection Claims. Rejection Claims must be Filed no later than 30 days after

the entry of the order rejecting the executory contract or unexpired lease or 30 days after the

entry of the Confirmation Order, whichever is sooner. Any such Rejection Claim not Filed

within such time shall be forever barred from asserting such Claim against Debtors,

Reorganized Debtor, their property, estates, and any guarantors of such obligations. Each

* * *

Rejection Claim resulting from such rejection shall constitute a Small or General Unsecured

Claim, as applicable.

ARTICLE 8

EFFECT OF CONFIRMATION

8.1 Debtors' Injunction. The effect of confirmation shall be as set forth in

Section 1141 of the Bankruptcy Code. Except as otherwise provided in the Plan or in the

Confirmation Order, confirmation of the Plan shall act as a permanent injunction applicable

to entities against (a) the commencement or continuation, including the issuance or

employment of process, of a judicial, administrative, or other action or proceeding against

Reorganized Debtor that was or could have been commenced before the entry of the

Confirmation Order, (b) the enforcement against Reorganized Debtor or their assets of a

judgment obtained before the Petition Date, and (c) any act to obtain possession of or to

exercise control over, or to create, perfect or enforce a lien upon all or any part of the assets.


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8.2 Sebastian Injunction. Any and all Creditors holding a Claim against the

Debtors shall be temporarily enjoined from attempting to collect its Claim from Mr. Randal

Sebastian and/or Mrs. Sandra Sebastian or any of their property until such time as all

required Plan payments have been made or there is a default under the Plan that is not cured

within 15 business days after receipt of notice to the Debtors and Mr. and Mrs. Sebastian.

ARTICLE 9

RETENTION OF JURISDICTION

9.1 Notwithstanding the entry of the Confirmation Order, the Court shall retain

jurisdiction of this Chapter 11 Case pursuant to and for the purposes set forth in

Section 1127(b) of the Bankruptcy Code:

(a) to classify the Claim or interest of any Creditor or stockholder,

reexamine Claims or Interests which have been owed for voting purposes and determine any

objections that may be Filed to Claims or Interests,

(b) to determine requests for payment of Claims entitled to priority under

Section 507(a) of the Bankruptcy Code, including compensation and reimbursement of

expenses in favor of professionals employed in these Bankruptcy Cases,

(c) to avoid transfers or obligations to subordinate Claims under Chapter 5

of the Bankruptcy Code,

(d) to approve the assumption, assignment or rejection of an executory

contract or an unexpired lease pursuant to this Plan,

(e) to resolve controversies and disputes regarding the interpretation of

this Plan,

(f) to implement the provisions of this Plan and enter orders in aid of

confirmation,

(g) to determine the validity, priority or extent of any claim or claim of

lien,


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(h) to adjudicate adversary proceedings and contested matters pending or

hereafter commenced in these Bankruptcy Cases, and

(i) to enter a final decree closing these Bankruptcy Cases.

ARTICLE 10

ADMINISTRATIVE PROVISIONS

10.1 Modification or Withdrawal of the Plan. Debtors may alter, amend or modify

the Plan pursuant to Section 1127 of the Bankruptcy Code and Bankruptcy Rule 3019 at any

time prior to the time that the Bankruptcy Court has signed the Confirmation Order. After

such time, and prior to the substantial consummation of the Plan, Debtors may, so long as the

treatment of holders of Claims and Interests under the Plan is not adversely affected, institute

proceedings in Bankruptcy Court to remedy any defect or omission or to reconcile any

inconsistencies in the Plan, the Disclosure Statement or the Confirmation Order, and any

other matters as may be necessary to carry out the purposes and effects of the Plan; provided,

however, that prior notice of such proceedings shall be served in accordance with

Bankruptcy Rule 2002.

10.2 Revocation or Withdrawal of Plan

10.2.1. Right to Revoke. Debtors reserve the right to revoke or withdraw

the Plan at any time prior to the Effective Date.

10.2.2. Effect of Withdrawal or Revocation. If Debtors revoke or withdraw

the Plan prior to the Effective Date, then the Plan shall be deemed null and void. In such

event, nothing contained herein shall be deemed to constitute a waiver or release of any

claims by or against Debtors or any other Entity or to prejudice in any manner the rights of

Debtors or any Entity in any further proceeding involving Debtors.

10.3 Nonconsensual Confirmation. Debtors shall request that the Bankruptcy

Court confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code if the


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requirements of all provisions of Section 1129(a) of the Bankruptcy Code, except

subsection 1129(a)(8), are met.

ARTICLE 11

MISCELLANEOUS PROVISIONS

11.1 Revesting. Except as otherwise expressly provided herein, on the Effective

Date, all property and assets of the estate of Debtors shall revest in Reorganized Debtor, free

and clear of all claims, liens encumbrances, charges and other Interests of Creditors arising

on or before the Effective Date, and Reorganized Debtor may operate, from and after the

Effective Date, free of any restrictions imposed by the Bankruptcy Code or the Bankruptcy

Court.

11.2 Rights of Action. Except as otherwise expressly provided herein, any claims,

rights, interests, causes of action, defenses, counterclaims, cross-claims, third-party claims,

or rights of offset, recoupment, subrogation or subordination including, without limitation,

claims under Section 550(a) of the bankruptcy Code or any of the sections referenced therein

(including, without limitation, any and all Avoidance Actions) accruing to Debtors shall

remain assets of Reorganized Debtor. Reorganized Debtor may pursue such rights of action,

as appropriate, in accordance with what is in its best interests and for its benefit.

11.3 Governing Law. Except to the extent the Bankruptcy Code, the Bankruptcy

Rules or other federal laws are applicable, the laws of the State of Oregon shall govern the

construction and implementation of the Plan, and all rights and obligations arising under the

Plan.

11.4 Withholding and Reporting Requirements. In connection with the Plan and

all instruments issued in connection therewith and distributions thereon, Debtors and

Reorganized Debtor shall comply with all withholding, reporting, certification and

information requirements imposed by any federal, state, local or foreign taxing authorities

and all distributions hereunder shall, to the extent applicable, be subject to any such


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withholding, reporting, certification and information requirements. Entities entitled to

receive distributions hereunder shall, as a condition to receiving such distributions, provide

such information and take such steps as Reorganized Debtor may reasonably require to

ensure compliance with such withholding and reporting requirements, and to enable

Reorganized Debtor to obtain the certifications and information as may be necessary or

appropriate to satisfy the provisions of any tax law.

11.5 Time. Unless otherwise specified herein, in computing any period of time

prescribed or allowed by the Plan, the day of the act or event from which the designated

period begins to run shall not be included. The last day of the period so computed shall be

included, unless it is not a Business Day, in which event the period runs until the end of the

next succeeding day which is a Business Day.

11.6 Section 1146(c) Exemption. Pursuant to Section 1146(c) of the Bankruptcy

Code, the issuance, transfer or exchange of any security under the Plan, or the execution,

delivery or recording of an instrument of transfer pursuant to, in implementation of or as

contemplated by the Plan, or the revesting, transfer or sale of any real property of Debtors or

Reorganized Debtor pursuant to, in implementation of or as contemplated by the Plan, shall

not be taxed under any state or local law imposing a stamp tax, transfer tax, or similar tax or

fee. Consistent with the foregoing, each recorder of deeds or similar official for any city,

county or governmental unit in which any instrument hereunder is to be recorded shall,

pursuant to the Confirmation Order, be ordered and directed to accept such instrument

without requiring the payment of any documentary stamp tax, deed stamps, transfer tax,

intangible tax or similar tax.

11.7 Severability. In the event that any provision of the Plan is determined to be

unenforceable, such determination shall not limit or affect the enforceability and operative

effect of any other provisions of the Plan. To the extent that any provision of the Plan would,

by its inclusion in the Plan, prevent or preclude the Bankruptcy Court from entering the


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Confirmation Order, the Bankruptcy Court, on the request of Debtors, may modify or amend

such provision, in whole or in part, as necessary to cure any defect or remove any

impediment to the confirmation of the Plan existing by reason of such provision.

11.8 Binding Effect. The provisions of the Plan shall bind Debtors, Reorganized

Debtor and all holders of Claims and Interests, and their respective successors, heirs and

assigns.

11.9 Retiree Benefits. On or after the Effective Date, to the extent required by

Section 1129(a)(13) of the Bankruptcy Code, Reorganized Debtor shall continue to pay all

retiree benefits (if any) as that term is defined in Section 1114 of the Bankruptcy Code,

maintained or established by Debtors prior to the Effective Date, without prejudice to

Reorganized Debtor's rights under applicable non-bankruptcy law to modify, amend or

terminate the foregoing arrangements.

* * *

* * *

11.10 Recordable Order. The Confirmation Order shall be deemed to be in

recordable form, and shall be accepted by any recording officer for filing and recording

purposes without further or additional orders, certifications or other supporting documents.

11.11 Plan Controls. In the event and to the extent that any provision of the Plan is

inconsistent with the provisions of the Disclosure Statement, or any other instrument or

agreement contemplated to be executed pursuant to the Plan, the provisions of the Plan shall

control and take precedence.

11.12 Effectuating Documents and Further Transactions. Debtors and Reorganized

Debtors shall execute, deliver, file or record such contracts, instruments, assignments, and

other agreements or documents, and take or direct such actions, as may be necessary or

appropriate to effectuate and further evidence the terms and conditions of this Plan.


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11.13 Dissolution of Committee. On the Effective Date, the Committee shall

dissolve and all members shall be released and discharged from their duties and

responsibilities as members of the Committee in connection with the Bankruptcy Cases, the

Disclosure Statement and the Plan and its implementation, except with respect to any appeal

of an order in the Bankruptcy Cases and applications for professionals' fees.

DATED this 29th day of October, 2009.

Respectfully submitted,

RENAISSANCE CUSTOM HOMES, LLC

By /s/ Randal S. Sebastian Randal S. Sebastian, Manager

RENAISSANCE DEVELOPMENT CORPORATION

By /s/ Randal S. Sebastian Randal S. Sebastian, President


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THE LAKES AT FISHERS LANDING, LLC

By /s/ Randal S. Sebastian Randal S. Sebastian, Manager

TONKON TORP LLP By /s/ Timothy J. Conway

Albert N. Kennedy, OSB No. 821429 Timothy J. Conway, OSB No. 851752 Ava L. Schoen, OSB No. 044072 Attorneys for Debtors


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Page 1 of 2 - CERTIFICATE OF SERVICE



Telephone (503) 802-5715

CERTIFICATE OF SERVICE

I hereby certify that I served the foregoing DEBTORS' SECOND

AMENDED PLAN OF REORGANIZATION (OCTOBER 29, 2009) on the parties listed below by electronic means through the Court's Case Management/Electronic Case File system on October 30, 2009.

• MATTHEW A ARBAUGH [email protected], [email protected] • JASON M AYRES [email protected], [email protected] • GARY L BLACKLIDGE [email protected], [email protected] • JESSICA S CAIN [email protected],

[email protected];[email protected];[email protected] • JOHN H CHAMBERS [email protected], [email protected] • TIMOTHY J CONWAY [email protected], [email protected] • BRADLEY S COPELAND [email protected], [email protected] • DAVID W CRISWELL [email protected], [email protected] • DOUGLAS P CUSHING [email protected],

[email protected];[email protected] • THOMAS A GERBER [email protected],

[email protected];[email protected] • J DANIEL GRAGG [email protected] • THOMAS J GREIF [email protected], [email protected] • IVY B GREY [email protected], [email protected] • ANDREW D HAHS [email protected], [email protected] • JAMES K HEIN [email protected], [email protected] • THOMAS K HOOPER [email protected], [email protected] • C SCOTT HOWARD [email protected], [email protected] • GARY K KAHN [email protected], [email protected] • ALBERT N KENNEDY [email protected], [email protected] • MICHAEL E KNAPP [email protected], [email protected] • SANFORD R LANDRESS [email protected],

[email protected] • WILLIAM L LARKINS [email protected],

[email protected];[email protected] • STEPHEN G LEATHAM [email protected] • HOWARD M LEVINE [email protected], [email protected] • CHARLES R MARKLEY [email protected],

[email protected] • MARTIN P MEYERS [email protected], [email protected] • JOHN CASEY MILLS [email protected], [email protected] • SONIA A MONTALBANO [email protected], [email protected] • ZACHARY MOSNER [email protected] • ANDREW R NAYLOR [email protected], [email protected] • KEVIN S NEIMAN [email protected], [email protected] • DOUGLAS R PAHL [email protected],

[email protected];[email protected];[email protected] • REGINALD W PERRY [email protected], [email protected] • MICHAEL C PETERSEN [email protected] • TIMOTHY J RESCH [email protected] • CRAIG G RUSSILLO [email protected], [email protected]


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Page 2 of 2 - CERTIFICATE OF SERVICE



Telephone (503) 802-5715

• TARA J SCHLEICHER [email protected], [email protected];[email protected] • JAMES RAY STREINZ [email protected],

[email protected];[email protected] • BRENT G SUMMERS [email protected], [email protected] • DON THACKER [email protected] • US Trustee, Portland [email protected] • JAMES C WAGGONER [email protected],

[email protected];[email protected] • LAWRENCE A WAGNER [email protected] • JOHN W WEIL [email protected], [email protected] • J STEPHEN WERTS [email protected],

[email protected];[email protected];[email protected] • MILLY WHATLEY [email protected], [email protected] • JOSEPH A YAZBECK [email protected], [email protected] • JEFFREY S YOUNG [email protected], [email protected] • JAMES ^MIERSMA [email protected]

In addition, on October 30, 2009, I served the foregoing on the following parties:

Keith A. McDaniels Winston & Strawn LLP 101 California Street San Francisco, CA 94111-5894 Attorney for Unsecured Creditors Committee

by mailing a copy thereof in a sealed, first-class postage prepaid envelope, addressed to each party's last-known address and depositing in the U.S. mail at Portland, Oregon.

DATED this 30th day of October, 2009.

TONKON TORP LLP By /s/ Timothy J. Conway

Albert N. Kennedy, OSB No. 821429 Timothy J. Conway, OSB No. 851752 Ava L. Schoen, OSB No. 044072 Attorneys for Debtors

1826237
