UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF ALABAMA NORTHERN DIVISION

Transcription

1 UNITED STATES BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF ALABAMA NORTHERN DIVISION x : In re : Chapter 11 : THE COLONIAL BANCGROUP, INC., : Case No (DHW) : Debtor. : : x THIRD AMENDED DISCLOSURE STATEMENT ACCOMPANYING SECOND AMENDED CHAPTER 11 PLAN OF LIQUIDATION OF THE COLONIAL BANCGROUP, INC. PARKER HUDSON RAINER & DOBBS LLP C. Edward Dobbs, Esq. Rufus T. Dorsey, IV, Esq. J. David Freedman, Esq. 285 Peachtree Center Avenue, Suite 1500 Atlanta, GA (404) Attorneys for The Colonial BancGroup, Inc. Dated: February 23, 2011 Montgomery, Alabama _3 Amended Disclosure Statement Page 1 of 207

2 THIS DISCLOSURE STATEMENT HAS BEEN PREPARED PURSUANT TO SECTION 1125 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 3016(b) AND IS NOT NECESSARILY IN ACCORDANCE WITH THE FEDERAL OR STATE SECURITIES LAWS OR SIMILAR LAWS. THIS DISCLOSURE STATEMENT CONTAINS SUMMARIES OF CERTAIN PROVISIONS OF THE PLAN AND CERTAIN OTHER DOCUMENTS AND FINANCIAL INFORMATION. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS PROVIDED FOR THE PURPOSE OF SOLICITING ACCEPTANCES OF THE PLAN AND SHOULD NOT BE RELIED UPON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER AND HOW TO VOTE ON THE PLAN. THE DEBTOR BELIEVES THAT THESE SUMMARIES ARE FAIR AND ACCURATE. THE SUMMARIES OF THE FINANCIAL INFORMATION AND THE DOCUMENTS THAT ARE ATTACHED TO, OR INCORPORATED BY REFERENCE INTO, THIS DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH INFORMATION AND DOCUMENTS. IN THE EVENT OF ANY INCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THIS DISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN, OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION INCORPORATED IN THIS DISCLOSURE STATEMENT BY REFERENCE, THE PLAN OR THE OTHER DOCUMENTS AND FINANCIAL INFORMATION, AS THE CASE MAY BE, SHALL GOVERN FOR ALL PURPOSES. THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAVE BEEN MADE AS OF THE DATE OF THIS DISCLOSURE STATEMENT UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMS AND EQUITY INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD NOT INFER AT THE TIME OF SUCH REVIEW THAT THERE HAVE BEEN NO CHANGES IN THE FACTS SET FORTH IN THIS DISCLOSURE STATEMENT SINCE THE DATE OF THIS DISCLOSURE STATEMENT. EACH HOLDER OF A CLAIM OR INTEREST ENTITLED TO VOTE ON THE PLAN SHOULD CAREFULLY REVIEW THE PLAN AND THIS DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE CASTING A BALLOT. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE. ANY ENTITIES DESIRING ANY SUCH ADVICE OR ANY OTHER ADVICE SHOULD CONSULT WITH THEIR OWN ADVISORS. NO ONE IS AUTHORIZED TO GIVE ANY INFORMATION WITH RESPECT TO THE PLAN OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT. NO REPRESENTATIONS CONCERNING THE DEBTOR OR THE VALUE OF ITS PROPERTY HAVE BEEN AUTHORIZED BY THE DEBTOR OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT AND THE DOCUMENTS ATTACHED TO THIS DISCLOSURE STATEMENT. ANY INFORMATION, REPRESENTATIONS, OR INDUCEMENTS MADE TO OBTAIN AN ACCEPTANCE OF THE PLAN THAT ARE OTHER THAN AS SET FORTH, OR INCONSISTENT WITH, THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT, THE DOCUMENTS ATTACHED TO THIS DISCLOSURE STATEMENT OR THE PLAN SHOULD NOT BE RELIED UPON BY ANY HOLDER OF A CLAIM OR EQUITY INTEREST. - ii - Amended Disclosure Statement Page 2 of 207

3 WITH RESPECT TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS, AND OTHER PENDING, THREATENED, OR POTENTIAL LITIGATION OR OTHER ACTIONS, THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE, AND MAY NOT BE CONSTRUED AS, AN ADMISSION OF FACT, LIABILITY, STIPULATION, OR WAIVER, BUT RATHER AS A STATEMENT MADE IN THE CONTEXT OF SETTLEMENT NEGOTIATIONS PURSUANT TO RULE 408 OF THE FEDERAL RULES OF EVIDENCE. THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF THE PLAN. ALTHOUGH THE DEBTOR BELIEVES THAT THE PLAN COMPLIES WITH ALL APPLICABLE PROVISIONS OF THE BANKRUPTCY CODE, THE DEBTOR CANNOT ASSURE SUCH COMPLIANCE OR THAT THE BANKRUPTCY COURT WILL CONFIRM THE PLAN. ALTHOUGH THE DEBTOR HAS USED ITS BEST EFFORTS TO ENSURE THE ACCURACY OF THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURE STATEMENT, THE FINANCIAL INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED, EXCEPT AS SPECIFICALLY INDICATED OTHERWISE. PLEASE REFER TO CHAPTER XII OF THIS DISCLOSURE STATEMENT, ENTITLED "RISK FACTORS" FOR A DISCUSSION OF CERTAIN CONSIDERATIONS IN CONNECTION WITH A DECISION BY A HOLDER OF AN IMPAIRED CLAIM TO ACCEPT THE PLAN. UNLESS OTHERWISE SPECIFICALLY INDICATED, THE FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED AND IS BASED ON AN ANALYSIS OF DATA AVAILABLE AT THE TIME OF THE PREPARATION OF THE PLAN AND THIS DISCLOSURE STATEMENT. TO BE COUNTED, THE BALLOTS UPON WHICH HOLDERS OF IMPAIRED CLAIMS ENTITLED TO VOTE SHALL CAST THEIR VOTE TO ACCEPT OR REJECT THE PLAN INDICATING ACCEPTANCE OR REJECTION OF THE PLAN MUST BE RECEIVED IN ACCORDANCE WITH THE INSTRUCTIONS ON SUCH BALLOT. THIS DISCLOSURE STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A AND SECTION 21E OF THE SECURITIES ACT, AS AMENDED. SUCH STATEMENTS MAY CONTAIN WORDS SUCH AS "MAY, "WILL," "MIGHT," "EXPECT," "BELIEVE, "ANTICIPATE," "COULD," "WOULD," "ESTIMATE," "CONTINUE," "PURSUE," OR THE NEGATIVE THEREOF OR COMPARABLE TERMINOLOGY, AND MAY INCLUDE, WITHOUT LIMITATION, INFORMATION REGARDING THE DEBTOR'S EXPECTATIONS REGARDING FUTURE - iii - Amended Disclosure Statement Page 3 of 207

4 EVENTS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN, PARTICULARLY IN LIGHT OF THE UNCERTAINTIES OF LITIGATION, AND ACTUAL RESULTS MAY DIFFER FROM THOSE EXPRESSED OR IMPLIED IN THIS DISCLOSURE STATEMENT AND THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. IN PREPARING THIS DISCLOSURE STATEMENT, THE DEBTOR RELIED ON FINANCIAL DATA DERIVED FROM ITS BOOKS AND RECORDS OR THAT WAS OTHERWISE MADE AVAILABLE TO IT AT THE TIME OF SUCH PREPARATION AND ON VARIOUS ASSUMPTIONS. WHILE THE DEBTOR BELIEVES THAT SUCH FINANCIAL INFORMATION FAIRLY REFLECTS THE FINANCIAL CONDITION OF THE DEBTOR AS OF THE DATE HEREOF AND THAT THE ASSUMPTIONS REGARDING FUTURE EVENTS REFLECT REASONABLE BUSINESS JUDGMENTS, NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OF THE FINANCIAL INFORMATION CONTAINED HEREIN OR THE DEBTOR'S FORECAST OF POTENTIAL DISTRIBUTIONS UNDER THE PLAN. THE DEBTOR EXPRESSLY CAUTIONS READERS NOT TO PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM CURRENT ESTIMATES OF FUTURE PERFORMANCE ARE THE FOLLOWING: (1) THE DEBTOR'S ABILITY TO DEVELOP, PROSECUTE, CONFIRM, AND CONSUMMATE A PLAN WITH RESPECT TO THIS CHAPTER 11 CASE; (2) THE OUTCOME AND TIMING OF THE DEBTOR'S EFFORTS TO SELL CERTAIN ASSETS; AND (3) OUTCOMES OF, AMONG OTHER THINGS, LITIGATION WITH THE FDIC-RECEIVER AND OTHERS. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT IS AS OF THE FILING DATE OF THIS DISCLOSURE STATEMENT AND THE DEBTOR IS UNDER NO OBLIGATION, AND EXPRESSLY DISCLAIMS ANY OBLIGATION, TO PUBLICLY UPDATE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS, OR OTHERWISE. - iv - Amended Disclosure Statement Page 4 of 207

5 TABLE OF CONTENTS Page Chapter I. INTRODUCTION...1 Chapter II. SUMMARY...3 A. Overview... 3 B. Frequently Asked Questions Who is the Debtor? How long has the Debtor been in Chapter 11? What is Chapter 11? Has the Debtor proposed a plan of liquidation? What type of Plan was filed? How does the Plan work? What is confirmation of the Plan? Who votes on the Plan? How can I determine if my Claim is allowed? How can I determine if my Claim or Equity Interest is impaired? How can I determine in which Class my Claim or Equity Interest has been placed? How can I determine what I will receive under the Plan? Do I have to vote for the Plan to receive a Distribution based on my Claim? How is the Plan accepted? If my Class votes to accept the Plan, do I get what the Plan provides for my Class? How do I vote on the Plan? Is my Claim or Equity Interest being paid in full under the Plan? What is the amount of my Claim or Equity Interest? When will the Distribution on my Claim be made? To what address will the Distribution be sent? Is the Debtor suing people responsible for any losses suffered by the Debtor? Do I have additional rights or remedies against third parties? Are there risk factors associated with consummation of the Plan? Have there been settlement discussions with the FDIC-Receiver? Chapter III. GENERAL INFORMATION ABOUT THE DEBTOR...11 A. Debtor's Business and Events Leading to Bankruptcy Filing B. Debtor's Capital Structure Common Stock Preferred Stock Public Debt a. Preferred Securities Debentures -- $103,092, b Indenture -- $5,155, c Indenture -- $250,000, Other Liabilities v- Amended Disclosure Statement Page 5 of 207

6 C. Debtor's Major Benefit Plans (k) Plan Pension Plan Non-Qualified Deferred Compensation Plan Certain Director Benefit Plans Chapter IV. THE DEBTOR'S CURRENT AND FORMER MANAGEMENT...27 Chapter V. THE DEBTOR'S SIGNIFICANT ASSETS AND LIABILITIES...28 A. The Debtor's Assets The Debtor's Bank Account Deposits Funds Derived From the Liquidation of a Deferred Compensation Account Debtor's Interest in Potential Tax Refunds Fidelity Policies and Claims Relating Thereto D&O Policies and Derivative Claims CBG Florida REIT Corp CBG Real Estate, LLC Refunds of Unearned Premiums Real Property in Orlando, Florida a. Dispute with FDIC-Receiver b. Condemnation Proceeding Furniture, Art and Office Equipment Claims Against Certain Subsidiaries a. Colonial Bank b. Colonial Brokerage, Inc LBSF Claim Other Claims B. The Debtor's Liabilities Chapter VI. PENDING LEGAL ACTIONS AND REGULATORY PROCEEDINGS...46 A. Pre-Petition Actions Against the Debtor Pending Investigations Regulatory Orders Pending Litigation a. Securities Litigation b. Shareholder Derivative Litigation c. ERISA Litigation d. Other Litigation e. Present Posture of All Litigation B. Potential Estate Causes of Action Chapter VII. POTENTIAL CLAIMS BY AND AGAINST THE DEBTOR...51 A. Claims By the Debtor vi - Amended Disclosure Statement Page 6 of 207

7 1. Claim Against Insiders Professional Liability Insurance Claims Piercing Corporate Veil Preferences and Fraudulent Conveyances B. Claims Against the Debtor Chapter VIII. SIGNIFICANT POST-PETITION DEVELOPMENTS AND STATUS...55 A. Filing of Chapter 11 Case B. Establishment of a Bar Date C. Formation of Unsecured Creditors Committee D. Stock Trading Motion E. FDIC-Receiver Litigation (o) Litigation and Fraudulent Transfer Litigation a. Alleged Capital Maintenance Commitment Under Section 365(o); Bankruptcy Court's Denial of FDIC-Receiver's Motion; Appeal to District Court b. Fraudulent Transfer Litigation; Withdrawal of Reference; Stay of Proceedings Deposit Account Litigation a. Original Stay Relief Motion b. Amended Stay Relief Motion c. Renewed Stay Relief Motion Debtor's Claim in Colonial Bank Receivership FDIC-Receiver's Claim in Debtor's Chapter 11 Bankruptcy Case Tax Return and Refund Litigation Fidelity Policies Litigation Garland Avenue Property Litigation F. Deferred Compensation Litigation G. Litigation with the Alabama Revenue Department H. Claims Against Directors and Officers I. Custody and Disposition of Debtor's Business Records Ownership Disputes Examination and Document Production Request Current Status of Document Retrieval J. SEC Administrative Proceeding K. Costs of Administration of Debtor's Bankruptcy Case Chapter IX. SUMMARY OF THE PLAN...68 A. Overview of the Plan B. Classification and Treatment of Claims under the Plan Payment and Treatment of Priority Claims vii - Amended Disclosure Statement Page 7 of 207

8 a. Administrative Claims b. Priority Tax Claims c. Class A (Priority Non-Tax Claims) Classification and Treatment of Non-Priority Claims a. Class B (Certain Secured Claims) b. Class C (Secured Claim of Alabama Revenue Department) c. Class D (Convenience Class Claims) d. Class E (Certain General Unsecured Claims) e. Class F (Indenture Claims) f. Class G (Statutorily Subordinated Claims) g. Class H (Preferred Stock) h. Class I (Equity Interests other than Preferred Stock) C. Structure of the Debtor After the Effective Date D. Management of the Debtor E. Identity and Compensation of Insiders Chapter X. IMPLEMENTATION OF THE PLAN...77 A. The Debtor and the Plan Trustee B. The Plan Committee C. Claims Administration Allowance of Claims Objections to Claims Temporary Allowance and Estimation of Claims a. Temporary Allowance of Claims for Voting Purposes b. Estimation of Claims for Distribution Purposes Reserve for Disputed Claims C. Funding of the Plan D. Discharge of Claims E. Plan Injunction F. Exculpation of the Debtor, the Case Committee and the Indenture Trustees G. Means of Implementing the Plan H. Abandonment of Estate Property Chapter XI. CONDITIONS PRECEDENT TO CONFIRMATION CONTAINED IN THE BANKRUPTCY CODE...86 A. Section 1129 of the Bankruptcy Code B. Acceptance of the Plan C. Confirmation Without Acceptance of All Impaired Classes - Cramdown D. "Best Interests" Test E. Feasibility Chapter XII. RISK FACTORS...92 A. Certain Bankruptcy Law Considerations viii - Amended Disclosure Statement Page 8 of 207

9 l. Objections to Plan's Classification of Claims and Equity Interests Failure to Satisfy Voting Requirements Inability to Secure Confirmation of Plan Nonconsensual Confirmation Objections to Amount or Classification of a Claim Risk of Non-Occurrence of Effective Date Effect of Certain Contingencies B. Certain Risk Factors that May Affect Recovery The Debtor Cannot State with Certainty Recovery Amounts Uncertainties of Litigation a. Capital Maintenance Claim b. Tax Refund Dispute with FDIC-Receiver c. Dispute Over Fidelity Policies with FDIC-Receiver d. Bank Account Disputes with FDIC-Receiver e. Bank Account Disputes with BB&T f. Garland Avenue Property Dispute with FDIC-Receiver g. D&O Policies Dispute with FDIC-Receiver and Others Settlement Discussions with FDIC-Receiver C. Disclosure Statement Disclaimers Information Contained Herein is for Soliciting Votes Disclosure Statement Not Approved by the SEC; Registration Exemption No Legal or Tax Advice Provided by Disclosure Statement No Admissions Failure to Identify Litigation Claims or Projected Objections No Waiver of Debtor's Rights Debtor Professionals' Reliance Potential for Inaccuracies; No Duty to Update No Representations Outside Disclosure Statement Are Authorized Chapter XIII. ALTERNATIVES TO THE PLAN A. Chapter 7 Liquidation B. Alternative Liquidation Plans Chapter XIV. OTHER MATTERS A. Tax Consequences of the Plan B. Disclaimers C. Confirmation Hearing D. Conditions to Effectiveness of the Plan E. Plan Injunction F. Retention of Jurisdiction by the Bankruptcy Court G. Amendments to the Plan H. Cram down I. No Admissions Chapter XV. CONCLUSION AND RECOMMENDATION ix - Amended Disclosure Statement Page 9 of 207

10 EXHIBIT A Plan of Liquidation...A EXHIBIT B Brief Explanation of Chapter 11...B EXHIBIT C Debtor's Known Subsidiaries as of June 30, C EXHIBIT D List of Individuals / Entities...D EXHIBIT E Resume of Ben S. Branch... E EXHIBIT F Liquidation Analysis... F - x - Amended Disclosure Statement Page 10 of 207

11 Chapter I. INTRODUCTION On August 25, 2009 (the "Petition Date"), The Colonial BancGroup, Inc. (the "Debtor") filed with the United States Bankruptcy Court for the Middle District of Alabama (the "Bankruptcy Court") a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. 101, et seq. (the "Bankruptcy Code"). The Debtor is a corporation formed under the laws of the State of Delaware and, prior to the Petition Date, was headquartered and conducted business at 100 Colonial Bank Boulevard, Montgomery, Alabama Prior to the Petition Date, the Debtor owned 100% of the common stock of Colonial Bank and also owned certain non-banking, non-debtor subsidiaries. On August 14, 2009, Colonial Bank was closed by the Alabama State Banking Department, and the Federal Deposit Insurance Corporation (the "FDIC") was appointed as receiver for Colonial Bank (in such capacity, the "FDIC-Receiver"). On the same day, the FDIC-Receiver and the FDIC (in its corporate capacity) entered into a Purchase and Assumption Agreement dated as of August 14, 2009, with Branch Banking & Trust Company ("BB&T") (as at any time amended, the "P&A Agreement") pursuant to which BB&T acquired certain former assets and assumed certain former liabilities of Colonial Bank. Since the Petition Date, the Debtor has continued to manage its business affairs as debtor in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. The Debtor now seeks confirmation of a proposed First Amended Chapter 11 Plan of Liquidation of The Colonial BancGroup, Inc. (the "Plan"), a copy of which is attached to this Disclosure Statement as Exhibit A. This Disclosure Statement (the "Disclosure Statement") is designed to provide creditors with adequate information to enable them to make a decision whether to vote for or against the Plan. This Disclosure Statement discusses, among other things, (i) voting instructions, (ii) classification of claims against the Debtor, (iii) payments of claims, and (iv) the Debtor's history, business, and property. This Disclosure Statement also contains a summary and analysis of the Plan. All creditors and interest holders of the Debtor are advised and urged to read this Disclosure Statement, the Plan and any other Exhibit attached to this Disclosure Statement in its entirety before voting to accept or reject the Plan. This Disclosure Statement was approved by Order of the Bankruptcy Court. NO REPRESENTATIONS ABOUT THE DEBTOR OR THE PLAN ARE AUTHORIZED EXCEPT AS CONTAINED IN THIS DISCLOSURE STATEMENT AND THE PLAN, AND, IN MAKING YOUR DECISION WHETHER TO VOTE FOR OR AGAINST THE PLAN, YOU SHOULD NOT RELY ON ANY REPRESENTATION THAT IS NOT CONTAINED HEREIN. INSTEAD, ANY SUCH REPRESENTATION OR INDUCEMENT SHOULD BE REPORTED DIRECTLY TO THE BANKRUPTCY COURT OR TO THE DEBTOR OR ITS COUNSEL. THE BANKRUPTCY COURT HAS NOT VERIFIED THE ACCURACY OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT, AND THE BANKRUPTCY COURT'S APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT IMPLY THAT THE BANKRUPTCY COURT ENDORSES OR APPROVES THE PLAN, BUT ONLY THAT, IF ACCURATE, THE INFORMATION SET FORTH IN THIS DISCLOSURE STATEMENT IS SUFFICIENT TO PROVIDE AN ADEQUATE BASIS FOR CREDITORS AND EQUITY Amended Disclosure Statement Page 11 of 207

12 INTEREST HOLDERS TO MAKE INFORMED DECISIONS WHETHER TO ACCEPT OR REJECT THE PLAN. Accompanying this Disclosure Statement are copies of: 1. the notice fixing the time for submitting acceptances or rejections of the Plan, the time for filing objections to the Plan, and the date and time of the hearings to consider confirmation of the Plan and related matters; and 2. for those Holders of Claims or Preferred Stock entitled to vote on the Plan, a ballot for voting on acceptance or rejection of the Plan. Section 1126(b) of the Bankruptcy Code provides that only classes of claims or equity interests that are "impaired" under a plan are entitled to vote on that plan unless deemed not to accept the plan. Under the Plan, the following classes of claims (all as described more fully in the Plan) will be impaired: Class D - Convenience Claims; Class E - Certain General Unsecured Claims; Class F - Indenture Claims; and Class G - Statutorily Subordinated Claims. The Plan also impairs the equity interests in Class H - Preferred Stock and Class I - Equity Interests other than Preferred Stock. The Debtor is sending ballots to all of the Holders of impaired Claims known to the Debtor except Class G, as there are no known members of that Class at this time. The Debtor will also not be sending ballots to the Holders of Common Stock (Class I), who are deemed to have rejected the Plan as they are not entitled to receive or retain anything under the Plan. Defined Terms and Conflict between Plan and Disclosure Statement. Most words or phrases used in this Disclosure Statement shall have their usual and customary meanings. Words or phrases used in this Disclosure Statement that are defined in the Plan, and not otherwise defined in this Disclosure Statement, shall have the definitions set forth in the Plan. Otherwise, the capitalized terms used but not defined in this Disclosure Statement shall have the meaning ascribed to such terms in the Bankruptcy Code or the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). In the event of any conflict between any statement in this Disclosure Statement and in the Plan, the Plan will control. Voting Instructions. After carefully reviewing the Disclosure Statement and its Exhibits, please indicate your vote on the enclosed ballot. IN ORDER FOR YOUR VOTE TO COUNT, YOUR BALLOT (OR, IN THE INSTANCE OF CLASS F - INDENTURE CLAIMS, THE MASTER BALLOT) MUST BE RECEIVED BEFORE 4:00 P.M., CENTRAL TIME, ON APRIL 25, 2011, unless such deadline is extended by the Debtor to the extent authorized (the "Voting Deadline"). If you have a Claim in more than one Class under the Plan, you should receive a separate ballot for each such Claim. If you need additional ballots, please contact the person identified in the instructions to the ballot that you receive. It is important that you exercise your right to vote to accept or reject the Plan. You should read the ballot carefully and follow the instructions. In voting for or against the Plan, please use only the ballot(s) sent to you with this Disclosure Statement or obtained from the person identified in the instructions to the ballot. Ballots that are signed and returned, but not Amended Disclosure Statement Page 12 of 207

13 expressly voted either for acceptance or rejection of the Plan, will be counted as an acceptance of the Plan. YOU SHOULD RETURN YOUR COMPLETED BALLOT(S) TO THE PERSON IDENTIFIED IN THE INSTRUCTIONS TO YOUR BALLOT(S) BY THE DEADLINE NOTED IN YOUR BALLOT(S). Chapter II. SUMMARY A. Overview On the Petition Date, the Debtor filed with the Bankruptcy Court a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The Debtor continues to operate its business as debtor in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No request has been made in this Chapter 11 bankruptcy case for the appointment of a trustee or an examiner. The Debtor's core assets on the Petition Date consisted primarily of: (a) the Debtor's bank account deposits in the approximate amount of $36,000,000 (which amounts are the subject of asserted, but disputed, secured claims and setoff rights); (b) approximately $1,900,000 of deposits derived from the liquidation of a deferred compensation account; (c) the Debtor's interest in certain potential tax refunds in excess of $253,000,000 (which requests remain pending with the Internal Revenue Service and are the subject of litigation with the FDIC- Receiver); (d) the Debtor's interest in claims made under and proceeds of Fidelity Policies with policy limits of $25,000,000 (which is the subject of a dispute as to ownership and entitlement with the FDIC-Receiver); (e) the Debtor's interest in certain derivative claims against former officers and directors of the Debtor and in the proceeds of the D&O Policies with policy limits of $35,000,000 (less attorneys' fees and expenses of certain defense counsel currently in excess of $3,000,000); (f) the Debtor's interest in and claims relating to certain 300,000 shares of preferred securities in CBG Florida REIT Corp. that had an original par value of $1,000 (which interests and claims are disputed by the FDIC-Receiver and likely BB&T); (g) the Debtor's interest in and claims relating to the CBG Real Estate, LLC, the Debtor's wholly-owned Alabama limited liability company, which purchased loans in the approximate face amount of $120,000,000 in December 2008 from Colonial Bank and later appears to have granted a 65% participation interest in such loans (which is asserted by the current holder to be senior in priority to the repayment of the non-participated portion of the loans) and thereafter transferred that participation interest to Colonial Bank; (h) refunds for unearned premiums under various policies of insurance; (i) an interest in certain real property in Orlando, Florida; (j) proceeds from the sale of certain furniture, art and office equipment located in Montgomery, Alabama at the Debtor's former headquarters building; (k) claims against certain subsidiaries such as Colonial Brokerage, Inc., which filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code in Montgomery, Alabama; (l) claims asserted in the bankruptcy case of Lehman Brothers Special Financing Inc. ("LBSF") in the amount of $4,053,591 that have been asserted in a proof of claim filed by the Debtor (which proof of claim has been or likely will be objected to by LBSF); and (m) a claim in both liquidated and unliquidated amounts against Colonial Bank in its receivership proceeding administered by the FDIC-Receiver that was disallowed by the FDIC-Receiver but remains the subject of pending litigation, all as described more fully herein (collectively, the Amended Disclosure Statement Page 13 of 207

14 "Core Assets"). As described in greater detail in later sections of this Disclosure Statement, the FDIC-Receiver, BB&T and the Alabama Revenue Department assert claims to, liens upon, or rights of offset with respect to substantially all of the Core Assets and any judicial rulings adverse to the Debtor with respect to any or all of these claims, liens and asserted rights of offset would substantially diminish the proceeds available for distribution to Holders of General Unsecured Claims and Preferred Stock. Since the Petition Date, the Debtor has focused its efforts on pursuing and liquidating to varying degrees these Core Assets. This process will continue in 2011 and, in the absence of resolutions between the Debtor and the relevant parties in interest with respect to Core Assets in dispute, likely beyond The FDIC-Receiver contends that virtually all assets that the Debtor asserts are part of its Chapter 11 estate constitute property of the FDIC-Receiver and/or BB&T and that, irrespective of the outcome of litigation regarding ownership of such assets, the FDIC-Receiver is entitled to receive substantially all of the proceeds of such assets by virtue of an asserted priority claim under Sections 507(a)(2) and/or 507(a)(9) of the Bankruptcy Code. For an additional description of the risks associated with the Plan resulting from litigation with the FDIC-Receiver and others, see "Risk Factors" (Chapter XII). In addition to liquidating the Core Assets, the Debtor is assessing the existence and collectability of claims against other third parties, the pursuit of which may supplement the proceeds of the Core Asset liquidation. These claims include, but are not limited to, bankruptcy avoidance claims (such as preference and fraudulent conveyance actions), potential claims against professionals (including attorneys and accountants) employed by the Debtor prior to the Petition Date, and claims against other affiliated and related companies and former officers, directors and professionals for such companies. These actual and potential claims held by the Debtor for the benefit of Holders of Claims and Equity Interests are described in greater detail in Chapter VII of this Disclosure Statement. In furtherance of the Debtor's goal to liquidate its assets and distribute the proceeds thereof to its creditors, the Debtor has prepared this Disclosure Statement and the Plan. The Plan provides a structure for the continuation and completion of the liquidation process and the distribution of the resulting proceeds. The Plan, if confirmed by the Bankruptcy Court, will be binding on the Debtor and its creditors and interest holders as to the issues addressed in the Plan, including, but not limited to, (i) the ongoing structure of the Debtor during the remaining liquidation process, (ii) the guidelines for conducting the liquidation, (iii) the manner in which creditors' claims will be determined, (iv) the method for distributing liquidation proceeds, (v) the classification of creditors' claims based on their relative rights, (vi) the entitlement of each creditor, in accordance with such classification, to a Distribution in whole or partial satisfaction of its claim, and (vii) certain injunction, stay and exculpation provisions. For this reason, the terms of the Plan and the treatment of Claims and Equity Interests under the Plan are significant issues that each creditor and interest holder should consider carefully. Under the Bankruptcy Code, a disclosure statement serves the purpose of providing information regarding a debtor and a proposed plan. The information contained in a disclosure statement is required to be sufficient to allow a creditor to make an informed decision regarding the terms of a plan and should be reviewed carefully. Even so, a proposed plan ultimately defines the rights and obligations of the parties and must be referred to for an accurate determination of such rights and obligations Amended Disclosure Statement Page 14 of 207

15 The ultimate return for creditors under the Plan will depend on the success of the liquidation process, the successful pursuit of third party claims, the determination and resolution of Disputed Claims (including the FDIC-Receiver's Disputed Claim) and the successful outcome of litigation with the FDIC-Receiver and others regarding ownership of and interests in the Debtor's Core Assets. See Risk Factors, Chapter XII. The Debtor believes, however, that the Plan is the best method for completing the liquidation process and maximizing the return on the Debtor's assets. Given the considerable knowledge and information developed by the Debtor, and the need for quick action to preserve the value of the Debtor's assets and to maximize the return to its creditors, other alternatives, such as converting this bankruptcy case to a Chapter 7 liquidation, would simply delay distribution of funds to creditors and add unnecessary expense. Creditors should note that any Distributions they receive under the Plan, if confirmed by the Bankruptcy Court, will represent the total amount that creditors can expect to receive from the Debtor or Estate Property in payment of their Claims because all available assets of the Debtor that can be recovered in a cost-effective manner will be liquidated and distributed in accordance with the Plan. However, depending on the circumstances surrounding a given creditor's claim, the creditor may have independent claims, rights and remedies against individuals or entities other than the Debtor (or against property other than Estate Property) for recovery of all or a part of any deficiency existing after all of the Debtor's assets that can be recovered in a cost-effective manner have been liquidated and distributed. This Disclosure Statement provides some information that may be relevant to the consideration of such independent rights and remedies, and the Plan, if confirmed by the Bankruptcy Court, will not prevent creditors from pursuing such claims, if any, that may exist while the Debtor's bankruptcy case is pending or after the bankruptcy case is closed. Creditors also should be aware that any such claims against Persons other than the Debtor are subject to state and federal statutes of limitations (which require that claims be brought within a specified period of time or possibly be waived) and that the filing of the Debtor's bankruptcy case does not toll the running of these statutes of limitations. The Debtor recommends that each creditor seek independent legal advice regarding the existence and nature of any such independent rights and remedies. B. Frequently Asked Questions Set forth below is a list of frequently asked questions and answers to assist each creditor in understanding the Debtor's bankruptcy case and the proposed Plan: 1. Who is the Debtor? The Debtor is a Delaware corporation which, prior to the Petition Date, was headquartered in Montgomery, Alabama. The Debtor was a publicly traded corporation with its principal assets consisting of the capital stock of Colonial Bank. 2. How long has the Debtor been in Chapter 11? As noted above, the Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code on August 25, Amended Disclosure Statement Page 15 of 207

16 3. What is Chapter 11? Chapter 11 is the chapter of the federal Bankruptcy Code frequently used for the reorganization or liquidation of a business. Under Chapter 11, a company may attempt to restructure its finances so that it can continue to operate its business or to liquidate its assets in an orderly manner so that all creditors will be treated fairly. Formulation of a plan of reorganization or liquidation is the primary purpose of a Chapter 11 case. A Chapter 11 plan sets forth and governs the treatment and rights to be afforded to creditors and interest holders with respect to their claims against and equity interests in a debtor. According to Section 1125 of the Bankruptcy Code, acceptances of a Chapter 11 plan may be solicited by a debtor only after a written disclosure statement approved by the Bankruptcy Court has been provided to each creditor or interest holder who is entitled to vote on the plan. This Disclosure Statement is presented to the Debtor's creditors and interest holders to satisfy the disclosure requirements contained in Section 1125 of the Bankruptcy Code. A more detailed description of the Chapter 11 process may be found at Exhibit B to this Disclosure Statement. 4. Has the Debtor proposed a plan of liquidation? Yes. On December 9, 2010, the Debtor filed its initial plan and disclosure statement. The Plan and this Disclosure Statement amend (and supersede) the initial plan and disclosure statement in their entirety. The Plan provides for an orderly liquidation of the Debtor's assets. A copy of the Plan is attached to this Disclosure Statement as Exhibit A. 5. What type of Plan was filed? The Plan calls for an orderly liquidation of the Debtor's assets and the Distribution of the proceeds to its Holders of Allowed Claims and, in the unlikely event that all such Claims are paid in full, to Holders of its Preferred Stock. 6. How does the Plan work? Under the Plan, the Plan Trustee will continue the task of liquidating the assets of the Debtor and distributing the proceeds of these assets to the Debtor's creditors in accordance with the Plan. After confirmation of the Plan, the Plan Trustee, acting on behalf of the Debtor, will be authorized to pursue, collect and liquidate the remaining assets of the Debtor. In the event of the death, incapacity, resignation or the Bankruptcy Court's removal of the Plan Trustee for any alleged misconduct, a new Plan Trustee will be appointed by the Plan Committee as a successor Plan Trustee, subject to the rights of creditors to file an objection with the Bankruptcy Court to such designated successor Plan Trustee. The Debtor's available cash, together with the proceeds (if any) obtained as a result of litigation or from the liquidation of other assets, will be used to fund the costs of implementing the Plan. The balance of these funds, upon the completion of the liquidation process, will be distributed to creditors and interest holders in accordance with the Plan. Under the Plan, the Debtor, acting through the Plan Trustee, will investigate and evaluate claims the Debtor may have against both affiliated companies and third parties, the pursuit of Amended Disclosure Statement Page 16 of 207

17 which may supplement this cash. These claims include, but are not limited to, bankruptcy avoidance claims (such as preference and fraudulent conveyance actions), claims for breach of fiduciary duties by former officers and directors of the Debtor, and claims against professionals (such as attorneys and accountants) employed by the Debtor before bankruptcy. In addition, the Plan Trustee will investigate and pursue, where appropriate, contingent claims that the Debtor may have against third parties based on transactions that occurred prior to the commencement of this bankruptcy case. These claims constitute a part of the assets of the Debtor and, if recovered, may produce an additional source of funds for Distribution to creditors depending on the outcome of the litigation and the collectability of any judgments. Additional information regarding potential claims the Debtor may have is set forth in Chapter VII, Section A of this Disclosure Statement. 7. What is confirmation of the Plan? Confirmation means that the Bankruptcy Court approves the Plan, at which time the Plan becomes binding on the Debtor and its creditors and Equity Interest Holders. The Bankruptcy Court must hold a confirmation hearing before it approves the Plan. The Bankruptcy Court has ordered that the confirmation hearing shall be held on May 11, 2011 at 10:00 a.m., Central Time, at the United States Bankruptcy Court, Middle District of Alabama, One Church Street, Montgomery, Alabama Chapter XI and Exhibit B to this Disclosure Statement contain more information on the requirements for confirmation of the Plan. 8. Who votes on the Plan? Creditors holding Allowed Claims (other than Class G) may vote on the Plan provided that their Claims are impaired by the treatment proposed in the Plan. The following classes of Allowed Claims (all as described more fully in the Plan) will be impaired under the Plan: Class D - Convenience Claims; Class E - Certain General Unsecured Claims; Class F - Indenture Claims; Class G - Statutorily Subordinated Claims; and Class H - Preferred Stock. Common Stock -- Class I (Equity Interests other than Preferred Stock) -- will also be impaired, but the Holders thereof will be deemed to reject the Plan and not allowed to vote thereon. 9. How can I determine if my Claim is allowed? Chapter X, Section C of this Disclosure Statement explains how to determine if your Claim or Equity Interest is allowed for voting purposes. Only Holders of Allowed Claims may vote on and receive Distributions under the Plan. Each Holder of an Allowed Claim impaired by the treatment proposed in the Plan will receive a ballot to vote on the Plan. If you do not receive a ballot and believe that you should have, you should contact J. David Freedman at (404) How can I determine if my Claim or Equity Interest is impaired? Article 5 of the Plan describes in detail which Claims and Equity Interests are impaired, and that Article should be read carefully. Allowed Claims in the following categories or classes are not impaired: Administrative Claims; Priority Tax Claims; Class A - Priority Non-Tax Claims; Class B - Certain Secured Claims; and Class C - Secured Claim of Alabama Revenue Department. The following classes of Allowed Claims will be impaired under the Plan: Class D Amended Disclosure Statement Page 17 of 207

18 - Convenience Claims; Class E - Certain General Unsecured Claims; Class F - Indenture Claims; Class G - Statutorily Subordinated Claims; Class H - Preferred Stock; and Class I - Equity Interests other than Preferred Stock. Equity Interests other than Preferred Stock will be impaired under the Plan and, additionally, Holders of Common Stock will not be entitled to receive or retain any property under the Plan. 11. How can I determine in which Class my Claim or Equity Interest has been placed? Chapter IX, Section B of this Disclosure Statement and Article 2 of the Plan describe the Classes of Claims and Equity Interests. The ballot that you receive will advise you in which Class the Debtor has placed your Claim, subject to objections as to the allowance of your Claim. If you disagree with the Class in which the Debtor has placed your Claim, you must file an objection with the Bankruptcy Court. Refer to Chapter XIV, Section C of this Disclosure Statement for further information on filing objections to confirmation of the Plan. 12. How can I determine what I will receive under the Plan? Chapter IX, Section B of this Disclosure Statement and Articles 3 through 6 of the Plan also describe the treatment of each class of Claims and Equity Interests under the Plan. 13. Do I have to vote for the Plan to receive a Distribution based on my Claim? No, provided the Plan is confirmed. If confirmed, the Holders of Allowed Claims will receive whatever the Plan provides for the Class in which such Claims have been placed, whether or not you vote for or against the Plan by sending in your ballot. If you are the Holder of a Claim and support confirmation of the Plan, however, you should be sure to fill out the ballot correctly and return it before the deadline noted on your ballot. It is not anticipated that the Holders of Statutorily Subordinated Claims or the Holders of Preferred Stock will receive any Distribution under the Plan even if the Plan is confirmed, but they are entitled to receive Distributions if there is Available Cash for that purpose after all other Allowed Claims are Paid in Full. 14. How is the Plan accepted? For a class of Claims to accept the Plan, creditors holding at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the "voting" Claims must accept the Plan. If you do not vote, you lose your right to be part of the determination as to which way your Class will vote. The votes from each Class will be counted separately to determine whether the Class as a whole voted to accept or reject the Plan. 15. If my Class votes to accept the Plan, do I get what the Plan provides for my Class? Usually, but not automatically. The Plan first must be confirmed by the Bankruptcy Court. You must also have an Allowed Claim, which is a Claim that is not a Disputed Claim. The Plan defines what is an Allowed Claim and a Disputed Claim. If you have filed a timely Amended Disclosure Statement Page 18 of 207

19 proof of claim and no objection is made to your claim, your Claim is deemed allowed. You will be notified of any objection to your Claim. 16. How do I vote on the Plan? To vote on the Plan, mark the accompanying ballot and return it in accordance with the instructions noted on your ballot. Chapter X, Section C and Chapter XI of this Disclosure Statement contain additional information relating to voting. 17. Is my Claim or Equity Interest being paid in full under the Plan? The Plan provides a structure for the liquidation of the assets and distribution of the proceeds thereof to creditors in accordance with their priorities as set forth in the Bankruptcy Code and the Plan and as may be determined by the Bankruptcy Court in resolving objections to Claims and Disputed Claims. The Debtor's ability to make any Distributions with respect to Claims and Preferred Stock (as well as the amount of any such Distribution) is directly related to, among other things, the outcome of certain pending litigation between the Debtor and third parties (including the FDIC-Receiver, BB&T and the Alabama Revenue Department) and the value of all assets available for liquidation and the Debtor's results in liquidating these assets, after payment of the reasonable and necessary expenses that the Debtor and the Plan Committee (and the professionals retained by the Debtor and the Plan Committee with Bankruptcy Court approval) incur during the liquidation process. The Debtor believes that Allowed Claims in the following categories and classes will be paid in full: Administrative Claims; Priority Tax Claims; Class A - Priority Non-Tax Claims; Class B - Certain Secured Claims; and Class C - Secured Claim of Alabama Revenue Department. The Debtor does not believe that Allowed Claims in the following categories and classes will be Paid in Full: Class D - Convenience Claims; Class E - Certain General Unsecured Claims; and Class F - Indenture Claims. The Debtor does not anticipate that the liquidation of its assets will result in any payment to the Holders of Claims in Class G - Statutorily Subordinated Claims or the Holders of Preferred Stock in Class H - Preferred Stock. Under the Plan, Holders of Equity Interests (other than Preferred Stock) in Class I - Equity Interests other than Preferred Stock will not receive or retain any property under the Plan on account of such Equity Interests. 18. What is the amount of my Claim or Equity Interest? The amount of your Claim depends on the amount owed to you by the Debtor or the value of the goods or services you provided to the Debtor. Therefore, the amount of each creditor's Claim against the Debtor varies. The amount of your Equity Interests depends on the number of such interests you hold. As discussed above, each Holder of an impaired Allowed Claim (other than Class G) will receive a ballot. If you do not receive a ballot and believe you should have, you should contact J. David Freedman at (404) If the Debtor objects to your Claim, you will receive notice of this objection and will have an opportunity to contest the objection. 19. When will the Distribution on my Claim be made? Before any Distributions can be made, the Plan first must be confirmed by the Bankruptcy Court, a topic discussed at greater length in Chapter XI and in Exhibit B to this Amended Disclosure Statement Page 19 of 207

20 Disclosure Statement. The initial Distribution to Holders of Allowed Priority Non-Tax Claims and Allowed General Unsecured Claims will be made on the Initial Distribution Date, which pursuant to Section 9.3(a) of the Plan is a date no later than thirty (30) days after the later of the Effective Date or the first date on which the Debtor determines it has Available Cash in an amount sufficient to make an initial Distribution in accordance with the Plan to the Holders of Priority Non-Tax Claims. 20. To what address will the Distribution be sent? The Debtor, through the Plan Trustee, intends to send any Distribution directly to each creditor holding an Allowed Claim or, in the case of Class F, to the applicable Indenture Trustee. In the case of an Allowed Claim that is not impaired under the Plan, Distributions will be sent to the last known address of the Holder of such Claim. The ballot sent to each Holder of an impaired Allowed Claim will include an address for the creditor. The initial Distribution will be sent to that address, unless the creditor notifies the Court (and the Plan Trustee) in writing prior to the date on which the hearing on confirmation of the Plan is initially scheduled that the address listed on the ballot is incorrect or should be changed. The ballot will contain spaces for the creditor to correct the listed address. Unless a creditor gives timely written notice of a change or correction in address, the Distribution to each creditor holding an impaired Allowed Claim will be sent to the address listed on the ballot. Any subsequent Distributions will be sent to the same address, unless that address is superseded by proofs of claim or transfer of claims filed pursuant to Bankruptcy Rule 3001 (or at the last known address of such creditor if the Plan Trustee has been notified in writing of a change in address). Neither the Debtor nor the Plan Trustee will be liable to any creditor in the event that a Distribution made on account of the creditor's claim is sent to an incorrect address. If any Distribution is made to Holders of Preferred Stock, the Debtor will be authorized to rely upon information regarding such Holders from DTCC. 21. Is the Debtor suing people responsible for any losses suffered by the Debtor? The Debtor and the Case Committee are evaluating potential claims against third parties when a question exists as to whether their conduct caused any loss to the Debtor and such conduct is actionable. The Plan Trustee will continue this process. Under the Plan, all Claims are reserved except those Claims expressly released under the Plan, an order confirming the Plan or other order of the Bankruptcy Court. Claims that are reserved include (i) potential claims against the former management of the Debtor and former professionals retained by the Debtor (such as accountants and attorneys) with respect to acts or omissions prior to the Petition Date and (ii) potential claims for the recovery of assets of the Debtor. A description of the types of potential claims being evaluated may be found in Chapter VII of this Disclosure Statement. The Debtor's evaluation, however, is limited to the rights which the Debtor, as a corporate entity, may have against these third parties, and any recovery would become an asset of the Debtor's bankruptcy estate subject to distribution in accordance with the terms and priorities set forth in the Plan, if confirmed by the Bankruptcy Court. In addition, the Debtor may pursue, when appropriate, the recovery of preferential and fraudulent transfers. Any person who received a preferential or fraudulent transfer of an interest in the Debtor's property is subject to an action under Sections 547 or 548 of the Bankruptcy Code (or applicable state law) to recover this interest in the Debtor's property Amended Disclosure Statement Page 20 of 207