Shane Co. recently filed a reorganization plan, the first
step to an official exit from Chapter 11.

Shane first declared Chapter 11 in January 2009.
The 20-store chain had asked for, and been granted, several delays in filing a final plan.

The plan calls for continued operation of the company, and
for Thomas Shane and various family trusts to retain their ownership. Shane
will also continue to be president and CEO of the company.  

The plan calls for some of the unsecured creditors with
outstanding obligations to get a junior security interest in the inventory of
the company.

Bankruptcy papers also note: “Thomas Shane, who has,
directly and indirectly, made loans to the company in excess of $30 million,
has agreed … to defer the repayment of the principal obligations on the $10.5
million debtor-in-possession loan, all payments on account of $20 million in
loans he made prior to the bankruptcy filing, and on account of certain other
claims which he holds against the company totaling approximately $3 million,
while payments are made to the general unsecured creditors.”

In addition Thomas Shane “agreed to loan to the company
fifty percent of federal income tax refunds he has and will collect in the
future on account of net operating losses of the company, to help fund the
obligations of the company.”

The company had 23 stores when it first filed for Chapter
11. At the time, executives cited the economic downturn as the main reason for
the filing.

JCK