Bankruptcy or Receivership, Financial Statements and Exhibits
ITEM 1.03 BANKRUPTCY OR RECEIVERSHIP. On April 12, 2006, Prosoft Learning Corporation, together with its ComputerPREP Inc. subsidiary (collectively the "Company"), filed petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Arizona (the "Bankruptcy Court"). On June 1, 2006, the Bankruptcy Court entered an order (the "Confirmation Order") approving and confirming the Plan of Reorganization Proposed by Prosoft Learning Corporation, et al dated April 27, 2006 (the "Plan of Reorganization" or the "Plan"). The effective date of the Plan of Reorganization is anticipated to be on or about June 12, 2006 (the "Effective Date"). A copy of the Plan of Reorganization as confirmed and the Confirmation Order are attached as Exhibits 2.1 and 2.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The following is a summary of the material features of the Plan. This summary only highlights certain of the substantive provisions of the Plan of Reorganization and is not intended to be a complete description of, nor a substitute for, the Plan of Reorganization. This summary is qualified in its entirety by reference to the full text of the Plan of Reorganization.
The Plan of Reorganization provides (among other things) that all equity interests of the Company, including without limitation, common or preferred stock, and any warrants, option rights, conversion rights, rights of first refusal, causes of action, or other rights (contractual or otherwise) to acquire or receive any stock or other equity ownership interests in the Company (collectively the "Existing Capital Stock") shall be cancelled and terminated as of the Effective Date, and Reorganized Prosoft will be formed. The holders of the Existing Capital Stock shall not receive any equity or other interest in Reorganized Prosoft and shall not receive any payment or other consideration in exchange for the Existing Capital Stock. Pursuant to the terms of the Acquisition and Reorganization Agreement dated April 12, 2006 by and among Prosoft Learning Corporation, ComputerPREP, Inc. and VCampus Corporation (the "Acquisition and Reorganization Agreement"), VCampus Corporation will acquire all of the new common stock of Reorganized Prosoft in exchange for payment of the purchase price. The consideration received from VCampus, together with all assets, rights and property of the Company not transferred to Reorganized Prosoft, shall be transferred and assigned to the Liquidating Trust. The Liquidating Trust will administer and distribute the purchase price and any assets not transferred to Reorganized Prosoft in accordance with the terms of the Plan and the Acquisition and Reorganization Agreement.
Other than those debts or executory contracts specifically assumed by Reorganized Prosoft, or as otherwise provided in the Plan, all existing debts and claims or any kind of the Company shall be discharged, released and terminated.
As of June 1, 2006, and prior to giving effect to the Plan of Reorganization, the Company estimated the total value of its assets at $1,211,000 and its liabilities at $5,632,000.