2 23 2011 Disclosure Statement Order

8/11/2019 2 23 2011 Disclosure Statement Order

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UNITED STATES BANKRUPTCY COURTFOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

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In re : Chapter 11:

THE COLONIAL BANCGROUP, INC., : Case No. 09-32303 (DHW):

Debtor. ::

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ORDER GRANTING AMENDED MOTION OFDEBTOR TO APPROVE DISCLOSURE STATEMENT,

APPROVE PROPOSED VOTING PROCEDURES, SCHEDULE

HEARING TO CONSIDER CONFIRMATION OF DEBTOR'S PLAN OFLIQUIDATION AND APPROVE FORM OF NOTICE OF CONFIRMATION HEARING

A hearing having been commenced on February 3, 2011 and continued on February 22, 2011 (the

"Hearing") to consider the Amended Motion of Debtor to Approve Disclosure Statement, Approve

Proposed Voting Procedures, Schedule Hearing to Consider Confirmation of Debtor's Plan of

Liquidation and Approve Form of Notice of Confirmation Hearing originally filed December 15, 2010

[Doc. No. 1015] and amended on February 2, 2011 [Doc. No. 1085] (as amended, the "Motion"), by The

Colonial BancGroup, Inc., debtor and debtor in possession (the "Debtor"); and it appearing from the

certificate of service on file with the Court that proper and timely notice of the Motion and the Hearing

were given; and it appearing that such notice was adequate and sufficient; the Court having jurisdiction

over the matters raised in the Motion pursuant to 28 U.S.C. 157 and 1334; consideration of the Motion

and the relief requested by the Debtor being a core proceeding pursuant to 28 U.S.C. 157(b)(2); venue

being proper before this Court pursuant to 28 U S C 1408 and 1409; the Debtor having filed with the


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additions, changes, corrections and deletions to the disclosure statement necessary to comport with the

record of the Hearing and the agreements, if any, reached with the parties, if any, that had filed

objections, a copy of which revised disclosure statement is attached hereto as Exhibit 1 (the "Disclosure

Statement"); and upon the Motion, the Disclosure Statement, and the record of the Hearing and upon all

of the proceedings heretofore had before the Court, the Court having found and determined that the legal

and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted

herein and that the relief requested in the Motion is in the best interests of the Debtor, its estate and

creditors; and after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY FOUND THAT:

A. All capitalized terms, not otherwise defined in this Order, shall have the meanings

ascribed to such terms in the Motion.

B. The notice of the Hearing was properly served upon all persons entitled to receive such

notice and constituted sufficient notice to all such parties of the Hearing and of the deadline to object to

approval of the Disclosure Statement.

C. The Disclosure Statement contains "adequate information" within the meaning of Section

1125 of the Bankruptcy Code.

D. Service by mail of the notice of the Confirmation Hearing (as defined below) on the

Holders of Claims in Class G (Statutorily Subordinated Claims) and the Holders of Equity Interests in

Class I (Equity Interests other than Preferred Stock) is impracticable. The form of notice to these Classes

proposed by the Debtor in the Motion and approved in this Order is sufficient notice of the date of the

Confirmation Hearing, the procedure for objecting to confirmation of the Second Amended Chapter 11

Plan of Liquidation of The Colonial BancGroup Inc [Doc No 1104-1] (as at any time amended the


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Department), and to all known parties to executory contracts and unexpired leases who do not hold filed

or scheduled Claims (excluding Claims scheduled as contingent, unliquidated or disputed), substantially

in the form attached hereto as Exhibit 2, complies with Bankruptcy Rule 3017 and adequately addresses

the particular needs of this Chapter 11 case.

F. The forms of the Ballots attached hereto as Exhibit 3 are substantially consistent with

Official Form No. 14, adequately address the particular needs of this Chapter 11 case, and are appropriate

for each Class of Claims entitled to vote to accept or reject the Plan.

G. The form of the Debtor Cover Letter, in substantially the form attached hereto as Exhibit

4, contains sufficient information and is appropriate under the circumstances.

H. The form of the Committee Cover Letter, in substantially the form attached hereto as

Exhibit 5, contains sufficient information and is appropriate under the circumstances.

I. The form of the Notice of Election to be Treated in Class D (Convenience Claims) (the

"Convenience Class Election Notice"), in substantially the form attached hereto as Exhibit 6, contains

sufficient information and is appropriate under the circumstances.

J. The Ballots call for sufficient information to assure that duplicate Ballots are not

submitted and tabulated and that the Ballots accurately reflect the votes of Holders of Claims and Equity

Interests.

K. Ballots need not be provided to the Holders of Administrative Claims and Priority Tax

Claims and to Holders of Claims in Class A (Priority Non-Tax Claims), Class B (Certain Secured

Claims), Class C (Secured Claim of Alabama Revenue Department), Class G (Statutorily Subordinated

Claims) and Class I (Equity Interests other than Preferred Stock), because the Plan either provides that

such Classes are unimpaired and therefore the Holders of such Claims are deemed to accept the Plan or


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L. The procedure the Debtor proposes in the Motion for distributing Solicitation Packages to

Holders of Claims in Class D (Convenience Claims) and Class E (Certain General Unsecured Claims),

and to the Holder of the Claim in Class F (Indenture Claims) based upon the 2003 Debentures Offering is

sufficient to comply with the applicable requirements set forth in the Bankruptcy Code and the

Bankruptcy Rules and will provide for a fair and equitable voting process.

M. The procedure the Debtor proposes for each Holder of a Claim in Class E (Certain

General Unsecured Claims) to elect to be treated as a Holder of a Claim in Class D (Convenience Claims)

is sufficient to comply with any applicable requirements set forth in the Bankruptcy Code and the

Bankruptcy Rules and will provide for a fair and equitable voting process.

N. The procedure the Debtor proposes in the Motion for distributing Solicitation Packages to

any Holder of a Claim in Class F (Indenture Claims) based upon either the Preferred Securities Offering

or the 2008 Debentures Offering or of an Equity Interest in Class H (Preferred Stock) is sufficient to

comply with the applicable requirements set forth in the Bankruptcy Code and the Bankruptcy Rules and

will provide for a fair and equitable voting process.

O. The period set forth below during which the Debtor may solicit acceptances to the Plan is

a reasonable and adequate period of time for creditors to receive the Solicitation Package, to make an

informed decision to accept or reject the Plan, to complete and submit Ballots, and for any Holder of a

Claim in Class F (Indenture Claims) based upon the Preferred Securities Offering or the 2008 Debentures

Offering or of an Equity Interest in Class H (Preferred Stock) to complete and submit its Ballot to

Broadridge or an Intermediary Record Holder, as the case may be, and for Broadridge to complete and

submit the Broadridge Master Ballots, and for each Intermediary Record Holder to complete and submit

an Intermediary Master Ballot to the Voting Agent (as defined below)


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Q. The Confirmation Hearing Notice (as defined below) substantially in the form attached

hereto as Exhibit 7; the advertisement to be published in the Montgomery Advertiser substantially in theform attached hereto as Exhibit 8; the Notice to Certain Equity Holders (as defined below) substantially in

the form attached hereto as Exhibit 9; the procedures set forth below for providing notice to all creditors

and equity security holders of the time, date and place of the Confirmation Hearing; and the contents of

the Solicitation Packages comply with Rules 2002 and 3017 of the Bankruptcy Rules and constitute

sufficient notice to all interested parties.

NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that:

1. The objections to the Motion and the Disclosure Statement filed by (i) Andrew A.

Harkness; (ii) Broadbill Investment Corp.; (iii) Arkansas Teacher Retirement System, The State-Boston

Retirement System, and City of Brockton Retirement System, as lead plaintiffs in a securities class action;

and (iv) the Federal Deposit Insurance Corporation, in its capacity as receiver for Colonial Bank,

Montgomery, Alabama, are hereby overruled or resolved as set forth herein. The entry of this Order is

without prejudice to any objection any party may have to confirmation of the Plan, including any

objection which a party stated in objecting to Court approval of the Disclosure Statement; any objections

to confirmation of the Plan are preserved and are not overruled or resolved by the entry of this Order.

2. The Motion is granted.

3. The Disclosure Statement is approved.

A. Approval of Voting Status

4. The "Record Holder Date" for the purposes of determining the Holders of Claims and

Equity Interests entitled to receive the Solicitation Package and to vote on the Plan shall be February 24,

2011


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6. Only the following Holders of Claims and Equity Interests in the Voting Classes (the

"Voting Holders") shall be entitled to vote with regard to such Claims and Equity Interests: (i) theHolders of timely filed proofs of claim as reflected, as of the close of business on the Record Holder Date,

on the official claims register maintained by the Court (the "Official Claims Register") which are in an

amount greater than zero dollars and which have not been disallowed, disqualified, expunged or

suspended prior to the computation of the vote on the Plan; (ii) the Holders of scheduled Claims that are

listed in the Debtor's schedules of liabilities filed with the Court (as at any time amended, the

"Schedules") as not contingent, unliquidated, or disputed Claims (excluding scheduled Claims that have

been superseded by a timely filed proof of claim); provided, however, that the assignee of a transferred

and assigned Claim (whether a timely filed or scheduled Claim) shall be permitted to vote such Claim

only if the transfer and assignment has been noted on the Court's docket and is effective pursuant to

Bankruptcy Rule 3001(e) as of the close of business on the Record Holder Date and which Claim has not

been disallowed, disqualified, expunged or suspended as of the Voting Deadline; and (iii) Holders of

Preferred Stock Interests (as defined below) as reflected on the records of Broadridge as of the Record

Holder Date.

B. Approval of Solicitation Package and Distribution Procedure

7. The package of documents for the Debtor's solicitation of votes on the Plan (the

"Solicitation Package") shall contain copies of the following:

(i)

the Debtor Cover Letter;(ii) the Committee Cover Letter;

(iii) notice of the confirmation hearing and related matters, substantially in the formof Exhibit 7 attached hereto (the "Confirmation Hearing Notice"), setting forththe time fixed for filing acceptances and rejections to the Plan, the time fixed for


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(vi) a Convenience Class Election Notice, for Holders of Claims in Class E (CertainGeneral Unsecured Claims) only; and

(vii) a copy of this Order (without the exhibits).

8. The Notice of Non-Voting Status substantially in the form attached hereto as Exhibit 2 is

approved, and the Court authorizes the Debtor to use such form in connection with the solicitation process

described in the Motion and this Order.

9. The Court hereby approves the forms of the Ballots in substantially the forms attached

hereto as Exhibit 3 and authorizes the Debtor's use of such forms in connection with soliciting votes on

the Plan.

10. The Court hereby approves the forms of the Debtor Cover Letter and the Committee

Cover Letter in substantially the forms attached hereto as Exhibit 4 and Exhibit 5, respectively, and

authorizes the Debtor's use of such forms in connection with soliciting votes on the Plan.

11. The Court hereby approves the form of the Convenience Class Election Notice in

substantially the form attached hereto as Exhibit 6 and authorizes the Debtor's use of such form in

connection with soliciting votes on the Plan.

12. The Confirmation Hearing Notice substantially in the form attached hereto as Exhibit 7 is

approved and shall be transmitted to all Holders of Claims and Preferred Stock Interests in accordance

with Bankruptcy Rule 2002, except as otherwise directed in this Order.

13. With respect to the copies of the Disclosure Statement Order and the Disclosure

Statement (with all exhibits, including the Plan) included in each Solicitation Package, the Debtor, at its

election, is authorized to disseminate such documents either in hard copy form or on a CD-ROM in an

Adobe Acrobat (PDF) standard form. In the event that the Debtor elects to disseminate such documents


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available on the Voting Agent's website; a Holder of a Claim or Equity Interest must contact the Voting

Agent by writing or telephone to obtain a Ballot. Regarding the other components of the SolicitationPackage, including the Debtor Cover Letter, the Committee Cover Letter, and the Ballot (with

instructions), the Debtor shall distribute such documents in hard copy form.

14. On or before March 4, 2011 (the "Solicitation Package Mailing Date"), the Debtor shall

distribute or cause to be distributed by United States Mail, adequate postage prepaid, a Solicitation

Package to each Voting Holder, except as specified herein.

15. For good cause shown, with respect to any Holder of a Claim in Class F (Indenture

Claims) based upon either the Preferred Securities Offering or the 2008 Debentures Offering, the Debtor

shall distribute the Solicitation Package to any such Holder in accordance with the following procedures:

(a) Except for those Holders referred to in subparagraph (b) below, the Debtor shallsend on or before March 4, 2011, an appropriate number of the SolicitationPackages to Broadridge. Upon receipt of the Solicitation Packages from theDebtor, Broadridge shall insert in each such Solicitation Package a returnenvelope with its address and adequate postage for each beneficial owner to useto return its Ballot to Broadridge and then mail to each such beneficial owner theSolicitation Package on or before March 17, 2011; and

(b) With respect to the securities for which the Record Holder is State Street Bank &Trust Company, The Bank of New York Mellon, Morgan Stanley & Company,

Northern Trust Company or Mellon Private Wealth (the "Intermediary RecordHolders"), the Debtor will send on or before March 4, 2011, the appropriatenumber of Solicitation Packages to each such Intermediary Record Holder. Uponreceipt of the Solicitation Packages from the Debtor, the Intermediary RecordHolder shall insert in each Solicitation Package a return envelope with its addressand adequate postage for each beneficial owner to use to return its ballot to such

Intermediary Record Holder and then mail the Solicitation Package to each such beneficial owner on or before March 17, 2011.

The distribution of Solicitation Packages to Holders of Claims in Class F (Indenture Claims) based upon

either the Preferred Securities Offering or the 2008 Debentures Offering in accordance with this


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with the procedures set forth in Paragraph 15(a) above. The distribution of Solicitation Packages to

Holders of Equity Interests in Class H (Preferred Stock) in accordance with this paragraph shall constituteadequate notice of the Confirmation Hearing, the Voting Deadline and the Objection Deadline (as defined

below) and will comply with Bankruptcy Rules 2002 and 3017(d).

17. With respect to addresses for which notices of the Hearing were returned as undeliverable

by the United States Postal Service: (a) the Debtor is excused from distributing Solicitation Packages

and/or Notices of Non-Voting Status to those persons or entities listed at such addresses unless the Debtor

is provided with accurate addresses for such persons or entities prior to the Voting Deadline; and (b)

failure to distribute Solicitation Packages to such persons or entities will not constitute inadequate notice

of the Confirmation Hearing, of the Objection deadline, or of the Voting Deadline and will not violate

Bankruptcy Rule 3017(d).

C. Approval of Notice to Non-Voting Classes

18. In lieu of mailing the Solicitation Package, on or before the Solicitation Package Mailing

Date, the Debtor shall deposit or cause to be deposited in the United States mail, postage prepaid, the

Notice of Non-Voting Status to each Holder known to the Debtor of an Administrative Claim, Priority

Tax Claim, and of Claims in Class A (Priority Non-Tax Claim), Class B (Certain Secured Claims), and

Class C (Secured Claim of Alabama Revenue Department), as such Classes of Claims are described in the

Plan, and to all known parties to executory contracts and unexpired leases who do not hold filed or

scheduled Claims (excluding Claims scheduled as contingent, unliquidated or disputed).19. With respect to Class G (Statutorily Subordinated Claims) and Class I (Equity Interests

other than Preferred Stock), the Debtor shall provide notice of the Confirmation Hearing and of the

Objection Deadline in accordance with the following procedures:


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b. Publication in the Montgomery Advertiser. By no later than March 4, 2011, the

Debtor shall cause the Montgomery Advertiser to make a single publication of an advertisement(to be run in the legal and/or classified section thereof) giving notice of the Confirmation

Hearing, of the Objection Deadline, and of the Voting Agent Website (as defined below), where

copies of the Disclosure Statement, the Plan, and this Order may be obtained, which

advertisement shall be in substantially the form attached hereto as Exhibit 8.

c. Publication through DTC. By no later than March 4, 2011, the Debtor shall

cause The Depository Trust & Clearing Corporation to issue an alert to the brokers with

beneficial owners of stock in the Debtor of the issuance of the Confirmation Hearing Notice and

the Voting Agent Website, where copies of the Disclosure Statement, the Plan and this Order may

be obtained.

d. Notice to Certain Equity Holders. By no later than March 4, 2011, the Debtor

shall deliver or cause to be delivered to Broadridge and Continental a postcard containing

information regarding the date of the Confirmation Hearing, the Objection Deadline, and the

Voting Agent Website, in substantially the form attached hereto as Exhibit 9 (the "Notice to

Certain Equity Holders"), in sufficient numbers for Broadridge and Continental to mail such

postcard to Holders of Equity Interests other than Preferred Stock. By no later than March 17,

2011, Broadridge and Continental shall cause the addresses of such Holders to be affixed to or

printed on the postcards and mail or cause to be mailed the postcard to each such Holder.e. Publication through Voting Agent Website. The Voting Agent shall cause the

Plan, the Disclosure Statement, the Confirmation Hearing Notice, and this Order to be posted on a

website maintained by the Voting Agent (the "Voting Agent Website") which may be accessed


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Such publication notice is approved as being sufficient under the circumstances of this case to provide

Holders of such Claims and Equity Interests with adequate notice of the Confirmation Hearing and the

Objection Deadline.

D. Approval of Voting and Tabulation Procedures

20. The Court hereby approves Parker, Hudson, Rainer & Dobbs LLP, counsel for the

Debtor, as the voting agent (the "Voting Agent") authorized to receive, analyze and tabulate all Ballots

and waives Local Rule 3018-1.

21. Except as otherwise provided herein, to be counted as a vote to accept or reject the Plan,

each Ballot (other than Ballots for Voting Holders of Claims in Class F based upon the Preferred

Securities Offering and 2008 Debentures Offering and of Equity Interests in Class H (Preferred Stock))

must be properly executed, completed and the original thereof delivered to the Voting Agent so as to be

actually received by the Voting Agent no later than 4:00 p.m. (Central Time) on April 25, 2011, or by

such later date and time as the Debtor may specify in accordance with this Order (the "Voting Deadline"),

at the following address:

J. David FreedmanParker, Hudson, Rainer & Dobbs LLP1500 Marquis Two Tower285 Peachtree Center Avenue, N.E.Atlanta, Georgia 30303

22. Except as otherwise provided herein, to be counted as a vote to accept or reject the Plan,

each Ballot of a Voting Holder of a Claim in Class F (Indenture Claims) based upon the Preferred

Securities Offering or the 2008 Debentures Offering or of an Equity Interest in Class H (Preferred Stock)

must be properly executed, completed and the original thereof delivered no later than 4:00 p.m. (Central

Time) on April 20 2011 to the address on each such Ballot (and not to the Voting Agent's address listed


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23. The Debtor, in its sole discretion, may extend the Voting Deadline without further order

of this Court to a date that is no later than April 28, 2011, by filing notice of such extension with the

Court and by publishing notice of such extension on the Voting Agent Website.

24. Solely for purposes of voting to accept or reject the Plan, not for the purposes of the

allowance of or distribution on account of a Claim or Equity Interest, and without prejudice to the rights

and remedies of the Debtor in any other context, the amount of each Claim within a Class of Claims

entitled to vote to accept or reject the Plan shall be determined as follows:

(a) if a Claim is listed in the Schedules as not contingent, unliquidated or disputed(excluding scheduled Claims that have been superseded by a timely filed proof ofclaim), such Claim shall be allowed for voting purposes in the amount set forth inthe Schedules;

(b) if a Claim for which a proof of claim has been timely filed is contingent orunliquidated, such Claim shall be temporarily allowed for voting purposes only at$1.00, and the Ballot mailed to the Holder of such Claim shall be marked asvoting at $1.00;

(c) if a Claim is partially liquidated and partially unliquidated, and/or partiallycontingent and partially non-contingent, the Claim shall be allowed for voting

purposes only in such liquidated and/or non-contingent amount; provided,however, that if the Debtor files an objection to the liquidated and/or non-

contingent amount of such Claim before the Voting Deadline, such Claim shall be temporarily allowed for voting purposes only at $1.00, except to the extentand in the manner as may be set forth in such objection or in an order of theCourt;

(d) if a Claim has been estimated or otherwise allowed for voting purposes by orderof the Court, such Claim shall be temporarily allowed in the amount so estimatedor allowed by the Court for voting purposes only, and not for purposes ofallowance or distribution;

(e) if a Claim is listed in the Schedules as contingent, unliquidated or disputed and a proof of claim was not (i) filed by the applicable bar date for the filing of proofsof claim established by the Court or (ii) deemed timely filed by an order of theCourt prior to the Voting Deadline, then such Claim shall be temporarilydisallowed for voting purposes only;


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(g) any Holder who has filed or purchased duplicate Claims that are classified underthe Plan in the same Class shall be provided with only one Solicitation Packageand one Ballot for voting a single Claim in such Class, regardless of whether theDebtor has objected to such duplicate Claims.

25. Any Holder of one or more Claims or Equity Interests in Class H (Preferred Stock) (a

"Preferred Stock Interest"), including, without limitation, a Holder of Claims that are liquidated or

unliquidated and/or contingent or non-contingent, may seek estimation of the amount of such Claim or

Preferred Stock Interest for voting purposes in accordance with the above procedures by serving on

counsel for the Debtor and filing with the Court on or before the later of (a) ten (10) days after the Record

Holder Date and (b) 4:00 p.m. (Central Time) on the seventh (7th) day after the date of service of an

objection, if any, to such Claim or Preferred Stock Interest, a motion for an order pursuant to Bankruptcy

Rule 3018(a) temporarily allowing such Claim or Preferred Stock Interest in a greater amount for

purposes of voting to accept or reject the Plan.

26. As to any Holder filing a motion pursuant to Bankruptcy Rule 3018(a), the amount of

such Holder's Claim or Preferred Stock Interest temporarily allowed for voting purposes shall be as

specified in Paragraph 24 above unless, after notice and a hearing, the Court enters an order directing

otherwise.

27. In considering a motion pursuant to Bankruptcy Rule 3018(a), the Court may, among

other things, consider whether all or any part of the Claim or Preferred Stock Interest that is the subject of

such motion may be subordinated under Section 510 of the Bankruptcy Code or expunged and

disallowed.

28. If and to the extent that the Debtor and any Holder filing a motion pursuant to

Bankruptcy Rule 3018(a) are unable to resolve the issues raised by such motion prior to the Voting


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29. With respect to Ballots submitted by a Voting Holder to the Voting Agent, to Broadridge

or to an Intermediary Record Holder:

(a) any Ballot which is properly completed, executed and timely returned to theVoting Agent, Broadridge or an Intermediary Record Holder but does notindicate an acceptance or rejection of the Plan or indicates both an acceptanceand a rejection of the Plan shall be deemed to be a vote to accept the Plan;

(b) any Ballot which is returned to the Voting Agent, Broadridge or an IntermediaryRecord Holder indicating an acceptance or rejection of the Plan but which is

unsigned or non-originally signed shall not be counted;

(c) whenever a Voting Holder casts more than one ballot voting the same Claim orEquity Interest prior to the Voting Deadline, the last timely Ballot shall bedeemed to reflect such Voting Holder's intent and to supersede any prior Ballotsand shall be the only Ballot counted;

(d) each Voting Holder shall be deemed to have voted the full amount of its Claim orEquity Interests;

(e) a Voting Holder shall not split its vote within a Claim or Equity Interest, and thuseach Voting Holder shall vote all of its Claim and Equity Interests within a

particular Class either to accept or reject the Plan;

(f) any Ballot that partially rejects and partially accepts the Plan shall not becounted;

(g)

any Ballot received by the Voting Agent, Broadridge or an Intermediary RecordHolder by telecopier, facsimile or other electronic communication shall not becounted;

(h) any Ballot which is returned to the Voting Agent, Broadridge or an IntermediaryRecord Holder indicating acceptance or rejection of the Plan, but which is signed

by an agent of the Voting Holder, shall not be counted unless the capacity of suchagent is reflected on the Ballot;

(i) a Voting Holder with multiple Claims or Equity Interests within a particularClass must vote all of its Claims and Equity Interests within such Class either toaccept or reject the Plan and may not split their votes, and, therefore, any Ballotfiled by a Voting Holder with multiple Claims or Equity Interests within a Classwho votes inconsistently shall not be counted;


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(l) any Ballot cast by a person who does not qualify as a Voting Holder for suchClass shall not be counted;

(m) any Ballot sent directly to the Debtor, its agents (other than the Voting Agent), orits financial or legal advisors or to any person other than the Voting Agent,Broadridge or an Intermediary Record Holder, as the case may be, shall not becounted;

(n) any Ballot from a Voting Holder of a Claim in Class F (Indenture Claims) basedupon either the Preferred Securities Offering or the 2008 Debentures Offering orof Equity Interests in Class H (Preferred Stock) which is sent to the Debtor, the

Voting Agent, or any of their respective agents or financial or legal advisors, andwhich is not sent to Broadridge or an Intermediary Record Holder, shall not becounted; and

(o) Any Ballot cast for a Claim or Equity Interest that has been disallowed,disqualified, expunged or suspended (for voting purposes or otherwise) shall not

be counted.

30. As stated above, with respect to any Ballot from a Voting Holder of a Claim in Class F

(Indenture Claims) based upon either the Preferred Securities Offering or the 2008 Debentures Offering

or of Equity Interests in Class H (Preferred Stock), such Ballot shall be sent directly to Broadridge or an

Intermediary Record Holder, as the case may be. Broadridge and each such Intermediary Record Holder

then shall tabulate the Ballots in accordance with the requirements and conditions set forth herein,

including, without limitation, the requirements set forth in Paragraph 29 above, and shall submit, in the

case of Broadridge, the Broadridge Master Ballots, and, in the case of each such Intermediary Record

Holder, the Intermediary Master Ballot to the Voting Agent on or before the Voting Deadline. To enable

Broadridge and each Intermediary Record Holder enough time to prepare and submit the Broadridge

Master Ballots and the Intermediary Master Ballot, respectively, to the Voting Agent by the Voting

Deadline, each such Voting Holder shall submit its Ballot to Broadridge or the Intermediary Record

Holder, as the case may be, so that such Ballot will be received by no later than 4:00 p.m. (Central Time)


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Ballot, respectively, to the Voting Agent. Broadridge and each Intermediary Record Holder shall hold all

originals of the Ballots each receives for a period of one year following the Voting Deadline for

inspection by the Court.

31. The Debtor is authorized (but not directed) to reimburse Broadridge and each

Intermediary Record Holder for their respective reasonable, actual and necessary out-of-pocket expenses

incurred in performing the tasks described in Paragraphs 15, 16 and 30 of this Order upon written request

by Broadridge or any such Intermediary Record Holder without further order of the Court or notice to any

party (but the Court shall retain jurisdiction to resolve any dispute over any such request) and upon

Broadridge or any such Intermediary Record Holder providing to the Debtor such information reasonably

requested by the Debtor evidencing and supporting such expenses.

32. The Debtor shall serve a copy of this Order upon Broadridge and each Intermediary

Record Holder promptly upon its entry.

33. For purposes of calculating the number of Allowed Claims in a Class of Claims held by

Holders of Allowed Claims in such Class that have voted to accept or reject the Plan under Section

1126(c) of the Bankruptcy Code, all Allowed Claims held by one person or entity and any affiliate of

such person or entity (including transferees and assignees of scheduled and filed claims) shall be

aggregated and treated as one Allowed Claim in such Class.

34. The Voting Agent, Broadridge and any Intermediary Record Holder may disregard any

defective Ballot with no further notice or opportunity to cure given to any person or entity, including,

without limitation, the Voting Holder submitting such defective Ballot. Neither the Debtor, the Voting

Agent, Broadridge, any Intermediary Record Holder, nor any other person or entity shall incur any

liability to any person or entity including without limitation the Voting Holder submitting such


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Confirmation Hearing (as defined below), and to the extent reasonably practicable no later than 12:00

p.m. Central Time on April 29, 2011, a tabulation of the Proper Ballots, and will report to the Court the

results of the voting, including the tabulation of the Proper Ballots at the Confirmation Hearing.

37. In tabulating the Ballots, the Voting Agent shall be entitled to rely upon the information

set forth in each Broadridge Master Ballot and Intermediary Master Ballot received by the Voting Agent,

without any independent investigation or other inquiry, and neither the Debtor nor the Voting Agent, nor

any of their respective directors, officers, agents, employees, attorneys or representatives, shall be liable

to any person or entity in any respect for any error or inaccuracy contained in a Broadridge Master Ballot

or Intermediary Master Ballot.

E. Confirmation Hearing and Objection to Confirmation

38. The hearing on confirmation of the Plan (the "Confirmation Hearing") is scheduled for

May 11, 2011, at 10:00 a.m., Central Time, the United States Bankruptcy Court for the Middle District of

Alabama, Northern Division, Courtroom #4C of the United States Courthouse Complex, One Church

Street, Montgomery, Alabama 36104. The Confirmation Hearing may be adjourned from time to time

without further notice other than an announcement of the adjourned date(s) at such Confirmation Hearing

and at any adjourned hearings.

39. Any objection to confirmation of the Plan must be filed with the Clerk of the Court,

Middle District of Alabama, One Church Street, Montgomery, Alabama 36104, no later than 4:00 p.m.,

Central Time, on April 25, 2011 (the "Objection Deadline"). Any objection to confirmation of the Plan

must be in writing and (i) must state the name and address of the objecting party and the nature and

amount of its Claims or Equity Interests and (ii) must state, with particularity, the basis for and nature of

its objection and the specific ground for each objection Any objection to confirmation not filed and


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conduct of the Confirmation Hearing. The Clerk of Court will issue a separate notice from this Order

setting forth the dial-in information for such status conference.

F. General Provisions

41. The Debtor is authorized to take any action and to expend such funds as are necessary or

appropriate to implement the terms of and the relief granted in this Order without seeking further order of

the Court.

42. The Debtor is authorized to make nonsubstantive changes to the Disclosure Statement,

the Plan, the Ballots, the Confirmation Hearing Notice, the Notice of Non-Voting Status, any other notice

related to the Plan or Disclosure Statement, and all exhibits and appendices to any of the foregoing,

without further order of the Court, including, without limitation, changes to correct typographical and

grammatical errors, to insert dates and to fill in blanks, and to make conforming changes among the

Disclosure Statement, the Plan and any other materials in the Solicitation Packages prior to their

distribution.

43. The Court shall retain jurisdiction with respect to all matters arising from or related to the

implementation of this Order.

44. This Order shall be binding upon the Debtor, all Holders of Claims against or Equity

Interests in the Debtor, any trustee appointed under Chapter 7 or Chapter 11 of the Bankruptcy Code, and

all other parties in interest.

45. Notwithstanding the possible applicability of Bankruptcy Rules 6004(h), 7062, or 9014,

or any other otherwise applicable Bankruptcy Rule, the terms and conditions of this Order shall be

effective and enforceable immediately upon its entry.


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Exhibit 1

Disclosure Statement


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UNITED STATES BANKRUPTCY COURTFOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

--------------------------------------------------------x:

In re : Chapter 11:

THE COLONIAL BANCGROUP, INC., : Case No. 09-32303 (DHW):

Debtor. ::

--------------------------------------------------------x

THIRD AMENDED DISCLOSURE STATEMENTACCOMPANYING SECOND AMENDED CHAPTER 11 PLAN OF

LIQUIDATION OF THE COLONIAL BANCGROUP, INC.

PARKER HUDSON RAINER & DOBBS LLPC. Edward Dobbs, Esq.

Rufus T. Dorsey, IV, Esq.J. David Freedman, Esq.

285 Peachtree Center Avenue, Suite 1500Atlanta, GA 30303

(404) 523-5300

Attorneys for The Colonial BancGroup, Inc.


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THIS DISCLOSURE STATEMENT HAS BEEN PREPARED PURSUANT TOSECTION 1125 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 3016(b) AND

IS NOT NECESSARILY IN ACCORDANCE WITH THE FEDERAL OR STATESECURITIES LAWS OR SIMILAR LAWS. THIS DISCLOSURE STATEMENT CONTAINSSUMMARIES OF CERTAIN PROVISIONS OF THE PLAN AND CERTAIN OTHERDOCUMENTS AND FINANCIAL INFORMATION. THE INFORMATION CONTAINED INTHIS DISCLOSURE STATEMENT IS PROVIDED FOR THE PURPOSE OF SOLICITINGACCEPTANCES OF THE PLAN AND SHOULD NOT BE RELIED UPON FOR ANYPURPOSE OTHER THAN TO DETERMINE WHETHER AND HOW TO VOTE ON THEPLAN. THE DEBTOR BELIEVES THAT THESE SUMMARIES ARE FAIR AND

ACCURATE. THE SUMMARIES OF THE FINANCIAL INFORMATION AND THEDOCUMENTS THAT ARE ATTACHED TO, OR INCORPORATED BY REFERENCE INTO,THIS DISCLOSURE STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BYREFERENCE TO SUCH INFORMATION AND DOCUMENTS. IN THE EVENT OF ANYINCONSISTENCY OR DISCREPANCY BETWEEN A DESCRIPTION IN THISDISCLOSURE STATEMENT AND THE TERMS AND PROVISIONS OF THE PLAN, ORTHE OTHER DOCUMENTS AND FINANCIAL INFORMATION INCORPORATED INTHIS DISCLOSURE STATEMENT BY REFERENCE, THE PLAN OR THE OTHER

DOCUMENTS AND FINANCIAL INFORMATION, AS THE CASE MAY BE, SHALLGOVERN FOR ALL PURPOSES.

THE STATEMENTS AND FINANCIAL INFORMATION CONTAINED IN THISDISCLOSURE STATEMENT HAVE BEEN MADE AS OF THE DATE OF THISDISCLOSURE STATEMENT UNLESS OTHERWISE SPECIFIED. HOLDERS OF CLAIMSAND EQUITY INTERESTS REVIEWING THIS DISCLOSURE STATEMENT SHOULD

NOT INFER AT THE TIME OF SUCH REVIEW THAT THERE HAVE BEEN NOCHANGES IN THE FACTS SET FORTH IN THIS DISCLOSURE STATEMENT SINCE THEDATE OF THIS DISCLOSURE STATEMENT. EACH HOLDER OF A CLAIM ORINTEREST ENTITLED TO VOTE ON THE PLAN SHOULD CAREFULLY REVIEW THEPLAN AND THIS DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE CASTINGA BALLOT. THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE LEGAL,BUSINESS, FINANCIAL, OR TAX ADVICE. ANY ENTITIES DESIRING ANY SUCHADVICE OR ANY OTHER ADVICE SHOULD CONSULT WITH THEIR OWN ADVISORS.

NO ONE IS AUTHORIZED TO GIVE ANY INFORMATION WITH RESPECT TOTHE PLAN OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURESTATEMENT. NO REPRESENTATIONS CONCERNING THE DEBTOR OR THE VALUEOF ITS PROPERTY HAVE BEEN AUTHORIZED BY THE DEBTOR OTHER THAN ASSET FORTH IN THIS DISCLOSURE STATEMENT AND THE DOCUMENTS ATTACHED


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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 NOTBE CONSTRUED AS, AN ADMISSION OF FACT, LIABILITY, STIPULATION, ORWAIVER, BUT RATHER AS A STATEMENT MADE IN THE CONTEXT OFSETTLEMENT NEGOTIATIONS PURSUANT TO RULE 408 OF THE FEDERAL RULESOF EVIDENCE.

THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED ORDISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE

COMMISSION, NOR HAS THE UNITED STATES SECURITIES AND EXCHANGECOMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THESTATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT OR UPON THEMERITS OF THE PLAN.

ALTHOUGH THE DEBTOR BELIEVES THAT THE PLAN COMPLIES WITH ALLAPPLICABLE PROVISIONS OF THE BANKRUPTCY CODE, THE DEBTOR CANNOTASSURE SUCH COMPLIANCE OR THAT THE BANKRUPTCY COURT WILL CONFIRM

THE PLAN.

ALTHOUGH THE DEBTOR HAS USED ITS BEST EFFORTS TO ENSURE THEACCURACY OF THE FINANCIAL INFORMATION PROVIDED IN THIS DISCLOSURESTATEMENT, THE FINANCIAL INFORMATION CONTAINED IN OR INCORPORATEDBY REFERENCE INTO THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED,EXCEPT AS SPECIFICALLY INDICATED OTHERWISE. PLEASE REFER TO CHAPTERXII OF THIS DISCLOSURE STATEMENT, ENTITLED "RISK FACTORS" FOR ADISCUSSION OF CERTAIN CONSIDERATIONS IN CONNECTION WITH A DECISIONBY A HOLDER OF AN IMPAIRED CLAIM TO ACCEPT THE PLAN. UNLESSOTHERWISE SPECIFICALLY INDICATED, THE FINANCIAL INFORMATIONCONTAINED IN THIS DISCLOSURE STATEMENT HAS NOT BEEN AUDITED AND ISBASED ON AN ANALYSIS OF DATA AVAILABLE AT THE TIME OF THEPREPARATION OF THE PLAN AND THIS DISCLOSURE STATEMENT.

TO BE COUNTED, THE BALLOTS UPON WHICH HOLDERS OF IMPAIREDCLAIMS ENTITLED TO VOTE SHALL CAST THEIR VOTE TO ACCEPT ORREJECT THE PLAN INDICATING ACCEPTANCE OR REJECTION OF THE PLANMUST BE RECEIVED IN ACCORDANCE WITH THE INSTRUCTIONS ON SUCHBALLOT.


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EVENTS. FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN,PARTICULARLY IN LIGHT OF THE UNCERTAINTIES OF LITIGATION, AND ACTUALRESULTS MAY DIFFER FROM THOSE EXPRESSED OR IMPLIED IN THISDISCLOSURE STATEMENT AND THE FORWARD-LOOKING STATEMENTSCONTAINED HEREIN. IN PREPARING THIS DISCLOSURE STATEMENT, THEDEBTOR RELIED ON FINANCIAL DATA DERIVED FROM ITS BOOKS AND RECORDSOR THAT WAS OTHERWISE MADE AVAILABLE TO IT AT THE TIME OF SUCHPREPARATION AND ON VARIOUS ASSUMPTIONS. WHILE THE DEBTOR BELIEVESTHAT SUCH FINANCIAL INFORMATION FAIRLY REFLECTS THE FINANCIALCONDITION OF THE DEBTOR AS OF THE DATE HEREOF AND THAT THE

ASSUMPTIONS REGARDING FUTURE EVENTS REFLECT REASONABLE BUSINESSJUDGMENTS, NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THEACCURACY OF THE FINANCIAL INFORMATION CONTAINED HEREIN OR THEDEBTOR'S FORECAST OF POTENTIAL DISTRIBUTIONS UNDER THE PLAN. THEDEBTOR EXPRESSLY CAUTIONS READERS NOT TO PLACE UNDUE RELIANCE ONANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. AMONG THEFACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROMCURRENT ESTIMATES OF FUTURE PERFORMANCE ARE THE FOLLOWING: (1) THE

DEBTOR'S ABILITY TO DEVELOP, PROSECUTE, CONFIRM, AND CONSUMMATE APLAN WITH RESPECT TO THIS CHAPTER 11 CASE; (2) THE OUTCOME AND TIMINGOF 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 OFTHE FILING DATE OF THIS DISCLOSURE STATEMENT AND THE DEBTOR IS UNDER

NO OBLIGATION, AND EXPRESSLY DISCLAIMS ANY OBLIGATION, TO PUBLICLYUPDATE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF

NEW INFORMATION, FUTURE EVENTS, OR OTHERWISE.


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TABLE OF CONTENTS Page

Chapter I. INTRODUCTION ...................................................................................................1

Chapter II. SUMMARY.............................................................................................................3

A. Overview............................................................................................................................. 3B. Frequently Asked Questions ............................................................................................... 5

1. Who is the Debtor? ................................................................................................. 52. How long has the Debtor been in Chapter 11? ....................................................... 5

3. What is Chapter 11?................................................................................................ 64. Has the Debtor proposed a plan of liquidation?...................................................... 65. What type of Plan was filed? .................................................................................. 66. How does the Plan work? ....................................................................................... 67. What is confirmation of the Plan? .......................................................................... 78. Who votes on the Plan?........................................................................................... 79. How can I determine if my Claim is allowed? ....................................................... 710. How can I determine if my Claim or Equity Interest is impaired?......................... 711. How can I determine in which Class my Claim or Equity Interest has been

placed? .................................................................................................................... 812. How can I determine what I will receive under the Plan? ...................................... 813. Do I have to vote for the Plan to receive a Distribution based on my Claim?........ 814. How is the Plan accepted? ...................................................................................... 815. If my Class votes to accept the Plan, do I get what the Plan provides for my

Class? ...................................................................................................................... 816. How do I vote on the Plan?..................................................................................... 917. Is my Claim or Equity Interest being paid in full under the Plan? ......................... 918. What is the amount of my Claim or Equity Interest? ............................................. 919. When will the Distribution on my Claim be made? ............................................... 920. To what address will the Distribution be sent?..................................................... 1021. Is the Debtor suing people responsible for any losses suffered by the Debtor? ... 1022. Do I have additional rights or remedies against third parties?.............................. 1123. Are there risk factors associated with consummation of the Plan? ...................... 11

24. Have there been settlement discussions with the FDIC-Receiver? ...................... 11Chapter III. GENERAL INFORMATION ABOUT THE DEBTOR .......................................11

A. Debtor's Business and Events Leading to Bankruptcy Filing........................................... 12B. Debtor's Capital Structure................................................................................................. 13

1 Common Stock 13


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C. Debtor's Major Benefit Plans. ........................................................................................... 24

1. 401(k) Plan............................................................................................................ 24

2. Pension Plan.......................................................................................................... 253. Non-Qualified Deferred Compensation Plan........................................................ 264. Certain Director Benefit Plans. ............................................................................. 26

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 .......................................................................................................... 28

1. The Debtor's Bank Account Deposits. .................................................................. 282. Funds Derived From the Liquidation of a Deferred Compensation Account....... 303. Debtor's Interest in Potential Tax Refunds. .......................................................... 314. Fidelity Policies and Claims Relating Thereto. .................................................... 335. D&O Policies and Derivative Claims. .................................................................. 346. CBG Florida REIT Corp....................................................................................... 357. CBG Real Estate, LLC.......................................................................................... 378. Refunds of Unearned Premiums. .......................................................................... 389. Real Property in Orlando, Florida......................................................................... 38

a. Dispute with FDIC-Receiver .................................................................... 38 b. Condemnation Proceeding ........................................................................ 39

10. Furniture, Art and Office Equipment.................................................................... 3911. Claims Against Certain Subsidiaries. ................................................................... 40

a. Colonial Bank ........................................................................................... 40

b. Colonial Brokerage, Inc. ........................................................................... 4212. LBSF Claim. ......................................................................................................... 4213. Other Claims. ........................................................................................................ 43

B. The Debtor's Liabilities..................................................................................................... 43

Chapter VI. PENDING LEGAL ACTIONS AND REGULATORY PROCEEDINGS .........46

A. Pre-Petition Actions Against the Debtor........................................................................... 46

1. Pending Investigations. ......................................................................................... 462. Regulatory Orders................................................................................................. 463. Pending Litigation................................................................................................. 47

a. Securities Litigation.................................................................................. 47 b. Shareholder Derivative Litigation............................................................. 48


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1. Claim Against Insiders.......................................................................................... 532. Professional Liability. ........................................................................................... 533. Insurance Claims................................................................................................... 534. Piercing Corporate Veil. ....................................................................................... 535. Preferences and Fraudulent Conveyances. ........................................................... 54

B. Claims Against the Debtor................................................................................................ 55

Chapter VIII. SIGNIFICANT POST-PETITION DEVELOPMENTS AND STATUS............55

A. Filing of Chapter 11 Case ................................................................................................. 55B. Establishment of a Bar Date ............................................................................................. 55

C. Formation of Unsecured Creditors Committee................................................................. 55D. Stock Trading Motion ....................................................................................................... 55E. FDIC-Receiver Litigation ................................................................................................. 56

1. 365(o) Litigation and Fraudulent Transfer Litigation........................................... 56

a. Alleged Capital Maintenance Commitment Under Section 365(o);Bankruptcy Court's Denial of FDIC-Receiver's Motion; Appeal to DistrictCourt ......................................................................................................... 56

b. Fraudulent Transfer Litigation; Withdrawal of Reference; Stay ofProceedings ............................................................................................... 57

2. Deposit Account Litigation................................................................................... 58

a. Original Stay Relief Motion...................................................................... 58 b. Amended Stay Relief Motion ................................................................... 58c. Renewed Stay Relief Motion .................................................................... 59

3. Debtor's Claim in Colonial Bank Receivership. ................................................... 604. FDIC-Receiver's Claim in Debtor's Chapter 11 Bankruptcy Case. ...................... 605. Tax Return and Refund Litigation. ....................................................................... 616. Fidelity Policies Litigation.................................................................................... 627. Garland Avenue Property Litigation..................................................................... 63

F. Deferred Compensation Litigation ................................................................................... 63G. Litigation with the Alabama Revenue Department .......................................................... 63H. Claims Against Directors and Officers ............................................................................. 64I. Custody and Disposition of Debtor's Business Records................................................... 64

1. Ownership Disputes. ............................................................................................. 652. 2004 Examination and Document Production Request. ....................................... 653. Current Status of Document Retrieval.................................................................. 66

J SEC Ad i i i P di 66


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a. Administrative Claims .............................................................................. 70 b. Priority Tax Claims................................................................................... 72c. Class A (Priority Non-Tax Claims) .......................................................... 72

2. Classification and Treatment of Non-Priority Claims. ......................................... 73

a. Class B (Certain Secured Claims)............................................................. 73 b. Class C (Secured Claim of Alabama Revenue Department) .................... 74c. Class D (Convenience Class Claims) ....................................................... 74d. Class E (Certain General Unsecured Claims)........................................... 74e. Class F (Indenture Claims) ....................................................................... 75

f. Class G (Statutorily Subordinated Claims)............................................... 75g. Class H (Preferred Stock) ......................................................................... 75h. Class I (Equity Interests other than Preferred Stock)................................ 75

C. Structure of the Debtor After the Effective Date .............................................................. 76D. Management of the Debtor ............................................................................................... 76E. Identity and Compensation of Insiders ............................................................................. 76

Chapter X. IMPLEMENTATION OF THE PLAN ...............................................................77

A. The Debtor and the Plan Trustee ...................................................................................... 77B. The Plan Committee ......................................................................................................... 79C. Claims Administration...................................................................................................... 81

1. Allowance of Claims............................................................................................. 812. Objections to Claims............................................................................................. 823. Temporary Allowance and Estimation of Claims................................................. 82

a. Temporary Allowance of Claims for Voting Purposes............................. 82 b. Estimation of Claims for Distribution Purposes ....................................... 83

4. Reserve for Disputed Claims. ............................................................................... 83

C. Funding of the Plan........................................................................................................... 83D. Discharge of Claims.......................................................................................................... 83E. Plan Injunction .................................................................................................................. 84F. Exculpation of the Debtor, the Case Committee and the Indenture Trustees................... 84G. Means of Implementing the Plan ...................................................................................... 84H. Abandonment of Estate Property ...................................................................................... 85Chapter XI. CONDITIONS PRECEDENT TO CONFIRMATION CONTAINED IN THEBANKRUPTCY CODE.................................................................................................................86

A. Section 1129 of the Bankruptcy Code .............................................................................. 86B A f h Pl 88


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l. Objections to Plan's Classification of Claims and Equity Interests. ..................... 922. Failure to Satisfy Voting Requirements................................................................ 923. Inability to Secure Confirmation of Plan. ............................................................. 924. Nonconsensual Confirmation................................................................................ 935. Objections to Amount or Classification of a Claim.............................................. 936. Risk of Non-Occurrence of Effective Date........................................................... 947. Effect of Certain Contingencies............................................................................ 94

B. Certain Risk Factors that May Affect Recovery............................................................... 94

1. The Debtor Cannot State with Certainty Recovery Amounts............................... 942. Uncertainties of Litigation. ................................................................................... 95

a. Capital Maintenance Claim....................................................................... 95 b. Tax Refund Dispute with FDIC-Receiver ................................................ 95c. Dispute Over Fidelity Policies with FDIC-Receiver ................................ 96d. Bank Account Disputes with FDIC-Receiver........................................... 96e. Bank Account Disputes with BB&T......................................................... 96f. Garland Avenue Property Dispute with FDIC-Receiver .......................... 97g. D&O Policies Dispute with FDIC-Receiver and Others .......................... 97

3. Settlement Discussions with FDIC-Receiver........................................................ 98

C. Disclosure Statement Disclaimers .................................................................................. 101

1. Information Contained Herein is for Soliciting Votes........................................ 1012. Disclosure Statement Not Approved by the SEC; Registration Exemption. ...... 1013. No Legal or Tax Advice Provided by Disclosure Statement.............................. 1014. No Admissions.................................................................................................... 101

5. Failure to Identify Litigation Claims or Projected Objections............................ 1016. No Waiver of Debtor's Rights............................................................................. 1027. Debtor Professionals' Reliance. .......................................................................... 1028. Potential for Inaccuracies; No Duty to Update. .................................................. 1029. No Representations Outside Disclosure Statement Are Authorized................... 102

Chapter XIII. ALTERNATIVES TO THE PLAN...................................................................102

A. Chapter 7 Liquidation ..................................................................................................... 103

B. Alternative Liquidation Plans ......................................................................................... 104Chapter XIV. OTHER MATTERS...........................................................................................104

A. Tax Consequences of the Plan ........................................................................................ 104B. Disclaimers ..................................................................................................................... 104C. Confirmation Hearing ..................................................................................................... 105


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EXHIBIT A Plan of Liquidation...................................................................................................A

EXHIBIT B Brief Explanation of Chapter 11 ..............................................................................B

EXHIBIT C Debtor's Known Subsidiaries as of June 30, 2009 ................................................... C

EXHIBIT D List of Individuals / Entities.....................................................................................D

EXHIBIT E Resume of Ben S. Branch......................................................................................... E

EXHIBIT F Liquidation Analysis................................................................................................. F


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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 UnitedStates 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 tothe Petition Date, was headquartered and conducted business at 100 Colonial Bank Boulevard,Montgomery, Alabama 36117. Prior to the Petition Date, the Debtor owned 100% of thecommon 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 BankingDepartment, and the Federal Deposit Insurance Corporation (the "FDIC") was appointed asreceiver for Colonial Bank (in such capacity, the "FDIC-Receiver"). On the same day, theFDIC-Receiver and the FDIC (in its corporate capacity) entered into a Purchase and AssumptionAgreement dated as of August 14, 2009, with Branch Banking & Trust Company ("BB&T") (asat any time amended, the "P&A Agreement") pursuant to which BB&T acquired certain formerassets and assumed certain former liabilities of Colonial Bank. Since the Petition Date, theDebtor has continued to manage its business affairs as debtor in possession pursuant to Sections1107(a) and 1108 of the Bankruptcy Code.

The Debtor now seeks confirmation of a proposed First Amended Chapter 11 Plan ofLiquidation of The Colonial BancGroup, Inc. (the "Plan"), a copy of which is attached to thisDisclosure Statement as Exhibit A. This Disclosure Statement (the "Disclosure Statement") isdesigned to provide creditors with adequate information to enable them to make a decisionwhether to vote for or against the Plan. This Disclosure Statement discusses, among otherthings, (i) voting instructions, (ii) classification of claims against the Debtor, (iii) payments ofclaims, and (iv) the Debtor's history, business, and property. This Disclosure Statement alsocontains a summary and analysis of the Plan. All creditors and interest holders of the Debtor areadvised and urged to read this Disclosure Statement, the Plan and any other Exhibit attached tothis Disclosure Statement in its entirety before voting to accept or reject the Plan. ThisDisclosure Statement was approved by Order of the Bankruptcy Court.

NO REPRESENTATIONS ABOUT THE DEBTOR OR THE PLAN AREAUTHORIZED EXCEPT AS CONTAINED IN THIS DISCLOSURE STATEMENT ANDTHE PLAN, AND, IN MAKING YOUR DECISION WHETHER TO VOTE FOR ORAGAINST THE PLAN, YOU SHOULD NOT RELY ON ANY REPRESENTATIONTHAT IS NOT CONTAINED HEREIN. INSTEAD, ANY SUCH REPRESENTATIONOR INDUCEMENT SHOULD BE REPORTED DIRECTLY TO THE BANKRUPTCY


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INTEREST HOLDERS TO MAKE INFORMED DECISIONS WHETHER TO ACCEPTOR REJECT THE PLAN.

Accompanying this Disclosure Statement are copies of:

1. the notice fixing the time for submitting acceptances or rejections of thePlan, the time for filing objections to the Plan, and the date and time of thehearings 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 equityinterests that are "impaired" under a plan are entitled to vote on that plan unless deemed not toaccept the plan. Under the Plan, the following classes of claims (all as described more fully inthe Plan) will be impaired: Class D - Convenience Claims; Class E - Certain General UnsecuredClaims; Class F - Indenture Claims; and Class G - Statutorily Subordinated Claims. The Planalso impairs the equity interests in Class H - Preferred Stock and Class I - Equity Interests otherthan Preferred Stock. The Debtor is sending ballots to all of the Holders of impaired Claimsknown 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 aredeemed to have rejected the Plan as they are not entitled to receive or retain anything under thePlan.

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. Wordsor phrases used in this Disclosure Statement that are defined in the Plan, and not otherwisedefined 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 meaningascribed 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 DisclosureStatement and in the Plan, the Plan will control.

Voting Instructions. After carefully reviewing the Disclosure Statement and itsExhibits, please indicate your vote on the enclosed ballot. IN ORDER FOR YOUR VOTE TOCOUNT, YOUR BALLOT (OR, IN THE INSTANCE OF CLASS F - INDENTURECLAIMS, 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 tothe extent authorized (the "Voting Deadline") . If you have a Claim in more than one Classunder the Plan, you should receive a separate ballot for each such Claim. If you need additional


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expressly voted either for acceptance or rejection of the Plan, will be counted as an acceptance ofthe Plan.

YOU SHOULD RETURN YOUR COMPLETED BALLOT(S) TO THE PERSONIDENTIFIED IN THE INSTRUCTIONS TO YOUR BALLOT(S) BY THE DEADLINENOTED IN YOUR BALLOT(S).

Chapter II. SUMMARY

A. Overview

On the Petition Date, the Debtor filed with the Bankruptcy Court a voluntary petition forrelief under Chapter 11 of the Bankruptcy Code. The Debtor continues to operate its business asdebtor in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. No requesthas been made in this Chapter 11 bankruptcy case for the appointment of a trustee or anexaminer.

The Debtor's core assets on the Petition Date consisted primarily of: (a) the Debtor's bankaccount deposits in the approximate amount of $36,000,000 (which amounts are the subject ofasserted, but disputed, secured claims and setoff rights); (b) approximately $1,900,000 ofdeposits derived from the liquidation of a deferred compensation account; (c) the Debtor'sinterest 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 entitlementwith the FDIC-Receiver); (e) the Debtor's interest in certain derivative claims against formerofficers 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 preferredsecurities in CBG Florida REIT Corp. that had an original par value of $1,000 (which interestsand claims are disputed by the FDIC-Receiver and likely BB&T); (g) the Debtor's interest in andclaims relating to the CBG Real Estate, LLC, the Debtor's wholly-owned Alabama limitedliability company, which purchased loans in the approximate face amount of $120,000,000 inDecember 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 therepayment of the non-participated portion of the loans) and thereafter transferred that participation interest to Colonial Bank; (h) refunds for unearned premiums under various policiesof insurance; (i) an interest in certain real property in Orlando, Florida; (j) proceeds from the saleof certain furniture, art and office equipment located in Montgomery, Alabama at the Debtor'sformer headquarters building; (k) claims against certain subsidiaries such as Colonial Brokerage


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"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, liensupon, or rights of offset with respect to substantially all of the Core Assets and any judicialrulings adverse to the Debtor with respect to any or all of these claims, liens and assertedrights of offset would substantially diminish the proceeds available for distribution toHolders of General Unsecured Claims and Preferred Stock.

Since the Petition Date, the Debtor has focused its efforts on pursuing and liquidating tovarying degrees these Core Assets. This process will continue in 2011 and, in the absence ofresolutions between the Debtor and the relevant parties in interest with respect to Core Assets indispute, likely beyond 2011. The FDIC-Receiver contends that virtually all assets that theDebtor asserts are part of its Chapter 11 estate constitute property of the FDIC-Receiverand/or BB&T and that, irrespective of the outcome of litigation regarding ownership ofsuch assets, the FDIC-Receiver is entitled to receive substantially all of the proceeds of suchassets by virtue of an asserted priority claim under Sections 507(a)(2) and/or 507(a)(9) ofthe Bankruptcy Code. For an additional description of the risks associated with the Planresulting from litigation with the FDIC-Receiver and others, see "Risk Factors" (ChapterXII). 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, bankruptcyavoidance claims (such as preference and fraudulent conveyance actions), potential claimsagainst professionals (including attorneys and accountants) employed by the Debtor prior to thePetition 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 theDebtor for the benefit of Holders of Claims and Equity Interests are described in greater detail inChapter VII of this Disclosure Statement.

In furtherance of the Debtor's goal to liquidate its assets and distribute the proceedsthereof 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 thedistribution 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 remainingliquidation 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) theclassification of creditors' claims based on their relative rights, (vi) the entitlement of eachcreditor, in accordance with such classification, to a Distribution in whole or partial satisfactionof its claim, and (vii) certain injunction, stay and exculpation provisions. For this reason, theterms of the Plan and the treatment of Claims and Equity Interests under the Plan are significanti th t h dit d i t t h ld h ld id f ll


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The ultimate return for creditors under the Plan will depend on the success of theliquidation process, the successful pursuit of third party claims, the determination and resolutionof Disputed Claims (including the FDIC-Receiver's Disputed Claim) and the successful outcomeof litigation with the FDIC-Receiver and others regarding ownership of and interests in theDebtor's Core Assets. See Risk Factors, Chapter XII. The Debtor believes, however, that thePlan is the best method for completing the liquidation process and maximizing the return on theDebtor'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 thereturn to its creditors, other alternatives, such as converting this bankruptcy case to a Chapter 7liquidation, 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 bythe Bankruptcy Court, will represent the total amount that creditors can expect to receive fromthe Debtor or Estate Property in payment of their Claims because all available assets of theDebtor that can be recovered in a cost-effective manner will be liquidated and distributed inaccordance with the Plan. However, depending on the circumstances surrounding a givencreditor's claim, the creditor may have independent claims, rights and remedies againstindividuals 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'sassets that can be recovered in a cost-effective manner have been liquidated anddistributed. This Disclosure Statement provides some information that may be relevant to theconsideration of such independent rights and remedies, and the Plan, if confirmed by theBankruptcy Court, will not prevent creditors from pursuing such claims, if any, that may existwhile the Debtor's bankruptcy case is pending or after the bankruptcy case is closed. Creditorsalso should be aware that any such claims against Persons other than the Debtor aresubject 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'sbankruptcy case does not toll the running of these statutes of limitations. The Debtorrecommends that each creditor seek independent legal advice regarding the existence andnature 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, washeadquartered in Montgomery, Alabama. The Debtor was a publicly traded corporation with its


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3. What is Chapter 11?

Chapter 11 is the chapter of the federal Bankruptcy Code frequently used for thereorganization or liquidation of a business. Under Chapter 11, a company may attempt torestructure its finances so that it can continue to operate its business or to liquidate its assets in anorderly manner so that all creditors will be treated fairly.

Formulation of a plan of reorganization or liquidation is the primary purpose of a Chapter11 case. A Chapter 11 plan sets forth and governs the treatment and rights to be afforded tocreditors 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 besolicited by a debtor only after a written disclosure statement approved by the Bankruptcy Courthas been provided to each creditor or interest holder who is entitled to vote on the plan. ThisDisclosure Statement is presented to the Debtor's creditors and interest holders to satisfy thedisclosure requirements contained in Section 1125 of the Bankruptcy Code. A more detaileddescription 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 disclosurestatement in their entirety. The Plan provides for an orderly liquidation of the Debtor's assets. Acopy 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 theDebtor and distributing the proceeds of these assets to the Debtor's creditors in accordance withthe Plan. After confirmation of the Plan, the Plan Trustee, acting on behalf of the Debtor, will beauthorized to pursue, collect and liquidate the remaining assets of the Debtor. In the event of thedeath, incapacity, resignation or the Bankruptcy Court's removal of the Plan Trustee for anyalleged misconduct, a new Plan Trustee will be appointed by the Plan Committee as a successorPlan Trustee, subject to the rights of creditors to file an objection with the Bankruptcy Court tosuch designated successor Plan Trustee.


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which may supplement this cash. These claims include, but are not limited to, bankruptcyavoidance claims (such as preference and fraudulent conveyance actions), claims for breach offiduciary 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, thePlan Trustee will investigate and pursue, where appropriate, contingent claims that the Debtormay have against third parties based on transactions that occurred prior to the commencement ofthis 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 theoutcome of the litigation and the collectability of any judgments. Additional informationregarding potential claims the Debtor may have is set forth in Chapter VII, Section A of thisDisclosure 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 BankruptcyCourt must hold a confirmation hearing before it approves the Plan. The Bankruptcy Court hasordered 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 36104. Chapter XI and Exhibit B to this Disclosure Statement containmore 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 providedthat their Claims are impaired by the treatment proposed in the Plan. The following classes ofAllowed Claims (all as described more fully in the Plan) will be impaired under the Plan: ClassD - Convenience Claims; Class E - Certain General Unsecured Claims; Class F - IndentureClaims; Class G - Statutorily Subordinated Claims; and Class H - Preferred Stock. CommonStock -- Class I (Equity Interests other than Preferred Stock) -- will also be impaired, but theHolders 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 yourClaim or Equity Interest is allowed for voting purposes. Only Holders of Allowed Claims mayvote on and receive Distributions under the Plan. Each Holder of an Allowed Claim impaired bythe treatment proposed in the Plan will receive a ballot to vote on the Plan. If you do not receivea ballot and believe that you should have, you should contact J. David Freedman at (404) 523-6995.


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- Convenience Claims; Class E - Certain General Unsecured Claims; Class F - Indenture Claims;Class G - Statutorily Subordinated Claims; Class H - Preferred Stock; and Class I - EquityInterests other than Preferred Stock. Equity Interests other than Preferred Stock will be impairedunder the Plan and, additionally, Holders of Common Stock will not be entitled to receive orretain any property under the Plan.

11. How can I determine in which Class my Claim or Equity Interest has beenplaced?

Chapter IX, Section B of this Disclosure Statement and Article 2 of the Plan describe theClasses of Claims and Equity Interests. The ballot that you receive will advise you in whichClass 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 anobjection with the Bankruptcy Court. Refer to Chapter XIV, Section C of this DisclosureStatement 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 Planalso 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 willreceive 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 Holderof 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 thatthe Holders of Statutorily Subordinated Claims or the Holders of Preferred Stock will receiveany Distribution under the Plan even if the Plan is confirmed, but they are entitled to receiveDistributions if there is Available Cash for that purpose after all other Allowed Claims are Paidin Full.

14. How is the Plan accepted?

For a class of Claims to accept the Plan, creditors holding at least two-thirds (2/3) indollar amount and more than one-half (1/2) in number of the "voting" Claims must accept thePlan. If you do not vote, you lose your right to be part of the determination as to which way yourClass will vote. The votes from each Class will be counted separately to determine whether theClass as a whole voted to accept or reject the Plan.


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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

2 23 2011 Disclosure Statement Order

Documents

Transcript of 2 23 2011 Disclosure Statement Order