The US Bankruptcy Court approved the second modified second amended plan of reorganization of Harbor Custom Development, Inc. on June 28, 2024. The debtor has filed its amended plan in the Court on June 27, 2024. As per the amended plan filed, administrative claims, United States Trustee Fees, Professional Fee Claims, Priority Tax Claims shall be paid in full in cash.

Secured Claims of Sound Capital Loans, LLC ? HCDI CA Properties, Secured Claims of Sound Capital Construction Fund ? HCDI TX, Secured Claims of Sound Capital High Income Debt Funds ?

HCDI, Secured Claims of Oakhurst Income Fund II ? HCDI TX Properties, Secured Claim of 222, LLC et al. ?

HCDI (Division 3), , Secured Claim of Sound Equity High Income Debt Fund LLC?Belfair Phase 1, Secured Claim of Oakhurst Income Fund II?Belfair Phase II of $5.22 million, Secured Claim of Benaroya Holdings ? Bridgeview, Secured Claim of 222, LLC et al. ?

Pacific Ridge, Secured Claim of Fratelli?s LLC ?Semiahmoo, Secured Claim of Oakhurst Opportunity Lending Fund I?Punta Gorda, Secured Claim of BankUnited, N.A.? Punta Gorda shall be paid in pro rata basis in cash. Secured claim of BankUnited ?

HCDI of $14.35 million shall receive $1 million in full satisfaction of the claim. Secured Claim of Buchanan Mortgage Holdings ?Tanglewilde shall be paid in the event the Free and Clear Sale of the Meadowscape property is to a Third-Party Buyer, the Buchanan Allowed Claim shall be $38.3 million, of which $0.3 million shall be designated by Buchanan as a Carveout. The Allowed Claim amount in Scenario 1 reflects a reduction in Buchanan?s asserted prepetition default interest in the amount of $0.75 million.

If the closing on the Third-Party Buyer agreement is after July 15, 2024, the Allowed Claim shall increase by the amount of nondefault interest that would have accrued on the Allowed Claim for every day between July 15 and the closing. In the event of the Free and Clear Sale of the Meadowscape property to Buchanan after Buchanan has been designated the Successful Bidder at the auction, the Buchanan Allowed Claim shall be $38.3 million, of which $0.3 million shall be designated by Buchanan as a Carveout. The Allowed Claim amount in Scenario 2 reflects a reduction in Buchanan?s asserted prepetition default interest in the amount of $0.75 million.

In the event Buchanan is designated as the Back-up Bidder, and Debtors? agreement with the Successful Bidder is not proceeding in accordance with the Bid Procedures Order and the Successful Bidder?s purchase and sale agreement as of July 5, 2024, or at any time thereafter, Debtors shall forthwith notify Buchanan of such development and shall immediately accept Buchanan?s bid as the Successful Bid and shall proceed to close on the terms set forth in such bid. In the event the Free and Clear Sale of the Meadowscape property to Buchanan is because of Buchanan?s status as a Back-up Bidder under the Bid Procedures Order, the Buchanan Allowed Claim shall be $38.3 million, of which $0.3 million shall be designated by Buchanan as a Carveout.

The Allowed Claim amount in Scenario 3 reflects a reduction in Buchanan?s asserted prepetition default interest in the amount of $0.3 million. Secured Claim of Sound Capital Construction Fund ? Pacific Ridge shall receive the Pacific Ridge Property in exchange for a $5 million credit bid and the payment of costs of sale and other amounts as set forth in the Settlement Agreement.

General Unsecured Claims ? HCDI shall receive 51% of new interests and Preferred Equity Interests ? HCDI shall receive 49% of new interests post effective of plan.

General Unsecured Claims ? Tanglewilde, General Unsecured Claims ? Belfair View Phase I and Phase II, General Unsecured Claims ?

Bridgeview, General Unsecured Claims ? Pacific Ridge, General Unsecured Claims ? Semiahmoo, General Unsecured Claims ?

Punta Gorda shall be paid in pro rata basis in cash. Warranty Claims shall receive no distribution and hence, cancelled. Common Equity Interests ?

HCDI shall be cancelled. Warrant Interests ? HCDI shall be cancelled and shall not receive any distribution under the plan.

Equity Interests ? Tanglewilde, Equity Interests ? Belfair, Equity Interests ?

Bridgeview, Equity Interests ? Pacific Ridge, Equity Interests ? Semiahmoo, Equity Interests ?

Punta Gorda are unimpaired classes and shall be paid in cash. The plan shall be funded through cash in hand, sale of assets and issuance of interests.