Case No. Bky 05-30073.United States Bankruptcy Court, D. Minnesota.
September 22, 2005
ORDER AUTHORIZING AND APPROVING COMPROMISE AND SETTLEMENT BETWEEN THE API PARTIES AND EMPLOYERS REINSURANCE CORPORATION
GREGORY KISHEL, Bankruptcy Judge
This matter having come before the Court on the Motion for Order Approving Asbestos Insurance Settlement Agreement with Employers Reinsurance Corporation (the “Motion”), filed by A.P.I. Inc., the debtor and debtor-in-possession herein (the “Debtor”), seeking approval of the Settlement Agreement, dated as of August 22, 2005 and filed herein at Docket No. 324 (as it may be amended, supplemented or otherwise modified from time to time in writing, the “Agreement”), and the settlements, releases and compromises contained therein pursuant to Bankruptcy Code Section 105 and Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). Unless otherwise defined herein, capitalized terms are used herein as defined in the Agreement.
Adequate notice of the Motion and of the hearing on the Motion was given (a) by mailing a copy of the Motion and notice of the hearing on the Motion to: (i) counsel to the Committee; (ii) counsel to the Legal Representative; (iii) the attorneys representing holders of Asbestos Claims who, as of the date the Motion was filed, had filed with the Court either (x) a proof of claim or (y) a notice in accordance with Bankruptcy Rule 2019; and (iv) all other persons or
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entities that as of the date the Motion was filed, had filed a notice of appearance and demand for service of papers in the Debtor’s Chapter 11 Case.
A hearing on the Motion was held on September 19, 2005 (the “Hearing”) to consider approval of the Agreement, and all interested parties were given an opportunity to be heard and to present evidence and object to the Motion. Based upon the record of the Hearing and of this Chapter 11 Case, and after due deliberation and sufficient cause appearing therefor:
The Court hereby FINDS[1] that:
A. This Court has jurisdiction to hear and consider the Motion pursuant to 28 U.S.C. §§ 157 and 1334. This Motion presents a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A), (M) and (O).
B. The notice of the Motion, of the deadline to object to the Motion and of the hearing on the Motion described above constitutes due, sufficient and timely notice to all persons entitled thereto in accordance with the requirements of the Bankruptcy Code, the Bankruptcy Rules and the local rules for this District, and of due process. No other or further notice of the Motion, of the hearing on the Motion or of the request for entry of this Order is or shall be required.
C. The API Parties and the ERC Parties negotiated at arm’s length and in good faith to reach agreement on the matters resolved through the Agreement. The Committee and the Legal Representative acknowledge that the settlements and compromises embodied in the Agreement are fair and reasonable and in the best interests of the Debtor, its creditors and holders of Asbestos Claims (including demands) and consent to the terms thereof. Further, each of the Legal Representative and the Committee consent to and support the entry of this Order.
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D. The Debtor’s rights and obligations under the API Policies are property of the Debtor’s estate, and this Court has the jurisdiction and power to approve the Agreement and the compromises and releases contained therein.
E. The API Parties have due and proper corporate authority to enter into the Agreement and perform all of their obligations thereunder.
F. The compromises contained in the Agreement are a valid and proper exercise of the reasonable business judgment of the API Parties and represent an exchange for reasonably equivalent value. The releases to be made by the API Parties pursuant to Section 5 of the Agreement are appropriate and should be approved. The ERC Parties would not have entered into the Agreement or any of the compromises and settlements contained therein, or agreed to pay and assign (as applicable) the settlement amount, without the benefit of obtaining the releases and injunctions contained in the Agreement and the Plan.
G. The Agreement results in substantial benefits to the Debtor’s estate and holders of Claims, including Asbestos Claims, by (i) settling complex negotiations that were likely to result in litigation; and (ii) providing for payment of the settlement amount from ERC for the benefit of the estate and holders of Asbestos Claims. The Agreement is fair and equitable with respect to the Debtor and the persons who have asserted, and who might subsequently assert, Claims, including Asbestos Claims, against the Debtor or the Trust.
H. Each of the following factors has been taken into account by the Parties in reaching the compromises embodied in the Agreement, and each factor supports approval of the Agreement and the entry of this Order pursuant to Bankruptcy Rule 9019:
(a) the probability of success in future litigation of the claims between the Debtor and ERC;
(b) the difficulties, including delay, to be encountered in collection of any future judgment against ERC;
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(c) the complexity of issues in dispute between the Debtor and ERC, and the expense, inconvenience and delay necessarily attending it;
(d) the paramount interest of creditors and proper deference to their reasonable views in the premises; and
(e) whether the conclusion of the dispute promotes the integrity of the judicial system.
I. The terms of the compromise and exchanges of consideration set forth in the Agreement: (i) are in the best interests of the API Parties, including the Debtor, its estate and all of its creditors; and (ii) are entered into in good faith.
J. By entering into the Agreement, the Parties have compromised their positions and have not admitted to or waived any legal, factual or other positions with respect to the disputes between the Parties, the API Policies, the insurance relationship between the Parties, or any other matters.
NOW, THEREFORE, pursuant to Bankruptcy Code Section 105(a) and Bankruptcy Rule 9019(a), IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1. The Motion shall be and hereby is GRANTED in all respects subject to the provisions of this Order, and the Agreement is hereby approved in all respects. All objections to the entry of this Order that have not been withdrawn, resolved, waived or settled, are hereby overruled on the merits.
2. The terms and provisions of the Agreement are incorporated by reference into and are an integral part of this Order. Each term of the Agreement is valid, binding and enforceable as though fully set forth herein. The provisions of the Agreement and this Order, including the findings of fact and conclusions of law set forth herein, are non-severable and mutually dependent. The failure to specifically include or reference any particular term or provision of the Agreement in this Order shall not diminish or impair the effectiveness of such term and provision, it being the intent of the Court that the Agreement be approved in its entirety.
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3. The API Parties are hereby authorized and empowered to take all necessary acts to carry out and implement the Agreement in accordance with its terms without further order of the Court, including designating the ERC Parties as Settling Asbestos Insurance Companies, Released Parties and Protected Parties in the Confirmation Order, and after the Effective Date (as defined in the Plan) of the Plan occurs, treating the ERC Parties as Settling Asbestos Insurance Companies, Released Parties and Protected Parties under the Plan for all purposes in this Chapter 11 Case. The Agreement constitutes a valid and binding obligation of the API Parties, including the Debtor and its estate, which shall be enforceable in accordance with the terms thereof and shall be binding on the API Parties, including the Debtor, and any and all successors and assigns to the Debtor, including the Trust, any trustee appointed in this Chapter 11 Case or any other case or proceeding, and all present and future holders of the Third-Party Claims, Released Claims, Asbestos Claims or demands and all other parties in interest, as set forth in the Agreement. The releases contained in Section 5 and the indemnification set forth in Section 8 of the Agreement are hereby approved in all respects and shall be effective in accordance with the terms of the Agreement.
4. As the Parties have entered into the Agreement by way of compromise and settlement, no Party released under the Agreement shall be deemed to have, and no such releasee has, admitted or waived any legal, factual or other positions and no Entity shall or may use the Agreement or any portion thereof, or any negotiations with respect thereto, as evidence of any kind or nature that any such releasee has made any admission or concession of any kind or nature with respect to the API Policies, any Person’s rights or obligations thereunder, or the Plan.
5. Notwithstanding any other provisions of this Order, this Order does not validate or determine the enforceability of the assignment of the ERC Indemnity Amounts. The rights of
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any entity to contest the validity or enforceability of the assignment of the ERC Indemnity Amounts thereof in any forum, at any time, are preserved without prejudice. The rights, claims, and defenses of the parties to the litigation commenced on or about June 24, 2002 against API entitled St. Paul Fire andMarine Insurance Company v. API, Inc. v. The Home InsuranceCompany, et al., in the District Court of the State of Minnesota, Court File No. 62-C9-02-8084 are not modified by approval of this Settlement.
6. Upon the entry of this Order, Section 7.3 of the Plan shall not be amended, supplemented or otherwise modified without the prior written consent of ERC, and the Plan shall otherwise not be amended, supplemented or otherwise modified without the prior written consent of ERC in a manner that would be materially adverse to the rights or obligations of ERC or contrary to the terms and conditions of the Agreement or this Order.
7. This Court shall retain jurisdiction through and subsequent to occurrence of the Effective Date of the Plan over any proceeding relating to the validity, enforceability, scope, construction or modification of (a) the Agreement and any of its provisions, (b) this Order and (c) the Settling Asbestos Insurance Company Injunction, the Supplemental Injunction and the Third-Party Injunction contemplated by the Plan in accordance with the Plan, and may enter such orders with respect thereto and grant such further relief as is just and proper.
8. Notwithstanding anything in this Order to the contrary, the Settling Asbestos Insurance Company Injunction, the Supplemental Injunction and the Third Party Injunction provided for in the Plan shall not be effective with respect to the ERC Parties until the date that is the latest to occur of (a) the date that the Confirmation Order becomes a Final Order, unless such condition is waived in writing by ERC after the date that the United States District Court for the District of Minnesota has issued or affirmed the Confirmation Order, (b) the occurrence
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of the Effective Date of the Plan, and (c) the satisfaction or waiver of the conditions precedent set forth in Section 3 of the Agreement and the making of the payments contemplated by Section 4 of the Agreement.
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