IN RE CONSECO, INC. (Bankr.N.D.Ill. 2003)

In re Conseco, Inc., et al.,[1] Chapter 11, Debtors.

Case No. 02 B49672, (Jointly Administered).United States Bankruptcy Court, N.D. Illinois, Eastern Division.
July 28, 2003.

[1] The Debtors are the following entities: (i) Conseco, Inc., CTIHC, Incorporated, CTIHC, Inc., Partners Health Group, Inc., (collectively the “Reorganizing Debtors”), (ii) Conseco Finance Corp. and Conseco Finance Servicing Corp. (n/k/a Green Tree Servicing LLC) (the “CFC Initial Debtors” and together with the Reorganizing Debtors, the “Initial Debtors”), (iii) Conseco Finance Corp. — Alabama (n/k/a Green Tree AL LLC), Conseco Finance Credit Corp., (n/k/a Green Tree Credit LLC), Conseco Finance Consumer Discount Company (n/k/a Green Tree Consumer Discount Company), Conseco Finance Canada Holding Company, Conseco Finance Canada Company, Conseco Finance Loan Company (n/k/a Green Tree Loan Company), Rice Park Properties Corporation, Landmark Manufactured Housing, Inc., Conseco Finance Net Interest Margin Finance Corp. I, Conseco Finance Net Interest Margin Finance Corp. II, Green Tree Finance Corp. — Two, Conseco Agency of Nevada, Inc., (n/k/a Green Tree Insurance Agency of Nevada, Inc.) Conseco Agency of New York, Inc., (n/k/a Green Tree Insurance Agency of New York, Inc.), Green Tree Floorplan Funding Corp., Conseco Agency, Inc., (n/k/a Green Tree Insurance Agency, Inc.), Conseco Agency of Alabama, Inc., (n/k/a Green Tree Insurance Agency of Alabama, Inc.), Conseco Agency of Kentucky, Inc., (n/k/a Green Tree Insurance Agency of Kentucky, Inc.), and Crum-Reed General Agency, Inc. (n/k/a Green Tree Insurance Agency of Texas, Inc.) (collectively, the “CFC Subsidiary Debtors”), Green Tree Residual Finance Corp. I, and Green Tree Finance Corp. — 5 (the “New Debtors”), and Conseco Finance Credit Card Funding Corp. (“CFCCFC”, together with the CFC Initial Debtors, the CFC Subsidiary Debtors, and the New Debtors, the “Finance Company Debtors”).

Erin N. Brady, James H.M. Sprayregan, P.C., Anup Sathy, Kirkland Ellis, Chicago, Illinois, Counsel for the Finance Company Debtors.

Kathryn A. Pamenter, Alan P. Solow, Goldberg, Kohn, Bell, Black Rosenbloom Moritz, Ltd., Chicago, Illinois, Counsel for BED.

STIPULATION AND AGREED ORDER BETWEEN THE FINANCE COMPANY DEBTORS AND THE SOUTH DAKOTA BOARD OF ECONOMIC DEVELOPMENT
CAROL DOYLE, Bankruptcy Judge

The Finance Company Debtors and the South Dakota Board of Economic Development (“BED”) hereby stipulate and agree as follows:

RECITALS
WHEREAS, on December 17, 2002, Conseco Finance Corp. (“CFC”) and Conseco Finance Servicing Corp. (“CFSC,” and together with CFC, the “CFC Debtors”) filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”);

WHEREAS, on December 19, 2002, the CFC Debtors filed the Motion for Order Pursuant to Sections 105(a), 363, 365 and 1146(c) of the Bankruptcy Code (I)(A) Establishing Bidding Procedures in Connection with the Sale of Substantially All of the Assets of the CFC Debtors, Including Certain Buyer Protections, (B) Approving the Form and Manner of Notices, (C) Approving the Form of the Asset Purchase Agreement, (D) Setting a Sale Hearing, and (E) Granting Related Relief; (II) Approving the Sale of the CFC Assets Free and Clear of All Liens, Claims and Encumbrances to the Successful Bidder, (III) Authorizing the Assumption and Assignment of Certain Executory Contracts and Leases (Doc. No. 119, the “Sale Motion”);

WHEREAS, on February 5, 2003, CFSC filed Schedules of Assets and Liabilities (the “Schedules”) listing, inter alia, secured creditors of CFSC, including BED;

WHEREAS, on or about February 24, 2003, BED timely filed its objection to the Sale Motion and the entry of the proposed sale order (the “Objection”);

WHEREAS, on February 28, 2003, BED filed its Proof of Claim (Claim No. 49676-000317) setting forth the basis of its secured claim against CFSC in the amount of $1,412,401.34 (the “BED Secured Claim”);

WHEREAS, on February 28, 2003, BED filed its Proof of Claim (Claim No. 49675-000515) setting forth the basis of its unsecured claim against CFC in the amount of $1,412,401.34 (the “BED Unsecured Claim”);

WHEREAS, on or about March 14, 2003, the CFSC and the BED resolved the Objection by stipulating and agreeing that the CFC Debtors would escrow the amount of the asserted lien by the BED for $1,412.401.34 (the “Escrowed Amounts”) exclusively for the benefit of the BED from the proceeds of the Purchase Price until such time as CFSC and BED obtain a Court order for the release of the Escrowed Amounts or any portion thereof in satisfaction of BED’s claim (the “Stipulation and Agreed Order”);

WHEREAS, on or about March 14, 2003, the Court entered an order approving the Stipulation and Agreed Order;

WHEREAS, on or about March 14, 2003, the Court entered an order approving the Finance Company Debtors’ proposed sale of substantially all of their assets to CFN Investment Holdings, Inc. (the “CFN Sale Transaction”) and General Electric Consumer Finance (the “GE Sale Transaction”);

WHEREAS, on or about May 30, 2003, the Finance Company Debtors, in the Finance Company Debtors’ Third Omnibus Objection To Claims Asserted Against The Finance Company Debtors, objected to the BED Unsecured Claim (the “Unsecured Objection”);

WHEREAS, on or about June 13, 2003, the Finance Company Debtors, in the Finance Company Debtors’ Fifth Omnibus Objection To Claims Asserted Against The Finance Company Debtors, objected to the BED Secured Claim (the “Secured Objection” and together with the Unsecured Objection, the “Objections”);

WHEREAS, on or about June 23, 2003, the Finance Company Debtors closed on the CFN Sale Transaction;

WHEREAS, on or about June 23, 2003, the Finance Company Debtors established the BED Escrow Account and deposited therein the Escrowed Amounts, upon which the BED’s lien continues and remains in full force and effect with the same entitlements, rights and priorities as previously enjoyed by BED prior to the Stipulation and Agreed Order;

WHEREAS, the parties now wish to resolve their differences with respect to the Objections without further legal proceedings or expense; and

WHEREAS, the parties having reached an amicable resolution memorialized herein; and it appearing that due and sufficient notice having been given and after due deliberation and good cause appearing for the entry of this Stipulation; and based upon the foregoing recitals and in consideration of the mutual covenants set forth below, the parties agree as follows:

IT IS HEREBY STIPULATED AND AGREED, BY AND BETWEEN THEUNDERSIGNED PARTIES:

1. The BED shall receive, in full and final satisfaction of the BED Secured Claim against CFSC, an allowed secured Class 2 Claim in the amount of $800,000 (the “Resolved BED Secured Claim”).

2. The BED shall receive, in full and final satisfaction of the BED Unsecured Claim against CFC, an allowed unsecured Class 5 claim in the amount of $612,401.34 (the “Resolved BED Unsecured Claim”).

3. The Finance Company Debtors shall pay the Resolved BED Secured Claim from the Escrowed Amounts upon the entry of this Agreed Order, or as soon thereafter as practicable, but in no event later than July 31. 2003

4. Upon satisfaction of the Resolved BED Secured Claim, the BED shall have no further lien in or right against any remaining Escrowed Amounts (the “Remaining Escrowed Accounts”), and the Finance Company Debtors shall be authorized to release such Remaining Escrowed Amounts pursuant to the terms of their reorganizing plan (the “Plan”) or their post-consummation estate agreement.

5. The Resolved BED Unsecured Claim shall be Allowed and paid as a Class 5 Claim pursuant to the terms of the Plan.

6. The Finance Company Debtors shall be deemed to have withdrawn their Objections.

7. The notice requirements of Rule 9019 of the Federal Rules of Bankruptcy Procedure are hereby waived by this Court for just and adequate cause shown.

ORDER
The foregoing, “Stipulation and Agreed Order Between the Finance Company Debtors and the South Dakota Board of Economic Development” shall be and hereby is APPROVED and made the Order of this Court.

IT IS SO ORDERED.