Case No. 02-43582-H4-11, JOINTLY ADMINISTEREDUnited States Bankruptcy Court, S.D. Texas.
June 22, 2003
Kent A. Radford, Pillsbury Winthrop LLP, Houston, Texas, for Lessor, CalWest Industrial Holdings, LLC
Alfredo R. Pérez, Lydia T. Protopapas, Katharine J. Caplan, Weil, Gotshal Manges LLP, Houston, Texas, for Debtors and Debtors In Possession
STIPULATION AND AGREED ORDER RELATED TO LIMITED OBJECTION OF CALWEST INDUSTRIAL HOLDINGS, LLC REGARDING ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM [This instrument pertains to Docket # 1699 # 1894]
WILLIAM GREENDYKE, Bankruptcy Judge
Encompass Services Corporation and certain of its direct and indirect subsidiaries, as debtors and debtors-in-possession (collectively, “Debtors”), and CalWest Industrial Holdings, LLC (“CalWest”) respectfully submit this Stipulation and Agreed Order Related To Limited Objection Of CalWest Industrial Holdings, LLC Regarding Allowance And Payment Of Administrative Expense Claim (“Stipulation”):
RECITALS
WHEREAS, on November 19, 2002 (“Petition Date”), Encompass Services Corporation and substantially all of its domestic direct and indirect subsidiaries, including Encompass Industrial Services Southwest, Inc. (“EIS-Southwest”), filed voluntary petitions for relief under chapter 11 title 11 of the United States Code (“BankruptcyCode”). The Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;
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WHEREAS, the Debtors, specifically ElS-Southwest, as Leases, and CalWest, as Lessor, were parties to an unexpired lease (“Lease”) of real property located at 6400 Goodyear Road, Benicia, California (“Premises”):
WHEREAS on January 31, 2003 (“Sale Date”) and pursuant to an order of this Court entered on the same date after notice and a hearing, the Debtors divested certain assets held by ElS-Southwest to GSI Acquisition, Inc. (“Gulf States”):
WHEREAS, notwithstanding the fact that the Lease was not assumed and assigned as part of the ElS-Southwest sale to Gulf States, Gulf States took sole possession of the Premises on January 31, 2003;
WHEREAS, on or about March 6, 2003, the Debtors filed the Expedited Second Omnibus Motion to Reject Certain Unexpired Leases of Nonresidential Real Property (“Second Rejection Motion”), docket no. 1699, seeking, inter alia, approval of the rejection of the Lease;
WHEREAS on March 25, 2003, CalWest subsequently filed the Limited Objection of CalWest Industrial Holdings, LLC to Debtors’ Expedited Second Omnibus Motion to Reject Certain Unexpired Leases of Nonresidential Real Property (“Limited Objection”), docket no., 1891, requesting that the Court set April 13, 2003 or, if later, the date the Debtors vacated the property, as the effective date of the rejection, also reserving the right to seek the allowance and payment of administrative rent for any unpaid rent and other amounts owing under the Lease, from the Petition Date until the effective rejection date set by the Court;
WHEREAS, in response to the Limited Objection, the Debtors asserted that the effective date of the rejection should be either the Sale Date, as the date on which the Premises were solely used and. occupied by Gulf States thus conferring no benefit to
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the Debtors’ estates, or the entry date of the order approving the Second Rejection Motion;
WHEREAS, on March 26, 2003 after a contested hearing, the Court entered the Order Approving Debtors’ Expedited Second Omnibus Motion To Reject Certain Unexpired Leases Of Nonresidential Real Property (“RejectionOrder”). Despite the Limited Objection, the Rejection Order did not explicitly specify the effective date of the rejection.
WHEREAS, Gulf States did not vacate the Premises until April 18, 2003, twenty-three (23) days after the date of the Rejection Order,
WHEREAS, CalWest subsequently contacted the Debtors seeking payment of unpaid rent from the Petition Date through April 18, 2003, the date Gulf States vacated the Premises, despite the Debtors’ assertion that the Premises had been occupied and used solely by Gulf States since the Sale Date (“Claim Dispute”);
WHEREAS, at the request of the Debtors, Gulf States paid to the Debtors $41, 119.74 for the use and occupancy of the Premises after the Sale Date, in anticipation that such funds would be paid to CalWest in full and final satisfaction of any and all administrative expense claims which CalWest may possess against the Debtors and their estates for the period of time the Premises were occupied by Gulf States;
WHEREAS, the Debtors and CalWest wish to resolve the issues raised by the Limited Objection and in the Claim Dispute without the cost and expense of further litigation;
WHEREAS, the Debtors and CalWest have negotiated this Stipulation in good faith and at arms’ length and, therefore, desire that it shall be binding upon each of them, their successors, heirs, and assigns; and
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WHEREAS, the Debtors and CalWest believe that this Stipulation is in their respective best interests.
In consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto stipulate and agree as follows:
STIPULATION
1. By agreement of the parties, CalWest is granted an administrative expense claim in the total amount of $41, 119.74 in full and final satisfaction of any and all administrative expense claims which CalWest may possess against the Debtors and their estates (“CalWestAdministrative Claim”).
2. The Debtors will pay to CalWest, on or before June 20, 2003, a total amount of $41,119,74 in full and final satisfaction of the CalWest Administrative Expense Claim.
3. This Court will retain exclusive jurisdiction to construe and enforce the terms of this Stipulation.
4. This Stipulation is the entire agreement between the parties with respect to the CalWest Administrative Claim.
5. This Stipulation may be executed in any number of counterparts, and all such counterparts, taken together, shall be deemed to constitute one and the same instrument.
6. This Stipulation may not be modified, except in a written instrument signed by each of the parties hereto, which modification, if material in the discretion of the Debtors and CalWest, shall be subject to the approval of this Bankruptcy Court.
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7. Counsel for both the Debtors and CalWest represent that they are authorized to execute this Stipulation, subject to this Bankruptcy Court’s approval.
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