Case No. 02-43582-H4-11, JOINTLY ADMINISTEREDUnited States Bankruptcy Court, S.D. Texas, Houston Division.
June 18, 2003
STIPULATION AND ORDER [This document pertains to matter number 2148.]
WILLIAM GREENDYKE, Bankruptcy Judge
Encompass Services Corporation and certain of its direct and indirect subsidiaries, as debtors and debtors-in-possession (collectively, “Encompass”) and Total Restoration Services, L.P. (“Total Restoration”) respectfully submit this Stipulation and Order (“Stipulation”):
RECITALS
WHEREAS, Total Restoration has a claim against the debtor, Encompass Industrial/Mechanical of Texas, Inc. (“Encompass Texas”), seeking to recover amounts for services performed for mold remediation damages to property of Encompass Texas (“Mold Remediation Work”);
WHEREAS, on November 19, 2002 (“Petition Date”), Encompass Services Corporation and substantially all of its domestic direct and indirect subsidiaries, including Encompass Texas (collectively, the “Debtors”), filed voluntary petitions for relief under chapter 11 title 11 of the United States Code (“Bankruptcy Code”). 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;
WHEREAS, the Debtors believe Total Restoration’s claim for the Mold Remediation Work is subject to coverage under one or more applicable insurance policies, consistent with all terms and conditions contained therein;
WHEREAS, on or about April 17, 2003, Total Restoration moved the Bankruptcy Court to modify the automatic stay to proceed with its claims with respect to the Mold Remediation Work (the “Total RestorationMotion”)
WHEREAS, the maximum amount of the claims asserted against the Debtors in the Total Restoration Motion is ascertainable, liquidated, and undisputed;
WHEREAS, Encompass Texas and Total Restoration wish to resolve the issues raised by the Total Restoration Motion without the cost and expense of further litigation;
WHEREAS, Encompass Texas and Total Restoration 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, as well as upon the bankruptcy estates; and
WHEREAS, Encompass Texas and Total Restoration 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. Subject to the provisions herein, on May 19, 2003, the automatic stay shall be lifted solely to the extent necessary to permit:
a. Total Restoration to pursue its claims for payment for the Mold Remediation Work to the extent of available insurance coverage and proceed with collection efforts against the Debtors’ insurer to secure payment;
b. Encompass Texas’s insurer to take any and all actions required to adjust, handle, litigate, settle or pay Total Restoration claim’s for the Mold Remediation Work.
2. Effective May 19, 2003, the automatic stay shall be modified to permit Total Restoration to take all actions necessary to be paid for the Mold Remediation Work.
3. Encompass Texas’s insurer is authorized to adjust, as necessary, the amount of Total Restoration’s claim for the Mold Remediation Work, and to make payment of the adjusted amount (as determined by agreement or litigation), all without further order of the Bankruptcy Court; provided, however, that no action shall be taken with respect to the Total Restoration Claim prior to May 19, 2003.
4. This Stipulation applies only to claims for reimbursement for Total Restoration that arose prior to the Petition Date or that are otherwise subject to the automatic stay and that have been or are assertable with respect to the Mold Remediation Work.
5. Nothing contained in this Stipulation shall alter, modify, impair, enlarge, reduce or affect in any way the parties’ rights and duties under the applicable insurance policy(ies).
6. Encompass Texas and Total Restoration agree and state that they have read the entire Stipulation and know and understand its contents, and that they have had the opportunity to consult, and have consulted with, their attorneys retained to represent them in this matter, on terms and implications of this Stipulation and that they have executed this Stipulation under their own free will and action.
7. In the event the Court declines to enter this Stipulation for any reason, the agreements contained herein shall be deemed null and void and of no force or effect and Total Restoration shall be able to proceed with the Total Restoration Motion, seeking relief from the automatic stay at a later hearing and allowing Encompass Texas an opportunity to make further response to such Motion. Total Restoration waives any and all rights to an automatic termination of the stay under Bankruptcy Code section 362(e) pending such later hearing.
8. This Stipulation is the entire agreement between the parties with respect to the subject matter of the Total Restoration Motion.
9. 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.
10. 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 Total Restoration and Encompass Texas, shall be subject to the approval of this Bankruptcy Court.
11. Counsel for Encompass Texas and Total Restoration represent that they are authorized to execute this Stipulation, subject to this Bankruptcy Court’s approval.
So ordered