Case No. 02-43582-H4-11, JOINTLY ADMINISTEREDUnited States Bankruptcy Court, S.D. Texas, Houston Division.
May 21, 2003
Alison P. Buchanan, California State Bar No. 215710; Bustamante
O’Hara; San Jose, California; Attorney for W.L. Butler Construction, Inc.
Alfredo R. Perez, State Bar No. 15776275; Lydia T. Protopapas, State Bar No. 00797267; Shayne H. Newell, State Bar No. 24002327; Houston, Texas; Attorneys for Debtors and Debtors In Possession.
STIPULATION AND ORDER [This document pertains to matter number 2225.]
WILLIAM R. GREENDYKE, United States Bankruptcy Judge
TO THE HONORABLE WILLIAM R. GREENDYKE, UNITED STATES BANKRUPTCY JUDGE:
Encompass Services Corporation and certain of its direct and indirect subsidiaries, as debtors and debtors-in-possession (collectively,”Encompass”), and W.L. Butler Construction, Inc. (“W.L. Butler”) respectfully submit this Stipulation and Order (“Stipulation”):
RECITALS
WHEREAS, W.L. Butler filed a cross-complaint in the action style Fremont Industrial Indemnity, Inc. v. W.L. Butler Construction, Inc. et al., Case No. 808418, in the Superior Court of Santa Clara County, California (“California Action”), against the debtor in this bankruptcy, Air Systems, Inc. (“Air Systems”) for a pre-petition claim for, inter alia, indemnity;
WHEREAS, on November 19, 2002 (“Petition Date”), Encompass Services Corporation and substantially all of its domestic direct and indirect subsidiaries (collectively, the “Debtors”), including Air Systems, 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, Air Systems has asserted in the California Action that it has no liability to W.L. Butler;
WHEREAS, Air Systems filed a Notice of Bankruptcy in the California Action stating that such action was stayed pursuant to section 362 of the Bankruptcy Code;
WHEREAS, on or about April 28, 2003, W.L. Butler moved the Bankruptcy Court to modify the automatic stay to proceed with its claims against Air Systems (the “W.L. Butler Motion”);
WHEREAS, Air Systems has available coverage under one or more policies of insurance for the benefit of claims asserted against Air Systems, such as those asserted in the California Action;
WHEREAS, Air Systems and W.L. Butler wish to resolve the issues raised by the W.L. Butler Motion without the cost and expense of further litigation;
WHEREAS, Air Systems and W.L. Butler 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
WHEREAS, Air Systems and W.L. Butler 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, the automatic stay should be lifted solely to the extent necessary to permit W.L. Butler to:
a. pursue its claims and causes of action against Air Systems to conclusion in the California Action to the extent one or more applicable insurance policies provide for the defense of Air Systems; and
b. proceed, if successful, with collection efforts on any judgment obtained, or settlement reached, only as against insurance policies that provide coverage to Air Systems for the matters set forth in the California Action, provided, however, that to the extent Air Systems is responsible for satisfying any amount in excess of one or more of its policies of insurance that provide coverage with respect to the California Action, W.L. Butler affirmatively waives the right, if any, to collect that excess amount.
2. This Stipulation applies only to claims and causes of action of W.L. Butler against Air Systems that arose prior to the Petition Date or that are otherwise subject to the automatic stay and that have been or are assertable in the California Action. This Stipulation does not foreclose W.L. Butler’s right or ability to recover future damages for causes of action that arose before the Petition Date.
3. Air Systems and W.L. Butler 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.
4. 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 W.L. Butler shall be able to proceed with W.L. Butler Motion, seeking relief from the automatic stay at a later hearing and allow Air Systems an opportunity to answer such Motion. W.L. Butler waives any and all rights to an automatic termination of the stay under Bankruptcy Code section 362(e) pending such later hearing.
5. This Stipulation is the entire agreement between the parties with respect to the subject matter of the W.L. Butler Motion.
6. 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.
7. 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 Air Systems and W.L. Butler, shall be subject to the approval of this Bankruptcy Court.
8. Counsel for both Air Systems and W.L. Butler represent that they are authorized to execute this Stipulation, subject to this Bankruptcy Court’s approval.