Case No. 01-16034 (AJG), Jointly AdministeredUnited States Bankruptcy Court, S.D. New York.
August 7, 2003
David Fleischer (DF-9230), Stephen Z. Starr (SZS-3793), PAUL, HASTINGS, JANOFSKY WALKER LLP, Counsel for General Electric Capital Corporation 75 East 55th Street, New York, New York 10022
Frank A. Oswald (FAO-1223), Howard P. Magaliff (HPM-2189), TOGUT, SEGAL SEGAL LLP, Bankruptcy Co-Counsel for the Debtors and Debtors in Possession, One Penn Plaza, Suite 3335, New York, New York 10119
ORDER APPROVING COMPROMISE AND SETTLEMENT BETWEEN SHELL GAS B.V., SHELL OVERSEAS TRADING LIMITED, SHELL CUIABA HOLDINGS LIMITED, SHELL GAS (LATIN AMERICA) B.V. AND ENRON CORP., ET AL. PURSUANT TO SECTIONS 363 AND 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 9019
ARTHUR J. GONZALEZ, United States Bankruptcy Judge
Upon consideration of the Motion for Approval of Compromise and Settlement dated June 27, 2003 (the “Motion”), filed by Enron Corp. (“Enron”), Enron South America LLC (“ESA”), Superior Construction Company, Enron do Brazil Holdings Ltd. (“EDBH”), Enron Brazil Power Holdings I Ltd. (“EBPH”) and certain of Enron’s other affiliated debtor entities (collectively, the “Debtors”), as debtors and debtors in possession, for an order pursuant to sections 363 and 365 of title 11 of the United States Code, 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”), and Rule 9019 of the Federal Rules of Bankruptcy (the “Bankruptcy Rules”) seeking approval of the settlement among Enron and certain of Enron’s affiliates and certain of Shell Gas B.V.’s affiliates, as set forth in that certain Definitive Agreement, dated as of June 3, 2003 (the “Agreement”),[1] among Enron, ESA, EDBH, EBPH and Enron Transportadora Holdings Ltd. (the “Enron Parties”), and Shell Gas B.V., Shell Overseas Trading Ltd., Shell Gas (Latin America) B.V. and Shell Cuiaba Holdings Limited (the “Shell Parties”); and it appearing that the relief requested in the Motion is in the best interest of the Debtors, their estates and creditors; and the hearing having been held before the Court; and upon the proceedings before the Court; and good and sufficient cause appearing;
IT IS HEREBY FOUND AND DETERMINED THAT:
1. The Court has jurisdiction to consider the Motion pursuant to 28 U.S.C. § 157 and 1334. This matter is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. § 1408 and 1409.
2. As evidenced by the affidavits of service filed with the Court: (a) proper, timely, adequate and sufficient notice of the Motion and the hearing thereon has been given in accordance with the Court’s Second Amended Case Management Order, dated December 17, 2002, (b) such notice was good and sufficient and appropriate under the circumstances, and (c) no further notice need be given.
3. The requirements of Rule 9013-1(b) of the Local Rules have been waived.
4. The settlement reflected in the Agreement and the agreements contemplated thereby, including the Mutual Release and Waiver attached as Exhibit 7.11 to the Agreement (the “Release”), is fair and reasonable to the Enron Parties, the Shell Parties and their respective affiliates that are parties to the agreements contemplated by the Agreement[2]
(collectively, the “Parties”), represents the exchange of reasonably equivalent value among the Parties and in no way unjustly enriches any of the Parties. In addition, the settlement constitutes the contemporaneous exchange of new value and legal, valid and effective transfers among the Parties. The settlement is in the best interest of the Debtors, their estates and creditors.
5. Absent authorization to enter into and implement the Agreement, the Parties would require extensive arbitration to resolve their many disputes and it is uncertain which of the Parties would emerge with a favorable and successful resolution of their claims. Such arbitration would be costly, time consuming and distracting. The approval of the Agreement and the authorization of the Debtors to enter into and implement the Agreement eliminates the attendant risk of litigation.
6. The settlement reflected in the Agreement is the product of extensive, arm’s length, good faith negotiations between the Parties.
7. The relevant provisions of section 363 of the Bankruptcy Code have been complied with as they apply to certain obligations contemplated in the Agreement and discussed in paragraph 10 of the Motion.
8. The relevant provisions of section 365 of the Bankruptcy Code have been complied with and are applicable to the assumption of the Agreement by EDBH, EBPH and ESA.
IT IS HEREBY ORDERED THAT:
1. The Motion is granted.
2. All objections, if any, to the Motion or the relief requested therein that have not been withdrawn, waived or settled, and all reservation of rights included therein, are overruled.
3. The compromise and settlement set forth in the Agreement and the agreements contemplated thereby (including the Release) is hereby approved in all respects pursuant to Bankruptcy Rule 9019.
4. The Debtors are authorized to execute, deliver, implement and fully perform any and all obligations, instruments, documents and papers, and to take any and all actions reasonably necessary or appropriate to consummate and perform any and all obligations contemplated in, the Agreement and the agreements contemplated thereby (including the Release) in accordance with the respective terms thereof.
5. Each of ESA, EDBH and EBPH is hereby authorized and directed to assume the Agreement under section 365 of the Bankruptcy Code.
6. Upon the closing of the transactions contemplated by the Agreement (including the transfer of equity interests, the assignment of certain notes and the restructuring of certain loans), the Parties and their respective agents and affiliates shall be mutually released and forever discharged from any and all claims, liabilities and causes of action with respect to (a) the development, construction and subsequent operation of the Power Plant (as defined in the Motion) and related pipelines and (b) the governance and operation of the Cuiaba Project Companies (as defined in the Motion), arising out of or relating in any way to any commitment or undertaking, existing or made or alleged to have existed or been made, or to any action or omission or alleged action or omission occurring, on or prior to such closing, including unasserted claims but excluding certain surviving claims, all in accordance with the terms and conditions set forth in the Release.
7. The allocation and use of the cash consideration to be paid by Shell Cuiaba Holdings Limited to EDBH, EBPH and ESA as set forth in the Agreement is hereby approved.
8. Except to the extent required to repay the DIP Obligations[3] (if any) pursuant to and in accordance with the DIP Order and the Documents, all proceeds received by EDBH, EBPH and ESA in connection with the transactions contemplated by the Agreement, exclusive of the approximately U.S. $8 million to be contributed to ETHL for the purchase of the notes described in paragraph 10(b) of the Motion, shall be retained by EDBH, EBPH and ESA, respectively, and be neither disbursed nor used until the earlier to occur of: (i) an agreement by and between EDBH, EBPH and ESA, respectively, and the Creditors’ Committee with respect to the release of such proceeds; and (ii) further order of this Court. After ETHL purchases the notes described above and in paragraph 10(b) of the Motion, ETHL may similarly not transfer, disburse, pledge or otherwise use said notes until the earlier to occur of: (i) an agreement between ETHL and the Creditors’ Committee; and (ii) further order of this Court.
9. The Agreement may be modified, amended or supplemented by the Parties in accordance with its terms without further order of the Court; provided, however, that the Parties shall obtain the prior written consent of the Creditors’ Committee, which consent shall not be unreasonably withheld; and, provided that any such modification, amendment or supplement shall not be material in nature or not change the economic substance of the settlement.
10. The Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective subsidiaries, divisions, successors, assigns, and shareholders, including any trustee assigned under the Bankruptcy Code by the Court to the Debtors’ estates.
11. The terms of this Order and any action taken pursuant thereto shall survive the entry of any order that may be entered converting any of the Debtors’ chapter 11 cases to a chapter 7 case, confirming any plan(s) of reorganization of the Debtors or dismissing any of Debtors’ chapter 11 cases.
12. The obligations of the Debtors under the Agreement and the agreements contemplated thereby (including the Release) shall not be discharged by the entry of any order confirming any chapter 11 plan(s) for the Debtors, and no subsequent order or any confirmed chapter 11 plan(s) shall change or modify any rights or obligations under the Agreement and the agreements contemplated thereby (including the Release).
13. The terms of this Order shall inure to the benefit of the Enron Parties and shall be binding upon each of the Debtors and their respective successors and assigns (including any trustee or other fiduciary appointed as a legal representative thereof), and shall also be binding upon all creditors of the Debtors and other parties in interest.
14. Until the effective date of the chapter 11 plan for Enron in these chapter 11 cases, this Court shall have the exclusive jurisdiction over disputes concerning the interpretation or enforcement of the Agreement and any such disputes shall be properly brought only before this Court; provided that if this Court determines that it does not have subject matter jurisdiction to resolve a dispute as to any individual affiliate of Enron, then the dispute involving such affiliate of Enron, together with any related dispute against Enron or other affiliates of Enron, shall be resolved pursuant to the other provisions in the Agreement. In no event shall the limited consent to submission to this Court of the Shell Parties and their affiliates that are parties to the agreements contemplated by the Agreement be interpreted as (a) a consent of N.V. Koninklijke Nederlandsche Petroleum Maatschappij or The “Shell” Transport and Trading Company, p.l.c., or any of their respective affiliates that are not parties to the Agreement or the agreements contemplated thereby, to the jurisdiction of any United States court for any purpose, or (b) a consent of Shell Overseas Trading Limited or Shell Gas B.V., or any of their respective affiliates that are parties to the Agreement or the agreements contemplated thereby, to the jurisdiction of any United States court other than, in each case, the limited consent to the jurisdiction of this Court for the limited purpose and period contemplated in this paragraph.