Case No. 01-16034 (AJG), Jointly AdministeredUnited States Bankruptcy Court, S.D. New York
September 4, 2003
Barry J. Dichter, Esq. and Evan R. Fleck, Esq., New York, New York, to the DEBTOR Maureen A. Sweeney, Esq., Boardman, Ohio, to ASSOCIATED PAPER STOCK, INC.
STIPULATION AND ORDER RESOLVING THE STATUS OF THAT CERTAIN AGREEMENT BETWEEN ENRON NORTH AMERICA CORP. AND ASSOCIATED PAPER STOCK. INC.
ARTHUR GONZALEZ, Bankruptcy Judge
This stipulation and order (“Stipulation”) is hereby entered into by and among the following parties as of August 25, 2003 (the “Execution Date”): (a) Enron North America Corp. (“ENA” or the “Debtor”), on the one hand, and (b) Associated Paper Stock, Inc. (“Associated”), on the other hand, subject to approval of this Court.
RECITALS
WHEREAS, ENA and its affiliated debtors and debtors in possession (collectively, including ENA, “Enron”) filed voluntary petitions for relief under chapter 11 of Title 11 of the United States Code, 11 U.S.C. § 101-1330 (as amended, the “Bankruptcy Code”), on or after December 2, 2001 (the “Petition Date”), in the United States Bankruptcy Court for the Southern District of New York (the “Court”) (collectively, the “Reorganization Cases”);
WHEREAS, on May 22, 2003, a hearing was held before the Court to consider Giant Eagle, Inc.’s Second Amended Motion for Relief From Automatic Stay and For Other Relief (the “Stay Relief Motion”);
WHEREAS, on June 3, 2003, Associated filed a Motion to Intervene As Interested Party in the contested matter between ENA and Giant Eagle, Inc.;
The Agreement Between ENA and Associated
WHEREAS, prior to the Petition Date, ENA and Associated entered into a three-year contact (the “Contract”) pursuant to which ENA agreed to pay Associated a fixed rate per ton for transportation of old corrugated cardboard;
WHEREAS, as of the Petition Date, ENA no longer required the services provided by Associated under the Contract;
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WHEREAS, the parties have entered into negotiations to resolve the issues relating to the Contract and the Stay Relief Motion;
WHEREAS, the parties to this Stipulation wish to settle and resolve their disputes in an efficient and cost-effective manner, and have reached a settlement to resolve these disputes;
WHEREAS, this Court possesses the authority to authorize the Debtor to enter into the Stipulation pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), which provides, in relevant part, that “[o]n motion by the [debtor in possession] and after notice and a hearing, the court may approve a compromise or settlement.” F.R.Bankr.P. 9019(a). The standard to be utilized by courts in reviewing a proposed compromise and settlement is whether the settlement is in the best interest of the debtor’s estate. Vaughn v. Drexel Burnham LambertGroup, Inc. (In re Drexel Burnham Lambert Group, Inc.), 134 B.R. 499, 505
(Bankr. S.D.N.Y. 1991) (citing In re Energy, Inc., 886 F.2d 921 (7th Cir. 1989)). The court need not “decide the numerous questions of law and fact raised by [the parties] but rather canvass the issues and see whether the settlement `fall[s] below the lowest point in the range of reasonableness.'” Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599, 608 (2d Cir. 1983), cert. denied, 464 U.S. 822 (1983) (quoting Newman v.Stein, 464 F.2d 689, 693 (2d Cir. 1972), cert. denied, 409 U.S. 1039
(1972)).
NOW, THEREFORE, ENA and Associated agree to settle their disputes relating to the Contract on the terms set forth herein to avoid the further risk, expense, uncertainty, inconvenience and distraction of litigation, and to minimize the losses incurred by the Debtor’s estate if the matters referenced herein continue unresolved, thereby continuing to consume the time and attention of the Debtor and risk a less satisfactory outcome as the result of litigation. In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto stipulate and agree as follows and respectfully request this Court approve this Stipulation:
1. Contract Rejected. The parties agree that the Contract shall be deemed to be, and shall be, automatically rejected and terminated upon the approval of this Stipulation by the Court. The parties further agree that as a result of such rejection, with respect to the settlement embodied in this Stipulation, Associated waives (a) any rejection damage claim, (b) any claim for liquidated damages arising under the Contract, and (c) any other monetary claim, in any case, that Associated may possess or assert against ENA or any entity affiliated with ENA relating to or under the Contract.
2. No Payments. The parties agree that, in connection with the Contract rejection referenced in paragraph one, the parties shall have no financial obligations to one another.
3. Entire Agreement. This Stipulation constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, written and oral, between the parties with respect to the subject matter hereof. All representations, warranties, promises, inducements or statements of intention made by the parties hereto are embodied in this Stipulation, and the parties hereto shall not be bound
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by, or liable for, any alleged representation, warranty, inducement or statement of intention that is not expressly embodied herein.
4. Effective Date of the Stipulation This Stipulation shall be binding on the date (the first such date, the “Effective Date”) that each of the following has occurred: (a) each of the parties hereto has executed this Stipulation; (b) this Stipulation has been approved and so ordered by this Court; and (c) the Settlement Agreement and Mutual Release among ENA, Enron Energy Services, Inc. and Giant Eagle, Inc. has been approved by this Court and the Payment Date thereunder has occurred. In the event that any of the conditions described in this Section 4(a), (b) and (c) do no occur, this Stipulation shall be deemed to be null and void and neither party shall have any obligations to the other Party arising out of this Stipulation, save and except for the obligations and/or provisions set forth in Sections 5 and 6(d), which provisions are intended to survive the expiration or earlier termination of this Stipulation.
5. Governing Law. This Stipulation and the rights and duties of the parties hereunder will be governed by and construed, enforced and performed in accordance with the law of the State of New York, without giving effect to principles of conflicts of laws that would require the application of laws of another jurisdiction. The parties acknowledge and agree that the Bankruptcy Court shall have the exclusive jurisdiction over this Stipulation and that any claims arising out of or related in any manner to this Stipulation shall be properly brought only before the Bankruptcy Court. If and to the extent that the bankruptcy case is closed or dismissed, the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City shall have exclusive jurisdiction over this Stipulation and any such claims.
6. Miscellaneous.
(a) Survival All representations, warranties, agreements, covenants and obligations herein are material, shall be deemed to have been relied upon by Associated, and shall survive the Effective Date.
(b) Successors and Assign. This Stipulation shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
(c) Counterpart Execution; Facsimile Execution This Stipulation may be executed in one or more counterparts, each of which shall be an original but all of which, taken together, shall constitute one agreement binding all of the parties hereto. This Stipulation may be executed by telecopier; provided, however, that any party that transmits an executed counterpart of this Stipulation by facsimile shall deliver an original of such counterpart promptly after delivery of the facsimile to the other party hereto.
(d) Admissions. This Stipulation is not an admission of any liability but is a compromise and settlement and this Stipulation shall not be treated as an admission of liability. All communications (whether oral or in writing) between and/or among the parties, their counsel and/or their respective representatives relating to, concerning or in connection with this Stipulation, or the matters covered hereby and thereby, shall be governed and protected in
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accordance with the Federal Rule of Evidence 408 and New York Civil Practice Law and Rules Section 4547 to the fullest extent permitted by law.
(e) Representation by Counsel. Each of the parties hereto acknowledges that it has been represented in the negotiation of this Stipulation by attorneys of its own choosing and that no party has relied upon any representations from the other party except as specifically provided in this Stipulation.
(f) Consent to Terms. Each party to this Stipulation hereby acknowledges and agrees to the terms and matters set forth herein.
(g) Further Assurances. Upon the parties’ execution of this Stipulation, each of the parties agrees to take all reasonable actions necessary to support the approval of this Stipulation by this Court and to take all actions as the other party may reasonably request in order to consummate the transactions contemplated hereunder and to effectuate the intent and purposes of this Stipulation.
(h) Effect of Court Disapproval of Stipulation This Stipulation is in settlement of disputes. Any concessions or settlements reflected herein, if any, are made for purposes of this Stipulation only, and if the Effective Date does not occur, the parties hereto shall not be bound or deemed prejudiced by any such concession or settlement.
(i) No Prior Assignment. Each party represents and warrants that it is the only party who, to its knowledge, has any interest in any claims released hereby and that none of such claims, nor any part thereof, have been assigned, granted or transferred in any way to any party.
(j) Notices. All communications between the parties hereto or notices or other information sent in connection herewith must be in writing and sent by (i) personal delivery, (ii) reputable overnight courier service, freight prepaid, (iii) certified mail, return receipt requested, postage prepaid, or (iv) telecopy or other facsimile transmission (provided that if sent by telecopy or other facsimile transmission, such must also be sent by express mail or courier (for next business day delivery)), addressed as follows:
If to ENA:
Enron North America Corp. 1400 Smith Street Houston, Texas 77002 Attn: Cheryl Lindeman, Esq. Telephone: (713) 345-2849 Facsimile: (713) 646-3490
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with a copy to:
Cadwalader, Wickersham Taft LLP Special Counsel to ENA 100 Maiden Lane New York, New York 10038 Attn: Barry J. Dichter, Esq. Telephone: (212) 504-6000 Facsimile: (212) 504-6666
If to Associated:
Associated Paper Stock, Inc. 11510 South Avenue PO Box 710 North Lima, Ohio 44452 Attn: Thomas Yanko Telephone: (330)549-5311 Facsimile: (330)549-0111
with a copy to:
Maureen Sweeney, Esq. 120 Marwood Circle Post Office Box 3965 Boardman, Ohio 3965 Telephone: (330) 726-1654 Facsimile: (330) 726-4608
and
The parties may designate another addressee or change its address for notices and other communications hereunder by a notice given to the other parties in the manner provided in this Paragraph. A Notice or other communication sent in compliance with the provisions of this section shall be deemed good and sufficient service regardless of whether the parties actually receive such notice.
(k) Expenses. Each party shall be responsible for the payment of (a) its own costs and expenses (including reasonable attorneys’ fees), and (b) all of its costs and expenses (including reasonable attorneys’ fees) in connection with the matters referred to in this Stipulation. Nevertheless, in any action or proceeding to enforce this Stipulation, the prevailing party shall be entitled to payment of its reasonable costs and expenses (including reasonable attorneys’ fees).
(l) Filing. As soon as reasonably practicable, the ENA will make its reasonable best efforts to file with, and seek approval of, this Stipulation with the Court.
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(m) No Third Party Beneficiaries. This Stipulation is solely for the benefit of the parties hereto and any assignees and successors in interest permitted under the terms of this Stipulation, and no other party is a beneficiary hereof.
IN WITNESS WHEREOF, the parties have executed this Stipulation by their duly authorized officers as of the date first set forth above.
CADWALADER, WICKERSHAM TAFT LLP
APPROVED AND SO ORDERED THIS
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