Case No. 01-16034 (AJG), Jointly Administered.United States Bankruptcy Court, S.D. New York.
October 22, 2004
DAVID N. KELLEY, United States Attorney for the Southern District of New York, Attorney for the United States of America.
DAVID S. JONES (DJ-5276), Assistant United States Attorney, WEIL, GOTSHAL MANGES, Melanie Gray, Martin J. Bienenstock (MB 3001), Brian S. Rosen (BR 0571), Melanie Gray (Pro Hac Vice), WEIL, GOTSHAL MANGES LLP, New York, New York, Attorneys for Debtors and Debtors in Possession.
STIPULATION AND ORDER RESOLVING 26TH OMNIBUS CLAIM OBJECTION AS AGAINST CUSTOMS CLAIM NOS. 17042 AND 17043, AND 33RD OMNIBUS CLAIM OBJECTION AS AGAINST BUREAU OF CUSTOMS AND BORDER CLAIM NO. 24301 AND LIFTING STAY TO EFFECT SETOFF
ARTHUR GONZALEZ, Bankruptcy Judge
WHEREAS, on December 2, 2001, Enron Corp. (“Enron”) along with certain of its subsidiaries (the “Debtors”) filed a voluntary petition for relief under Chapter 11, Title 11 of the United States Code, 11 U.S.C. § 101, et seq., as amended (the “Bankruptcy Code” or the “Code”); and
WHEREAS, the Debtors have continued in the possession and control of their assets and their business as Debtors in Possession pursuant to sections 1107 and 1108 of the Bankruptcy Code; and
WHEREAS by order, dated July 15, 2004 (the “Confirmation Order”), the Bankruptcy Court confirmed the Debtors’ Supplemental Modified Fifth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, dated July 2, 2004 (the “Plan”), and entered findings of fact and conclusions of law (the “Findings and Conclusions”) in connection therewith, in accordance with section 1129 of the Bankruptcy Code.
WHEREAS, numerous agencies of the United States have asserted claims against Enron entities, and Enron asserts entitlement to payment of funds from various United States agencies; and
WHEREAS, on or about October 15, 2002, the United States Customs Service (subsequently merged into the Bureau of Customs and Border Protection within the Department
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of Homeland Security, and herein referred to as “Customs”) filed three proofs of claim relating to customs duties against (a) Enron Liquid Fuels, Inc. in the amount of $413,328.07, all of which was an unsecured priority claim (the “Customs Enron Liquid Fuels Claim,” assigned Claim No. 17043); (b) Enron Gas Liquids, Inc., in the amount of $10,785,682.08, of which $7,402,826.69 was an unsecured priority claim and the remainder was a general unsecured claim (the “Customs Enron Gas Liquids Claim,” assigned Claim No. 17042); and (c) Enron Metals Commodity Corp., in the amount of $454,077.60, of which $449,706.08 was a general unsecured claim, $4,371.52 was a secured claim, and an additional unliquidated amount was a priority claim (the “Customs Enron Metals Claim” assigned Claim No. 24301) (collectively, the “Customs Claims”); and
WHEREAS, the Customs Enron Metals Claim was withdrawn on September 26, 2003, while significant portions of the remaining Customs Claims represented “accelerated drawbacks” of Customs duties that were refunded by Customs to Enron entities pending final administrative action, which would remain a potential liability of the Enron entity at issue to Customs until and unless such administrative action was finalized without change; and
WHEREAS, Customs has resolved a number of outstanding entries since the time it filed its initial claims against Enron entities; and
WHEREAS, on or about October 14, 2003, in light of the administrative actions completed by that date, Customs filed amended proofs of claim against (1) Enron Gas Liquids, Inc., in the amount of $5,991,066.35 (assigned Claim No. 24300), and (2) Enron Liquid Fuels, Inc., in the amount of $205,809.42 (assigned Claim No. 24301); and
WHEREAS, on or about January 9, 2004, Debtors filed a “Twenty-Sixth Omnibus Objection to Proofs of Claim (Duplicate Claims and Amended or Superceded
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Claims),” objecting to and seeking to disallow and expunge,inter alia, Claim Nos. 17042 and 17043, while leaving on file Claim Nos. 24300 and 24301; and
WHEREAS, on or about May 11, 2004, Debtors filed a “Thirty-Third Omnibus Objection to Proofs of Claim (No Amount Due per Debtors’ Books and Records and Insufficient Proof),” objecting to and seeking to disallow and expunge, inter alia
Claim Nos. 24300 and 24301; and
WHEREAS, Customs has continued to complete administrative action with respect to additional entries by Enron entities, and has made final determinations with respect to numerous additional entries, which determinations are summarized at Exhibit A
hereto; and
WHEREAS, as a result of the determinations made by Customs, and as reflected in Exhibit A hereto with respect to the Customs Enron Gas Liquids Claim and the Customs Enron Liquid Fuels Claim, Enron Gas Liquids owes Customs an aggregate amount of $67,980.97 and Customs owes Enron Gas Liquids an aggregate amount of $45,448.55;
WHEREAS, these amounts represent prepetition obligations of each party to the other; and
WHEREAS, the parties wish to resolve the Customs Claims without the expense and burden of further litigation, both by amending the Customs Claims and by permitting an offset of amounts due to and from each party hereto;
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and between the parties hereto, through their respective undersigned counsel, that:
1. The Debtors’ Objections to claim nos. 17042 and 17043 on the Twenty-Sixth Omnibus Objection and claim nos. 24300 and 24301 on the Thirty-Third Omnibus
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Objection are resolved as provided herein, without costs or attorney’s fees to either the Debtors or Customs.[1]
2. The Customs Enron Liquid Fuels, Inc. Claim No. 17043, Enron Gas Liquids, Inc. Claim No. 24300, and Enron Liquid Fuels, Inc. Claim No. 24301 will be disallowed and expunged and the Customs Enron Gas Liquids Claim No. 17042 will be allowed in the amount of $67,980.97 as a general unsecured claim, except that the Customs Claims are secured to the extent they are secured by right of setoff, and specifically subject to the setoff authorized by paragraph 4 herein.
3. Customs owes Enron Gas Liquids an aggregate amount of $45,448.55 in connection with liquidated prepetition entries.
4. The automatic stay is hereby lifted solely to the extent that Customs may offset, without further order of the Court, the $45,448.55 otherwise due from Customs to Enron against Customs’ $67,980.97 claim against Enron, resulting in a net remaining Customs Claim of $22,532.42, which shall be classified as a secured claim solely to the extent it is secured by any right of setoff as against funds held by Customs or any other agencies of the United States, and which to the extent not so secured shall be classified as a general unsecured claim. Nothing in this Stipulation and Order shall authorize any setoff by Customs other than in the amount specified in this paragraph, nor shall anything in this Stipulation and Order preclude Customs or any other agency from pursuing or exercising any other right of setoff that it may enjoy.
5. Customs Enron Gas Liquids Claim No. 17042 shall be and hereby is an Allowed General Unsecured Claim against Enron Gas Liquids, to be included in and to receive distributions in accordance with Class 17 of the Plan, in the total net amount of $22,532.42, with
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all deductions and setoffs deemed to have been taken or made as provided in the Stipulation and Order.
6. Nothing in this Stipulation and Order shall release, discharge, or exculpate any entity from its obligations or liabilities as surety for the Debtor’s obligations under the customs laws and regulations of the United States.
7. Customs shall retain its right to offset prepetition refunds owed to the Debtor by Customs or any other federal agency against prepetition debts owed to Customs by the Debtor.
8. This Stipulation and Order, and each of its terms and conditions, is subject to the approval of the Bankruptcy Court. In the event that the Bankruptcy Court does not approve this Stipulation and Order, this agreement shall be null and void and of no force and effect.
SO ORDERED.