Case No. 01-16034 (AJG), Jointly Administered.United States Bankruptcy Court, S.D. New York.
June 20, 2005
David R. Berz (DB-4517), WEIL, GOTSHAL MANGES LLP, New York, New York, Attorneys for the Reorganized Debtors.
Lawrence J. Kotler (LK-8177), DUANE MORRIS LLP, Philadelphia, PA, Attorneys for the Federal Insurance Company.
STIPULATION AND ORDER RESOLVING PROOF OF CLAIM NUMBERS 9312 AND 9313 FILED BY FEDERAL INSURANCE COMPANY
ARTHUR GONZALEZ, Bankruptcy Judge
This Stipulation (the “Stipulation”) is entered into by and between Federal Insurance Company, (the “Surety”) and Enron Corp. (“Enron”) and Enron Energy Marketing Corp. (“EEMC”), as affiliated reorganized debtor entities (collectively, the “Reorganized Debtors” and, together with the Surety, the “Parties”).
RECITALS WHEREAS, commencing on December 2, 2001 (the “Petition Date”), and periodically thereafter, Enron Corp. and its affiliated debtor entities (prior to the Effective Date, the “Debtors”) filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code;
WHEREAS, the Debtors’ chapter 11 cases were procedurally consolidated for administrative purposes, and prior to emergence from chapter 11, the Debtors continued to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;
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WHEREAS, on July 15, 2004, the Court entered an order (the “Confirmation Order”) confirming the 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”);
WHEREAS, the Plan became effective on November 17, 2004 (the “Effective Date”), and the Reorganized Debtors emerged from chapter 11;
WHEREAS, prior to the Petition Date, the Surety issued surety bonds on behalf of certain of the Debtors for the benefit of various obligees (the “Surety Bonds”);
WHEREAS, in order to collateralize the obligations of the Debtors under these bonds, Enron entered into a General Indemnity Agreement (“GIA”) with the Surety related to the Surety Bonds;
WHEREAS, subsequent to the Petition Date, the Surety filed numerous proofs of claim against the Debtors arising from the Surety Bonds and the GIA (the “Surety Claims”);
WHEREAS, on or about June 29, 2000 and as part of its issuance of Surety Bonds, the Surety issued two surety bonds (the “PGE Bonds”) on behalf of EEMC and in favor of Pacific Gas
Electric (“PGE”);
WHEREAS, one of the bonds was in the principal amount of $30,000,000 (the “EEMC Bond”) and was issued in connection with a contract dated October 31, 1997, for the purchase and transmission of electrical energy, entered into by and between EEMC and PGE (the “Energy Purchase Agreement”);
WHEREAS, the second bond was in the principal amount of $2,000,0000 (the “Surety Bond”) and was issued in connection with a series of agreements entered into by and
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between EEMC and PGE pertaining to the purchase and transmission of natural gas (collectively, the “GTS Agreements”);
WHEREAS, on or about January 25, 2002, PGE made a demand for payment under the PGE Bonds based upon EEMC’s alleged breach of the Energy Purchase Agreement and the GTS Agreements (the “PGE Demand”);
WHEREAS, on or about April 9, 2004, PGE filed suit against the Surety in the United States District Court for the Northern District of California seeking, inter alia, to recover on account of the PGE Demand (the “Bond Payment Litigation”);
WHEREAS, among the Surety Claims, the Surety filed contingent, secured claims based upon the maximum possible exposure under the PGE Bonds as well as for claims against Enron under the GIA;
WHEREAS, the Debtors’ claim servicing agent has designated these claims as follows: (i) proof of claim no. 9312 against Enron and (ii) proof of claim no. 9313 against EEMC (the “Claims”);
WHEREAS, subsequent to the Petition Date, the Debtors have filed three separate objections to the Claims, including, without limitation, the Debtors’ Sixteenth Omnibus Objection to Claims, the Debtors’ Twenty-Fifth Omnibus Objection to Claims and the Debtors’ Sixty-Seventh Omnibus Objection Filed in Aid of Consummation of Joint Plan to Reclassify Proofs of Claim Filed as Administrative and Priority Claims (collectively, the “Objections”);
WHEREAS, on April 7, 2005, the Surety and PGE resolved the Bond Payment Litigation by entering into a certain settlement agreement, whereby, the Surety was required to pay a certain sum, more particularly specified in the settlement agreement by and between
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PGE and the Surety (the “Settlement Payment”), which resolved all of PGE’s claims under the PGE Bonds;
WHEREAS, the Surety has made and provided proof to the Debtors of its payment of the Settlement Payment; and
WHEREAS, to avoid the expense and time of litigation, the outcome of which is uncertain, the Reorganized Debtors and the Surety desire to (i) resolve the Objections and (ii) fix the amount and classification under the Plan of the Claims in accordance with the terms of this Stipulation.
NOW, THEREFORE, in consideration of the foregoing, the Parties, by their undersigned counsel, stipulate and agree as follows:
AGREEMENT
1. This Stipulation shall not become effective until it is approved and “So Ordered” by the Bankruptcy Court, and (iii) such order becomes final and non-appealable.
2. If the Stipulation does not become effective pursuant to paragraph 1 above, (a) the Stipulation shall be deemed null and void; (b) none of the Parties to the Stipulation shall be deemed to have waived any rights, claims and/or defenses that it may have had and that existed before the execution of the Stipulation; (c) the Parties shall be restored to their respective positions immediately before execution of the Stipulation; and (d) neither the Stipulation nor any exhibit, document, or instrument delivered hereunder, nor any statement, transaction, or proceeding in connection with the negotiation, execution, or implementation of the Stipulation, shall be (i) with prejudice to any person or party herein, (ii) deemed to be or construed as an admission by any of the Parties herein of any act, matter, proposition, or merit or lack of merit of any claim or defense, or (iii) referred to or used in any manner or for any purpose in any
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subsequent proceeding in this action, or in any other action in any court or in any other proceeding. The Parties further agree that in the event the Bankruptcy Court does not approve this Stipulation, the Claims shall remain outstanding and subject to objection by the Reorganized Debtors notwithstanding any time limitations in Article 21.1, or any other provision, of the Plan.
3. Each of the Claims shall be and hereby is reclassified and allowed as a prepetition, general unsecured claim in the amount, and subject to the classification, set forth on Exhibit A to this Stipulation, with all deductions and setoffs deemed to have been taken or made (the “Allowed Claims”). The agreement set forth in this Stipulation constitutes a full and complete resolution of the Claims in their entirety.
4. The Objections shall be and hereby are deemed withdrawn. 5. To the extent not specifically allowed herein or by way of another order of this Court, the Surety Claims are hereby disallowed.
6. This Stipulation shall be binding upon and shall inure to the benefit of the Parties and their legal representatives, predecessors, successors and assigns.
7. This Stipulation may be executed in counterparts by the Parties by either facsimile or original signatures.
8. This Court shall retain jurisdiction with respect to any and all issues or disputes that may arise in connection with this Stipulation.
9. This Stipulation shall be governed by, construed and enforced in accordance with applicable federal bankruptcy law and the laws of the State of New York.
10. This Stipulation sets forth the entire understanding of the Parties pertaining to the subject matter hereof and is intended to be the complete and exclusive statement
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of the terms thereof and may not be modified or amended except by a writing signed by all the Parties.
SO ORDERED.
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EXHIBIT A Allowed Fee Claims
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