In re ENRON CORP., et al., Chapter 11, Reorganized Debtors.

Case No. 01-16034 (AJG), Jointly Administered.United States Bankruptcy Court, S.D. New York.
May 16, 2005

Labov Mechanical, Inc., By: Charles F. Kenny, Peckar
Abramson, P.C., EPC Estate Services, Inc. f/k/a National Energy Production Company (“NEPCO”), By: Andrew M. Troop, (Pro Hac Vice), Weil, Gotshal Manges LLP, Boston, MA, for attorneys.

ARTHUR GONZALEZ, Bankruptcy Judge

This settlement stipulation (the “Stipulation”) is entered into by and among reorganized EPC Estate Services, Inc. (f/k/a the National Energy Production Company or “NEPCO”) and Labov Mechanical, Inc. (“Labov”).

RECITALS A. Background

1. Commencing on December 2, 2001 (the “Petition Date”) and periodically thereafter, each of Enron Corp. (“Enron”) and certain of its affiliated entities (collectively, the “Debtors”) filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “BankruptcyCode”). NEPCO commenced its chapter 11 case on May 20, 2002. The Debtors’ chapter 11 cases were procedurally consolidated for administrative purposes.

2. Prior to emergence from chapter 11, the Debtors continued to be authorized 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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3. On July 15, 2004 (the “Confirmation Date”), the Bankruptcy 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”).[1]

4. On November 17, 2004 (the “Effective Date”), the Plan became effective, and as of the Effective Date, the Debtors became the “Reorganized Debtors.”

B. The Labov Claims

5. On August 26, 2002, Labov filed two (2) partially secured claims against NEPCO, each in the amount of $6,781,379.00 (“Claim Nos. 3104 and 3038”).

6. On October 20, 2002, Labov filed an unsecured claim against NEPCO in the amount of $3,828,328.15 (“Claim No. 21954”), which replaced Claim Nos. 3104 and 3038.

7. The Debtors objected to Claim Nos. 3104 and 3038 on their First Omnibus Objection to Proofs of Claim (Claims Based on Duplicate Claims and Amended or Superseded Claims) (Docket No. 9601). By order dated April 25, 2003 (Docket No. 10509), Claim Nos. 3104 and 3038 were disallowed and expunged, leaving Claim No. 21954 as the remaining claim.

8. On February 25, 2005, the Reorganized Debtors objected to Claim No. 21954 on their Eighty-Second Omnibus Objection to Proofs of Claim and Request for Modification and Allowance of Claims (the “Eighty-Second Omnibus”) (Docket No. 23914), which seeks, among other things, the allowance of Labov’s claim in a reduced amount. On

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March 28, 2005, Labov filed its opposition to the Eighty-Second Omnibus (Docket No. 24715).

C. The Preference Action

9. On November 18, 2003, Enron commenced an adversary proceeding against Labov seeking to avoid and recover a transfer made to Labov in the amount of $858,398.96 as a preferential transfer and/or a fraudulent transfer (the “Transfer”). This adversary proceeding has been docketed as number 03-93047 (AJG) (the “Adversary Proceeding”). Labov disputes all or any part of the Transfer can be avoided.

D. Desire to Resolve Claim No. 21954 Without Affecting theAdversary Proceeding

10. NEPCO and Labov (collectively, the “Parties”) wish to resolve their respective rights in, to and with respect to Claim No. 21954 on the terms set forth in this Stipulation without the cost, expense and uncertainty of litigation. However, the Parties do not wish to affect the claims asserted or defenses raised in the Adversary Proceeding.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, NEPCO and Labov stipulate and agree as follows, subject only to Bankruptcy Court approval of this Stipulation:

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11. Claim No. 21954 shall be allowed as a general unsecured claim against NEPCO in the amount of $3,198,228.43, which claim shall be classified as a class 67 claim under the Plan. Distributions on Claim No. 21954 shall be subject to resolution of the Adversary Proceeding, and if the Adversary Proceeding is resolved in favor of Enron, return of the amount determined to be avoided in the Adversary Proceeding (the “Avoided Transfer”).

12. But for (a) Labov’s rights to receive distributions under the Plan with respect to Claim No. 21954 as set forth in paragraph 11 above, (b) all claims and defenses asserted in the Adversary Proceeding and (c) Labov’s rights to assert a claim for any Avoided Transfer pursuant to section 502(h) of the Bankruptcy Code and Rules 3002(c)(3) and 3003(c)(3) of the Federal Rules of Bankruptcy Procedure, Labov waives, releases and withdraws all other Claims that were or could have been asserted against any and all of the Debtors or the Reorganized Debtors, including but not limited to any liabilities that may appear on the Debtors’ Schedules. All proofs of claim and all scheduled liabilities for Labov, other than Claim No. 21954, shall be disallowed and expunged in their entirety.

13. Nothing herein is intended to, nor shall it, affect, impact or release any claim or defense of Labov against NEPCO in the Adversary Proceeding nor shall this Stipulation affect, impact or release any claim or defense of any of the Debtors or the Reorganized Debtors against Labov in the Adversary Proceeding.

14. The Bankruptcy Court shall retain jurisdiction over the Parties and this Stipulation, including, without limitation, for the purposes of interpreting, implementing and enforcing the Stipulation’s terms and conditions.

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15. This Stipulation shall be effective upon it being “so-ordered” by the Bankruptcy Court.

Executed as a sealed instrument as of the 6th day of May, 2005.

So Ordered.

[1] Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Plan.