IN RE ENRON CORP. (Bankr.S.D.N.Y. 2005)

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.
December 20, 2005

Sandra E. Mayerson (SEM-8119), HOLLAND KNIGHT LLP, New York, New York, ATTORNEYS FOR FORMOSA PLASTICS CORP., U.S.A.

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 THE REORGANIZED DEBTORS.

STIPULATION AND ORDER RESOLVING REORGANIZED DEBTORS’ OBJECTION TO PROOF OF CLAIM NO. 5565 FILED BY FORMOSA PLASTICS CORP., U.S.A.
ARTHUR GONZALEZ, Bankruptcy Judge

Enron Liquid Fuels, Inc. (“ELFI”), as reorganized debtor, and Formosa Plastics Corp., U.S.A. (“Creditor”) (Creditor and ELFI are collectively referred to hereafter as the “Parties”), by and through their respective undersigned counsel, hereby stipulate and agree as follows:

RECITALS: Procedural Background:

A. On December 2, 2001 (the “Petition Date”), and from time to time thereafter, Enron Corp. and certain of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). From and after the Petition Date, the Debtors managed and operated their businesses as debtors-in-possession pursuant to Bankruptcy Code sections 1107 and 1108.

B. 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 as of July 2, 2004 (the “Plan”). On November 17, 2004, the Plan became effective and the Debtors emerged from chapter 11 (the “Reorganized Debtors”).

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The Proof of Claim:

C. On September 30, 2002, Creditor filed Claim No. 5565 against ELFI (the “Formosa Claim”). The Formosa Claim — filed as an unsecured claim in the amount of $14,700,000 — is allegedly based on a termination payment (the “Termination Payment”) allegedly owing by ELFI to Creditor in connection with a Master Plastics Purchase and Sale Agreement, dated September 27, 2001 (the “MPPSA”), between Creditor and ELFI, and confirmations for the purchase of polypropylene and polyethylene in connection therewith (the “Confirmations”). The MPPSA and Confirmations were allegedly terminated by Creditor pursuant to a letter, dated December 12, 2001 (the “Termination Letter”), a copy of which is attached to the Formosa Claim.

D. On or about February 22, 2005, the Reorganized Debtors filed an objection to the Formosa Claim (the “Objection”), pursuant to which the Reorganized Debtors alleged, among other things, that the Termination Payment was an unenforceable penalty and should not be enforced, and sought to have the Formosa Claim disallowed. See Docket No. 23812.

E. On or about June 8, 2005, Creditor filed its response to the Objection (the “Response”). See Docket No. 26087.

F. The Parties now desire to resolve the Objection and the Formosa Claim on the terms and conditions provided herein.

AGREEMENT
NOW, THEREFORE, IT IS HEREBY AGREED BY THE PARTIES, BY AND THROUGH THEIR RESPECTIVE COUNSEL, AS FOLLOWS:

1. Proof of Claim No. 5565 shall be disallowed as filed, and allowed as a Class 39 General Unsecured Claim in the amount of $9,400,000.00 (the “Allowed Claim”).

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2. Payments and/or distributions on account of the Allowed Claim will be made in the manner provided and at the time set forth in the Plan. All Scheduled Liabilities related to Creditor as set forth in the liability schedules filed with the Court are hereby disallowed in their entirety in favor of the Allowed Claim.

3. The Reorganized Debtors and Creditor each agree that this Stipulation and Order is the entire understanding of the Parties and is intended to be the complete and exclusive statement of the terms thereof and may not be modified or amended except by a writing signed by all the Parties hereto, which shall be so ordered by the Court.

4. This Court shall retain jurisdiction with respect to any and all issues or disputes that may arise in connection with this Stipulation and Order.

5. This Stipulation and Order shall be binding on the Parties hereto and their respective successors and assigns.

6. This Stipulation and Order may be executed in any number of counterparts and shall constitute one agreement, binding upon all Parties thereto as if all Parties signed the same document; all facsimile signatures shall be treated as originals for all purposes.