Case No. 01-16034 (AJG), Jointly Administered.United States Bankruptcy Court, S.D. New York.
August 10, 2005
David R. Berz (DB-4517), Andrew M. Troop (pro hac vice), WEIL, GOTSHAL MANGES LLP, New York, New York, Attorneys for the Reorganized Debtors.
D. Farrington Yates, Daphnée Surpris, SONNENSCHEIN, NATH
ROSENTHAL LLP, New York, NY, Attorneys for Fireman’s Fund Insurance Company.
STIPULATION AND ORDER PURSUANT TO BANKRUPTCY RULE 9019 AND BANKRUPTCY CODE SECTION 502 REGARDING MAHONIA RELATED CLAIMS OF FIREMAN’S FUND INSURANCE COMPANY
ARTHUR GONZALEZ, Bankruptcy Judge
This Stipulation (the “Stipulation”) is entered into by and among Fireman’s Fund Insurance Company (the “Surety”) and Enron Corp. and affiliated 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;
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”);
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WHEREAS, the Plan became effective on November 17, 2004 (the “Effective Date”), and the Reorganized Debtors emerged from chapter 11;
WHEREAS, the Surety issued surety bonds prior to the Petition Date on behalf of certain of the Debtors for the benefit of various obligees (the “Surety Bonds”);
WHEREAS, Enron Corp. entered into a General Indemnity Agreement (“GIA”) with the Surety related to the Surety Bonds;
WHEREAS, the Surety filed numerous proofs of claim against the Debtors arising from the Surety Bonds and the GIA (the “Original Surety Claims”);
WHEREAS, certain of the Original Surety Claims include claims in connection with or with respect to certain Surety Bonds issued that concern particular obligations of certain Debtors to Mahonia Ltd. or Mahonia Natural Gas Ltd. (the “Mahonia Bonds”);
WHEREAS, the Original Surety Claims related to the Mahonia Bonds include claims for payments of principal (the “Mahonia Bond Payment Claims”) and claims for fees and/or expenses incurred (the “Mahonia Fee Claims”);
WHEREAS, the Surety assigned and transferred its Mahonia Bond Payment Claims to JPMorgan Chase Bank (“JPMC”) pursuant to (i) the Agreement for Assignment of Bankruptcy Claim, dated as of January 8, 2003 between the Surety, as assignor and JPMC, as assignee (“Mahonia Bond Assignment”). The Mahonia Fee Claims and all other claims related to the Surety Bonds other than the Mahonia Bond Payment Claims have been retained by the Surety and were not assigned to JPMC (the “Retained Claims”);
WHEREAS, the Mahonia Bond Assignment resulted in the partial transfer of those Original Surety Claims related to the Mahonia Bond Payment Claims represented by proof
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of claim numbers 19270, 19271 and 19276. These Original Surety Claims were amended and superceded by proof of claim numbers 25058, 25059, and 25062 (the “First Amended Surety Claims”). The First Amended Surety Claims were then further amended and superceded by proof of claim numbers 25075, 25076, and 25077 (collectively, the “Second Amended Surety Claims,” and together with the First Amended Surety Claims, the “Amended Surety Claims”). The Amended Surety Claims asserted Fee Claims and the NEPOOL Claim both as defined below;
WHEREAS, the Second Amended Surety Claims also include claims for fees and/or expenses incurred in connection with or with respect to Surety Bonds other than the Mahonia Bonds (the “Non-Mahonia Fee Claims,” and together with the Mahonia Fee Claims, the “Fee Claims”);
WHEREAS, except for the Fee Claims, NEPOOL Claim (defined below), and the First Amended Surety Claims, the Parties have resolved all of the otherwise Retained Claims pursuant to that certain Stipulation and Order Pursuant to Bankruptcy Rule 9019 and Bankruptcy Code Section 502 Regarding Certain Claims of Safeco Insurance Company of America, ISO New England, Inc., in its Capacity as Agent for the Participants in the New England Power Pool, and Fireman’s Fund Insurance Company ordered by this Court on April 22, 2005 at docket no. 25348 (the “NEPOOL Stipulation”) as well as that certain Order Approving Settlement Agreement and Mutual Release by and Among Enron Corp., Enron Funding Corp., Harrington International Insurance Limited, St. Paul Medical Liability Insurance Company, Federal Insurance Company, Fireman’s Fund Insurance Company, Zurich American Insurance Company, Lumbermens Mutual Casualty Company, SPCP Group, L.L.C., as agent for Silver
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Point Capital Fund, L.P., and Silver Point Capital Offshore Fund, Ltd., and Longacre Capital Partners (QP), L.P., dated May 24, 2005 (the “Monte Settlement Order”);
WHEREAS, pursuant to the NEPOOL Stipulation, the Parties previously liquidated but did not allow that portion of the Surety’s claim against Enron Corp. (contained in claim no. 25077) representing claims under the GIA in the aggregate amount of $11,252,401.80 (the “NEPOOL Claim”);
WHEREAS, the Parties agree that the NEPOOL Claim is liquidated in the amount of $11,252,401.80 in accordance with the NEPOOL Stipulation but dispute the appropriate classification of such claim as a Class 4 Claim (as the Surety contends) or a Class 185 Claim (as the Reorganized Debtors contend) (the “NEPOOL Classification Dispute”);
WHEREAS, on March 9, 2005, the Reorganized Debtors objected to the Fee Claims (the “Fee Claim Objection”) and the Surety filed a timely response in opposition to the Fee Claim Objection; 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 Fee Claim Objection and fix the amount and classification under the Plan of the Fee Claims in accordance with the terms of this Stipulation, (ii) establish a procedure for resolving the NEPOOL Classification Dispute, and (iii) disallow and expunge the First Amended Surety Claims retained by Surety and not transferred to JPMC as reflected above.
NOW, THEREFORE, IT IS HEREBY STIPULATED, CONSENTED TO ANDAGREED by and between the Parties that:
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1. The foregoing recitals are incorporated herein as if fully set forth in the text of this Stipulation.
2. This Stipulation shall not become effective until (i) it is approved and “So Ordered” by the Bankruptcy Court, and (ii) such order becomes final and non-appealable.
3. If the Stipulation does not become effective pursuant to paragraph 2 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 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 Amended Surety 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.
4. The First Amended Surety Claims, identified for ease of reference on Exhibit A, shall be and hereby are disallowed and expunged from the claims registry.[1]
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5. Each of the Second Amended Surety Claims shall be and hereby is allowed as a prepetition, general unsecured claim in the amount, and subject to the classification, set forth on Exhibit B to this Stipulation, with all deductions and setoffs deemed to have been taken or made (the “Allowed Claims”). Without limiting the foregoing sentence, each Second Amended Surety Claim shall be and hereby is allowed as an Allowed General Unsecured Claim (as defined in the Plan) against that Debtor identified on Exhibit B.
6. With the exception of resolving the proper classification of the NEPOOL Claim portion of claim no. 25077, the Allowed Claims identified in Exhibit B shall constitute a full and complete resolution of such claims for all purposes in this case, including for the purpose of distributions.[2] The NEPOOL Classification Dispute shall be set for hearing on September 15, 2005 for determination of the appropriate class of the NEPOOL Indemnity Claim.
7. To the extent not specifically allowed herein, the Second Amended Surety Claims are hereby disallowed, and the Fee Claim Objection is hereby deemed withdrawn.
8. Neither this Stipulation nor any exhibit, document, or instrument delivered hereunder, nor any statement, transaction, or proceeding in connection with the negotiation, execution, or implementation of this Stipulation, shall be (i) deemed to be construed as an admission by the Surety or the Reorganized Debtors of any act, matter, proposition, objection, or merit or lack of merit of any claim or defense, or (ii) referred to or used in any manner or for any purpose in any subsequent proceeding in this action, or any other action in any court or in any other proceeding, regarding any other claims of the Surety against the Debtors, including, but not limited to, the proceeding to resolve the NEPOOL Classification Dispute.
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9. Except as otherwise provided herein, the Surety, for itself and its respective affiliates, officers, trustees, directors, employees, attorneys, agents, predecessors, successors, heirs, executors, administrators, parents and subsidiaries, past and present, and assigns (each, a “Surety Releasing Party”), fully and forever remises, releases and discharges the Reorganized Debtors, the Debtors, and their respective affiliates, officers, trustees, directors, employees, attorneys, agents, predecessors, successors, heirs, executors, administrators, parents and subsidiaries, past and present, and assigns (collectively, the “Enron Released Parties”), of and from any and all claims relating to the Surety Bonds and the GIAs, which any of the Surety Releasing Parties has had, now has or hereafter can, shall or may have against the Enron Released Parties, for or by reason of or arising out of or in any way related to the Surety Bonds and the GIAs; provided, however, the Surety is not releasing (i) the Allowed Claims and its rights under this Stipulation or the Plan with respect to the Allowed Claims, (ii) any prepetition claims that they might have that are unrelated to the Surety Bonds and the GIAs, (iii) any claims allowed under the NEPOOL Stipulation and Monte Settlement Order and their rights under the NEPOOL Stipulation, the Monte Settlement Order, or the Plan with respect to such allowed claims, and (iv) the NEPOOL Claim.
10. Except as otherwise provided herein and except for the Surety’s obligations under this Stipulation, the Reorganized Debtors and the Debtors, for themselves and their respective affiliates, officers, trustees, directors, employees, attorneys, agents, predecessors, successors, heirs, executors, administrators, parents and subsidiaries, past and present, and assigns (each, a “Debtor Releasing Party”), fully and forever remise, release and discharge the Surety and any of its officers, directors, employees, attorneys, agents, predecessors, successors, administrators, and assigns (collectively, the “Surety Released Parties”), of and from any and all
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claims relating to the Surety Bonds and the GIAs, which the Debtor Releasing Parties have had, now have or hereafter can, shall or may have against the Surety Released Parties, for or by reason of or arising out of or in any way related to the Surety Bonds and the GIAs; provided, however, the Debtors are not releasing, and expressly reserve, any and all rights, objections and defenses that they may have with respect to (i) any claims that have been asserted or that may be asserted by the Surety that are unrelated to the Surety Bonds and the GIAs, (ii) the NEPOOL Stipulation and Monte Settlement Order, or (iii) the NEPOOL Claim.
11. This Stipulation shall be binding upon and shall inure to the benefit of the Parties and their legal representatives, predecessors, successors and assigns.
12. This Stipulation may be executed in counterparts by the Parties by either facsimile or original signatures.
13. This Court shall retain jurisdiction with respect to any and all issues or disputes that may arise in connection with this Stipulation.
14. 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.
15. 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 of the terms thereof and may not be modified or amended except by a writing signed by all the Parties.
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SO ORDERED.
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EXHIBIT A Claims to be Disallowed and Expunged Proof of Claim # Treatment
ENGMC 25058 Disallow and Expunge ENA 25059 Disallow and Expunge Enron Corp. 25062 Disallow and Expunge
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EXHIBIT B Allowed Claims