Case No. 02 B 12059, (Jointly Administered).United States Bankruptcy Court, N.D. Illinois, Eastern Division.
May 3, 2005
ORDER (A) APPROVING MEDIATION PROCEDURES FOR PREFERENCE ADVERSARY PROCEEDINGS FILED BY DLA PIPER RUDNICK GRAY CARY US LLP (FORMERLY KNOWN AS PIPER RUDNICK LLP) AND APPOINTMENT OF MEDIATOR; (B) AUTHORIZING OPT-OUT PROCEDURES AND (C) MODIFYING CERTAIN FINAL PRETRIAL ORDERS
CAROL DOYLE, Bankruptcy Judge
THIS MATTER COMING TO BE HEARD on the Motion of the Post-Confirmation Committee (the “Committee”) for an Order (a) Approving Mediation Procedures and Appointment of Mediator and (b) Modifying Certain Final Pretrial Orders (the “Motion”);[1] the Court having considered the Motion; the Court having jurisdiction over the subject matter of this core proceeding and over the parties hereto; the Court being satisfied that the relief requested in the Motion is in the best interests of the Debtors’ estates, their creditors, and the parties to the Adversary Proceedings; proper and adequate notice of the Motion and the hearing thereon having been given and no other or further notice being necessary; and after due deliberation thereon,
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. Pursuant to 11 U.S.C. § 105(a), Fed.R.Bankr.P. 7016, Fed.R.Civ.P. 7016, and Local Bankruptcy Rule 9060, the Committee and the defendants in the Adversary Proceedings are hereby authorized and directed to utilize the Mediation Procedures, as modified and attached
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to this Mediation Order as Exhibit 1, to attempt to liquidate and settle the Adversary Proceedings through alternative dispute resolution.
2. The Committee shall serve this Mediation Order and the Mediation Procedures upon all Defendants who have appeared in their respective Adversary Proceedings (the “Subject Defendants”) on or before May 3, 2005. Service of the Mediation Order and Mediation Procedures shall be made upon counsel of record for the Subject Defendants.
3. The Mediation Procedures are hereby approved in all respects and are incorporated by reference herein.
4. Notwithstanding anything to the contrary contained in this Mediation Order, any Subject Defendant may elect not to be bound by the terms of this Mediation Order by completing and serving upon Counsel for the Committee an Opt-Out Notice (the “Opt-Out”) in a form substantially similar to that attached to this Mediation Order as Exhibit 2 on or before June 3, 2005.
5. Except as otherwise provided herein, upon service of this Mediation Order and the Mediation Procedures by the Committee on the Subject Defendants, the Mediation Procedures shall be binding on the Subject Defendants.
6. The Mediator, described and identified in the Mediation Procedures, is hereby approved and appointed to conduct mediations for each of the Adversary Proceedings, consistent with the terms of this Mediation Order.
7. If the Mediator has a conflict with respect to any Adversary Proceeding (a “Conflicted Adversary Proceeding”), the Mediator shall disclose such conflict, in writing, to all parties to the Conflicted Adversary Proceeding (the “Conflict Notice”) on or before May 16, 2005. Upon receipt of the Conflict Notice, the parties to the Conflicted Adversary Proceeding
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may mutually agree, with such agreement to be memorialized in writing, to proceed with the Mediator and waive the disclosed conflicts. In the event the parties to any Conflicted Adversary Proceeding have not waived the disclosed conflicts on or before June 3, 2005, the parties shall be deemed to have submitted an Opt-Out Notice in accordance with the terms of Paragraph 4 of this Mediation Order.
8. The fee charged by the Mediator may not exceed $1,500 per Adversary Proceeding. Each Subject Defendant shall deliver to Counsel for the Committee the sum of $750.00 (the “Defendant Funds”), made payable to “DLA Piper Rudnick Gray Cary US LLP Mediation Escrow Account” (the “Mediation Account”) no later than fourteen (14) days prior to the mediation, as scheduled in the Mediation Procedure (the “Fee Deadline”). The Committee shall likewise deposit in the Mediation Account, on or before the Fee Deadline, the sum of $750.00 from the assets of the HA2003 Creditor Trust (the “Plaintiff Funds”, together with the Defendant Funds, the “Funds”) for each Adversary Proceeding that will be the subject of mediation.
9. For each Adversary Proceeding in which a mediation is conducted pursuant to the terms of this Mediation Order and the Mediation Procedures, the Funds relating to such Adversary Proceeding shall be deemed earned by the Mediator and will benon-refundable upon the start of the mediation. The fees for such mediations shall be paid from the Mediation Account.
10. In the event that Position Statements in any Adversary Proceeding are submitted to the Mediator, but no mediation is actually held, the Mediator shall be entitled to compensation in the amount of $530 per hour for actual time spent preparing for such mediation. Under such circumstances, the Mediator shall send an invoice to the Committee setting forth the Adversary
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Proceeding Number, the amount of time spend preparing for the mediation, and the total amount of compensation due to the Mediator (the “Preparation Invoice”); provided, however, that the Preparation Invoice shall not exceed $1,500 for each Adversary Proceeding. The Committee is authorized to pay the Preparation Invoice from the Mediation Account and shall refund the Defendant Funds, less one-half of the Preparation Invoice, to the Defendant in the applicable Adversary Proceeding within fourteen (14) days of the payment of the Preparation Invoice.
11. The Mediator shall prepare and serve by regular mail the Mediator’s Protocol, as defined in the Mediation Procedures, on the Subject Defendants and the Committee on or before June 18, 2005. The Mediator shall have the authority in the Mediator’s Protocol to establish procedures and scheduling consistent with this Mediation Order and the Mediation Procedures. When practical to do so, the mediations shall be scheduled so that attorneys representing multiple Subject Defendants shall have the mediations for those defendants conducted on the same day or on consecutive days.
12. The mediations shall commence at the time set forth in the Mediator’s Protocol, or as further directed by order of this Court. To the extent that the Committee or a Subject Defendant is not available on the scheduled date and time for a mediation, as set forth in the Mediator’s Protocol; such party must notify opposing counsel and the Mediator of such unavailability within seven (7) days of receipt of the Mediator’s Protocol. Any such notification must also include at least three (3) alternative dates and times on which such party is available for the meditation.
13. For those Adversary Proceedings in which the Subject Defendants do not Opt-Out of this Mediation Order, all parties to such Adversary Proceedings are required to comply with
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the Mediation Procedures and Mediator’s Protocol and to negotiate, or attempt to negotiate, the settlement of the Adversary Proceedings in good faith.
14. For those Adversary Proceedings in which the Subject Defendants do not Opt-Out of this Mediation Order, the Final Pretrial Orders[2] are hereby modified as follows:
a. All dispositive motions, including summary judgment motions and discovery disputes must be filed and served no later than September 16, 2005, any responsive pleading to any dispositive motion must be filed no later than October 10, 2005, any reply to such response must be filed no later than October 24, 2005 and all dispositive motions will be heard by the Court on November 1, 2005;
b. All parties must confer and together prepare and file with the court on or before November 21, 2005, a joint document captioned “Pretrial Statement”; and
c. A final pretrial conference is scheduled for December 6, 2005, at 11:00 a.m.
15. On or before June 20, 2005, Counsel for the Committee shall submit to the Bankruptcy Court amended Final Pretrial Orders, modified to reflect the dates set forth in paragraph 13 of this Mediation Order, for all Adversary Proceedings in which no Opt-Out Notice was received by Counsel for the Committee.
16. With the exception of the modifications set forth in paragraph 13 of this Mediation Order, all other aspects of the Final Pretrial Orders shall otherwise remain in full force and effect.
17. This Court shall retain jurisdiction over all issues arising with respect to the mediations or any other terms of this Mediation Order.
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18. This Mediation Order is a final order and is effective immediately.
EXHIBIT 1
IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
IN RE: ) ) Chapter 11 Case HA2003, INC., formerly known as HA-LO ) Honorable Carol A. Doyle Industries, Inc., et al., ) Case No. 02 B 12059 ) (Jointly Administered) Debtors. )
MEDIATION PROCEDURES FOR ADVERSARY PROCEEDINGS INVOLVING CLAIMS ARISING UNDER CHAPTER 5 OF THE BANKRUPTCY CODE
These Mediation Procedures are designed to facilitate efficient and inexpensive settlement of the Adversary Proceedings. If you are a defendant in a pending Adversary Proceeding involving preference/avoidance actions arising under Chapter 5 of the Bankruptcy Code, it is very important that you read and comply with the procedures set forth below. If you have a lawyer, youshould consult with your lawyer.
1. Definitions.
“Adversary Proceeding(s)” mean the action commenced by DLA Piper Rudnick Gray Cary US LLP (formerly known as Piper Rudnick LLP) in the Chapter 11 case of HA2003, INC., formerly known as HA-LO Industries, Inc., et al., to pursue claims arising under Chapter 5 of the Bankruptcy Code.
“Bankruptcy Case” means the above-captioned Jointly Administered bankruptcy cases of HA2003, Inc., formerly known as HA-LO Industries, Inc., et al.
“Bankruptcy Court” means the United States Bankruptcy Court for the Northern District of Illinois.
“Chapter 5 Claims” mean any and all claims arising under sections 542, 544, 545, 547, 548, 549, 550, 552(b) and 553 of the Bankruptcy Code.
“Committee” means The Post-Confirmation Committee, as successor to The Official Committee of Unsecured Creditors of HA2003, Inc., formerly known as HA-LO Industries, Inc., LW2003, Inc., formerly known as Lee Wayne Corporation, and Starbelly.com, Inc.
“Counsel for the Committee” means DLA Piper Rudnick Gray Cary US LLP.
“Defendant(s)” means parties against whom Adversary Proceedings have been commenced.
“Defendant Position” means a concise written outline of the Defendant’s defenses to the Chapter 5 Claims with evidentiary support.
“Defenses” means all legal or equitable defenses to the Chapter 5 Claims that the Defendants are entitled to raise under applicable law.
“Estates” means, collectively, the Debtors’ bankruptcy estates.
“Mediator” means Ronald Barliant of the law firm, Goldberg Kohn Bell Black Moritz, Ltd., 55 E. Monroe Street, Suite 3700, Chicago, Illinois 60603, 312-201-3880 (T), 312-863-7880 (F), appointed in accordance with the Mediation Order, the Federal Rules of Civil Procedure, Federal Rules of Bankruptcy Procedure, and the Local Rules.
“Mediation Order” means the Order (A) Approving Mediation Procedures And Appointment Of Mediator, (B) Authorizing Opt-Out Procedures and (C) Modifying Certain Final Pretrial Orders entered by the Bankruptcy Court.
“Mediation Procedures” mean these Mediation Procedures, as approved by the Bankruptcy Court.
“Mediator’s Protocol” means the document prepared and served by the Mediator upon the Committee and the Defendants setting forth the place and time that the mediations will be conducted with an accompanying schedule reflecting the times each Defendant shall appear for its respective mediation, together with any additional procedures and dates for the submission of position papers, if any, by the parties to the Mediator.
“Plaintiff Position” means a concise outline of the Debtor’s Chapter 5 Claims with evidentiary support and a response to defenses asserted by the Defendant in its answer, if any, filed in the Adversary Proceeding.
“Position Statements” means the Defendant Positions and the Plaintiff Positions, collectively.
“Settlement Position” means an outline of the Defendant’s and Committee’s respective positions on settlement value relating to the Adversary Proceeding.
1. Mediator.
Ronald Barliant of the law firm, Goldberg Kohn Bell Black
Moritz, Ltd., 55 E. Monroe Street, Suite 3700, Chicago, Illinois 60603, 312-201-3880 (T), 312-863-7880 (F), shall serve as the Mediator in the Adversary Proceedings.
On or before June 18, 2005, the Mediator shall serve, upon the Committee and all Defendants, the Mediator’s Protocol setting forth the place that the mediations will be conducted with an accompanying schedule reflecting the times each Defendant shall appear for its respective mediation, the dates for the submission of the Position Statements by the parties to the Mediator, and any additional procedure deemed necessary or appropriate by the Mediator, in his sole discretion.
2. Costs of Mediation.
The fee charged by the Mediator is $1,500 per mediation. In order to share the cost of mediating each Adversary Proceeding equally between the Estates and the Defendants, each Defendant shall deliver to Counsel for the Committee the sum of $750.00 (the “Defendant Funds”), made payable to “DLA Piper Rudnick Gray Cary US LLP Mediation Escrow Account” (the “Mediation Account”) no later than fourteen (14) days prior to the mediation, as scheduled in the Mediation Procedures (the “Fee Deadline”). The Committee shall likewise deposit in the Mediation Account, on or before the Fee Deadline, the sum of $750.00 from the assets of the HA2003 Creditor Trust (the “Plaintiff Funds”, together with the Defendant Funds, the “Funds”) for each Adversary Proceeding that will be the subject of mediation.
For each Adversary Proceeding in which a mediation is conducted pursuant to the terms of this Order and the Mediation Procedure, the Funds relating to such Adversary Proceeding shall be deemed earned by the Mediator and will be non-refundable upon the start of the mediation. The fees for such mediations shall be paid from the Mediation Account.
The Mediator shall be entitled to compensation in the amount of $530/hour for actual time spent preparing for the mediation of any Adversary Proceeding for which Position Statements have been submitted, but no mediation is actually held. Under such circumstances, the Mediator shall send an invoice to the Committee setting forth the Adversary Proceeding Number, the amount of time spend preparing for the mediation, and the total amount due (the “Preparation Invoice”); provided, however, that such Preparation Invoice shall not exceed $1,500 for each Adversary Proceeding. The Committee is authorized to pay the Preparation Invoice from the Mediation Account and shall refund the Defendant Funds, less one-half of the Preparation Invoice, to the Defendant in the Adversary Proceeding within fourteen (14) days of the payment of the Preparation Invoice.
3. Conduct of Mediation.
Consistent with the Mediation Procedures and the Order (A) Approving Mediation Procedures and Appointment of Mediation, (B) Authorizing Opt-Out Notice Procedures, and (C) Modifying Certain Final Pretrial Orders, the Mediator shall handle all Adversary Proceedings in his complete and sole discretion. In all cases, the procedures used by the Mediator shall be reasonable and practical under the existing circumstances.
Any party may be represented by legal counsel, although the participation of legal counsel shall not be required for the conduct of the mediation.
The Mediator shall meet with the parties or their representative, individually and jointly, for a conference or a series of conferences as determined by the mediator and set forth in the Mediator’s Protocol.
The Mediator may, in accordance with the Mediation Procedures and the Mediator’s Protocol, review the claims and defenses of the parties, the prior negotiations between the parties, all correspondence between the parties during prior, informal negotiations, if any, and such additional information as the parties may, in their discretion, wish to submit.
The Mediator’s Protocol shall provide for simultaneous submission of Position Statements in each mediation. Consistent with the Mediation Procedures and the Mediator’s Protocol, the parties must submit to the Mediator their complete Position Statements and Settlement Positions by the dates set forth in the Mediator’s Protocol. Further, unless otherwise directed by the Mediator, all parties shall serve their respective Position Statements upon all parties to their respective Adversary Proceedings by the dates set forth in the Mediator’s Protocol.
The Settlement Positions shall be sent only to the Mediator and shall not be disclosed to the opposing party.
The Mediator shall work with each opposing party to reach a settlement of the Adversary Proceeding mutually acceptable to the parties.
Any statement made by the Mediator, by the parties or by others during the mediation process shall not be divulged by any of the participants in the mediation (or their agents) or by the Mediator to the Bankruptcy Court or to any third party unless otherwise ordered by the Bankruptcy Court. All records, reports, or other documents received or made by the Mediator while serving in such capacity shall be confidential and shall not be provided to the Bankruptcy Court, unless they would otherwise be admissible. In furtherance of the foregoing, no party shall be entitled to serve any discovery on, or depose, the Mediator with respect to the Adversary Proceedings or the mediations without prior leave of the Bankruptcy Court.
4. Time and Location of Mediations.
The place and time of the mediations will be set forth in the Mediator’s Protocol. To the extent that the Committee or a Defendant is not available on the scheduled date and time for a mediation, as set forth in the Mediator’s Protocol, such party must notify opposing counsel and the Mediator of such unavailability within seven (7) days of receipt of the Mediator’s Protocol. Any such notification must also include at least three (3) alternative dates and times on which such party is available for the meditation. Each party to the mediation of an Adversary Proceeding must appear at the mediation by a representative, which may consist solely of counsel, with ultimate authority to settle (“ultimate authority” meaning full discretion to settle the Adversary Proceeding in its entirety) must be present at the mediation, unless the total amount sought by the Committee in the Adversary Proceeding is $20,000.00 or less, in which case the parties may appear by telephone. Mediations of all Adversary Proceedings involving claims in excess of $20,000.00 will be conducted, in person, in Chicago, Illinois. All mediations shall be limited to one day or less, unless otherwise agreed by the participants.
EXHIBIT 2 NOTICE OF ELECTION TO OPT-OUT OF MEDIATION ORDER
Name of Defendant: __________________________
Adversary Proceeding No: ____________________
Pursuant that the Order (A) Approving Mediation Procedures And Appointment Of Mediator, (B) Authorizing Opt-Out Procedures and (C) Modifying Certain Final Pretrial Orders (the “Mediation Order”), entered by the Bankruptcy Court on April __, 2005, the above-named Defendant hereby exercises its right to opt-out of the mediation procedures outlined in the Mediation Order. Accordingly, Defendant agrees and acknowledges that the Mediation Order is not applicable to the above-referenced adversary proceeding and that the Final Pretrial Order previously entered in the above-referenced adversary proceeding, if any, shall remain in full force and effect and shall not be modified unless (i) agreed to by both parties and (ii) approved by the Bankruptcy Court by separate order.
Dated: ________________
By: ____________________
Its: _________________
EXHIBIT 3