Case No. 00-19258-LBRUnited States Bankruptcy Court, D. Nevada
February 9, 2001
Craig Hansen, Esq., SQUIRE SANDERS, Phoenix, Arizona, Counsel for Debtor.
James Shea, Esq., SHEA CARLYON, LTD., Las Vegas, Nevada, Local Counsel for Debtor.
Jon Yard Arnason, HOLLAND KNIGHT LLP, New York, New York, Attorneys for General Electric Credit Corporation.
STIPULATION AND AGREED ORDER REGARDING EXTENSION OF THE 11 U.S.C. § 1110 PERIOD
LINDA B. RIEGLE, United States Bankruptcy Judge
General Electric Capital Corporation (the “Lender”) and National Airlines, Inc., (the “Debtor”) hereby agree to this Stipulation and Agreed Order Regarding Extension of the 11 U.S.C. § 1110 Period (the “Stipulation”) as follows:
RECITALS
1. On December 6, 2000 (the “Filing Date”), the Debtor filed a petition for relief under Chapter 11, Title 11 of the United States Code (the “Bankruptcy Code”).
2. The Debtor is in possession of its assets and operates, and intends to continue to operate, its business as a debtor-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.
3. The Debtor has entered into a Credit Agreement with the Lender dated as of November 12, 1999 (the “Credit Agreement”) whereby the Lender lent $15 million to the Debtor and took as security for that loan a security interest in all of the Debtor’s right, title and interest in certain collateral (the “Collateral”) more fully described in Article 2 of the Security Agreement dated November 12, 1999 between the Lender and the Debtor (the “Security Agreement”). All capitalized terms not defined herein have the same meaning as set forth in the Credit Agreement or the Security Agreement.
4. On January 8, 2000 this Court approved a Stipulation (the “Stipulation and Order”) providing for, inter alla, the protection of Lender’s interest in the Collateral.
5. On each of December 1, 2000, January 1, 2001 and February 1, 2001 the Debtor failed to make scheduled loan payments in the amounts of, respectively: $360,411.46, $367,366.67 and approximately $360,000.00. In addition, Debtor is required to reimburse Lender for certain reasonable costs, expenses, and attorneys’ fees and for default interest accrued on amounts due and unpaid wider the Credit Agreement and Security Agreement.
6. The Collateral is “equipment” as that term is used in 11 U.S.C. § 1110, and the Lender is entitled to the protection of Section 1110 of the Bankruptcy Code.
7. The sixty (60) day time period provided for in 11 U.S.C. § 1110(a)(1) with respect to this aircraft expires on February 4, 2001. Pursuant to 11 U.S.C. § 1110(b) the Lessor may agree, subject to the Court’s approval, to extend the sixty (60) day period specified in Section 1110(a)(1).
8. Lender hereby agrees to extend the 11 U.S.C. § 1110 period until March 1, 2001, provided that:
(a) The Debtor complies with each and every term of this Stipulation;
(b) The Stipulation and Order continues in effect and Debtor complies with each and every term thereof;
(c) There are no defaults wider the Credit Agreement or Security Agreement (other than (i) payments of amounts due thereunder and not otherwise paid under this Stipulation, (ii) defaults of the kind specified in Bankruptcy Code § 365(b)(2), or (iii) defaults because of defaults on other indebtedness and lease obligations of the Debtor), including no encumbering of the Collateral; and
(d) This Stipulation is approved by final order entered by the Bankruptcy Court by February 2, 2001, and that no appeals are taken from that order.
9. In consideration of said extension, Debtor will pay to Lender $38,250.00 on each of February 5, February 12, February 19, and February 26, 2001, provided that the amount will be increased pro rata, prospectively and retroactively, if any aircraft lessor receives a greater proportion of its lease payments than Lender is receiving with respect to its loan payments. These payments will be made by wire transfer of immediately available funds initiated by the Debtor before 2:00 p.m. Las Vegas time (with same day value) and shall be applied to the Debtor’s obligations due under the Credit Agreement in such maimer as Lender deems appropriate, and shall not be subject to disgorgement or clawback on any grounds. By accepting these payments, Lender does not waive any right to receive the full amounts due under the Credit Agreement accruing through March 1, 2001 or thereafter.
10. If the Debtor fails to comply fully with the terms of this Stipulation, including by virtue of a default under the Credit Agreement or Security Agreement not excepted under paragraph 6, the Lender shall be entitled to exercise its rights under 11 U.S.C. § 1110 immediately, without further action by the Court, as if this Stipulation had not been entered into. The Debtor confirms that Lender is entitled to the protections of 11 U.S.C. § 1110, and absent this Stipulation or a sufficient cure payment and performance commitment, the Lessor could repossess the Collateral on February 4, 2001. The Debtor further confirms that absent such a cure payment and performance commitment (pursuant to the Credit Agreement or under a stipulation), on March 1, 2001, Lender can repossess the Collateral and exercise its other tights under 11 U.S.C. § 1110 without further action by the Court, and Debtor will immediately surrender to Lender the Collateral as required by 11 U.S.C. § 1110(c)(1).
11. Lender shall be entitled to repossess the Collateral immediately without further action by the Bankruptcy Court if this case is converted to a case under Chapter 7, and the Order approving this Stipulation shall be deemed to lift the automatic stay as necessary to enable such repossession.
12. The Lender and the Debtor agree that this Stipulation does not otherwise affect any term or provision of the Credit Agreement or Security Agreement except as expressly set forth in the Stipulation, and that both parties preserve all of their respective rights and remedies with respect thereto. No rights or remedies are waived, including with respect to any procedure necessary or appropriate to enforce any of the terms and conditions of this Stipulation, and any delay or failure to exercise rights or remedies shall not be deemed a waiver of them.
13. This Stipulation may be executed in several counterparts, each of which will be a duplicate original and all of which will constitute one and the same agreement.
14. This Stipulation and order shall bind any trustee in the event of conversion of this case, and shall bind all successors and assigns of the Debtor, and all creditors and parties in interest in this case.
15. The Court shall retain jurisdiction to resolve any dispute concerning this Stipulation and Agreed Order.
STIPULATED AND AGREED TO.
The Foregoing Stipulation between General Electric Credit Corporation and National Airlines, Inc., the debtor and debtor-in-possession herein, is hereby:
ENTERED AND APPROVED.