Case No. 02-B-48191, (Jointly Administered).United States Bankruptcy Court, N.D. Illinois, Eastern Division.
July 15, 2005
ORDER
EUGENE WEDOFF, Bankruptcy Judge
Upon the motion (the “Motion”)[1] of the Debtors in the above-captioned Chapter 11 cases, for entry of an order authorizing United to enter into the Letter Agreement; and proper notice having been given; and all interested parties having been afforded an opportunity to be heard with respect to the Motion and all relief related thereto; and the Court having reviewed and considered the Motion and the objections thereto, if any; and after due deliberation thereon; and good and sufficient cause appearing therefore;
The Court, having considered the relief requested in the Motion and being duly advised of the premises, hereby finds that
A. Entering into the Letter Agreement with the Counter-Party, and the transactions contemplated in the Letter Agreement, including the sale of certain Aircraft and the new leases with Counter Party for each of the Aircraft, on the terms and subject to the conditions set forth in the Letter Agreement, constitutes sound business judgment and is in the best interests of the Debtors, their estates and their creditors.
B. Each of the Aircraft constitutes “equipment” within the meaning of Section 1110(a)(3)(A)(i) of the Bankruptcy Code.
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C. United holds an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of title 49, U.S. Code, for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo, and is engaged in charter commercial airline and passenger scheduled airline domestic and international services.
D. The Aircraft will be used by United in the operation of its charter, commercial airline, and/or passenger scheduled airline services in the United States and internationally.
E. The Letter Agreement, including both the sale transaction and the lease transactions contemplated therein, were negotiated, proposed and entered into by the parties in good faith, from arm’s length bargaining positions, and without collusion. The Counter-Party is not an “insider” or “affiliate” of the debtors (as such terms are defined in the Bankruptcy Code). The Counter-Party is a good faith purchaser under section 363(m) of the Bankruptcy Code and, as such, is entitled to all of the protections afforded thereby in consummating the transactions contemplated by the applicable agreement. The Counter-Party will be acting in good faith within the meaning of section 363(m) of the Bankruptcy Code in closing the transactions contemplated by the Letter Agreement at all times after the entry of this order. Neither United nor the Counter-Party has engaged in any conduct that would prevent the application of section 363(m) of the Bankruptcy Code or cause the application of section 363(n) of the Bankruptcy Code to these transactions.
F. The consideration to be provided by the Counter-Party for the purchase of each of the Aircraft pursuant to the Letter Agreement and any applicable sale agreement (i) is fair and reasonable, (ii) represents the highest and best offer for the applicable purchased assets under the circumstances, and (iii) constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code and applicable non-bankruptcy law.
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G. The Debtors have full corporate power and authority to execute, deliver and perform the Letter Agreement and all other documents and agreements contemplated thereby, including the new leases and the sale agreements for the Aircraft to be sold; and no further consents or approvals are required for United to consummate the transactions contemplated by the Letter Agreement.
H. With respect to any and all entities asserting any options, pledges, security interests, claims, equities, reservations, third party rights, voting trusts or similar arrangements, liens, charges or other encumbrances or restrictions on or conditions to transfer or assignment of any kind (including, without limitation to the generality of the foregoing, restrictions or conditions on or to the transfer, assignment or renewal of licenses, permits registrations and authorizations or approvals of or with respect to governmental units and instrumentalities), whether direct or indirect, absolute or contingent, matured or unmatured, liquidated or unliquidated on or against the purchased assets (collectively, the “Encumbrances””), either (i) such entity has consented to the sale and transfer, license and assignment, as applicable, free and clear of its Encumbrance, with such Encumbrance to attach to the proceeds of such sale and transfer, license and assignment, as applicable, respectively, (ii) applicable non-bankruptcy law permits sale of the assets free and clear of such Encumbrance, (iii) such Encumbrance is in bona fide dispute, or (iv) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such Encumbrance, so that the conditions of section 363(f) of the Bankruptcy Code have been met.
I. Upon the closing of the sale of each Aircraft to be sold to Counter-Party under the terms of the Letter Agreement, the sale and transfer of the relevant Aircraft to Counter-Party or its designee shall be a legal, valid and effective transfer of such Aircraft to such purchaser, and
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shall vest in such purchaser all right, title and interest in the applicable Aircraft in accordance with the terms and conditions of the Letter Agreement and the relevant sale agreement free and clear of any Encumbrances, under sections 105(a) and 363(f) of the Bankruptcy Code, other than encumbrances created under the Letter Agreement.
J. The Counter-Party would not have entered into the Letter Agreement, and would not consummate the transactions contemplated therein, including entering into the sale agreements or the new leases, if (i) the sale of the relevant Aircraft to the Counter-Party or its designee were not free and clear of all Encumbrances of any kind or nature whatsoever, or if the Counter-Party or its relevant designee would, or in the future could, be liable for any of such Encumbrances, (ii) the automatic stay created by section 362 of the Bankruptcy Code were not modified and lifted to permit the Counter-Party and its applicable designee to enforce the terms of the Letter Agreement and, once consummated, the new leases and sale agreements, and to exercise remedies thereunder in these cases without further order of the Court, and (iii) the claims for any Maintenance Obligation (as defined in the Letter Agreement), if any such claim comes into existence, were not entitled to be allowed as a super priority administrative claim, with priority over all other administrative claims, except as expressly provided or limited in the Letter Agreement.
K. Good cause exists for granting the Counter-Party relief from the automatic stay created by section 362 of the Bankruptcy Code, to permit the Counter-Party to enforce the terms of the Letter Agreement and, once consummated the new leases and sale agreements, and to exercise remedies thereunder in these cases without further order of the Court, as provided or limited in the Letter Agreement.
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L. Good cause exists for allowing the claims for any Maintenance Obligation (as defined in the Letter Agreement), if any such claim comes into existence, as a super priority administrative claim, with priority over all other administrative claims, except as expressly provided in the Letter Agreement.
M. Notwithstanding anything in this Order to the contrary, nothing in this Order shall authorize the Debtors to sell or engage in a transaction affecting any of the Trustees’ Aircraft (as defined in the Protective Objection and Reservation of Rights of U.S. Bank National Association, The Bank of New York and Wells Fargo Bank Northwest, N.A., as Trustees, to the Debtors’ Motion to Approve Letter Agreement with Counter-Party (the “Protective Objection”)) including the respective airframe, engines and related parts or otherwise impair the rights of any of the Trustees as defined in the Protective Objection relating to the Trustees’ Aircraft or their claims against United with respect thereto without the consent of the respective Trustee; provided that the foregoing statement in this paragraph M regarding the Debtors’ authority does not apply to any such Trustee’s Aircraft as to which the Trustees (as defined in the Protective Objection) have no interest (whether as a result of the Trustees’ voluntary sale or consensual release of lien) by the time of the sale or other transaction contemplated by the Letter Agreement. (This clarification of the scope of the Order shall be referred to herein as the “Trustees’ Rights”).
N. Proper, timely, adequate and sufficient notice of the Motion, the entry into the Letter Agreement, the proposed sale of certain of the Aircraft and the proposed lease of the Aircraft, and the hearing on the foregoing has been provided in accordance with section 102(1) of the Bankruptcy Code and Rule 2002 of the Bankruptcy Rules, and no other or further notice is required of the Motion or of the transactions contemplated by the Letter Agreement.
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Accordingly, the relief requested in the Motion should be granted and IT IS HEREBY ORDERED ADJUDGED, AND DECREED THAT:
1. The Motion is granted.
2. The Letter Agreement is approved in its entirety, and United is authorized to enter into and consummate the Letter Agreement and the transactions contemplated therein, including entering into and performing under the new leases and the sale agreements in accordance with the terms and conditions of the Letter Agreement.
3. United is authorized to execute and deliver, without further need of Court order, agreements and instruments as shall be necessary or appropriate to reflect and constitute definitive agreements and documentation of the transactions contemplated in the Letter Agreement, consistent with the terms and conditions set forth in the Letter Agreement.
4. The failure to include specifically any particular provision of the Letter Agreement or the new leases or sale agreements in this Order shall not diminish or impair the effectiveness of such provisions, it being the intent of the Court that the Letter Agreement and the new leases and sale agreements contemplated therein be approved in their entirety.
5. Each of the leases contemplated under the Letter Agreement, when executed, shall constitute a post-petition obligation of United that entitles the Lessor thereunder to the benefits of section 1110 of the Bankruptcy Code, 11 U.S.C. § 101, et seq. in connection with any subsequent bankruptcy proceeding involving United.
6. This Order is binding upon United and its successors and permitted assigns, including any trustee appointed for United under chapter 7 of the Bankruptcy Code or otherwise.
7. The Letter Agreement, new leases, sale agreements, and any and all other documents or agreements relating or necessary to consummate the transactions contemplated in
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the Letter Agreement, when executed by United, constitute and evidence the valid and binding obligations of United, which obligations shall be enforceable against United and its successors and assigns, including any trustee appointed for United under chapter 7 of the Bankruptcy Code or otherwise, in accordance with the terms thereof and this Order.
8. The Letter Agreement may be modified, amended or supplemented in writing by the parties thereto in accordance with and pursuant to the terms thereof, without further order or approval of the Court.
9. The automatic stay created by Section 362 of the Bankruptcy Code is modified and lifted to permit enforcement by the Counter-Party and its designees of the terms of and remedies under the Letter Agreement, the contemplated sale agreements and the contemplated leases for the Aircraft in accordance with the terms of each of them without further order of the Bankruptcy Court.
10. The Counter-Party shall be entitled to a super priority claim for any Maintenance Obligation (as defined in the Letter Agreement), if any such claim comes into existence. Moreover, such super-priority claims, if any, shall be allowed as an administrative claim with priority as set forth in paragraph 3 of the Letter Agreement. Any such super-priority administrative claims, if any, shall be subject and subordinate in all respects to (i) the claims and liens of lenders to United and its related debtors in the Chapter 11 Case in connection with the DIP Financing, (ii) carve-outs created in connection with the DIP Financing, (iii) allowed claims incurred by the cash management banks that are entitled to super-priority status pursuant to the terms of the cash management order entered by the Bankruptcy Court on December 9, 2002, and (iv) the allowed fees, costs, and expenses entitled to administrative expense status incurred (by a
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chapter 7 trustee or otherwise) in any superseding chapter 7 case for United and its related debtors, if any.
11. If (A) United is not in default in the performance of any Maintenance Obligation at the time of United’s emergence from chapter 11 under a confirmed chapter 11 plan; (B) at the time of emergence any Maintenance Obligation has not been completed or performed; (C) the confirmed chapter 11 plan contemplates that the lease for the related Aircraft constitutes an obligation of United or its successor under the confirmed chapter 11 plan; and (D) such lease in fact becomes an obligation of United or its successor as contemplated by such confirmed chapter 11 plan, then: (i) the status of any correlating obligation as a super-priority claim or as any other administrative expense (under sections 364, 503, or otherwise under the Bankruptcy Code) shall terminate, (ii) the correlating obligation shall constitute an obligation of reorganized United or its successors under United’s confirmed plan of reorganization, and (iii) United shall have no obligation (under section 1129(a)(9) of the Bankruptcy Code or otherwise), as a condition to confirmation or otherwise, to escrow cash for or otherwise secure any such obligation.
12. In respect to the contemplated sale of the Aircraft from United to the Counter-Party, the Counter-Party is a good faith purchaser for purposes of section 363(m) of the Bankruptcy Code.
13. In respect to any future contemplated sale of the Aircraft from United to the Counter-Party, other than the sale of the Jets 95A Aircraft approved for purchase by United pursuant to the Order Pursuant to Bankruptcy Code Sections 105(a) and 363
Approving Letter of Intent Relating to Purchase of Jets 95A Aircraft, United shall seek prior approval for such sales by separate motion before this Court.
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14. United is authorized to sell to the Counter-Party any Aircraft pursuant to the terms of the Letter Agreement, and such Aircraft shall be conveyed to the Counter-Party free and clear of all Encumbrances (other than the obligation to lease such Aircraft to United as provided in the Letter Agreement), and specifically free and clear of any and all liens, claims and Encumbrances created under or servicing any and all post-petition financing, loan or credit to United, including the DIP financing, as the same may be amended or supplemented.
15. This Order may not be amended, modified or supplemented without the prior written consent of the Counter-Party.
16. United is authorized to take all actions necessary to effectuate the terms of the Letter Agreement. Each authorized signatory of United, acting singly, is hereby authorized to execute and deliver the new leases and sale agreements and any and all other documents or agreements relating to or necessary to consummate the transactions contemplated in the Letter Agreement, such execution and delivery to be conclusive of such signatory’s authority to act in the name of and on behalf of United, without the need for further Court order or approval.
17. United shall file a copy of the Letter Agreement, and any supplements thereto, under seal with the clerk of this Court.
18. This Order is subject to and limited by the Trustees’ Rights as set forth in paragraph M above.
19. Notwithstanding the possible applicability of bankruptcy Rules 4001(a)(3), 6004(g), 7062, 9014 or otherwise, this Order shall take effect immediately upon entry.
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20. This Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order.
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