Case No. 04-13819, Jointly Administered.United States Bankruptcy Court, E.D. Virginia, Alexandria Division.
August 3, 2005.
Brian P. Leitch, Esq., Daniel M. Lewis, Esq., Michael J. Canning, Esq., ARNOLD PORTER LLP, Denver, Colorado, and Washington, DC, and New York, New York, and
Douglas M. Foley, Lawrence E. Rifken, Esq. (VSB No. 29037), Douglas M. Foley, Esq. (VSB No. 34364), David I. Swan, Esq., McGUIREWOODS LLP, McLean, Virginia, Counsel to the Debtors and Debtors-in-Possession.
Stephen E. Leach, Esq. (VSB No. 20601), Leach Travell, a Professional Corporation, Vienna, Virginia, Julie A. Manning, Esq., Shipman Goodwin LLP, Hartford, Connecticut, Counsel for U.S. Bank, National Association and U.S. Bank Trust, National Association.
STIPULATION AND ORDER REGARDING SECTION 1110 AGREEMENT CURE DISPUTE BETWEEN THE DEBTORS, U.S. BANK NATIONAL ASSOCIATION AND U.S. BANK TRUST NATIONAL ASSOCIATION
STEPHEN MITCHELL, Bankruptcy Judge
This Stipulation is entered into by and among US Airways, Inc. (“US Airways, Inc.”) and four of its subsidiaries and affiliates, debtors and debtors-in-possession in the above-captioned cases (collectively, the “Debtors”), and U.S. Bank National Association and U.S.
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Bank Trust National Association, each not in its individual capacity but solely as indenture trustee, pass through trustee, subordination agent and/or liquidating trustee, as appropriate (“U.S. Bank”).
WHEREAS, on September 12, 2004 (the “Petition Date”), the Debtors filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq.
(the “Bankruptcy Code”) and the Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;
WHEREAS, U.S. Bank serves in various trustee capacities in connection with thirty-six (36) Boeing aircraft (the “U.S. Bank Boeing Aircraft”) and eighty-nine (89) Airbus aircraft (the “U.S. Bank Airbus Aircraft”) (the U.S. Bank Boeing Aircraft and the U.S. Bank Airbus Aircraft are collectively, the “U.S. Bank Aircraft”) that are either leased to or mortgaged by US Airways, Inc. pursuant to multiple aircraft lease and financing documents (the “Aircraft Agreements”);
WHEREAS, on November 10, 2004, the Debtors filed with the Court an 1110 Agreement and Order Regarding Section 1110 Compliance with Respect to Certain Boeing Aircraft (the “Boeing Section 1110(a) Agreement”) (Docket No. 729) with respect to the U.S. Bank Boeing Aircraft;
WHEREAS, on November 10, 2004, the Debtors filed with the Court an 1110 Agreement and Order Regarding Section 1110 Compliance with Respect to Certain Airbus Aircraft (the “Airbus Section 1110(a) Agreement”) (Docket No. 730) (the Boeing Section 1110(a) Agreement and the Airbus Section 1110(a) Agreement are collectively, the “Section 1110(a) Agreements”) with respect to the U.S. Bank Airbus Aircraft;
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WHEREAS, on December 3, 2004, U.S. Bank filed with the Court a Notice of Dispute and Request for Hearing in Connection with Section 1110 Cure Amounts with respect to the U.S. Bank Boeing Aircraft (the “U.S. Bank Boeing Aircraft Notice”) (Docket No. 1233);
WHEREAS, on December 3, 2004, U.S. Bank filed with the Court a Notice of Dispute and Request for Hearing in Connection with Section 1110 Cure Amounts with respect to the U.S. Bank Airbus Aircraft (the “U.S. Bank Airbus Aircraft Notice”) (Docket No. 1232) (the U.S. Bank Boeing Aircraft Notice and U.S. Bank Airbus Aircraft Notice are collectively, the “U.S. Bank Aircraft Notices”);
WHEREAS, the U.S. Bank Aircraft Notices contained claims for unpaid basic rent and interest thereon that was subsequently paid by US Airways, Inc. without protest, as well as a claim for certain unreimbursed fees and expenses of (i) U.S. Bank and its agents, including some amounts incurred by Bingham McCutchen, U.S. Bank’s counsel with respect to the Debtors’ 2002 Chapter 11 case, (ii) MBIA Insurance Corporation in its capacity as Policy Provider with respect to one of the enhanced equipment trust certificate, or EETC, deals for which U.S. Bank serves as trustee, which deal is commonly referred to as the 2001-1 EETC, (iii) Citibank, N.A. in its capacity as Liquidity Provider for the 2001-1 EETC pass through transaction, and (iv) Morgan Stanley Capital Services in its capacity as Liquidity Provider for the 2000-3 EETC pass through transaction;
WHEREAS, for the period from September 2004 through April 2005, U.S. Bank allegedly incurred $1,416,803.58 million in fees and expenses (the “U.S. Bank Fees”) on account of the U.S. Bank Aircraft (inclusive of certain Bingham McCutchen fees from 2003) (the “U.S. Bank Settlement Period”);
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WHEREAS, the Debtors and U.S. Bank have been in negotiations regarding all amounts, including cure amounts, due under the Section 1110(a) Agreements;
WHEREAS, an evidentiary hearing with respect to the U.S. Bank Aircraft Notices was held on June 23, 2005 at 11:30 a.m.;
WHEREAS, prior to the June 23 hearing, U.S. Bank and US Airways, Inc. reached a settlement with respect to the U.S. Bank Fees and the ongoing fees and expenses of U.S. Bank and its agents, leaving unresolved only those fees and expenses of third parties, namely, MBIA, Citibank and Morgan Stanley, set forth in the U.S. Bank Aircraft Notices;
WHEREAS, counsel for the Debtors reported the basic terms of the settlement to the Court at the June 23 hearing; and
WHEREAS, the parties desire to memorialize those terms as set forth herein;
NOW, THEREFORE, the Debtors and U.S. Bank agree, subject to approval of the Bankruptcy Court:
1. U.S. Bank agrees to voluntarily reduce the U.S. Bank Fees by $400,000 in the aggregate for the U.S. Bank Settlement Period, thereby resulting in $1,016,803.58 of U.S. Bank Fees for the U.S. Bank Settlement Period.
2. From and after May 2005 on a go forward basis, U.S. Bank will provide the Debtors with contemporaneous copies of its actual detailed bills and invoices, including those of outside professionals, redacted to protect the attorney client privilege. US Airways, Inc. reserves the right to review such bills and invoices in accordance with its own internal billing policies and to object to the reimbursement, as Supplemental Rent under the leases with respect to the U.S. Bank Aircraft (the “Leases”) or a supplemental payment obligation under the indenture and security agreements relating to the U.S. Bank
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Aircraft (the “Security Agreements”), of any fees and expenses it deems unreasonable. In establishing billing protocols which will govern Debtors’ obligations under Section 1110 to pay expenses and fees due under the Aircraft Agreements, some of the factors that may be considered include the requirements established by U.S. Bank, the trust documentation related to the Aircraft Agreements, the direction and instructions of the certificate holders, the U.S. Trustee guidelines, and the billing guidelines established by the Debtors for their outside counsel and professionals. U.S. Bank and its agents likewise reserve the right to assert and prove, if and to the extent necessary, the reasonableness of any fees and expenses that US Airways, Inc. finds objectionable, and to seek reimbursement of same through any legal and/or equitable means available.
3. From and after May 2005 on a go forward basis, U.S. Bank agrees to not seek reimbursement from the Debtors for outside professionals’ fees and expenses for attendance of more than one (1) outside professional at any meetings of the Official Committee of Unsecured Creditors.
4. With the exception of the U.S. Bank Fees, U.S. Bank and US Airways, Inc. reserve all rights with respect to any and all fees and expenses of any party, including third parties, whether incurred prepetition or postpetition, other than during the US Bank Settlement Period.
5. This Stipulation does not release or waive any claims that U.S. Bank may have in connection with the Financing Documents (including, but not limited to, U.S. Bank’s pending motion for adequate protection, U.S. Bank’s previously filed proofs of claim, claims for rejection damages or any other claims that U.S. Bank has or may have in the future), except as specifically provided herein.
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6. This Stipulation pertains only to certain fees and expenses of U.S. Bank and its agents, and does not affect any rights U.S. Bank, US Airways, Inc. or any third party may have with respect to the reimbursement of third party fees and expenses not covered by the terms of this Stipulation, including without limitation the fees and expenses of any “liquidity provider” or “policy provider” under any enhanced equipment trust certificate transaction.
7. Subject to the foregoing, the U.S. Bank Aircraft Notices, as they pertain to U.S. Bank and its agents only, are hereby withdrawn in their entirety.
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8. The Court shall retain jurisdiction to resolve any matters or disputes that arise from this Stipulation.
SO ORDERED.