Case No. 02-13533 (AJG), (Jointly Administered).United States Bankruptcy Court, S.D. New York.
June 10, 2003.
David S. Rosner, Kasowitz, Benson, Torres Friedman LLP., New York, NY, Attorneys for the MCI Noteholders’ Committee.
Arlene R. Alves, Seward Kissel, New York, NY, Attorneys for Law Debenture Trust Company of New York.
Sharon Youdelman, Marcia L. Goldstein, Esq., Lori R. Fife, Esq., Weil, Gotshal Managers LLP, New York, NY, Attorneys for Debtors and Debtors In Possession.
Alfredo R. Perez, Esq., Weil, Gotshal Manages LLP, Houston, TX, Attorneys for Debtors and Debtors In Possession.
STIPULATION AND ORDER AMONG MCI COMMUNICATIONS CORPORATION, THE MCI NOTEHOLDERS COMMITTEE, AND LAW DEBENTURE TRUST COMPANY OF NEW YORK, AS TRUSTEE, FURTHER TOLLING CERTAIN TIME PERIODS UNDER MCI 7-1/8% DEBENTURES
ARTHUR J. GONZALEZ, United States Bankruptcy Judge
RECITALS:
A. On July 21, 2002 (the “Commencement Date”) and November 8, 2002, WorldCom, Inc. and certain of its direct and indirect subsidiaries (the “Debtors”) commenced cases under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). By orders dated July 22, 2002 and November 12, 2002, the Debtors’ chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered. 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.
B. On June 24, 1996, MCI Communications Corporation (“MCI”) issued $500,000,000 principal amount 7-1/8% Debentures due June 15, 2027 (the “Notes”) pursuant to that certain indenture, dated February 17, 1995, as amended, between MCI and Citibank, N.A., as trustee. Law Debenture Trust Company of New York (the “Trustee”) is the successor indenture trustee to Citibank, N.A.
C. Certain holders of the Notes and other bonds and/or debentures issued by MCI have formed a committee to represent their interests in the Debtors’ cases (the “MCI Noteholders Committee”). The MCI Noteholders Committee represents that its members hold, inter alia, in excess of 50% of the Notes.
D. The Notes provide that they are subject to redemption on June 15, 2003 (the “Redemption Date”) by holders of Notes (“Noteholders”) that have exercised the option to redeem by delivering, no earlier than April 16, 2003 (the “Notice Period Commencement”) and no later than May 15, 2003 (the “Notice Period Deadline”), the Notes to be redeemed and notice of the exercise of such redemption option in accordance with applicable provisions of the Notes (the “Redemption Notice”).
F. MCI contends that the exercise of the redemption option, including the delivery of Redemption Notices, during the pendency of MCI’s chapter 11 case would constitute a violation of the automatic stay imposed by section 362(a) of the Bankruptcy Code.
F. The MCI Noteholders Committee contends that such actions would not violate the automatic stay, and if the automatic stay were implicated, such implication would be technical and good cause would exist for modification of the automatic stay to permit the exercise of the redemption option.
G. MCI, the MCI Noteholders Committee, and the Trustee believe that the issue of the applicability of the automatic stay to the exercise of the redemption option and delivery of Redemption Notices need not be adjudicated at this time.
H. In order to postpone adjudication of the applicability of the automatic stay, MCI, the MCI Noteholders Committee, and the Trustee entered into that certain stipulation and order, dated March 27, 2003, and entered by the Bankruptcy Court on April 8, 2003, pursuant to which the parties agreed to toll the Notice Period Commencement to June 16, 2003, the Notice Period Deadline to July 15, 2003, and the Redemption Date to the earlier of (a) August 15, 2003 and (b) the date that is 10 days prior to the scheduled date of commencement of a hearing to consider confirmation of a plan of reorganization in the Debtors’ cases that provides for the reinstatement of the Notes.
I. In order to further postpone adjudication of the applicability of the automatic stay, MCI, the MCI Noteholders Committee, and the Trustee have agreed to further toll the Notice Period Commencement, the Notice Period Deadline, and the Redemption Date on the terms and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, MCI, the MCI Noteholders Committee, and the Trustee hereby stipulate and agree, by and through their attorneys, that:
AGREEMENT:
1. The Notice Period Commencement is hereby tolled to August 15, 2003. The Notice Period Deadline is hereby tolled to September 15, 2003.
2. The Redemption Date is hereby tolled to the earlier of (a) October 15, 2003 and (b) the date that is 10 days prior to the scheduled date of commencement of a hearing to consider confirmation of a plan of reorganization in the Debtors’ cases that provides for the reinstatement of the Notes.
3. This Stipulation and Order sets forth the entire agreement of the parties hereto. Nothing herein shall constitute a waiver by any of the parties hereto and the other holders of the Notes with respect to their rights with respect to the applicability of the automatic stay to any act or to the validity and enforceability of any Redemption Notices given.
4. In the event that MCI, the MCI Noteholders Committee, and the Trustee desire to further toll the Notice Period Commencement, the Notice Period Deadline, and/or the Redemption Date, the parties are authorized to enter into an agreement tolling such periods without the need for further order of the Bankruptcy Court; provided, however, that the parties provide prior notice of such agreement to the statutory committee of unsecured creditors.
5. Upon approval by the Bankruptcy Court, this Stipulation and Order shall be binding on the parties hereto and their respective successors and assigns from the date of its execution and shall inure to the benefit of all holders of the Notes. In the event the Bankruptcy Court does not approve this Stipulation, no provision hereof, other than this Paragraph 5, shall be of any force or effect or be used by or against any party to this Stipulation and Order or otherwise in any subsequent proceedings or prejudice or impair any of the rights or remedies of the parties hereto.
6. This Stipulation and Order may be executed in one or more counterparts, which, when taken together, shall be considered one and the same agreement.
7. The Bankruptcy Court shall retain jurisdiction to hear and determine all matters arising from or relating to this Stipulation and Order.
SO ORDERED.