Case No. 02-13533 (AJG), (Jointly Administered).United States Bankruptcy Court, S.D. New York.
September 30, 2004
Lawrence J. Kotler, Duane Morris LLP, Philadelphia, PA, Attorney for Federal Insurance Company.
Marcia L. Goldstein, Esq. (MG 2606), Lori R. Fife, Esq. (LF 2839), Adam P. Strochak, Esq., WEIL, GOTSHAL MANGES LLP, New York, NY, and Alfredo R. Perez, Esq., WEIL, GOTSHAL MANGES LLP, Houston, TX, Attorneys for MCI.
STIPULATION AND ORDER
ARTHUR GONZALEZ, Bankruptcy Judge
MCI, Inc. and certain of its direct and indirect subsidiaries (collectively, “MCI”) and Federal Insurance Company (the “Surety”) respectfully submit this Stipulation and Order (“Stipulation”):
RECITALS
WHEREAS, 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, these chapter 11 cases were consolidated for procedural purposes. During the chapter 11 cases, the Debtors operated their businesses and managed their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;
WHEREAS, on October 31, 2003, this Court entered an order confirming the Debtors’ Modified Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code;
WHEREAS, on April 20, 2004, the Plan became effective in accordance with its terms, and pursuant to the Plan, WorldCom, Inc. merged with and into MCI, Inc. with MCI, Inc. being the survivor;
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WHEREAS, Debtor MCI WORLDCOM Communications, Inc. (“MCIWC”) and Oakland County, Michigan (“Oakland”) are parties to the Inmate Call Control Contract, dated August 14, 2001 (the “Contract”), pursuant to which MCIWC contracted to install and operate an inmate calling program in Oakland and to pay Oakland commissions from such calls;
WHEREAS, Oakland asserts that the Debtors owe Oakland $417,920.91 for prepetition commissions arising under the Contract, and, accordingly, has filed a proof of claim in the Debtors’ bankruptcy, numbered 10432 (the “Oakland POC”);
WHEREAS, the Surety provided a surety bond, Bond No. 81839193 (the “Bond”), in favor of Oakland to collateralize MCIWC’s obligations due and owing under the Contract;
WHEREAS, on January 21, 2003, the Surety filed a proof of claim, numbered 16035, (the “Surety POC”) against the Debtors in the aggregate estimated amount of $17,016,900.00 plus attorneys’ fees and interest, representing the Surety’s maximum liability under this Bond and other bonds issued to collateralize the Debtors’ obligations under certain inmate calling agreements;
WHEREAS, pursuant to its obligations, the Surety satisfied its obligations and paid to Oakland the sum of $417,920.91 in complete satisfaction of the prepetition commissions owing from MCIWC to Oakland under the Contract;
WHEREAS, in consideration of this payment, Oakland assigned to the Surety any and all of its rights and claims against MCIWC for any prepetition commissions relating to the Contract;
WHEREAS, the Debtors have assumed the Contract;
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WHEREAS, pursuant to 11 U.S.C. § 365(b), the Debtors, following assumption of the Contract, have to cure any and all defaults existing thereunder;
WHEREAS, MCI and the Surety (collectively, the “Parties”) wish to resolve the issues and claims among them without the cost and expense of further litigation;
WHEREAS, the Parties have negotiated this Stipulation in good faith and at arms’ length and, therefore, desire that it shall be binding upon each of them, their successors, heirs, and assigns; and
WHEREAS, the Parties believe that this Stipulation is in their respective best interests.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto stipulate and agree as follows:
STIPULATION
1. Assumption of the Contract. The Debtors have assumed the Contract in accordance with section 365 of the Bankruptcy Code. The cure payment for the assumption of the Contract shall be $417,920.91 (the “Cure Payment”). The Cure Payment shall be recognized and satisfied by MCI by paying to the Surety the sum of $417,920.91 in cash within fifteen (15) calendar days following the entry of a final, non-appealable Order approving this Stipulation. Except as provided for herein, the Debtors and/or MCI shall not be obligated to make any other payment to the Surety or any other party as a result of the assumption of the Contract. The Cure Payment shall satisfy, discharge, and/or remedy the prepetition debt arising from the Contract and all conditions, defaults, and/or amounts owed by the Debtors and/or MCI under or related to
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the Contract that are necessary or required to enable and/or authorize the assumption of the Contract.
2. The Surety’s Claims. Upon receipt of the $417,920.91 cash payment, the Surety and/or its respective affiliates, subsidiaries, and/or related entities shall have no claim(s) of any kind whatsoever with respect to the Cure Payment against any of the Debtors and/or MCI and/or their respective estates and, accordingly, the Surety POC shall be deemed automatically expunged and extinguished upon the receipt of the Cure Payment. The entry of this Stipulation shall be sufficient to allow the Surety POC to be removed from the claims register maintained in the Debtors’ cases. The Parties shall, however, pay, in accordance with the terms of the Parties’ agreements and the applicable invoices, all post-petition amounts that are or become due and owing by them to each other.
3. Entire Agreement. This Stipulation is the entire agreement between the Parties with respect to the subject matter of this Stipulation. All representations, warranties, inducements, and/or statements of intention made by the Parties hereto are embodied in this Stipulation, and no party hereto relied upon, shall be bound by, or shall be liable for any alleged representation, warranty, inducement, or statement of intention that is not expressly set forth in this Stipulation.
4. Counterparts. This Stipulation may be executed in any number of counterparts, and all such counterparts, taken together, shall be deemed to constitute one and the same instrument.
5. Modifications. This Stipulation may not be modified, except in a written instrument signed by each of the Parties hereto, which modification, if material in the discretion of MCI or the Surety, shall be subject to the approval of the Bankruptcy Court.
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6. Authority. MCI and the Surety represent that they are authorized to execute this Stipulation, subject to the Bankruptcy Court’s approval. Further, this Stipulation shall be binding on and inure to the benefit of the Parties and to their successors, heirs, and assigns.
7. Effective Date. This Stipulation shall be binding on the Parties from the date of its execution, but is expressly subject to and contingent upon its approval by the Bankruptcy Court. If the Bankruptcy Court does not approve this Stipulation, this Stipulation shall be null and void.
8. Retention of Jurisdiction. The Bankruptcy Court shall retain exclusive jurisdiction over any and all disputes arising out of or otherwise relating to this Stipulation, the assumption of the Contract.
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So ORDERED.