Case No. 02-13533 (AJG) (Jointly Administered)United States Bankruptcy Court, S.D. New York.
April 6, 2004
Marcia L. Goldstein, Esq., Lori R. Fife, Esq., Adam P. Strochak, Esq., WEIL, GOTSHAL MANGES LLP, New York, NY, for Debtors and Debtors In Possession
Alfredo R. Perez, Esq., WEIL, GOTSHAL MANGES LLP, Houston, TX, for, for Debtors and Debtors In Possession
David C. McGrail, Esq., DECHERT LLP, New York, NY, for CDI Corporation
Ethan D. Fogel, Esq., Jeffrey K. Daman, Esq., DECHERT LLP, Philadelphia, PA, for CDI Corporation
STIPULATION AND ORDER
ARTHUR GONZALEZ, Bankruptcy Judge
WorldCom, Inc. and certain of its affiliates (“Debtors”), as debtors-in-possession, and CDI Corporation, on behalf of itself and its affiliates (collectively, “CDI”) respectfully submit this Stipulation and Order (“Stipulation”):
RECITALS
WHEREAS, On July 21, 2002 (the “Commencement Date”) and Novembers, 2002, WorldCom, Inc. and certain of its direct and indirect subsidiaries 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 were consolidated for procedural purposes. During the chapter 11 cases, the Debtors have operated their businesses and managed their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code;
WHEREAS, by order, dated October 31, 2003, the Court confirmed the Debtors’ Modified Second Amended Joint Plan of Reorganization;
WHEREAS, a predecessor of Debtor MCI WORLDCOM Network Services, Inc. and CDI Corporation are parties to the January 1, 2002 Contract Labor Master Services
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Agreement, as amended, (the “Labor Contract”), under which CDI provides certain goods and/or services to the Debtors;
WHEREAS, CDI asserts that the Debtors owe an outstanding balance for prepetition goods and/or services rendered pursuant to the Labor Contract of at least $900,000 (the “WorldCom Debt”) and, accordingly, has filed proofs of claim numbers 21633, 21634, 21635, and 21643 (the “CDI Proofs of Claim”);
WHEREAS, the Debtors dispute owing a portion of the WorldCom Debt;
WHEREAS, the Debtors assert that CDI and certain of its affiliates owe outstanding balances that total $614,000 (the “CDI Debt”) for prepetition goods and/or services rendered pursuant to the Special Customer Arrangement between MCI WORLDCOM Communications, Inc. and Management Recruiters International, Inc., Individually and as agent for the Franchisees, and CDI Corporation, as amended (the “Telecommunications Contract”);
WHEREAS, CDI disputes owing a portion of the CDI Debt;
WHEREAS, the Debtors and CDI (collectively, the “Parties”) wish to resolve the issues and claims between them without the cost and expense of further litigation;
WHEREAS, the Debtors and CDI 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 Debtors and CDI 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:
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STIPULATION
1. Assumption of the Labor Contract. The Debtors shall assume the Labor Contract in accordance with section 365 of the Bankruptcy Code. The cure payment for the assumption of the Labor Contract shall be and is $614,000 (the “Cure Payment”), and the Cure Payment is not subject to reduction. The Cure Payment shall be recognized and satisfied by deducting the Cure Payment from the GDI Debt. The Debtors shall not be otherwise obligated to make a payment to GDI as a result of the assumption of the Labor Contract. Application of the Cure Payment to the GDI Debt shall fully satisfy, discharge, and/or remedy the WorldCom Debt and all conditions and/or defaults by the Debtors that are necessary or required to enable and/or authorize the assumption of the Labor Contract.
2. No Further Prepetition Debt. Upon consummation of the terms of this Stipulation, (i) CDI and/or its affiliates, subsidiaries, and/or related entities shall not owe the Debtors any payment obligation(s) that first became due prior to the Commencement Date for prepetition goods and/or services provided under the Telecommunications Contract and (ii) the Debtors shall not owe GDI and/or its affiliates, subsidiaries, and/or related entities any payment obligation(s) that first became due prior to the Commencement Date for prepetition goods and/or services provided under the Labor Contract, and, accordingly, the GDI Proofs of Claim shall be deemed withdrawn upon the Court’s approval of this Stipulation, which approval shall be sufficient to allow the Debtors’ claims agent to expunge the GDI Proofs of Claim from the claims against the estate of the Debtor in which they were filed. Nothing herein shall be construed to modify any obligations related to services, payment, or otherwise that first became or become due (including under the Labor Contract and/or the Telecommunications Contract)
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from the Debtors, on the one hand, and CDI and/or its affiliates, subsidiaries, and/or related entities, on the other, to each other on or after the Commencement Date.
3. Entire Agreement. This Stipulation is the entire agreement related to this Stipulation between the Parties. 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 the Debtors and CDI, shall be subject to the approval of the Bankruptcy Court. Should the Parties hereto seek to modify this Stipulation, they shall provide notice to counsel for the Official Committee of Unsecured Creditors. To the extent the Official Committee of Unsecured Creditors objects to any such modification, the Parties hereto shall seek Bankruptcy Court approval of such modification.
6. Authority. Both the Debtors and GDI represent that they are authorized to execute this Stipulation, subject to the Bankruptcy Court’s approval.
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.
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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
So ORDERED.