Case No. 02-13533 (ALG) (Jointly Administered).United States Bankruptcy Court, S.D. New York.
March 22, 2005
THALER GERTLER, LLP Westbury, New York 11590
DEUTSCHE BANK SECURITIES, INC. Scott G. Martin, Managing Director New York, NY 10021 Co-Attorneys for Baltimore Gas and Electric Company.
MORRISON FOERSTER LLP New York, New York 10104, STARK EVENT TRADING LTD. Colin M. Lancaster, General Counsel c/o Stark Offshore Management, LLC St. Francis, WI 53235 Attorneys for Longacre Master Fund, Ltd.
STIPULATION AND ORDER RESOLVING (I) MOTION OF BALTIMORE GAS AND ELECTRIC COMPANY, PURSUANT TO 11 U.S.C. § 105(a) AND RULE 9024, TO PARTIALLY SET ASIDE TRANSFER OF CLAIM AND (II) RIGHTS AND OBLIGATIONS OF PARTIES REGARDING PROOF OF CLAIM NO. 8290 AND SCHEDULED CLAIM NOS. 229009490 AND 229009500 AGAINST MCI WORLDCOM NETWORK SERVICES, INC.
ARTHUR GONZALEZ, Bankruptcy Judge
Longacre Master Fund, Ltd. (“Longacre”), Baltimore Gas and Electric Company (“BGE”), Stark Event Trading Ltd. (“Stark”), and Deutsche Bank Securities, Inc. (“DeutscheBank”) hereby stipulate (the “Stipulation”) and agree as follows:
RECITALS
WHEREAS on July 21, 2002 and November 8, 2002, MCI Worldcom Network Services, Inc. (“MCI”), one of the above-captioned debtors, along with other affiliated debtors (collectively, the “Debtors”) each filed a voluntary petition for relief with the United States Bankruptcy Court for the Southern District of New York (the “Court”) under Chapter 11 of title 11, United States Code (the “Bankruptcy Code”); and
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WHEREAS the Debtors’ Chapter 11 cases are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”);
WHEREAS in its Schedules of Assets and Liabilities (the “Schedules”) filed with the Court on or about November 4, 2002, MCI listed BGE as the holder of a liquidated, noncontingent and undisputed scheduled claim, no. 229009490, in the amount of $525,424.53, against MCI; and
WHEREAS in its Schedules, MCI listed BGE as the holder of an additional liquidated, non-contingent and undisputed scheduled claim, no. 229009500, in the amount of $12,938.48, against MCI (collectively referred to herein with claim no. 229009490 as, the “Scheduled Claims”); and
WHEREAS BGE executed an Assignment of Claim, dated December 30, 2002 (the “BGE Assignment”), pursuant to which BGE agreed to sell to Longacre the Scheduled Claims; and
WHEREAS on January 2, 2003, BGE filed proof of claim number 8290 against MCI, in the aggregate amount of $823,365.68 (the “Proof of Claim”);
WHEREAS on January 22, 2003, Longacre filed a Notice of Transfer of Claim Pursuant to FRBP Rule 3001(e)(2) (the “Longacre Notice of Transfer”), which mistakenly and inadvertently stated that BGE had transferred the full amount of the Proof of Claim, i.e., $823,365.68, to Longacre; and
WHEREAS the Longacre Notice of Transfer intended to effectuate the transfer from BGE to Longacre of only the portion of the Proof of Claim that Longacre believed related to the Scheduled Claims, i.e., $538,363.01; and
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WHEREAS Longacre subsequently entered into an agreement with Deutsche Bank pursuant to which Longacre agreed to sell to Deutsche Bank the Scheduled Claims; and
WHEREAS on June 9, 2003, Deutsche Bank filed a Notice of Transfer of Claim Pursuant to FRBP Rule 3001(e)(2) (the “Deutsche Bank Notice of Transfer”), which mistakenly and inadvertently stated that Longacre had transferred the full amount of the Proof of Claim, i.e., $823,365.68, to Deutsche Bank; and
WHEREAS the Deutsche Bank Notice of Transfer intended to effectuate the transfer from Longacre to Deutsche Bank of only the portion of the Proof of Claim that Longacre believed related to the Scheduled Claims, i.e., $538,363.01; and
WHEREAS Deutsche Bank subsequently agreed to sell to Stark the Scheduled Claims; and
WHEREAS pursuant to that agreement, Stark became the beneficial owner of the Assigned Claim, while Deutsche Bank remains the record owner of the Assigned Claim; and
WHEREAS on or about October 15, 2004, the Debtors filed an objection to the Proof of Claim (the “Claim Objection”), alleging that “the Debtor has no liability for the claim(s) and its records reflect that it does not owe the claimant any money”; and
WHEREAS on or about November 18, 2004, BGE filed a Response to the Claim Objection stating that the Proof of Claim should be allowed in the full amount (the “Response”);
WHEREAS BGE subsequently determined that only $463,100.36 of the Proof of Claim related to the Scheduled Claims;
WHEREAS BGE contends that the balance of the Proof of Claim in the amount of $360,265.32 relates to amounts due and owing to BGE under an executory contract(s) that
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has allegedly been assumed by the Debtors and for which assumption no cure payment was made to BGE (the “BGE CureAmount”); and
WHEREAS on or about December 17, 2004, BGE filed its Motion Pursuant to 11 U.S.C. § 105(a) and Rule 9024(b), to Set Aside Transfer of Claim Due to Lack of Service and Fraud by Alleged Transferee (the “Motion to Set Aside Transfer”), seeking various relief related to the ownership and transfer of, inter alia, the Scheduled Claims and the Proof of Claim, as set forth therein; and
WHEREAS Longacre vigorously disputes the allegations contained in the Motion to Set Aside Transfer, and particularly disputes any allegations of fraud set forth by BG E and
WHEREAS on or about February 23, 2005, BGE filed its Motion to Compel Payment of Cure Amounts Owed (the “Motion to Compel”), seeking an order compelling payment of the BGE Cure Amount to BGE under a Telecommunications Service Agreement between BGE and the Debtors; and
WHEREAS the hearing on the Motion to Compel is scheduled for March 22, 2005 at 10:00 a.m.; and
WHEREAS the Claim Objection is currently pending before the Court and scheduled for a hearing on March 29, 2005 at 10:00 a.m.; and
WHEREAS the hearing on the Motion to Set Aside Transfer is scheduled for March 22, 2005 at 10:00 a.m.; and
WHEREAS, the parties hereto have met and conferred with respect to the dispute regarding the claim transfers and the Motion to Set Aside Transfer and have agreed to the following:
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IT IS HEREBY STIPULATED, AGREED AND ORDERED, that:
1. The Longacre Notice of Transfer is hereby amended and as amended, is binding, authorized, and of full force and effect, pursuant to which BGE is deemed to have transferred to Longacre a portion of the Proof of Claim in the amount of $463,100.36. The foregoing transfer of a portion of the Proof of Claim does not include any amounts that relate to or concern the BGE Cure Amount.
2. The Deutsche Bank Notice of Transfer is hereby amended and as amended, is binding, authorized, and of full force and effect, pursuant to which Longacre is deemed to have transferred to Deutsche Bank that same portion of the Proof of Claim in the amount of $463,100.36.
3. Stark is the current beneficial owner of the portion of the Proof of Claim equal to $463,100.36.
4. Deutsche Bank is the record owner of the portion of the Proof of Claim equal to $463,100.36.
5. In settlement of any and all claims that Longacre has or may have against BGE based on the purchase and transfer of the Scheduled Claims, BGE shall, wire $32,362.93 to Longacre’s counsel, Morrison Foerster LLP (the “Escrow Agent”), on or before March 11, 2005, for it to hold in escrow pending Court approval of this Stipulation and Order, pursuant to the terms and conditions contained in the Escrow Agreement dated March 11, 2005, entered into by and between the Escrow Agent, Longacre and BGE. The foregoing amount represents the amount by which the Scheduled Claims exceed $463,100.36, multiplied by the percentage paid by Longacre to BGE: (($538,363.01 — $463,100.36 = $75,262.65) x .43 = $32,362.93). If the Court fails to enter the Stipulation and Order within thirty (30) days of the Hearing Date, the
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Escrow Agent shall promptly return the Settlement Proceeds to BGE, as set forth in the Escrow Agreement.
6. Upon Court approval of this Stipulation and Order, the Motion to Set Aside Transfer shall be deemed settled and withdrawn with prejudice by BGE.
7. By entry into this Stipulation and Order and by execution hereof, BGE expressly acknowledges that it withdraws with prejudice its allegations and claims of fraud against Longacre contained in the Motion to Set Aside Transfer.
8. By entry into this Stipulation and Order and by execution hereof, BGE is not waiving and expressly reserves any and all of its rights, claims, causes of action, setoffs or other such rights relative to the other claims set forth in the Claim Objection and Response.
9. Subject to the performance of each of the parties obligations under this Stipulation and Order, and in particular, BGE’s obligations contained in Paragraph 5, and approval of the Stipulation and Order by the Court, BGE and Longacre agree to exchange mutually-agreeable general releases of liability within thirty (30) days of entry of this Stipulation and Order.
10. Any notice or other communication required, permitted or desirable hereunder, shall be in writing, and shall be deemed sufficiently given if personally delivered, or if sent by facsimile transmission or by certified or registered mail, postage prepaid, return receipt requested, addressed as follows:
To BGE: Russell R. Johnson III 3734 Byfield Place Richmond, VA 23233 Telephone: (804) 747-7208 Facsimile: (804) 747-7209
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To Longacre: Morrison Foerster LLP Attn: Jason C. DiBattista 1290 Avenue of the Americas New York, New York 10104-0050 Telephone: (212) 468-8216 Facsimile: (212) 468-7900
with a copy to: Longacre Master Fund, Ltd. Attn.: Howard Zauderer 810 Seventh Avenue, 22nd Floor New York, NY 10019 Telephone: (212) 259-4325 Facsimile: (312) 456-8435
To Stark: Stark Event Trading Ltd. c/o Stark Offshore Management, LLC 3600 South Lake Drive St. Francis, WI 53235 Attn.: Colin M. Lancaster Telephone: (414) 294-7000 Facsimile: (414) 294-7700
To Deutsche Bank: Deutsche Bank Securities, Inc. 60 Wall Street 2nd Floor New York, NY 10021 Telephone: (212) 250-5760
Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above. Any notice given in accordance with the above shall be deemed to have been given upon personal delivery if so delivered, upon receipt of confirmation if sent via facsimile transmission, or on the third (3rd) day after mailing if mailed.
11. This Stipulation and Order shall be binding upon Stark, Deutsche Bank, Longacre and BGE and each of their respective successors, assigns, and representatives. By entry into this Stipulation and Order and by execution hereof, other than as set forth herein, Stark, Deutsche
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Bank, Longacre and BGE are not waiving any rights, defenses, claims, causes of action, setoffs or other such rights.
12. The Court shall retain jurisdiction to interpret and enforce this Stipulation and Order.
13. This Stipulation and Order may only be modified by further stipulation of the parties filed with and “so ordered” by the Court.
14. This Stipulation and Order may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.