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In re Enron Corp.

United States Bankruptcy Court, S.D. New York
Nov 29, 2005
Case No. 01-16034 (AJG), Jointly Administered (Bankr. S.D.N.Y. Nov. 29, 2005)

Opinion

Case No. 01-16034 (AJG), Jointly Administered.

November 29, 2005


ORDER, PURSUANT TO SECTION 105 OF THE BANKRUPTCY CODE AND FEDERAL RULES OF BANKRUPTCY PROCEDURE 2002, 6004, AND 9019, AUTHORIZING AND APPROVING (A) THE EXECUTION, DELIVERY, AND PERFORMANCE OF SETTLEMENT AGREEMENT WITH THE RBC PARTIES WITH RESPECT TO MEGACLAIM LITIGATION, THE MEGACLAIM OBJECTION, THE RBC CLAIMS, AND THE TRANSFEREE SUIT AS SET FORTH THEREIN, AND (B) THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY


Upon consideration of the motion, dated October 31, 2005 (the "Motion"), of Enron Corp. ("ENE"), Enron North America Corp. ("ENA"), Enron Natural Gas Marketing Corp. ("ENGMC"), Enron Broadband Services, Inc. ("EBS"), Enron Energy Services, Inc. ("EES"), EES Service Holdings, Inc. ("EESH"), Enron International Inc. ("EII"), Enron Energy Services Operations, Inc. ("ESO"), ECT Merchant Investments Corp. ("ECT"), Enron Power Marketing, Inc. ("EPMI"), Atlantic Commercial Finance, Inc. ("ACFI") and Enron Capital Trade Resources International Corp. ("ECTRIC"), as reorganized debtors (collectively, the "Reorganized Debtor Movants"), for an order, pursuant to section 105 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, and 9019, authorizing and approving: (a) the execution, delivery and performance of the Settlement Agreement, dated as of October 31, 2005 (the "Settlement Agreement"), by and among the Reorganized Debtor Movants and Royal Bank of Canada ("RBC"), Royal Bank Holding Inc., RBC Dominion Securities Inc., RBC Dominion Securities Limited, RBC Holdings (USA) Inc., and RBC Dominion Securities Corporation (now known as RBC Capital Markets Corporation) and (b) the consummation of the transactions contemplated thereby; and the Bankruptcy Court having jurisdiction to consider the Motion and the relief requested therein, pursuant to 28 U.S.C. §§ 157 and 1334 and Article XXXVIII of the Plan; and it appearing that due and proper notice of the Motion and the relief requested therein having been given, and no other or further notice need be given; and all parties in interest having been heard or having been afforded an opportunity to be heard at the hearing held on November 29, 2005 to consider the Motion and the relief requested therein (the "Hearing"); and the relief requested in the Motion being in the best interests of the Reorganized Debtor Movants and the other Debtors and Reorganized Debtors, their respective estates and creditors; and the Bankruptcy Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein and that the terms and provisions contained in the Settlement Agreement are fair and reasonable; and based upon the Motion, the exhibits thereto, the evidence adduced and the legal arguments presented at the Hearing and all other proceedings had before the Bankruptcy Court; and after due deliberation thereon and good and sufficient cause appearing therefor,

All capitalized terms not defined herein shall have the meanings ascribed thereto in the Settlement Agreement.

IT IS HEREBY FOUND AND DETERMINED THAT:

A. The Bankruptcy Court has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334 and Article XXXVIII of the Plan. Venue of the Debtors' chapter 11 cases and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

B. As evidenced by the certificate of service filed with the Bankruptcy Court, proper, timely, adequate and sufficient notice of the Motion and the transactions contemplated thereby, and the Hearing to consider the Motion and the relief requested therein, has been provided to all interested persons and parties in accordance with the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules for the Southern District of New York (the "Local Rules"), and this Court's Second Amended Case Management Order Establishing, Among Other Things, Noticing Electronic Procedures, Hearing Dates, Independent Website and Alternative Methods of Participation at Hearings, dated December 17, 2002, and such notice was good, sufficient and appropriate under the particular circumstances and no other or further notice of the Motion, this Order, or the Hearing is required.

C. Pursuant to the MegaClaim Complaint, the Plaintiffs have brought claims (1) against the Financial Institution Defendants (as defined in the MegaClaim Complaint), including, but not limited to, the RBC Parties, for damages based upon, among other claims and causes of action, aiding and abetting fraud, aiding and abetting breach of fiduciary duty, and civil conspiracy; (2) against various of the Financial Institution Defendants, including, but not limited to, the RBC Parties, and other entities, for (a) disallowance and/or equitable subordination of their respective claims against the Plaintiffs, and (b) recovery of certain payments or other deliveries and commitments made to the Financial Institution Defendants by the Plaintiffs and assertedly constituting avoidable transfers, and (3) for an accounting, punitive damages, interest and costs.

D. The RBC Parties consistently have denied, and continue to deny, any and all liability with respect to the claims asserted against them in the MegaClaim Litigation. By Notice of Motion, dated March 8, 2004, the RBC Parties moved to dismiss the Bankruptcy Avoidance Claims that were asserted against them and for a more definite statement as to the Common Law Claims asserted against them. By stipulation so ordered and entered by the Court on October 15, 2004, the Plaintiffs withdrew the Bankruptcy Avoidance Claims asserted against the RBC Parties, resolving, in part, the RBC Motion to Dismiss. Plaintiffs filed an opposition to the RBC Parties' motion for a more definite statement. The briefing on this motion, upon agreement of the parties, has not yet been fully briefed or scheduled for hearing.

E. Over a period of several months, principals of the Plaintiffs and the RBC Parties held several meetings and telephone conversations to address whether a settlement might be possible and, if so, on what terms and conditions. Those discussions, which included participation by senior executives of both the Plaintiffs and the RBC Parties eventually resulted in the Settlement Agreement.

F. The negotiations were conducted at arms' length, over an extended period, between very sophisticated parties that were in an adversary relationship throughout their dealings with each other. All the terms of the settlement are set out in the Settlement Agreement presented to the Court. There are no side agreements or additional consideration of any kind apart from what is included in the Settlement Agreement. In particular, there is no evidence or indication from the terms of the Settlement Agreement that it represents or includes any effort by Plaintiffs to secure, or by the RBC Parties to assist Plaintiffs in securing, unfair or inequitable treatment of others against whom Plaintiffs or the other Enron Entities have asserted or may assert claims. The Settlement Agreement does not establish or seek to preserve for the RBC Parties a right of contribution or indemnity, in whole or in part, as to any Non-Settling Defendants or others who are themselves precluded by the terms of the settlement from bringing like claims against the RBC Parties.

G. As a further result of such negotiations, the Debtors reasonably determined that the settlement could not be achieved unless the RBC Entities were protected from the risk of post-settlement exposure to Non-Settling Defendants and others for contribution and indemnity, predicated upon actions taken by, through, on behalf of or for the benefit of any Enron Releasees. The provision of the Settlement Agreement affording that protection constitutes an essential term of the Settlement Agreement without which the compromise and settlement could not have been achieved. Neither the Debtors nor any other Person is harmed or disadvantaged by this provision in the context of the other terms of the Settlement Agreement.

H. The Plaintiffs have engaged in an extensive analysis of the role of the RBC Parties in connection with the Enron Parties, including a thorough review of the findings and conclusions of the Bankruptcy Court-approved examiners who reviewed in detail the role of numerous financial institutions and others in regard to the special purpose entity transactions engaged in by the Enron Parties, the documentation and evidence collected by such examiners, the information produced to date in the MegaClaim Litigation, which includes over 150,000 pages of documents produced by the RBC Parties, and testimony given to the examiners by the RBC Parties, as well as documents produced by and testimony of other parties to the MegaClaim Litigation.

I. Without prejudice to the position that the Plaintiffs have taken in the MegaClaim Litigation that the Financial Institution Defendants are subject to joint and several liability, the Enron Parties formulated a system of allocation for the Common Law Claims to assess the proportional responsibility of each of the Financial Institution Defendants for the harms alleged to have been suffered by the Plaintiffs based on objective factors. Those factors included, among others, the number of transactions in which each Financial Institution Defendant was involved; the nature and size of each Financial Institution Defendant's role in each transaction; the nature and extent of the financial statement impact of the deals led by or participated in by each Financial Institutional Defendant; and the revenues (i.e., interest, fees) received by each Financial Institution Defendant with respect to such transactions.

J. In the exercise of their reasonable business judgment, the Debtors and the Reorganized Debtors, for and on behalf of their respective estates, fairly determined that, without conceding Plaintiff's position that the Financial Institution Defendants are subject to joint and several liability, the putative proportional responsibility in respect of the RBC Parties is approximately one and one-half percent (1.5%), the smallest allocation to any Financial Institution Defendant. Accordingly, the Settlement Agreement and the compromise and the settlement embodied therein is in the best interests of the Debtors, the Reorganized Debtors and their respective estates, creditors, interest holders and other parties in interest.

K. The RBC Parties did not underwrite the issuance of any of the Enron Entities' debt or equity securities, did not provide the Enron Entities with any accounting services, did not prepare or assist in the preparation of, or comment on proposed forms of, financial statements for the Enron Entities, did not participate as the equity investor in any Enron FAS 125/140 "special purpose entity" transaction and did not determine which financial transactions the Enron Entities would pursue. For these and other reasons, the Enron Entities have determined that further conduct of the MegaClaim Litigation and the MegaClaim Objection insofar as they relate to the RBC Parties would be protracted, expensive and without certainty as to their outcome. The Enron Entities have therefore determined that it is desirable and beneficial to them and their beneficiaries that the MegaClaim Litigation and MegaClaim Objection insofar as they relate to the RBC Parties, as well as the Transferee Suit, be settled in the manner and upon the terms and conditions set forth in the Settlement Agreement.

L. The Reorganized Debtors and the Debtors have advanced sound and sufficient business justifications, and it is a reasonable exercise of their respective business judgment, to execute, deliver and consummate the Settlement Agreement and the transactions contemplated thereby.

M. The consummation of the Settlement Agreement and the settlement contemplated thereby, is properly authorized under all applicable provisions of the Bankruptcy Code, including, without limitation, section 105 of the Bankruptcy Code, and all applicable Bankruptcy Rules, including, without limitation, Bankruptcy Rules 2002, 6004, and 9019, as well as Local Rule 9013-1(c), and all of the applicable provisions of such sections have been complied with in respect thereof.

N. Subject to the entry of this Order, the Reorganized Debtor Movants, directly or indirectly, have the power and the authority to bind each other Debtor, Reorganized Debtor and Enron Entity to the terms of the Settlement Agreement or otherwise have been duly authorized by such Debtor, Reorganized Debtor and other Enron Entity to execute and deliver the Settlement Agreement on its behalf.

O. The consideration set forth the Settlement Agreement constitutes reasonably equivalent value and fair consideration pursuant to the Bankruptcy Code and applicable state law.

P. The Settlement Agreement was proposed, negotiated, and entered into by the parties thereto without collusion and in good faith.

Q. Except as otherwise provided in this Order, no consents or approvals, other than this Order and those expressly provided for in the Settlement Agreement, are required for the parties to consummate the transactions contemplated by the Settlement Agreement. Without limiting the generality of the foregoing, upon entry of this Order, no further action, approval or consent of any person shall be required to enter into, deliver, perform, and comply with the Settlement Agreement.

THEREFORE, IT IS HEREBY ORDERED THAT:

1. The findings of fact and the conclusions of law stated herein shall constitute the Bankruptcy Court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this proceeding pursuant to Bankruptcy Rule 9014. To the extent any finding of fact shall later be determined to be a conclusion of law, it shall be so deemed, and to the extent any conclusion of law shall later be determined to be a finding of fact, it shall be so deemed.

2. The Motion is granted in its entirety.

3. All objections, including, without limitation, any objections interposed at the Hearing, to the Motion or the relief requested therein that have not been withdrawn, waived or settled, and all reservations of rights included therein, are overruled.

4. The Settlement Agreement and the transactions contemplated thereby are approved in their entirety pursuant to section 105 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, and 9019, and Local Rule 9013-1(c).

5. The Reorganized Debtor Movants are authorized and directed for themselves and on behalf of each other Debtor, Reorganized Debtor and Enron Entity, pursuant to section 105 of the Bankruptcy Code and Bankruptcy Rule 9019, to execute and deliver the Settlement Agreement and each of the Debtors, Reorganized Debtors and other Enron Entities are authorized and directed to perform all of their obligations with respect thereto, and to execute and deliver, or cause their respective subsidiaries and affiliates to execute and deliver, such Settlement Agreement, and perform all of their obligations with respect thereto and take such other actions as are necessary to effectuate the transactions contemplated thereby.

6. On the Effective Date, the RBC Entities shall pay to ENE, by wire transfer of immediately available funds, Twenty Five Million Dollars ($25,000,000.00) in exchange for the full and final satisfaction of the claims and causes of action asserted against the RBC Parties in the MegaClaim Litigation and for the granting of the releases provided in the Settlement Agreement and provided herein.

7. On the Effective Date, (1) the RBC Entities shall pay to ENE, by wire transfer of immediately available funds, Twenty Four Million Dollars ($24,000,000.00), (2) in consideration therefor and subject to the provisions of Sections 2.2(b) and (c) of the Settlement Agreement, the RBC Claims and RBC's pro rata portion of the Agent Claims, each as set forth in Section 2.2(a) of the Settlement Agreement, shall be deemed to be Allowed Claims, and (3) subject to the provisions of Section 2.2(d) of the Settlement Agreement, the KS Claims shall be deemed Allowed Claims against ENE in the amounts and classes as set forth in Section 2.2(d) of the Settlement Agreement.

8. As provided in Section 2.2(b) of the Settlement Agreement, notwithstanding the provisions of Section 2.2(a) of the Settlement Agreement, the allowance of (1) Claim No. 11224 (the "Brazos Claim") shall remain subject to the entry of a Final Order approving the Brazos Settlement, at which time, RBC's pro rata portion of the Brazos Claim shall not constitute Recovery Action Indebtedness, as defined in the Brazos Settlement, and (2) the E-Next Claims shall remain subject to the entry of a Final Order approving the E-Next Settlement, at which time, RBC shall not be considered a Section 1.3 Lender, as defined in the E-Next Settlement. In the event that either the Brazos Settlement or the E-Next Settlement are not approved by the Bankruptcy Court, the Enron Entities and the RBC Entities shall negotiate in good faith so as to give effect, on an economic basis, to the understanding of the Parties with respect to the Brazos Claim and the E-Next Claims.

9. As soon as practicable following the Effective Date, but in no event later than twenty (20) Business Days subsequent to the Effective Date, in order to reflect the other RBC Allowed Claims on the Claims Registry in the Debtors' chapter 11 cases, (1) ENE shall cause Bankruptcy Services, LLC, as claims agent, to (i) assign new claim numbers to (x) the LTR Claim and the STR Claim (collectively, the "Revolver Claims") and (y) RBC's pro rata portion of Claims Nos. 11166, 11235, 11236 and 22135 (collectively, the "Syndicated LC Claims") and (ii) reduce the Challenged LTR Claim, the Challenged STR Claim and the Disputed Syndicated LC Claims, as defined in the Syndicated LC Settlement Agreement, by the amount of the Revolver Claims and the Syndicated LC Claims, respectively, and (2) the Challenged LTR Claim, the Challenge STR Claim and the Disputed Syndicated LC Claims shall be deemed withdrawn and expunged to the extent of the RBC Allowed Claims with respect to the Revolver Claims and the Syndicated LC Claims; provided, however, that, notwithstanding the foregoing, nothing contained herein shall constitute an amendment of a waiver of the provisions of Section 3.5 of the Syndicated LC Settlement Agreement with respect to the payment of distributions to JPMorgan Chase in its capacity as Paying Agent in connection with the Syndicated LC Facility.

10. On the Effective Date, the KS Claims shall be deemed Allowed Claims against ENE in the amounts and classes as set forth in Section 2.2(d) of the Settlement Agreement. On the Effective Date, the Transferee Suit and any related Claims objection shall be deemed resolved, and the Transferee Suit and any related Claims objection shall be withdrawn and dismissed with prejudice.

11. On the Effective Date, any claims, causes of action, damages, obligations, rights and interests that the Enron Entities, the Debtors or the Reorganized Debtors may have against the RBC Entities, including, without limitation, those asserted by the Plaintiffs in the MegaClaim Litigation or in the MegaClaim Objection, automatically shall be deemed completely, finally and fully satisfied and the RBC Entities shall be deemed dismissed as Defendants from the MegaClaim Litigation with prejudice. For procedural clarity, within five (5) Business Days of the Effective Date, the Plaintiffs shall take any and all action as is appropriate to cause the clerk's office to record the dismissal with prejudice of the RBC Parties from the MegaClaim Litigation, including, without limitation, filing with the Court a Stipulation of Dismissal With Prejudice, in the form annexed to the Settlement Agreement as Exhibit "D."

12. On the Effective Date, and without the need for the execution and delivery of additional documentation or the entry of any additional orders of the Bankruptcy Court, except as expressly provided in the Settlement Agreement, the RBC Entities, each of their subsidiaries and affiliates and the successors and assigns of any of them and any other Person that claims or might claim through, on behalf of or for the benefit of any of the foregoing (collectively, the "RBC Releasors") shall be deemed to have irrevocably and unconditionally, fully, finally and forever waived, released, acquitted and discharged the Enron Entities, the other Debtors, if any, each of the Debtors' estates, the Reorganized Debtors, their respective past or present parents, subsidiaries, affiliates, directors, officers, employees, and the successors and assigns of any of them, other than those parties set forth on Exhibit "E" to the Settlement Agreement (the "Enron Excluded Parties") (collectively, excluding the Enron Excluded Parties, the "Enron Releasees") from any and all claims, demands, rights, liabilities, or causes of action of any and every kind, character or nature whatsoever, in law or in equity, known or unknown (including Unknown Claims), whether asserted or unasserted, which the RBC Releasors, or any of them, or anyone claiming through them, on their behalf or for their benefit have or may have or claim to have, now or in the future, against any Enron Releasee that are based upon, relate to, or arise out of or in connection with the RBC Claims, the RBC Transactions or any claim, act, fact, transaction, occurrence, statement or omission in connection with the RBC Transactions, or alleged in the MegaClaim Litigation or that could have been alleged in the MegaClaim Litigation or other similar proceeding (the "Enron Released Claims"). Notwithstanding anything contained in this Order, the Settlement Agreement or elsewhere to the contrary, (i) the foregoing is not intended to release, nor shall it have the effect of releasing, the Enron Releasees from the performance of their obligations in accordance with the Settlement Agreement and the terms of this Order; and (ii) the RBC Releasors specifically retain all rights they otherwise have or may obtain to seek discovery from the Enron Releasees, to name or identify any or all of the Enron Releasees as responsible parties in any litigation, and to seek to establish the legal liability of such Enron Releasees solely for defensive purposes or purposes of showing proportional responsibility and not for purposes of obtaining any affirmative recovery from the Enron Releasees; provided, however, that the RBC Releasors are not permitted and agree not to join any of the Enron Releasees as parties to any suit or proceeding.

13. On the Effective Date, and without the need for the execution and delivery of additional documentation or the entry of any additional orders of the Bankruptcy Court, except as expressly provided in the Settlement Agreement, the Enron Entities, the other Debtors, if any, each of the Debtors' estates, the Reorganized Debtors, each of their respective subsidiaries and affiliates and the successors and assigns of any of them and any other Person that claims or might claim through, on behalf of or for the benefit of any of the foregoing (collectively, the "Enron Releasors") shall be deemed to have irrevocably and unconditionally, fully, finally and forever waived, released, acquitted and discharged the RBC Entities, their past or present parents, subsidiaries, affiliates, directors, officers, employees, and the successors and assigns of any of them (collectively, the "RBC Releasees") from any and all claims, demands, rights, liabilities, or causes of action of any and every kind, character or nature whatsoever, in law or in equity, known or unknown (including Unknown Claims), whether asserted or unasserted, which the Enron Releasors, or any of them, or anyone claiming through them, on their behalf or for their benefit have or may have or claim to have, now or in the future, against any RBC Releasee that are based upon, relate to, or arise out of or in connection with the RBC Claims, the RBC Transactions, or any claim, act, fact, transaction, occurrence, statement or omission in connection with the RBC Transactions, or alleged in the MegaClaim Litigation or that could have been alleged in the MegaClaim Litigation or other similar proceeding (the "RBC Released Claims"). Notwithstanding anything contained in this Order, the Settlement Agreement or elsewhere to the contrary, the foregoing is not intended to release, nor shall it have the effect of releasing, the RBC Releasees from the performance of their obligations in accordance with the Settlement Agreement and the terms of this Order.

14. Without in any way limiting the scope of decretal paragraph 12 hereof, from and after the Effective Date, if any claim or cause of action is commenced, asserted, continued or pursued by, on behalf of, or for the benefit of any of the RBC Releasors against any Person other than the Enron Releasees and, as a direct or indirect result thereof, any Person seeks and successfully obtains, by way of judgment, settlement or otherwise, directly or indirectly, any contribution or indemnity from any of the Enron Releasees based upon, arising from, or related to the Enron Released Claims or any transaction underlying any Enron Released Claim, then no such RBC Releasor shall execute on, collect on, obtain a lien based upon, or otherwise perfect or use in any manner any judgment or settlement in its favor unless the RBC Releasor first reduces the judgment or settlement amount or otherwise structures such judgment or settlement, by agreement or otherwise, such that all liability of the Enron Releasees to such Persons based upon contribution or indemnity is eliminated. Nothing contained in this decretal paragraph 14 shall require any RBC Releasor to pay or otherwise be responsible for any attorneys' fees or other costs of litigation incurred by any Enron Releasee in defense of a claim for contribution or indemnity, all such fees and costs being the sole responsibility and obligation of the Enron Releasee.

15. Without in any way limiting the scope of decretal paragraphs 12 and 14 hereof, in the event: (1) any of the RBC Releasors commences, asserts, continues or pursues an action, suit, or other proceeding against any of the Enron Excluded Parties or any agent of any of the Enron Releasees (an "RBC Target") with respect to any Enron Released Claim (the "RBC Target Claims"), (2) the RBC Target has a claim for contribution or indemnity against any of the Enron Releasees with respect to costs and expenses incurred by the RBC Target in connection with such RBC Target Claim, and (3) a final judgment or Final Order is entered by a court of competent jurisdiction requiring the payment of any contribution or indemnity amount by any of the Enron Releasees (the "RBC Indemnification Amount"), then (y) if the RBC Target Claims are the sole claims against an RBC Target in a given suit or other proceeding giving rise to an RBC Indemnification Amount (a "Pure RBC Claim Over"), the applicable RBC Releasor shall indemnify the applicable Enron Releasee for the RBC Indemnification Amount, but only to the extent of any actual payments made to the RBC Target by the Enron Releasee, or (z) if the RBC Target Claims are not the sole claims against an RBC Target in a given suit or other proceeding giving rise to an RBC Indemnification Amount, the applicable RBC Releasor shall indemnify the applicable Enron Releasee for a per capita share of the RBC Indemnification Amount (as determined by dividing the RBC Indemnification Amount by the number of separately represented parties or groups of parties giving rise to the RBC Indemnification Amount in that suit or other proceeding), but only to the extent of the per capita share of actual payments made to the RBC Target by the Enron Releasee. In connection with any action or proceeding against an Enron Releasee with respect to any claim for contribution or indemnity, the Enron Releasee agrees to use its best good faith efforts to defeat such claim; provided, however, that, in a Pure RBC Claim Over, the RBC Entities shall have the right (but not the duty) to elect to direct the defense by such Enron Releasee of the claim for contribution or indemnity (a "Defense Election"). Nothing contained in this decretal paragraph 15 shall require any RBC Releasor to pay or otherwise be responsible for any attorneys' fees or other costs of litigation incurred by any Enron Releasee in defense of a claim for contribution or indemnity against any Enron Releasee, all such fees and costs being the sole responsibility and obligation of the Enron Releasee; provided, however, that, in the event of a Defense Election, the RBC Entities shall act reasonably in directing the defense of a claim for contribution or indemnity. The rights and obligations set forth in this decretal paragraph 15 shall not apply to distributions made pursuant to the Plan with respect to Resolved Claims.

16. Without in any way limiting the scope of decretal paragraph 13 hereof, from and after the Effective Date, if any claim or cause of action is commenced, asserted, continued or pursued by, on behalf of, or for the benefit of any of the Enron Releasors against any Person other than the RBC Releasees and, as a direct or indirect result thereof, any Person seeks and successfully obtains, by way of judgment, settlement or otherwise, directly or indirectly, any contribution or indemnity from any of the RBC Releasees based upon, arising from, or related to the RBC Released Claims or any transaction underlying any RBC Released Claim, then no such Enron Releasor shall execute on, collect on, obtain a lien based upon, or otherwise perfect or use in any manner any judgment or settlement in its favor unless the Enron Releasor first reduces the judgment or settlement amount or otherwise structures such judgment or settlement, by agreement or otherwise, such that all liability of the RBC Releasees to such Persons based upon contribution or indemnity is eliminated. Nothing contained in this decretal paragraph 16 shall require any Enron Releasor to pay or otherwise be responsible for any attorneys' fees or other costs of litigation incurred by any RBC Releasee in defense of a claim for contribution or indemnity against any RBC Releasee, all such fees and costs being the sole responsibility and obligation of the RBC Releasee. The rights and obligations set forth in this decretal paragraph 16 shall not apply to claims and causes of action in which contribution or indemnity is sought and obtained from any RBC Releasee based solely upon such RBC Releasee's acquisition or assignment of a claim or proof of claim against the Debtors, the Debtors' chapter 11 estates or the Reorganized Debtors during the period from and after the Petition Date.

17. Without in any way limiting the scope of decretal paragraphs 13 and 15 hereof, in the event: (1) any of the Enron Releasors commences, asserts, continues or pursues an action, suit or other proceeding against any agent of any of the RBC Releasees (an "Enron Target") with respect to any RBC Released Claim (the "Enron Target Claims"), (2) the Enron Target has a claim for contribution or indemnity against any of the RBC Releasees with respect to costs and expenses incurred by the Enron Target in connection with such Enron Target Claim, and (3) a final judgment or Final Order is entered by a court of competent jurisdiction requiring the payment of any contribution or indemnity amount by any of the RBC Releasees (the "Enron Indemnification Amount"), then the applicable Enron Releasor shall indemnify the applicable RBC Releasee for the Enron Indemnification Amount but only to the extent of any actual payments made to the Enron Target by the RBC Releasee. In connection with any action or proceeding against an RBC Releasee with respect to any claim for contribution or indemnity, the RBC Releasee agrees to use its best good faith efforts to defeat such claim. Nothing contained in this decretal paragraph 17 shall require any Enron Releasor to pay or otherwise be responsible for any attorneys' fees or other costs of litigation incurred by any RBC Releasee in defense of a claim for contribution or indemnity against any RBC Releasee, all such fees and costs being the sole responsibility and obligation of the RBC Releasee. The rights and obligations set forth in this decretal paragraph 17 shall not apply to claims and causes of action in which contribution or indemnity is ordered from any RBC Releasee based solely upon such RBC Releasee's acquisition or assignment of a claim or proof of claim against the Debtors or the Debtors' chapter 11 estates during the period from and after the Petition Date.

18. The release of the RBC Released Claims set forth at decretal paragraph 13 hereof is intended to apply only to the RBC Releasees and shall not have the effect of releasing any other person that may be a Defendant or a defendant in any adversary proceeding or other litigation pending before the Bankruptcy Court or such other court of competent jurisdiction.

19. The release of the Enron Released Claims set forth at decretal paragraph 12 hereof is intended to apply only to the claims set forth therein and shall have no negative effect on the validity and enforceability of the Resolved Claims.

20. The RBC Entities shall, as part of any subsequent settlement by the Plaintiffs of the MegaClaim Litigation with any Non-Settling Defendant(s), provide a full and complete release of all claims against such Defendant(s) and any of its (their) partners, principals, officers or directors to the extent those claims arise out of the claims in the MegaClaim Litigation, including, but not limited to, claims for contribution or indemnity, arising under federal, state or foreign law. The release set forth in the foregoing sentence shall be conditioned upon the Enron Entities obtaining comparable releases for the RBC Entities from any other Defendants in the MegaClaim Litigation who settle with the Plaintiffs.

21. Each and every Person (including, but not limited to, all other Defendants in the MegaClaim Litigation) is permanently enjoined, barred and restrained from instituting, prosecuting, pursuing or litigating in any manner any claim or action for contribution or indemnity against the RBC Releasees, based upon liability or responsibility, or asserted or potential liability or responsibility, either directly or indirectly of any Person to or for the benefit of any Enron Releasee arising from or related to the claims, acts, facts, transactions, occurrences, statements or omissions that are, could have been or may be alleged in the MegaClaim Litigation or in any other action brought or that might be brought by, through, on behalf of, or for the benefit of the Enron Releasees or any of them (whether arising under federal, state or foreign law and regardless of where asserted). Any Person so enjoined, barred and restrained shall be entitled to a settlement and/or judgment credit in accordance with any applicable statutory or common law rule. This provision shall not be considered or deemed in any way to be a determination or concession by the Plaintiffs as to whether the Financial Institution Defendants are subject to joint and several liability in the MegaClaim Litigation, as to which law is applicable in any manner in the MegaClaim Litigation, or as to whether any particular loss allocation or comparative responsibility statute or common law rule is applicable in any manner in the MegaClaim Litigation. Nothing contained in this Order shall limit the rights of the Non-Settling Defendants to obtain discovery from the RBC Releasees, develop evidence in discovery and/or present evidence or arguments at trial to support a judgment reduction credit that reflects a proportionate share of responsibility, if any, allocable to the RBC Releasees different from the percentage set out in paragraph J of this Order. This Order also shall not limit the rights of the Non-Settling Defendants to defend the MegaClaim Litigation and to assert any substantive or procedural rights provided by applicable law, subject, however, to the bar on instituting, prosecuting, pursuing or litigating in any manner claims against the RBC Releasees, including, without limitation, claims against the RBC Releasees for contribution or indemnity as set forth above.

22. With respect to any of the Agented Transactions, if and to the extent that an RBC Entity is obligated pursuant to the relevant financing documentation with respect to fees or other expenses incurred by the agent in connection with the performance of its duties under the relevant financing documentation or pursuant to the documentation, then (i) if such fees and expenses are for services rendered and/or expenses incurred during the period prior to and including the Effective Date, such fees and expenses shall be the responsibility of and shall be paid by such RBC Entity in accordance with the applicable financing documentation (either to the applicable agent or, if such fees are otherwise deducted from such RBC Entity's pro rata portion of any Plan distribution, to ENE within ten (10) Business Days of notification thereof of any such distribution) or (ii) if such fees and expenses are for services rendered and/or expenses incurred after the Effective Date, such fees and expenses shall be the responsibility of and paid by the Reorganized Debtors in accordance with the applicable financing documentation.

23. The Settlement Agreement and any related agreements, documents or other instruments may be modified, amended or supplemented by the Parties' mutual agreement thereto, in a writing signed by the Parties, and in accordance with the terms thereof without further order of the Bankruptcy Court;provided, however, that, any such modification, amendment or supplement shall not be material in nature and not change the economic substance of the transactions contemplated hereby.

24. Each and every federal, state and local governmental agency or department is hereby directed to accept any and all documents and instruments necessary and appropriate to consummate the transactions contemplated by the Settlement Agreement. This Order is and shall be binding upon and shall govern the acts of all such entities, including, without limitation, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, registrars of patents, trademarks or other intellectual property, administrative agencies, governmental departments, secretaries of state, federal, state, and local officials, and all other persons and entities, who may be required by operation of law, the duties of their office, or contract, to accept, file, register or otherwise record or release any documents or instruments that reflect, the consummation of the transactions contemplated by the Settlement Agreement.

25. The failure to specifically include any particular provisions of the Settlement Agreement in this Order shall not diminish or impair the effectiveness of such provisions, it being the intent of the Bankruptcy Court that the Settlement Agreement and the transactions contemplated thereby be approved in their entirety and performed in accordance with their terms. Any conflict between the terms and provisions of this Order and the Settlement Agreement shall be resolved in favor of this Order.

26. The terms and provisions of the Settlement Agreement, together with the terms and provisions of this Order, shall be binding on and inure to the benefit of the Parties to the Settlement Agreement, each of the remaining Debtors, Reorganized Debtors and Enron Entities, and their respective estates and creditors, and other parties in interest, and any successors, assigns or affiliates of such persons and entities, including, without limitation, (a) any fiduciary, committee, trustee or examiner now existing or appointed in the future in these cases or any subsequent or converted cases of the Debtors under chapter 7 or chapter 11 of the Bankruptcy Code and (b) any purchaser, agent for a purchaser or assignee of any of the RBC Claims;provided, however, that, notwithstanding the foregoing, the allocation referred to in paragraph J of this Order and in the Settlement Agreement and the methodology associated with such allocation shall be recognized as having been developed for settlement purposes and nothing contained in this Order shall limit or otherwise affect any treatment that such materials may otherwise be entitled to receive for discovery or evidentiary purposes pursuant to the Federal Rules of Civil Procedure or the Federal Rules of Evidence. This Order shall also be binding in all respects upon any affected third parties, including, without limitation, those asserting a lien or claim against, or interest in, the Debtors' estates.

27. The provisions of this Order are nonseverable and mutually dependent.

28. The 10-day stay imposed pursuant to Bankruptcy Rule 6004(g) shall not be in effect, and this Order shall be effective and enforceable immediately upon entry. Any party objecting to this Order must exercise due diligence in filing an appeal and pursuing a stay or risk such appeal being foreclosed as moot in the event the parties elect to close the transactions contemplated by the Settlement Agreement prior to this Order becoming a final order.

29. No person or entity shall take any action to prevent, enjoin or otherwise interfere with the consummation of the Settlement Agreement.

30. The requirement set forth in Rule 9013-1(b) of the Local Rules that any motion or request for relief be accompanied by a memorandum of law is hereby deemed satisfied by the contents of the Motion.

31. The Bankruptcy Court shall retain jurisdiction to hear and determine all matters arising from the interpretation, implementation and enforcement of this Order, the Settlement Agreement and any disputes arising from, and all documents executed, in connection therewith.


Summaries of

In re Enron Corp.

United States Bankruptcy Court, S.D. New York
Nov 29, 2005
Case No. 01-16034 (AJG), Jointly Administered (Bankr. S.D.N.Y. Nov. 29, 2005)
Case details for

In re Enron Corp.

Case Details

Full title:In re ENRON CORP., et al., Chapter 11, Reorganized Debtors

Court:United States Bankruptcy Court, S.D. New York

Date published: Nov 29, 2005

Citations

Case No. 01-16034 (AJG), Jointly Administered (Bankr. S.D.N.Y. Nov. 29, 2005)

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