Opinion
Case No. 07-10598 (PM).
August 5, 2008
BLANK ROME LLP, John E. Lucian, Fed. Bar No. 14096, Philadelphia, PA, Counsel for the Trustee.
BUD STEPHEN TAYMAN, P.A., Bud Stephen Tayman, Fed. Bar. No. 08249, Greenbelt, Maryland, Counsel for the Collett Parties.
STIPULATION AND CONSENT ORDER RESOLVING MOTION OF COLLETT LAND COMPANY, INC.
WHEREAS, on or about May 20, 2008, William Duncan Bishop was appointed chapter 11 trustee (the "Trustee") in the above-captioned cases; and
WHEREAS, on or about June 9, 2008, Collett Land Company, Inc. filed its Motion for Rejection and Surrender of Mineral Leases as Unexpired Leases of Nonresidential Real Property or, Alternatively, to Fix the Last Date for the Assumption or Rejection of Mineral Leases as Executory Contracts [Dkt. No. 180] (the "Collett Motion"), to which only the Trustee objected; and
WHEREAS, the Collett Motion involved three mineral leases, to wit: Lease Agreement, dated January 12, 2002, between Collett Land Company, Inc. and J L Drilling, Inc. ("Mineral Lease 1"), Lease Agreement, dated January 12, 2002, between Collett Farm and Orchard, Inc. and J L Drilling ("Mineral Lease 2"), and Lease Agreement, dated January 12, 2002, between Edmond Collett and wife Edith S. Collett and J L Drilling, Inc. ("Mineral Lease 3") (the foregoing mineral leases collectively referred to herein as the "Original Mineral Leases"); and
WHEREAS, as described in the Collett Motion, the Original Mineral Leases were superceded by three superceding Lease Agreements, each dated January 10, 2004, between Collett Land Company, Inc. and the James Parsons Construction Company ("Mineral Lease 1A"), between Collett Farm Orchard, Inc. and the James Parsons Construction Company ("Mineral Lease 2A"), and between Edmond Collett and wife Edith S. Collett and the James Parsons Construction Company ("Mineral Lease 3A") (the foregoing superceding mineral leases collectively referred to herein as, the "Superceding Mineral Leases"); and
WHEREAS, as additionally described in the Collett Motion, Mineral Lease 1A was modified by letter, dated March 22, 2006, from Mitchell J. Rotbert on behalf of the lessee to Edmond Collett (the "Mineral Lease Modification Letter Agreement") which, inter alia, added an additional 343 acre tract referred to as the Allen Griffitts Tract to Mineral Lease 1A; and
WHEREAS, the parties have agreed to a resolution of the Collett Motion as set forth herein; and
WHEREAS, Debtor Parsons 4E, LLC, is the successor to the rights of the James Parsons Construction Company under the Superceding Mineral Leases;
NOW, THEREFORE, it is hereby stipulated and agreed by and between the parties, and ordered by the Court, as follows:
1. Termination of Superceding Mineral Lease. The parties agree to immediately terminate and surrender Mineral Lease 3A. Therefore, the entry of this Stipulation and Consent Order shall be, and hereby is, deemed to constitute the termination and surrender of Mineral Lease 3A and the real property subject thereto be, and hereby is, no longer property of the bankruptcy estate. Collett Land Company, Inc. for itself and as successor in interest to Edmond Collett and wife Edith S. Collett hereby waives any claim against the bankruptcy estate which may exist in regard to Mineral Lease 3A.
2. Retained Superceding Mineral Leases. The parties agree that Mineral Lease 1A, as modified by the Mineral Lease Modification Letter Agreement, and Mineral Lease 2A, and all rights and benefits thereunder, shall be retained in the bankruptcy estate for the Trustee's use as provided herein. (Mineral Lease 1A, as modified by the Mineral Lease Modification Letter Agreement, and Mineral Lease 2A are collectively referred to herein as the "Retained Superceding Mineral Leases").
3. Cure Payment. The Trustee shall pay to Collett Land Company, Inc., on its own behalf and on behalf of any person or entity related thereto and/or asserting any rights under any of the leases referenced in the Collett Motion (collectively, the "Collett Parties"), the aggregate sum of Four Hundred Thousand Dollars ($400,000) (the "Cure Amount") in full satisfaction of all defaults under the Retained Superceding Mineral Leases. The Cure Amount shall be paid to Collett Land Company, Inc. and shall be paid according to the following schedule: $100,000 upon this Stipulation and Consent Order becoming a final, non-appealable Order; $100,000 sixty days after the aforementioned payment, so long as the Trustee has received the full settlement amount of the proceeds of the Trustee's settlement with Frank H. Ikerd approved by Court Order entered on July 9, 2008 [Dkt. No. 202], and, if the settlement amount has not been received, then within one hundred twenty days after the aforementioned payment; and the remaining $200,000 to be paid (along with all amounts, if any, then due under the Retained Superceding Mineral Leases) upon entry of a final, nonappealable Order authorizing assumption and assignment of the Retained Superceding Mineral Leases to a third party.
4. Recoupment of Advance Royalties. The Cure Amount shall constitute advance royalties and shall be recoupable against future royalties in full in accordance with the terms of the Retained Superceding Mineral Leases once mining operations commence. In addition to the Cure Amount, the sum of Two Hundred Fourteen Thousand Dollars ($214,000) paid to the Collett Parties prior to the chapter 11 filing shall constitute advance royalties and shall be recoupable against future royalties in full in accordance with the terms of the Retained Superceding Mineral Leases once mining operations commence.
5. Deferral of Advance Royalties. The advance royalties for calendar year 2009, currently due under the Retained Superceding Mineral Leases on January 10, 2009 to the extent that mining operations have not commenced yet, shall now be due on July 1, 2009. Any advance royalties due in successive years shall be due on July 1st of said year rather than January 10th (e.g., 2010 advance royalty payments would be due on July 1, 2010). To the extent that any other sums (other than the Cure Amount) become due and payable under any of the Retained Superceding Mineral Leases from the date of this Stipulation and Consent Order through June 30, 2009, said due date(s) shall be deemed deferred and extended until July 1, 2009.
6. Assignability. So long as the Trustee remains current with payment of the Cure Amount, the Retained Superceding Mineral Leases are fully assumable and assignable by the Trustee, subject to the provisions of the Retained Superceding Mineral Leases, 11 U.S.C. § 365, and this Stipulation and Consent Order. The Trustee agrees to obtain the consent of Edmond Collett, Esquire, which consent shall not be unreasonably withheld, prior to seeking Court approval of an assignment of any of the Retained Superceding Mineral Leases.
7. Future Rejection of the Retained Superceding Mineral Leases. Notwithstanding any provision hereof to the contrary, unless otherwise ordered herein, the Retained Superceding Mineral Leases shall be deemed immediately rejected and shall automatically be surrendered by the Trustee to Collett Land Company, Inc., for itself and as Successor in Interest to Collett Farm Orchard, Inc., without further Order of this Court if a final, nonappealable Order authorizing the assignment of the Retained Superceding Mineral Leases has not been entered, or otherwise approved through a confirmed chapter 11 plan, by December 31, 2009. Moreover, unless the assumption and assignment of the Retained Superceding Mineral Leases has been approved by the prior entry of a final, nonappealable Order authorizing the assumption and assignment of the Retained Superceding Mineral Leases, or otherwise approved through a confirmed chapter 11 plan, then upon any conversion of the above-captioned bankruptcy case of Parsons 4E, LLC to a case under chapter 7 of Title 11 of the U.S. Code, the provisions of this Stipulation and Consent Order shall no longer apply and the Retained Superceding Mineral Leases shall be deemed immediately rejected and automatically surrendered to Collett Land Company, Inc. for itself and as Successor in Interest to Collett Farm Orchard, Inc. without further Order of this Court.
8. Resolution of Collett Motion. The Collett Parties waive all rights to challenge assumption and assignment of the Retained Superceding Mineral Leases except to the extent such assumption and assignment does not comply with the terms of this Stipulation and Consent Order. The Collett Motion shall be deemed fully resolved by this Stipulation and Consent Order. The Collett Parties waive the right to seek relief similar to any of the relief requested in the Collett Motion and/or otherwise to seek to compel assumption or rejection of any of the Retained Superceding Mineral Leases, except as set forth herein.
9. Survival of Contract Provision. Unless to the extent otherwise altered by this Stipulation and Consent Order, all terms and provisions of the Retained Superceding Mineral Leases shall remain in full force and effect.
10. Hearing Cancelled. The hearing on the Collett Motion scheduled for September 3, 2008 is cancelled.
11. No Assumption. Nothing herein shall be deemed to be an assumption of any of the Original Mineral Leases, the Superceding Mineral Leases or the Retained Superceding Mineral Leases. However, until the Retained Superceding Mineral Leases shall be rejected, pursuant to 11 U.S.C. 365, all amounts owed post-petition (other than the Cure Amount) shall constitute administrative expenses of the bankruptcy estate, but only upon such amount(s) becoming due and owing under the modified due dates set forth herein and such amount(s) meeting the standard set forth in 11 U.S.C. § 503(b). This paragraph shall not be construed as a waiver by the Collett Parties of any argument that the Cure Amount constitutes an administrative expense, and is without prejudice to the rights of the Collett Parties to assert that any portion or all of the Cure Amount constitutes an administrative expense, and is without prejudice to the rights of the Trustee or any party in interest to contest same.
12. Mineral Lease 1A Addendum. The parties agree to execute a lease addendum with respect to Mineral Lease 1A to formalize the applicable provisions of the Mineral Lease Modification Letter Agreement.
13. Additional Tracts of Land. The parties agree that any additional tracts of land acquired by Collett Land Company, Inc. prior to the assumption and assignment of the Retained Superceding Mineral Leases shall be available to the Trustee as additional tracts of land for assumption and assignment along with the tracts of land referenced in the Retained Superceding Mineral Leases.
SO ORDERED as of the date appearing in the signature block at the top of this Stipulation and Consent Order.
END OF ORDER
SO OFDERED