Opinion
Case No. 01-61119 (DHA)
February 27, 2002
Upon the motion, dated December 7, 2001 (the "Motion"), of the above-captioned debtors and debtors in possession (collectively, the "Debtors"), for an order, pursuant to §§ 105(a), 362, 363, 502 and 503 of title 11 of the United States Code (the "Bankruptcy Code") to establish an alternative dispute resolution program and to permit Debtors to liquidate certain prepetition claims; and it appearing that notice of the Motion and the hearing thereon has been provided and properly served as set forth in the Motion, and no other or further notice being necessary or required; and it appearing that implementing the ADR Program is necessary and in the best interests of the Debtors' estates; and a hearing on the Motion having been held on February 27, 2002 (the "Hearing"); and upon the Motion, the Hearing, the arguments of counsel made at the Hearing, and the full record of these cases; and after due deliberation and sufficient cause appearing therefor, it is hereby:
ADJUDGED, DECREED AND ORDERED that:
1. The Motion is granted, except as to those claimants hereinafter named who are specifically excluded from the ADR Procedures.
2. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Motion.
3. The ADR Procedures described in the Motion and set forth in Exhibit B to the Motion (the "Procedures"), are approved in all respects.
4. All time periods and deadlines set forth in the ADR Procedures shall be construed and governed by Federal Rule of Bankruptcy Procedure 9006.
5. The terms and conditions of the ADR Procedures, including, but not limited to, the time periods set forth therein, shall be binding in every respect upon all Claimants in these cases, except as to those claimants hereinafter named who are specifically excluded from the ADR Procedures. Notwithstanding the foregoing, the ADR Procedures shall not apply to any Claim insured in full or in part by National Union Fire Insurance Company of Pittsburgh, Pa., on behalf of itself and all of its affiliates (collectively, "National Union") pursuant to the Debtors' workers compensation insurance policies with National Union and the Debtors' automobile insurance policies with National Union, and any Claimant asserting such Claim or Claims shall not be bound by or subject to the ADR Procedures in regard to such Claim or Claims. In addition, to the extent National Union has filed a Claim or Claims in the Debtors' bankruptcy cases, such Claim or Claims, to the extent they are disputed by the Debtors, shall not be subject to resolution or liquidation under the ADR Procedures, and National Union shall not be bound by the ADR Procedures in respect to such Claim or Claims.
6. The forms of ADR Notice annexed to the Motion as Exhibit "D" and the Statement of Claim and the Release annexed to the ADR Procedures as Exhibits "1" and "2" are hereby authorized and approved.
7. The Debtors are authorized to refer all ADR Claims which are not resolved following the negotiation phase of the ADR Procedures to the American Arbitration Association or other mediator acceptable to the Debtors for Mediation and the Debtors are authorized to pay one-half of all fees charged by the mediator for such Mediations.
8. All holders of ADR Claims that participate in the Mediation segment of the ADR Procedures, as applicable, are directed to pay, on an equal basis with the Debtors, all fees and costs for each Mediation session, and if a Claimant fails to pay its share of all fees and costs for Mediation within thirty (30) calendar days of the date payment is due, the Claimant's claim shall be forever disallowed and expunged in its entirety, without further Court order.
9. To the extent the Debtors elect to resolve a Disputed Claim under the ADR Procedures and such Disputed Claim is filed in an amount that may potentially be subject to excess general liability insurance coverage provided by National Union for occurrences occurring after April 30, 2001, the Debtors shall advise National Union that the Debtors have elected to resolve and liquidate such claim under the ADR Procedures and shall ensure that National Union is afforded a full opportunity to participate in the resolution and liquidation of such claim. The Debtors are further authorized to enter into an agreement with National Union specifying which settlement decisions concerning such claims shall be subject to the approval of National Union.
10. Pursuant to §§ 105(a) and 362 of the Bankruptcy Code and section 11.8 of the Debtors' confirmed Second Amended Second Modified Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the "Plan"), all Claimants are enjoined from taking any further action in any judicial or administrative forum or otherwise seeking to establish, liquidate or obtain satisfaction of their Claims from the Debtors, their successors in interest, and to the extent they are a party to a pending or threatened action under an ADR Claim, against the Debtors' Insurers, any non-debtor defendant affiliated with or potentially entitled to indemnification or reimbursement from any of the Debtors or for whose liability the Debtors may have ultimate liability, and the current and former officers, directors or employees of each of the foregoing parties, or any insurance policy of such parties, except as provided in the ADR Procedures and this Order.
11. The automatic stay of § 362(a) of the Bankruptcy Code and section 11.4 of the Plan (the "Automatic Stay") is modified with respect to ADR Claims filed against the Debtors' Insurers, the Debtors or their successors in interest, to the extent of permitting the liquidation of such ADR Claims consistent with the terms of the ADR Procedures and this Order.
12. Under such modification of the Automatic Stay, the provisions of § 362 of the Bankruptcy Code, including, without limitation, those provisions prohibiting execution, enforcement or collection of any settlement or judgment that may be obtained against the Debtors from and against any assets or properties of the Debtors' estates (as defined in § 541 of the Bankruptcy Code), except as otherwise set forth in the ADR Procedures and this Order, shall remain in full force and effect, and neither Claimants nor any of their agents, attorneys, or representatives shall take any action or attempt to cause any action to be taken with respect to the commencement or prosecution of any and all actions or claims of whatever kind which arise against any of the Debtors and, to the extent they are a party to pending or threatened action under an ADR Claim, against the Debtors' Insurers, any non-debtor defendant affiliated with or potentially entitled to indemnification or reimbursement from any of the Debtors or for whose liability the Debtors may have ultimate liability, any of their successors in interest, and the respective officers, directors and employees of each.
13. All Claimants are provisionally barred from seeking relief from the automatic stay or any other applicable injunction until they have complied with the ADR Procedures in good faith and their ADR Claim has nonetheless not been liquidated.
14. Claimants holding ADR Claims who elect not to participate in the ADR Procedures are barred from prosecuting their ADR Claims and from seeking relief from the automatic stay or any other applicable injunction until the allowance of the subject ADR Claim by a final order of this Court or the District Court or an order is entered closing the Debtors' bankruptcy cases.
15. The failure of a Claimant who has elected to participate in the ADR Procedures to participate in good faith in the ADR Procedures or any required stage thereof may result in the waiver and release by the Claimant of any and all rights or remedies to which such Claimant may otherwise be entitled against any or all of the Debtors, their successors in interest, the officers, directors or employees thereof, and/or any insurance policy in which any such party is named as an insured.
16. Pursuant to the ADR Procedures, the failure of a Claimant who has elected to participate in the ADR procedures to participate in the ADR Procedures, or to perform required acts under the ADR Procedures which are necessary to the resolution of his or her ADR Claim under the ADR Procedures, shall, without further Court order, result in the Claimant's claim(s) being forever disallowed, expunged, discharged and waived against the Debtors and their bankruptcy estates and the Debtors' Insurers, and such Claimant shall be forever barred from asserting such Claim against the Debtors' Insurers, the Debtors or their successors in interest or recovering any distribution made by the Debtors to their creditors, and such Claimant shall no longer have a "claim" as such term is defined in § 101(5) of the Bankruptcy Code.
17. Unless otherwise ordered by the Court, (a) participation in the ADR Procedures shall in no way alter the requirement that each Claimant also have timely filed a proof of claim in these chapter 11 cases, and (b) failure to timely file a proof of claim may result in the disallowance of such Claimant's claim or claims against the Debtors.
18. The Debtors are authorized and empowered to take all actions required or contemplated by the terms and provisions of this Order and the ADR Procedures.
19. The Debtors' Insurers shall fully cooperate and participate in the ADR Procedures in accordance with the terms and conditions set forth therein.
20. Upon written request by the Debtors, the Debtors' Insurers shall deliver to the Debtors copies of all files relating to the ADR Claims within twenty (20) calendar days of the date of the Debtors' written request.
21. This Court shall retain jurisdiction over the Debtors, the Debtors' Insurers and the Claimants with respect to all matters and disputes arising out of or relating to the implementation of the Motion, the ADR Procedures, and/or the implementation of this Order.
22. Notwithstanding the foregoing, nothing in this Order shall pertain to any dispute relating to Proof of Claim No. 2442 filed by Herricks Fore Plan, Inc. ("Herricks") and the Debtors shall not seek to invoke the ADR Procedures to resolve any dispute relating to Proof of Claim No. 2442 and Herricks shall not be bound by, or subject to, the provisions of this Order, however, nothing in this Order shall prejudice the Debtors' or Herricks' rights, under applicable law, to request the Court, by separate motion, to refer any other dispute between the Debtors and Herricks to mediation.
23. Notwithstanding the foregoing, nothing in this Order shall pertain to any dispute relating to Proof of Claim No. 3587 filed by Kevin VanDolah and the Debtors shall not seek to invoke the ADR Procedures to resolve any dispute relating to Proof of Claim No. 3587 and Mr. VanDolah shall not be bound by, or subject to, the provisions of this Order, however, nothing in this Order shall prejudice the Debtors' or Mr. VanDolah's rights, under applicable law, to request the Court, by separate motion, to refer any dispute between the Debtors and Mr. VanDolah to mediation.
24. Notwithstanding the foregoing, nothing in this Order shall pertain to any dispute relating to Proofs of Claim Nos. 2708, 2709 and 2712 filed by Shion Sakiyama, Julie Kuo and Sun Hee Kwon, on behalf of the Estate of Suel Lee, respectively (collectively, the "Sakiyama Plaintiffs"), and the Debtors shall not seek to invoke the ADR Procedures to resolve any dispute relating to Proof of Claim Nos. 2708, 2709 and 2712 and the Sakiyama Plaintiffs shall not be bound by, or subject to, the provisions of this Order, however, nothing in this Order shall prejudice the Debtors' or the Sakiyama Plaintiffs' rights, under applicable law, to request the Court, by separate motion, to refer any dispute between the Debtors and the Sakiyama Plaintiffs to mediation.
25. Notwithstanding the foregoing, nothing in this Order shall pertain to any dispute relating to Proof of Claim Nos. 2770, 2771 and 2772 filed by Hsin Hwa Chen, Chin Chih Ting and Hsin Hwa Chen, Chin Chih Ting, Hsin Hwa Chen and Chin Chih Ting on behalf of the Estate of Lynn May Chen, respectively (collectively, the "Chen Plaintiffs"), and the Debtors shall not seek to invoke the ADR Procedures to resolve any dispute relating to Proofs of Claim Nos. 2770, 2771 and 2772 and the Chen Plaintiffs shall not be bound by, or subject to, the provisions of this Order, however, nothing in this Order shall prejudice the Debtors' or the Chen Plaintiffs' rights, under applicable law, to request the Court, by separate motion, to refer any dispute between the Debtors and the Chen Plaintiffs to mediation.
26. Notwithstanding the foregoing, nothing in this Order shall pertain to any dispute relating to Proof of Claim No. 4140 filed by Dustin H. O'Neil and the Debtors shall not seek to invoke the ADR Procedures to resolve any dispute relating to Proof of Claim No. 4140 and Mr. O'Neil shall not be bound by, or subject to, the provisions of this Order, however, nothing in this Order shall prejudice the Debtors' or Mr. O'Neil's rights, under applicable law, to request the Court, by separate motion, to refer any dispute between the Debtors and the Mr. O'Neil to mediation. Further, nothing in this Order shall prejudice Mr. O'Neil's rights to move the Court for relief from the automatic stay.
27. Notwithstanding the foregoing, nothing in this Order shall pertain to any dispute relating to Proof of Claim No. 2921 filed by Richard Stiller and the Debtors shall not seek to invoke the ADR Procedures to resolve any dispute relating to Proof of Claim No. 2921 and Mr. Stiller shall not be bound by, or subject to, the provisions of this Order, however, nothing in this Order shall prejudice the Debtors' or Mr. Stiller's rights, under applicable law, to request the Court, by separate motion, to refer any dispute between the Debtors and Mr. Stiller to mediation.
28. Upon entry, the Debtors may, at their discretion, serve a copy of the Order, an ADR Notice and a Statement of Claim on those parties holding Disputed Claims by serving a copy of the Order, an ADR Notice and a Statement of Claim (a) in accordance with Federal Rule of Bankruptcy Procedure 7004 and Federal Rule of Civil Procedure 4, (b) to the extent the identity of counsel for a Claimant is unknown to the Debtors, by first class mail, postage prepaid, on the signatory on the Claimant's Proof of Claim or other representative identified in the Proof of Claim and any attachment thereto; or (c) by first class mail, postage prepaid, on any counsel that has appeared on the Claimant's behalf in the Debtors' bankruptcy cases.
29. The Court retains jurisdiction to enforce compliance by affected parties with this Order.