Opinion
Case No. 01-80096-RGM.
September 20, 2004
James W. Reynolds, Esquire, VSB No. 33226, Fairfax, Virginia, ODIN FELDMAN PITTLEMAN PC, Counsel for Donald F. King, Trustee.
NINTH ORDER APPROVING SETTLEMENT OF CERTAIN ADVERSARY PROCEEDINGS
THIS MATTER comes on upon the ninth motion of Donald F. King, Trustee (the "Trustee") for approval of settlement of adversary proceedings pertaining to the recovery of preferential transfers against (a) Harmelin Associates, Inc., (b) Pearson Education, Inc. and (c) Hewlett-Packard Financial Services Company.
IT APPEARING that there is cause for approving the settlements with the above referenced parties, it is therefore ORDERED as follows:
A. Donald F. King, Trustee v. Harmelin Associates, Inc. ("Harmelin") (Adv. Pro. No. 03-01007-RGM)
That the settlement and the Settlement Agreement dated July 12, 2004, a copy of which is attached hereto as Exhibit A, between the Trustee, Harmelin and Viacom, Inc. (on behalf of VSC Communications Inc., Paramount Stations Group of Philadelphia Inc., Infinity Broadcasting East Inc. and Infinity Broadcasting Corp. of Philadelphia), Capstar Radio Operating Company, Gannett Georgia L.P., Turner Entertainment Networks, Inc., Fox Television Stations, Inc. (for itself and on behalf of New World Communications of Atlanta, Inc. d/b/a WAGA-TV, and Fox Television Stations of Philadelphia, Inc., d/b/a WTXF-TV), Tribune Television Company (licensee of WPHL-TV and WATL, LLC, licensee of WATL(TV)), and NBC News Productions, Inc. (collectively, the Third Party Defendants") is hereby approved; that Harmelin and the Third Party Defendants shall pay a total of $25,000.00 to the estate to settle the above referenced adversary proceeding; that the settlement shall include a mutual release of claims between the Trustee, Harmelin and the Third Party Defendants, except that Harmelin and the Third Party Defendants retain their rights to a distribution from the estate based upon their new or amended proofs of claim, pursuant to 11 U.S.C. § 502(h), filed within thirty (30) days after this order becomes final and such section 502(h) claims shall be deemed allowed, provided they do not exceed the amount contributed to the settlement by Harmelin or the particular Third Party Defendant; and that once this order becomes final, the Trustee shall dismiss with prejudice the complaint to avoid and recover preferential transfer against Harmelin, and Harmelin shall dismiss with prejudice the Third Party Complaint against the Third Party Defendants;
B. Donald F. King, Trustee v. Pearson Education, Inc. ("Pearson") (Adv. Pro. No. 02-08290-RGM)
That the settlement between the Trustee and Pearson is hereby approved; that Pearson shall pay $5,000.00 to the estate to settle the complaint against it; that the settlement shall include a mutual release of claims between the Trustee and Pearson; and that once this order becomes final, the Trustee shall dismiss the complaint to avoid and recover preferential transfer against Pearson.
C. Donald F. King, Trustee v. Hewlett-Packard Financial Services Company ("Hewlett") (Adv. Pro. No. 02-08318-RGM)
That the settlement between the Trustee and Hewlett is hereby approved; that Hewlett shall pay $28,500.00 to the estate to settle the complaint against it; that the settlement shall include a mutual release of claims between the Trustee and Hewlett, except that Hewlett will retain its rights to a distribution from the estate based upon its proof of claim, which may be amended pursuant to 11 U.S.C. § 502(h); and that once this order becomes final, the Trustee shall dismiss the complaint to avoid and recover preferential transfer against Hewlett.
SETTLEMENT AND RELEASE AGREEMENT
This Settlement and Release Agreement (the "Agreement") is entered into on this 12th day of July 2004, by and between Donald F. King, Trustee, the chapter 7 trustee (the "Trustee") for the bankruptcy estate of Computer Learning Centers, Inc. (the "Debtor"), which is the debtor in Case No. 01-80096-RGM pending in the United States Bankruptcy Court for the Eastern District of Virginia (the "Bankruptcy Case"), Harmelin Associates, Inc. (the "Defendant") and Viacom Inc. (on behalf of VSC Communications Inc., Paramount Stations Group of Philadelphia Inc., Infinity Broadcasting East Inc. and Infinity Broadcasting Corp. of Philadelphia), Capstar Radio Operating Company, Gannett Georgia L.P., Turner Entertainment Networks, Inc., Fox Television Stations, Inc. (for itself and on behalf of New World Communications of Atlanta, Inc. d/b/a WAGA-TV, and Fox Television Stations of Philadelphia, Inc., d/b/a WTXF-TV), Tribune Television Company (licensee of WPHL-TV and WATL, LLC, licensee of WATL(TV)), and NBC News Productions, Inc. (collectively, the "Third Party Defendants") on the following terms and conditions:
Recitals
A. On January 25, 2001 (the "Petition Date"), the Debtor filed a voluntary chapter 7 petition in the United States Bankruptcy Court for the Eastern District of Virginia (the "Bankruptcy Court");
B. The Trustee asserts that within ninety (90) days prior to the Petition Date (the "Preference Period"), the Debtor made payments totaling $271,237.22 to the Defendant (the "Transfers");
C. The Trustee commenced an adversary proceeding, identified as Adv. Pro. No. 03-01007-RGM, to recover the Transfers as preferential transfers pursuant to 11 U.S.C. §§ 547 and 550;
D. The Defendant responded to the Trustee's complaint and denied liability to the Trustee on various grounds that the Trustee disputed. The Defendant also filed a third party complaint against the Third Party Defendants, pursuant to which the Defendant contended that, if there was any liability arising from the Trustee's allegations in the adversary proceeding, such liability belonged to the Third Party Defendants (the action commenced by the Trustee, together with the third party complaint, hereinafter collectively referred to as the "Adversary Proceeding");
E. The Defendant has engaged in efforts to resolve the Adversary Proceeding, including negotiations with the counsel to the Trustee and negotiations with each of the Third Party Defendants or their counsel; and
F. To avoid the expense, delay, uncertainty and risk inherent in litigation, the Trustee, the Defendant and the Third Party Defendants have concluded that it is appropriate and have agreed to resolve any and all claims and issues that may exist between them with regard to the Transfers in accordance with the terms set forth below.
NOW, THEREFORE, for good and valuable consideration between the parties, including the payments and undertakings recited herein, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Third Party Settlement Payments. Each of the Third Party Defendants shall, upon execution of this Agreement, make payment to counsel to the Defendant in the amount of the respective third party settlement payment (each a "Third Party Settlement Payment") set forth in the attached Exhibit "A". Counsel to the Defendant shall hold all Third Party Settlement Payments in escrow (the "Escrow Account") pending the entry of an order which becomes a Final Approval Order, as hereinafter defined. Upon execution of the Agreement, Defendant shall also make payment into the Escrow Account of the sum of $2,037.50.
2. Motion For Approval. Within fourteen (14) business days of receiving written confirmation from the Defendant of Defendant's receipt of all of the Third Party Settlement Payments, counsel to the Trustee shall file a motion for approval of this Agreement with the Bankruptcy Court (the "Settlement Motion"). Counsel to the Trustee shall diligently pursue approval of the Settlement Motion by the Bankruptcy Court, and the Defendant and each of the Third Party Defendants shall use commercially reasonable efforts to assist with approval of the Settlement Motion but the Third Party Defendants shall not be required to incur any additional fees or expenses of the Defendant other than as set forth in this Agreement.
3. Payment to Trustee. Within five (5) business days of obtaining a Final Approval Order, Defendant shall make payment from the Escrow Account to the Trustee in the amount of $25,000.00 (the "Trustee Payment"). For the purposes of this Agreement, "Final Approval Order" means an order approving this Agreement, the operation or effect of which has not been stayed, reversed or amended and as to which order the time to appeal or seek review or rehearing has expired and as to which no appeal or petition for review or rehearing was filed or, if filed, remains pending.
4. Mutual Releases. Effective as of the Trustee's receipt of the Trustee Payment, (a) the Trustee for himself and for the Debtor and the bankruptcy estate of the Debtor, (b) the Defendant, and (c) each of the Third Party Defendants, including any and all affiliated entities identified in this Agreement, hereby mutually release and forever discharge each other of and from any and all claims, obligations, rights, causes of action and liabilities (other than their respective claims and rights under this Agreement) which such entity or individual may be entitled to assert against any other party hereto, whether known or unknown, foreseen or unforeseen, then existing or thereafter arising, relating to the Transfers, the Debtor, or the Debtor's bankruptcy case (collectively, "Claims"), save and except the Defendant's and the Third Party Defendants' claim for payment pursuant to 11 U.S.C. § 502(h) based on payments pursuant to this Agreement filed within thirty (30) days after Final Approval Order and which § 502(h) claims will be deemed allowed, and any other claims against the Debtor set forth in proofs of claim which have been filed in the Bankruptcy Case. The Trustee reserves the right to object to the Defendant's or the Third Party Defendants' proofs of claim filed under § 502(h) but only to the extent any such claim exceeds the amount contributed by such party to the Trustee Payment. The Trustee reserves any right the estate may have to object to proofs of claim other than the § 502(h) proofs of claim which have been filed in the Bankruptcy Case.
5. Dismissal of Adversary Proceeding. Within ten (10) business days of the entry of the Final Approval Order, each of the parties hereto shall execute and deliver to counsel to the Trustee a Stipulation of Dismissal with Prejudice in the form attached hereto as Exhibit "B". Within two (2) business days of obtaining an executed stipulation of dismissal from the Defendant and each of the Third Party Defendants, counsel for the Trustee shall file such stipulation in the Bankruptcy Court.
6. Fee Payment. In the event Defendant's reasonable legal fees and expenses incurred in connection with the Adversary Proceeding ("Legal Expenses") equal or exceed $25,000.00, Defendant shall be entitled to retain the funds remaining in the Escrow Account after payment of the Trustee Payment. In the event Defendant's reasonable legal fees and expenses are less than $25,000.00, Defendant shall be entitled to retain from the funds remaining in the Escrow Account after payment of the Trustee Payment an amount equal to 91.85% of the Legal Expenses and Defendant shall, within ten (10) business days of dismissal of the Adversary Proceeding, return to the Third Party Defendants, in proportion to their respective contributions, the funds remaining in the Escrow Account after payment of the Trustee Payment and payment of 91.85% of the Legal Expenses. In the event the Defendant and any Third Party Defendant cannot resolve any dispute regarding the reasonableness of the legal fees and disbursements incurred by Defendant, such Third Party Defendant shall be entitled to file a motion to determine the reasonableness of such fees and expenses, and the Bankruptcy Court shall determine such reasonableness. The Third Party Defendants shall have no liability in the event that Defendant's attorneys fees and costs exceed the balance remaining in the Settlement Fund after the Trustee Payment.
7. Entire Agreement. This Agreement contains the entire agreement of the parties with respect to these matters (and solely with respect to these matters) and supersedes any discussions and negotiations made with respect thereto. This Agreement may not be modified in any way except in writing executed by the authorized representatives of each of the parties hereto.
8. Authorization. The individual signatories to this Agreement represent that they have been duly authorized to execute this Agreement on behalf of the parties they purport to represent herein.
9. Representations. The Defendant and the Third Party Defendants represent that they have voluntarily entered into this Agreement after careful review and the opportunity to consult counsel. Except as otherwise expressly set forth herein, no representations have been made by any of the parties with respect to any of the matters addressed in this Agreement or with respect to the Debtor's bankruptcy case.
10. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto on separate counterparts, each of which counterpart, when so executed and delivered (including by facsimile transmission), shall be deemed an original, and all of which counterparts, taken together, shall constitute one and the same Agreement.
11. Binding Agreement. This Agreement will bind and inure to the benefit of each of the undersigned parties' respective predecessors, successors, trustees, receivers, guardians, executors, administrators, heirs, partners, directors, officers, employees, shareholders, agents, beneficiaries and assignees whether so expressed or not.
12. Governing Law. The terms, conditions and provisions of this Agreement shall be governed by, and construed in accordance with, Virginia law, without giving consideration to its conflict of laws provisions.
13. Headings. The use in this Agreement of headings is for convenience of reference only. Such headings are not and shall not be considered a part of this Agreement, nor shall such headings control the construction or interpretation of the terms and conditions hereof.
14. No Admission of Liability. This settlement is a compromise of a disputed claim and is not to be construed as an admission of any liability in connection with the Transfers.
15. Bankruptcy Court Approval. This Settlement Agreement is subject to the entry of an order in the Bankruptcy Case approving this settlement. In the event a Final Approval Order is not obtained on or before September 30, 2004, then, unless the parties hereto otherwise agree in writing (1) this Agreement shall be null and void in its entirety and of no effect; (2) any Third Party Settlement Payments received by the Defendant shall be returned by October 12, 2004; and (3) the parties shall be restored to their factual and legal positions as of the date just prior to the execution of this Agreement.
16. Enforcement of Agreement. The Bankruptcy Court shall retain jurisdiction to interpret and enforce this Agreement. In the event any of the parties hereto fail to perform their obligations hereunder, such party shall be liable for reasonable attorneys' fees and expenses incurred in enforcing this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Settlement and Release Agreement to be signed by it or its duly authorized agents as of the date set forth in the first paragraph of this Agreement.
Donald F. King, Trustee
By: __________________________________ James W. Reynolds, Esquire J.P. Sherry, Esquire Counsel for Donald F. King, Trustee Odin, Feldman Pittleman, P.C. 9302 Lee Highway, Suite 1100
Fairfax, Virginia 22031 Direct: 703-218-2134
Harmelin Associates, Inc.
By: _______________________ Name: ________________ Title: _______________
Viacom Inc. (on behalf of VSC Communications Inc., Paramount Stations Group of Philadelphia Inc., Infinity Broadcasting East Inc. and Infinity Broadcasting Corp. of Philadelphia)
By: _____________________ Name: Martin P. Messinger Title: Assistant Secretary
Capstar Radio Operating Company
By: _______________________ Name: _______________ Title: ______________
Gannett Georgia L.P.
By: _______________________ Name: ______________ Title: _____________
Turner Entertainment Networks, Inc.
By: _______________________ Name: ______________ Title: _____________
Fox Television Stations, Inc. (for itself and on behalf of New World Communications of Atlanta, Inc. d/b/a WAGA-TV, and Fox Television Stations of Philadelphia, Inc., d/b/a WTXF-TV)
By: _______________________ Name: ______________
Title: __________________
Tribune Television Company (licensee of WPHL-TV and WATL, LLC, licensee of WATL(TV))
By: _______________________ Name: ___________________ Title: __________________
NBC News Productions, Inc.
By: _______________________ Name: ___________________ Title: __________________
By: _______________________ Name: ___________________ Title: __________________
NBC News Productions, Inc.
By: _______________________ Name: ___________________ Title: __________________
It is so ORDERED this ____ day of June, 2004.
___________________________________ Hon. _________________________ United States Bankruptcy JudgeEXHIBIT A
COMPANY STATIONS TOTALS PERCENTAGE THIRD PARTY REPRESEN- PAID TO OF $271,237.22 SETTLEMENT TED STATIONS TRANSFERRED PAYMENT
FOX TELEVISION WAGA-TV $48,173.75 17.76% $8,880.00 STATIONS, INC.
WTXF-TV $39,397.50 14.53% $7,265.00
TOTAL: $16,145.00
VIACOM INC. WUPA-TV $5,185.00 1.91% $955.00
WPSG-TV $19,303.50 7.12% $3,560.00
WYSP-FM $42,572.25 15.7% $7,850.00
WIP-AM $20,357.50 7.51% $3,755.00
KYW-AM $5,788.50 2.13% $1,065.00
TOTAL: $17,185.00
TRIBUNE TRIBUNE $26,908.45 9.92% $4,960.00 TELEVISION TELEVISION COMPANY COMPANY
WATL, LLC $9,122.00 3.36% $1,680.00
TOTAL: $6,640.00
NBC NEWS WCAU-TV $14,084.50 5.19% $2,595.00 PRODUCTIONS INC.
TURNER WTBS-TV $4,165.00 1.54% $770.00 ENTERTAINMENT NETWORKS, INC.
CAPSTAR RADIO WUSL-FM $9,197.00 3.39% $1,695.00 OPERATING COMPANY
GANNETT GEORGIA WXIA-TV $4,845.00 1.79% $895.00 L.P.
TOTALS $249,099.95 91.85% $45,925.00