Opinion
Case Nos. 01-16034 (AJG), Jointly Administered, 04-13856 (RDD), Jointly Administered.
August 12, 2005
Edward A. Smith (ES 2461), Evan R. Fleck (EF 3477), CADWALADER, WICKERSHAM TAFT LLP, One World Financial Center, New York, NY, Mark C. Ellenberg (ME 6927), Washington, DC, SPECIAL COUNSEL TO THE DEBTORS.
Neal Brickman (NB 0874), CORNERSTONE DEBTORS, by and through their counsel, THE LAW OFFICES OF NEAL BRICKMAN, P.C., New York, New York, SPECIAL COUNSEL TO THE CORNERSTONE DEBTORS.
This Stipulation and Order is entered into by and among Cornerstone Propane, L.P. ("Cornerstone"), Cornerstone Propane Partners, L.P. ("CP Partners") and Coast Energy Canada, Inc. ("Coast"), Coast Energy Group, a division of Cornerstone, Cornerstone Propane, GP, Inc. (f/k/a Coast Energy Group, Inc.) and certain of their affiliates ("Cornerstone Debtors"), and Enron Corp. ("Corp.") Enron North America Corp. ("ENA") and Enron Gas Liquids, Inc. ("EGLI", and together with Corp., ENA, the "Enron Debtors"). The Enron Debtors and the Cornerstone Debtors, (collectively the "Parties"), by and through their respective undersigned counsel, hereby stipulate and agree as follows:
RECITALS : The Enron Bankruptcy Case
A. Commencing on December 2, 2001 (the "Enron Petition Date"), ENA and certain of its affiliates (collectively, the "Enron Debtors" or "Reorganized Enron Debtors"), filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). The Enron Debtors' chapter 11 cases were procedurally consolidated for administrative purposes into Case No. 011-6035 ("Enron Bankruptcy Case").
B. On July 15, 2004, the Bankruptcy Court entered an order confirming the Enron Debtors' Supplemental Fifth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, dated as of January 9, 2004, as subsequently modified (the "Enron Plan"). The Effective Date of the Enron Plan was November 17, 2004 and the Reorganized Enron Debtors have emerged from chapter 11.
C. At or about the time the Enron Debtors filed the Enron Bankruptcy Case, the Enron Debtors prepared and filed with the Bankruptcy Court liability schedules reflecting sums presumed owed to various third parties, including liabilities owed to Cornerstone (Schedule Nos. 100128090, 100128100, and 100026170) (the "Cornerstone Scheduled Liability").
D. On or about October 14, 2002, Cornerstone Propane, L.P. (Coast Energy Group) filed Proof of Claim No. 12842 for $10,803,315.61 against ENA relating to the ISDA Agreement between ENA and Cornerstone in the Enron Bankruptcy Case ("Cornerstone POC").
E. On January 21, 2004, ENA filed a complaint against Cornerstone and objection to the Cornerstone POC in the Enron Bankruptcy Case (Adversary Proceeding No. 04-1100) (the "ENA Complaint").
The Cornerstone Bankruptcy Case
G. On June 3, 2004, (the "Cornerstone Commencement Date"), the Cornerstone Debtors filed voluntary petitions for relief under chapter 11 the Bankruptcy Code and commenced cases under chapter 11 of the Bankruptcy Code in the Bankruptcy Court resulting in Case No. 04-13856 (the "Cornerstone Bankruptcy Case").
H. On the Cornerstone Commencement Date, the Cornerstone Debtors filed the Debtors' Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, which was modified on October 18, 2004 (the "Cornerstone Plan").
I. On November 4, 2004, a hearing was held to consider confirmation of the Cornerstone Plan; on November 8, 2004, the Bankruptcy Court entered an order confirming the Cornerstone Plan; and on December 20, 2004, the Cornerstone Plan became effective.
J. By order of the Bankruptcy Court, dated June 16, 2004 (the "Cornerstone Bar Date Order"), the Bankruptcy Court established July 27, 2004 (the "Cornerstone Bar Date") as the deadline by which all creditors, subject to certain exceptions, were required to file their proofs of claim in the Debtors' chapter 11 cases. In accordance with the Cornerstone Bar Date Order, the Cornerstone Debtors mailed written notice of the Cornerstone Bar Date to, among others, all creditors listed on the Cornerstone schedules.
K. On or about July 27, 2004, creditor ENA filed (i) Proof of Claim No. 1402 in the amount of $4,464,022.00 in the Cornerstone chapter 11 case, (ii) Proof of Claim No. 1161 in the amount of $4,900,298.00 in CP Partners chapter 11 case, and (iii) Proof of Claim No. 1393 in the amount of $436,276.00 in the Coast chapter 11 case (the "ENA Claims").
L. On or about July 27, 2004, creditor EGLI filed (i) Proof of Claim No. 1436 in the amount of $479,920.00 in the Cornerstone chapter 11 case, and (ii) Proof of Claim No. 1345 in the amount of $479,920.00 in the CP Partners chapter 11 case (the "EGLI Claims").
M. On or about March 18, 2005, the Cornerstone Debtors filed Objections to the EGLI Claims and the ENA Claims (the "Cornerstone Objections").
N. At or about the time the Cornerstone Debtors filed the Cornerstone Bankruptcy Case, the Cornerstone Debtors prepared and filed with the Bankruptcy Court liability schedules reflecting sums presumed owed to various third parties, including liabilities owed to ENA and EGLI (the "ENA/EGLI Scheduled Liability").
O. Throughout their course of dealing, the Enron Debtors and the Cornerstone Debtors entered into agreements and guarantees pertaining to the purchase, sale and exchange of natural gas and natural gas liquids, including without limitation those set forth on Appendix I hereto (the "Contracts").
The Parties now desire, on the terms and conditions provided herein, to provide for (i) the allowance and disallowance of certain of the EGLI Claims and the ENA Claims, (ii) the disallowance of the Cornerstone POC, (iii) the expungement of the Cornerstone Scheduled Liability and the ENA/EGLI Scheduled Liability, (iv) the withdrawal of the ENA Complaint, (v) the resolution of the Cornerstone Objections, and (vi) the release of all liability associated with the Contracts.
AGREEMENT
NOW, THEREFORE, IT IS HEREBY AGREED BY THE PARTIES, BY AND THROUGH THEIR COUNSEL, AS FOLLOWS:
1. The Recitals are fully incorporated herein by reference.
2. ENA Claim No. 1393 is reduced and allowed as a general unsecured claim against Cornerstone in the amount of $25,193.84. ENA Claim No. 1402 is reduced and allowed as a general unsecured claim against Cornerstone in the amount of $2,544,886.16. ENA Claim Nos. 1393 and 1402 shall be treated as an allowed Class 6 Claim (Cornerstone General Unsecured Claim) pursuant to the Cornerstone Plan. Upon the distribution of ENA Claim Nos. 1393 and 1402 contemplated above, ENA Claim No. 1161 shall then be reduced and allowed as a general unsecured claim against CP Partners in the amount of $2,570,080.00 less distributions received on account of the distribution of ENA Claim Nos. 1393 and 1402 contemplated above, which claim shall receive distribution as a Class 7 Claim (CP Partners General Unsecured Claim) pursuant to the Cornerstone Plan.
3. EGLI Claim No. 1436 is allowed as a general unsecured claim against Cornerstone in the amount of $479,920.00 and shall be treated as an allowed Class 6 Claim (Cornerstone General Unsecured Claim) pursuant to the Cornerstone Plan. EGLI Claim No. 1345 shall then be reduced and allowed as a general unsecured claim against CP Partners in the amount of $479,920.00 less distributions received on account of the distribution of EGLI Claim No. 1436 contemplated in the preceding sentence, which claim shall receive distribution as a Class 7 Claim (CP Partners General Unsecured Claim) pursuant to the Cornerstone Plan.
4. The Cornerstone POC is disallowed and expunged in its entirety.
5. The Cornerstone Scheduled Liability and the ENA/EGLI Scheduled Liability are expunged.
6. The ENA Complaint is withdrawn with prejudice.
7. The Cornerstone Objections are resolved.
8. On the Effective Date (defined below), and with exception only to the Parties' rights and obligations under this Stipulation and Order, the Reorganized Enron Debtors and the Cornerstone Debtors shall be deemed to have released, acquitted and discharged one another and their respective directors, officers, employees and agents, including any subsidiary corporation or parent corporation, from any and all liabilities, claims, demands, obligations, losses, actions, causes of action, liens, suits, attorneys' fees, damages, costs, and compensation or recoupment of any nature whatsoever that any of the Parties have, had or may in the future have solely in connection with or arising out of the ENA Claims (or the agreements referenced therein), the EGLI Claims (or the agreements referenced therein), the Cornerstone POC (or the agreements referenced therein), the Cornerstone Scheduled Liability (or the agreements referenced therein), the ENA Complaint, the Contracts, or the Cornerstone Objections.
9. Upon request from any Party, each Party that acted as a purchaser of any physical commodity shall use reasonable efforts to provide the selling Party with documentation, in the form of state exemption certificates or other valid evidence of exemption, to support any exemption from or reduction of any tax arising from the transfer of physical commodity.
10. The Parties agree that this Stipulation and Order is the entire understanding of the Parties and is intended to be the complete and exclusive statement of the terms thereof and may not be modified or amended except by a writing signed by all the Parties hereto, which shall be so ordered by the Court.
11. The Stipulation and Order shall become effective and binding as of entry of the Stipulation and Order on the dockets as "so ordered" by the Bankruptcy Court in both the Enron Bankruptcy Case and the Cornerstone Bankruptcy Case (the "Effective Date"). If this Stipulation and Order is not approved by the Bankruptcy Court in either the Enron Bankruptcy Case or the Cornerstone Bankruptcy Case, it shall be null and void and have no force and effect.
12. This Stipulation and Order shall be binding on the Parties hereto and their respective successors and assigns.
13. This Stipulation and Order may be executed in any number of counterparts and shall constitute one agreement, binding upon all Parties thereto as if all Parties signed the same document; all facsimile signatures shall be treated as originals for all purposes.
14. This Stipulation and Order shall be governed by the laws of the State of New York.
SO ORDERED:
APPENDIX I — CONTRACTS GUARANTEES
Contracts:
1. Coast Energy Group, a division of Cornerstone Propane, L.P. (96046555) — GTC Spot Sale Firm Agreement with ENA
2. Coast Energy Group, a division of Cornerstone Propane, L.P. (96061805) — GTC Spot Sale Firm Agreement with ENA
3. Coast Energy Group, a division of Cornerstone Propane, L.P. (96038246) — GTC Spot Purchase Firm Agreement with ENA
4. Coast Energy Group, a division of Cornerstone Propane, L.P. (96036578) — GTC Spot Purchase Firm Agreement with ENA
5. Coast Energy Group, a division of Cornerstone Propane, L.P. (96026229) — GTC Spot Purchase Firm Agreement with ENA
6. Coast Energy Group, a division of Cornerstone Propane, L.P. (96023476) — GISB Base Contract with ENA
7. Coast Energy Group, a division of Cornerstone Propane, L.P. — GTC Annex A with ENA
8. Coast Energy Group, a division of Cornerstone Propane, L.P. — 20002-006 Cutover Clearing Agreement with ENA
9. Cornerstone Propane, L.P. (96021763) — ISDA Master Agreement with ENA
10. Coast Energy Canada, Inc. (96032600) — Online GTC Gas Short-Term Agreement with collateral with ENA
11. Coast Energy Canada, Inc. (96022131) — GTC Spot Sale Agreement with ENA
12. Cornerstone Propane Partners, L.P., (named in error as Cornerstone Propane, GP, Inc., f/k/a Coast Energy Group, Inc.) (96000741) — Master Purchase Sale Spot Agreement with ENA
13. Coast Energy Group, a division of Cornerstone Propane, L.P. (YB2133) — Sale, Purchase and/or Exchange Agreement Confirmation with EGLI
Guarantees:
1. Enron Corp. Guaranty, dated January 6, 1999, in the maximum amount of $10,000,000 with respect to the obligations of ENA, in favor of Cornerstone Propane, LP
2. Enron Corp. Guaranty, dated May 10, 1999, in the maximum amount of $10,000,000 with respect to the obligations of ENA, in favor of Cornerstone Propane, LP
3. Cornerstone Propane Partners, LP Guaranty, dated March 26, 1999, in the maximum amount of $10,000,000, with respect to the obligations of Cornerstone Propane, L.P., in favor of Enron Corp.