Opinion
Case No. 01-16034 (AJG), Jointly Administered.
July 28, 2003.
Upon the motion dated June 27, 2003 (the "Motion"), of Enron Acquisition III Corp. ("EAIII"), as debtor and debtor in possession, for an order pursuant section 363 of the title 11 of the United States Code, 11 U.S.C. § 101 et seq. (the "Bankruptcy Code") and Rule 9019 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules") (i) approving a settlement (the "Settlement") with Reemay, Inc. ("Reemay") and GESF Energy Capital, LLC ("GESF"); (ii) authorizing EAIII to terminate the Contract and the Loan Agreements; (iii) authorizing EAIII to transfer the Facility Assets free and clear of all liens, claims, encumbrances, rights of setoff, recoupment, netting, and deduction to Reemay, and (iv) authorizing EAIII to enter into a mutual release of all claims, obligations, and liabilities under the Contract and Loan Agreements; and the Court having reviewed the Motion and having determined that granting the relief requested is in the best interest of the EAIII, its estate, and creditors, and is a proper exercise of the EAIII's business judgment; and it appearing that proper and adequate notice of the Motion has been given under the circumstances and that no other or further notice is necessary; and upon the record herein; and upon the representations of counsel present at the hearing; and after due deliberation; and good and sufficient cause approving therefor,
Capitalized terms used herein, except as otherwise noted, shall have the meanings ascribed to them in the Motion and the Settlement Agreement.
IT IS HEREBY FOUND AND DETERMINED THAT:
A. The Court has jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. § 157 and 1334.
B. As evidenced by the certificate of service filed with the Court, and based on the representations of counsel at the hearing, (A) proper, timely, adequate, and sufficient notice of the Motion has been provided in accordance with sections 105 and 363 of the Bankruptcy Code and Bankruptcy Rules 2002, 6004, and 9013, and Rule 9013-1(c) of the Local Bankruptcy Rules for the Southern District of New York (the "Local Rules") to all interested persons and entities, including, but not limited to, (i) the Office of the United States Trustee, (ii) counsel for the DIP Lenders, (iii) counsel for the Official Committee of Unsecured Creditors in the Debtors' chapter 11 cases (the "Creditors' Committee"), (iv) EAIII and its counsel, (v) GESF and its counsel, (vi) all entities known to EAIII to have, or to have asserted, any lien, claim, encumbrance interest, rights of setoff, recoupment, netting or deduction, in or upon the Facility Assets, (vii) the Examiner for ENA, (viii) counsel for the Employment-Related Issues Committee; (ix) all entities who had filed a notice of appearance and request for service of papers in these cases in accordance with the Court's Second Amended Case Order, dated December 17, 2003, and (x) all other creditors of EAIII; (B) such notice was good and sufficient and appropriate under the particular circumstances, and (C) no other or further notice of the Motion is required.
C. The requirements of Rule 9013-1(b) of the Local Rules have been waived.
D. A reasonable opportunity to object or be heard with respect to the Motion and the relief requested therein and this Order has been afforded to all those parties listed in paragraph B above.
E. Pursuant to the Loan Agreements GESF was granted a security interest in and a lien on the Facility Assets. Such lien is valid and properly perfected on the Facility Assets.
F. The Settlement Agreement was negotiated at arm's-length and proposed and entered into by and among EAIII, Reemay, and GESF without collusion and in good faith. Reemay is a good faith purchaser in accordance with 363(m) of the Bankruptcy Code and is entitled to all of the protections afforded thereby. Neither EAIII nor Reemay has engaged in any conduct that would cause or permit the Settlement Agreement to be avoided (or the validity of the sale of the Facility Assets affected) under 363(n) of the Bankruptcy Code or any other provisions of the Bankruptcy Code.
G. The relief sought in the Motion is in the best interests of EAIII, its estate, creditors, and all parties in interest.
H. EAIII has advanced sound and sufficient business justification, and it is a reasonable exercise of its business judgment, to transfer the Facility Assets to Reemay on the terms and conditions set forth in the Settlement Agreement and consummate all transactions contemplated by the Settlement Agreement.
I. The provisions of sections 363(b), 363(f), 363(m), 363(n), 363(o) of the Bankruptcy Code have been complied with and are applicable to the sale of the Facility Assets.
ACCORDINGLY, THE COURT HEREBY ORDERS THAT:
1. The findings of fact set forth above and the conclusions of law stated herein shall constitute the 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 later shall be determined to be a conclusion of law, it shall be so deemed, and to the extent any conclusion of law later shall be determined to be a finding of fact, it shall be so deemed.
2. The Motion is granted in its entirety.
3. EAIII is authorized to enter into and consummate the Settlement Agreement.
4. All parties in interest have had an opportunity to object to the relief requested in the Motion and to the extent that objections to the Motion or the relief requested therein, have not been withdrawn, waived, or settled, such objections and all reservations of rights included therein, are overruled on the merits. Those parties who did not object, or who withdrew their objections, to the Motion are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code.
5. The Settlement Agreement is approved in all respects, including, without limitation, the payment of the Loan Payment by Reemay to GESF, the payment of the Final Invoice by Reemay to EAIII, the sale of the Facility Assets to Reemay, and the entry into the mutual releases set forth in the Settlement Agreement.
6. EAIII may take such actions and execute such documents as are necessary to consummate the settlement as provided in the Settlement Agreement.
7. The Settlement Agreement shall be binding and enforceable on the parties and the Contract and Loan Agreements will be deemed terminated pursuant to the terms of the Settlement Agreement.
8. The sale of the Facility Assets pursuant to this Order and the Settlement Agreement will vest Reemay with good title to the Facility Assets and will be a legal, valid and effective transfer of the Facility Assets free and clear of all liens, claims (as that term is defined in section 101(5) of the Bankruptcy Code), encumbrances, rights of setoff, recoupment, netting, or deduction with all such liens, claims (as that term is defined in section 101(5) of the Bankruptcy Code), encumbrances, rights of setoff, recoupment, netting or deduction, including DIP Liens, if any, to attach to the proceeds of the sale in the order of their priority, with the same validity, force and effect which they now have, subject to any defenses parties in interest may possess with respect thereto.
As defined in the Final Order Authorizing Debtors to Obtain Post-Petition Financing Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), dated July 2, 2002 (the "Final Order"), as amended by the Order Authorizing, Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), Amendment of DIP Credit Agreement to Provide for Extension of Post-Petition Financing, dated May 8, 2003.
9. Pursuant to sections 105(a) and 363(f) of the Bankruptcy Code, upon the Closing Date (as defined in the Settlement Agreement), (a) the Facility Assets shall be transferred to Reemay free and clear of all liens, claims (as that term is defined in section 101(5) of the Bankruptcy Code), encumbrances, rights of setoff, recoupment, netting and deduction, and (b) solely with respect to the Facility Assets, except as expressly permitted by the Settlement Agreement, all persons and entities shall be barred from asserting against Reemay, its affiliates, designees, officers, directors, employees, agents, successors or assigns or their respective properties:
(i) all mortgages, security interests, conditional sale or other title retention agreements, pledges, liens, claims, liabilities, judgments, demands, encumbrances, (including, without limitation, any claims and encumbrances (x) that purport to give to any party a right or option to effect a forfeiture, modification or termination of EAIII's or Reemay's interest in the Facility Assets or (y) in respect of taxes), easements, restrictions, rights of first refusal and charges and interests of any kind or nature (collectively, "Third Party Interests"); and (ii) all debts arising under, relating to, or in connection with the Facility Assets, claims (as that term is defined in section 101(5) of the Bankruptcy Code), obligations, demands, guaranties, options, rights, contractual commitments, restrictions, interests, rights of setoff, recoupment, netting, or deduction, and matters of any kind and nature, whether arising prior to or subsequent to the commencement of these cases, whether under any theories of successor or transferee liability and whether imposed by agreement, understanding, law, equity or otherwise (including, without limitation, any claims and encumbrances (x) that purport to give to any party a right or option to effect a forfeiture, modification, right of first refusal or termination of EAIII's or Reemay's interest in the Facility Assets or (y) in respect of taxes) (collectively, "Claims")
with all such Third Party Interests and Claims, including DIP Liens, if any, to attach to the proceeds of the sale in the order of their priority, with the same validity, force and effect which they now have against the Facility Assets, subject to any defenses parties in interest may possess with respect thereto.
As defined in the Final Order Authorizing Debtors to Obtain Post-Petition Financing Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), dated July 2, 2002 (the "Final Order"), as amended by Order Authorizing, Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), Amendment of DIP Credit Agreement to Provide for Extension of Post-Petition Financing, dated May 8, 2003.
10. Notwithstanding anything contained herein to the contrary, nothing in this Order and the transactions approved hereby releases the Debtor parties and any party to those transactions and their respective affiliates from any claims of the United States Government or modifies, alters, impairs or in any way affects the application of any laws or regulations of the United States.
11. Except to the extent required to repay the DIP Obligations, if any, pursuant to and in accordance with the Final Order, as amended, and the Documents, all proceeds received by EAIII in connection with the transactions contemplated by the Settlement Agreement shall be retained by EAIII and be neither disbursed nor used until the earlier to occur of (i) agreement by and between EAIII and the Creditors' Committee with respect to the release of such proceeds and (ii) further order of this Court.
As defined in the Final Order Authorizing Debtors to Obtain Post-Petition Financing Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), dated July 2, 2002 (the "Final Order"), as amended by Order Authorizing, Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), Amendment of DIP Credit Agreement to Provide for Extension of Post-Petition Financing, dated May 8, 2003.
12. EAIII has demonstrated that it is an exercise of its sound business judgment to sell the Facility Assets to Reemay in connection with the consummation of the transactions contemplated by the Settlement Agreement as it is in the best interests of EAIII, its estate, and creditors.
13. In the absence of a stay pending appeal, in the event that EAIII and Reemay elect to consummate the transactions contemplated by the Settlement Agreement at any time after the entry of this Order, then with respect to the transactions approved and authorized herein, Reemay, as a purchaser in good faith within the meaning of section 363(m) of the Bankruptcy Code, shall be entitled to the protections of 363(m) of the Bankruptcy Code in the event this Order or any authorization contained herein is reversed or modified on appeal
14. 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 Purchase Agreement.
15. To the extent applicable, the stay of this Order provided by the Bankruptcy Rules (including Bankruptcy Rule 6004) whether for ten (10) days or otherwise shall not be applicable to this Order, and this Order shall be effective and enforceable immediately upon entry.
16. This Court shall retain jurisdiction to hear and determine all matters arising from the implementation of this Order.