Opinion
Case No. 01-16034 [AJG], Jointly Administered (Post Confirmation).
May 13, 2005
TOGUT, SEGAL SEGAL LLP, Bankruptcy Co-Counsel for Enron Corp., et al. Reorganized Debtors New York, New York Frank A. Oswald (FAO-1223) Daniel F.X. Geoghan (DG-3132).
WHEREAS, commencing on December 2, 2001 (the "Petition Date"), Enron Corp., and certain of its affiliated debtor entities (collectively the "Reorganized 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"); and
WHEREAS, the Effective Date of the Reorganized Debtors' Plan occurred on November 17, 2004 and the Debtors emerged from Chapter 11; and WHEREAS, on October 28, 2003, the Reorganized Debtors made a demand (the "Demand") upon Gibbs Bruns, LLP ("Gibbs Bruns", together with the Reorganized Debtors, the "Parties") seeking, pursuant to, inter alia, sections 547, 548 and 550 of the Bankruptcy Code, the return of alleged preferential transfers (the "Transfers") made within 90 days of the Petition Date; and
WHEREAS, by Stipulation dated November 26, 2003, as amended from time to time (the "Tolling Stipulation"), the parties agreed to toll the statute of limitations: (i) for any claim or cause of action against Gibbs Bruns under or through any provision of the Bankruptcy Code, including, without limitation, sections 502, 506, 541, 544, 547, 548, 549, 550 and 553 of the Bankruptcy Code or applicable provisions of any non-bankruptcy law that may be asserted by one or more of the Reorganized Debtors (the "Tolled Claims"); or (ii) any defenses, setoffs and counterclaims to such Tolled Claims which might be asserted by Gibbs Bruns; and
WHEREAS, the following claims were scheduled by the Reorganized Debtors in favor of Gibbs Bruns: Claim No. 10303275 in the amount of $10,383.23; Claim No. 10701596 in the amount of $191,152.48; Claim No. 10701597 in the amount of $81.25; Claim No. 10701598 in the amount of $1,567.49; Claim No. 10714740 in the amount of $173.40; and
WHEREAS, as a result of arms-length negotiations and an exchange of documents, the Reorganized Debtors and Gibbs Bruns have agreed to settle the Debtors' claims against Gibbs Bruns by: (a) Gibbs Bruns' payment of $450,000 to the Reorganized Debtors (the "Settlement Amount"); and (b) the waiver by Gibbs Bruns of any and all claims against the Reorganized Debtors and their estates arising from or relating to the Transfers sought in the Demand, including, but not limited to, claims arising pursuant to section 502(h) of the Bankruptcy Code, pursuant to the terms of this Stipulation and Order (the "Stipulation"); and
WHEREAS, pursuant to the Order of the Bankruptcy Court dated September 11, 2003 ("Settlement Procedures Order"), the Reorganized Debtors are only required to: (A) serve notice of this Stipulation (the "Notice") by regular, first-class mail upon: (i) counsel for the Official Committee of Unsecured Creditors appointed in the Debtors' Chapter 11 cases (the "Creditors' Committee"); (ii) the United States Trustee; (iii) the parties listed on the Service List in the Case Management Order; and (iv) Gibbs Bruns; and (B) file such Notice on the Bankruptcy Court's electronic docket; nonetheless, in light of, among other things, the release granted herein, the Parties seek Bankruptcy Court approval of this Stipulation; and
WHEREAS, the Procedures Order is deemed a part hereof and incorporated by reference herein; and
WHEREAS, the Reorganized Debtors have concluded that the proposed settlement is in the best interests of their estates, considering, among other things, the defenses asserted by Gibbs Bruns and the cost, expense and delay associated with litigating the matter, the result of which is uncertain.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and between the Parties as follows:
1. Gibbs Bruns shall pay the Settlement Amount to the Debtors in two (2) equal installments of two hundred twenty five thousand ($225,000.00) dollars each. The first installment (the "First Installment") shall be paid on the date this agreement is executed by the Parties to Togut, Segal Segal LLP, counsel to the Reorganized Debtor, by wire transfer, in immediately available funds, to be held in escrow pending the Effective Date (as defined below) whereupon such funds shall be released to the Reorganized Debtors. The second installment (the "Second Installment", together with the First Installment, the "Installments") shall be paid within 60-days from the Effective Date directly to the Reorganized Debtors. Wire transfer instructions for each Installment have been provided to Gibbs Bruns.
2. The "Effective Date" of this Stipulation shall be the date on which it is "So Ordered" by the Bankruptcy Court.
3. If full and complete payment of the Second Installment is not made in accordance with paragraph "1" above on or before the 60th day following the Effective Date, the Reorganized Debtors are hereby authorized to settle an order on five (5) days notice to Gibbs Bruns and its counsel for the Second Installment, plus interest, costs and legal fees incurred by the Reorganized Debtors enforcing the terms of this Stipulation, in amounts to be determined by the Bankruptcy Court.
4. After the Effective Date, upon timely, full and complete payment of the Settlement Amount (the "Consummation Date"), the Debtors and Reorganized Debtors shall be deemed to have waived and released any and all claims (to be interpreted in the broadest manner possible) that they may have against Gibbs Bruns including, but not limited to, the Tolled Claims and any other claims arising out of or relating to the Transfers sought in the Demand; provided however, the "Tolled Period" provided for in the Tolling Stipulation is further extended through and including the Consummation Date; provided further that, in the event this Stipulation is not "So Ordered" by the Bankruptcy Court, the Parties agree that the "Tolled Period" provided for in the Tolling Stipulation is extended to and including 20 days after the denial of the relief requested herein.
5. On the Consummation Date, Gibbs Bruns shall be deemed to have waived and released any and all claims (to be interpreted in the broadest manner possible) they may have against the Debtors and the Reorganized Debtors arising out of, or relating to, the Transfers sought in the Demand, including (i) any claim for, or on account of, its payment of the Settlement Amount pursuant to Bankruptcy Code section 502(h); and (ii) Scheduled Claim Nos. 10303275, 10701596, 10701597, 10701598 and 10714740, but expressly subject to each of the provisions in paragraph 4 above.
6. Gibbs Bruns will not file any proofs of claim in the Reorganized Debtors' chapter 11 cases, including any claim in connection with Gibbs Bruns' payment of the Settlement Amount, and any such claim shall be deemed immediately expunged without any further Order of the Court.
7. The Settlement Amount shall be retained by the Reorganized Debtors and neither disbursed nor used by them unless such disbursement or use is consistent with the Supplemental Modified Fifth Amended Plan of Affiliated Debtors which was confirmed on July 15, 2004, and as may be amended by further Order of the Bankruptcy Court. This Paragraph does not impose any obligation upon Gibbs Bruns.
8. This Stipulation may be executed in multiple counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement. Subject to Bankruptcy Court approval, this Stipulation shall be binding upon and shall inure to the benefit of the parties hereto and their legal representatives, predecessors, successors and assigns, including any chapter 11 or chapter 7 trustee that may be appointed in the Reorganized Debtors' cases.
9. It is expressly understood and agreed that the terms hereof, including the recital paragraphs and headings, are contractual and that the agreement herein contained and the consideration transferred is to compromise disputed claims and avoid litigation, and that no statement made herein, payment, release or other consideration given shall be construed as an admission by the parties of any kind or nature.
10. The Bankruptcy Court shall retain exclusive jurisdiction to interpret and enforce the terms of this Stipulation and to resolve any disputes in connection herewith.
So Ordered.