Opinion
Case No. 01-16034 (AJG), Jointly Administered
February 19, 2003
Melanie Gray, Martin J. Bienenstock (MB 3001), Brian S. Rosen (BR 0571), Melanie Gray, Martin A. Sosland, Weil, Gotshal Manges LLP New York, New York, ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION
Harley Goldstein, Harley Goldstein, Esq. (HG-6955), Katten Muchin Zavis Rosenman, Chicago, Illinois, ATTORNEYS FOR SOLO CUP
Enron Energy Services, Inc., as debtor and debtor in possession ("EESI" or the "Debtor"), and Solo Cup Company ("Solo Cup"), by and through their respective counsel, hereby stipulate and agree as follows:
RECITALS
A. On or about October 15, 1999, EESI and Solo Cup entered into that certain Electric Energy Sales and Services Agreement (the "Agreement"), pursuant to which EESI agreed to provide electricity services to Solo Cup. The Agreement had an eleven (11) year term.
B. On December 2, 2001, EESI filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").
C. EESI rejected the Agreement pursuant to an order of the Bankruptcy Court, dated January 4, 2002.
D. On or about January 23, 2003, Solo Cup filed a motion to confirm elimination of alleged payment obligation or right of recoupment, or, in the alternative, for relief from the automatic stay to effect setoff (the "Motion"). The Motion is scheduled for hearing on February 20, 2003 at 10:00 a.m.
E. Solo Cup has filed a proof of claim in Enron Corp's chapter 11 case for purported damages, in the amount of approximately $15,000,000.00, pursuant to section 365 of the Bankruptcy Code arising from EESI's rejection of the Agreement (the "Prepetition Damage Claim"). EESI disputes, among other things, Solo Cup's calculation of the Prepetition Damage Claim.
F. EESI has invoiced Solo Cup for services rendered prepetition under the Agreement in the amount of $785,477.50 (the "EESI A/R"). To date, Solo Cup has not paid the EESI A/R to EESI.
G. EESI acknowledges and agrees that upon (i) a determination by the Court, pursuant to section 502 of the Bankruptcy Code, of the allowable amount of Solo Cup's Prepetition Damage Claim against EESI, if any, or (ii) agreement of EESI and Solo Cup as to the amount of any Prepetition Damage Claim, Solo Cup will be legally entitled to offset any mutual prepetition obligations, to the extent of any allowable Prepetition Damage Claim.
H. EESI and Solo Cup desire to resolve certain of the issues raised in the Motion without the cost and expense of litigation and by approving the offset of such claims, upon a determination of the allowable Prepetition Damage Claim.
NOW, THEREFORE, IT IS HEREBY AGREED, BY THE PARTIES, BY AND THROUGH THEIR RESPECTIVE COUNSEL, AS FOLLOWS: AGREEMENT
1. Solo Cup agrees that EESI is entitled to the EESI A/R for services rendered pursuant to the Agreement.
2. Upon (i) a determination by the Court, pursuant to section 502 of the Bankruptcy Code, of the allowable amount of the Prepetition Damage Claim against EESI, if any, or (ii) agreement of EESI and Solo Cup as to the amount of any Prepetition Damage Claim (resolution of the Prepetition Damage Claim pursuant to either of the foregoing clauses (i) or (ii) shall hereafter be referred to as the "Allowable Prepetition Damage Claim"), Solo Cup will be legally entitled and authorized to offset, pursuant to section 553 of the Bankruptcy Code, the EESI A/R from the Allowable Prepetition Damage Claim. The automatic stay is hereby modified to the extent necessary to permit Solo Cup to effectuate such set-off, without further order of the Court, at such time as the Allowable Prepetition Damage Claim against EESI is determined.
3. EESI shall not attempt to collect the EESI A/R until the Allowable Prepetition Damage Claim has been determined in accordance with Paragraph 2, above.
4. Except as otherwise provided for and determined herein, the parties (including the Official Committee of Unsecured Creditors (the "Committee") appointed in these chapter 11 cases) reserve all of their respective rights, claims and defenses with regard to the Prepetition Damage Claim. Nothing in this Stipulation and Order shall prevent or limit EESI from asserting any claim for postpetition services rendered to Solo Cup pursuant to the Agreement (the "Postpetition A/R), or prevent or limit Solo Cup from challenging such assertion. Nothing in this Stipulation and Order shall prevent or limit Solo Cup from asserting an administrative claim, pursuant to section 503 of the Bankruptcy Code, relating to the period from December 2, 2001 through January 4, 2002, or prevent or limit EESI or the Committee from challenging such assertion.
5. This Stipulation and Order constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, written and oral, between the parties with respect to the subject matter hereof. All representations, warranties, promises, inducements, or statements of intention made by the parties hereto are embodied in this Stipulation and Order, and no party hereto shall be bound by, or liable for, any alleged representation, warranty, inducement, or statement of intention that is not expressly embodied herein or otherwise set forth in this Stipulation and Order.
6. Each counsel executing this Stipulation and Order individually represents and warrants that he/she has all of the requisite authority to bind his/her respective client hereto.
7. This Stipulation and Order shall be binding on the parties hereto and their respective successors and assigns, including any chapter 7 or 11 trustee appointed in these jointly-administered cases.
8. This Stipulation and Order shall be binding on the parties from the date of its execution, but is expressly subject to and contingent upon its approval by the Bankruptcy Court.
9. The Bankruptcy Court shall retain exclusive jurisdiction over any and all disputes arising or otherwise relating to this Stipulation and Order.
10. This Stipulation and Order may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to the other party. Facsimile signatures shall be binding to the same effect as originals.