Opinion
Case No. 01-16034 (AJG), Jointly Administered.
August 30, 2005
Martin J. Bienenstock (MB 3001), Brian S. Rosen (BR 0571), Melanie Gray (Pro Hac Vice), Martin A. Sosland (Pro Hac Vice), Weil, Gotshal Manges LLP, New York, New York, ATTORNEYS FOR REORGANIZED DEBTORS.
Enron Corp. ("Enron"), as reorganized debtor, files this motion (the "Motion") for an order pursuant to section 105 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the "Bankruptcy Code") directing the disbursement of certain escrow funds by U.S. Bank, N.A. (or any successor or assign), as escrow agent, to Enron Capital Trade Resources Mexico Holdings B.V. ("BV1") resulting from (i) the sale by BV1 of certain of its assets to Tractebel S.A. ("Tractebel") and (ii) the assumption and assignment of agreements related to a cogeneration facility located in Nuevo Leon, Mexico by BV1 and Operational Energy Corp. ("OEC"). In support thereof, Enron respectfully represents as follows:
Jurisdiction
1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157 and 1334 and Section 38.1 of the Plan (as defined below). This matter is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
Background
2. Commencing on December 2, 2001, and periodically thereafter, Enron and its affiliated debtor entities (prior to the Effective Date (as defined below), the "Debtors") each filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The Debtors' chapter 11 cases were procedurally consolidated for administrative purposes.
3. On December 12, 2001, in accordance with section 1102 of the Bankruptcy Code, the United States Trustee for the Southern District of New York appointed a statutory committee of unsecured creditors in the Debtors' chapter 11 cases (the "Creditors' Committee").
4. On July 15, 2004, the Court entered an order (the "Confirmation Order") confirming the Supplemental Modified Fifth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, dated July 2, 2004 (the "Plan"). The Plan became effective on November 17, 2004 (the "Effective Date"), and the Debtors emerged from chapter 11. Sale of Assets by BV1 to Tractebel S.A.
5. On May 30, 2003, the Court entered an order approving, inter alia, (i) the sale of all or substantially all of the assets owned by BV1, a non-debtor Netherlands corporation and a direct, wholly-owned subsidiary of Enron North America Corp. ("ENA"), a reorganized debtor, (ii) the assumption by BV1 of certain contractual rights with respect to a natural gas-fired cogeneration project located in Nuevo Leon, Mexico (the "Project") and assignment of such agreements, and (iii) the assumption by OEC, a wholly-owned subsidiary of ENA and a Reorganized Debtor, of a technical assistance agreement in connection with the Project and assignment of such agreement to Tractebel S.A. (collectively, the "Sale") for a total amount of $13,573,088.14 (together with any and all associated interest earned thereon, the "Proceeds"). See Docket No. 4119.
The assets sold by BV1 included (i) 200 Class A ordinary voting shares of Tractebel Energia de Monterrey Holdings, B.V., a Netherlands private company ("BV1.5"), constituting one hundred percent (100%) of the issued and outstanding Class A ordinary voting shares of BV1.5, which represented twenty percent (20%) of the aggregate issued and outstanding ordinary voting shares of BV1.5 and (ii) a note payable to BV1 by Tractebel Energia de Monterrey, a Netherlands private company (formerly known as Enron Energia Industrial de Mexico, B.V.) in the stated principal amount of up to $13,000,000.
Escrow Agreement
6. On or about August 20, 2002, BV1 entered into an Escrow Agreement with U.S. Bank, N.A., as escrow agent (the "Escrow Agent") in accordance with a request by the Creditors' Committee pursuant to which BV1 delivered the Proceeds to the Escrow Agent. A copy of the Escrow Agreement is attached as Exhibit "A." Pursuant to section 1.4 of the Escrow Agreement, the Proceeds may only be disbursed in accordance with the terms of a "final, non-appealable order of the Court."
RELIEF REQUESTED
7. By this Motion, Enron respectfully requests entry of an order pursuant to section 105 of the Bankruptcy Code directing the Escrow Agent (or any successor or assign) to disburse the Proceeds to BV1, net of any costs owed to the Escrow Agent under the terms of the Escrow Agreement, in accordance with BV1's instructions for payment, as set forth in the proposed order approving this Motion.
APPLICABLE AUTHORITY
8. Section 105(a) of the Bankruptcy Code provides that "[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]." 11 U.S.C. § 105(a). Pursuant to section 105(a) of the Bankruptcy Code, the Court has expansive equitable powers to fashion any order or decree that is in the interest of preserving or protecting the Debtors' assets. See Chinichian v. Campolongo (In re Chinichian), 784 F.2d 1440, 1443 (9th Cir. 1986) ("Section 105 sets out the power of the bankruptcy court to fashion orders as necessary pursuant to the purposes of the Bankruptcy Code.") (citation omitted; see also, Bird v. Crown Convenience (In re NWFX, Inc.), 864 F.2d 588, 590 (8th Cir. 1988) ("[t]he overriding consideration in bankruptcy . . . is that equitable principles govern.") (citations omitted); In re Cooper Properties Liquidating Trust, Inc., 61 B.R. 531, 537 (Bankr. W.D. Tenn. 1986) ("[t]he Bankruptcy Court is one of equity and as such it has a duty to protect whatever equities a debtor may have in property for the benefit of its creditors as long as that protection is implemented in a manner consistent with the bankruptcy laws.") (citation omitted).
9. The Reorganized Debtors are in the process of dissolving the numerous direct and indirect non-debtor subsidiaries of Enron and ENA, including BV1. In furtherance of the dissolution of BV1, the Proceeds should be released from escrow to BV1 and ultimately disbursed by BV1 to ENA, BV1's sole shareholder, making such funds available for distribution to ENA's creditors under the Plan.
NOTICE
10. Notice of this Motion has been given in accordance with Bankruptcy Rules 2002, 9013, 9014, Rule 9013-1(c) of the Local Bankruptcy Rules for the Southern District of New York (the "Local Rules") and the Second Amended Case Management Order, including, but not limited, to the Escrow Agent. The Enron Parties submit that no other notice be given.
11. Pursuant to Local Rule 9013-1(b), because there are no novel issues of law presented herein, the Enron Parties respectfully request that the Court waive the requirement that Enron and ENA file a memorandum of law in support of this Motion.
WHEREFORE, the Enron Parties respectfully request that the Court enter an order (i) directing the Escrow Agent (or any successor or assign) to disburse the Proceeds to BV1 and (ii) grant such other relief as is just and proper.