Opinion
Case No. 01-16034 (AJG), Jointly Administered.
July 12, 2005
Martin J. Bienenstock (MB 3001), Brian S. Rosen (BR 0571), Melanie Gray (admitted pro hac vice), WEIL, GOTSHAL MANGES LLP, New York, New York, Attorneys for the Reorganized Debtors.
William M. Silverman (WS-6907), Peter Feldman (PF-3271), OTTERBOURG, STEINDLER, HOUSTON ROSEN, P.C., New York, NY, Attorneys for The Bank of Tokyo-Mitsubishi, Ltd.
Scott Esbin (SE-2800), ESBIN ALTER, LLP, New City, NY, Attorneys for BZ Realty Holdings, L.P.
Enron Corp. ("Enron"), Enron North America Corp. ("ENA"), The Bank of Tokyo-Mitsubishi, Ltd. ("BTM") and BZ Realty Holdings, L.P. ("BZ Realty", and together with Enron, ENA and BTM, the "Parties"), by and through their respective counsel do hereby stipulate as follows:
RECITALS
A. Commencing on December 2, 2001 (the "Petition Date"), Enron and certain of its affiliated debtor entities (collectively, the "Debtors" or "Reorganized Debtors"), filed voluntary petitions for relief under chapter 11 of title 11 of the Bankruptcy Code. The Debtors' chapter 11 cases were procedurally consolidated for administrative purposes.
B. On July 15, 2004, the Bankruptcy Court entered an order confirming the 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 "Plan"). The Effective Date of the Plan was November 17, 2004 and the Reorganized Debtors have emerged from chapter 11.
Factual Background
C. On October 15, 2002, BTM filed proof of claim number 12862 against ENA and proof of claim number 12863 against Enron, each in an amount of not less than $149,044,297.25 (collectively, the "Claims"). The alleged basis for each of the Claims is identical:
a. Brazos Office Holdings, L.P. ("Brazos"). An amount not less than $20,000,000 in connection with (i) certain financing facilities and credit arrangements in connection with a credit agreement dated as of April 14, 1997 among Brazos, as borrower, certain banks named therein, including BTM, and JPMorgan Chase Bank ("JPMorgan"), as Agent, and (ii) the parent guaranty dates as of April 14, 1997 in favor of Brazos and JPMorgan, as Agent (the "Brazos Claims");
b. ETOL II. An amount not less than $21,388,000 in connection with (i) certain financing facilities and credit arrangements related to the ISDA Master Agreement, Schedule and Swap Confirmation, each dated as of November 1, 2000 by and between RBS Financial Trading Company Ltd. ("RBSF") and Enron, as amended, (ii) the Term Facility Agreement, dated November 1, 2000, by and among RBSF, The Royal Bank of Scotland ("RBS"), as arranger, the financial institutions parties thereto as lenders and National Westminster Bank plc ("NatWest") as Agent, and (iii) the Term Facility Agreement dated March 30, 2001 by and among RBSF, RBS, as arranger, the financial institutions parties thereto as lenders and NatWest as Agent, and (iv) the Put Option Agreement and Guaranty, each dated as of November 1, 2000, by Enron in favor of RBSF (collectively, the "ETOL Claims");
c. J.T. Holdings. An amount not less than $20,619,615.96 in connection with (i) certain financing facilities and credit arrangements in connection with the Amended and Restated Participation Agreement [Methanol] dated as of December 27, 1995 among Enron Gas Processing Company (predecessor-in-interest to Enron Ventures Corp.), State Street Bank and Trust Company of Connecticut as Trustee ("SSBCT"), State Street Bank and Trust Company as Collateral Trustee ("SSB"), the persons named therein as purchasers, and Citibank N.A. as agent ("Citibank"), and (ii) the Second Amended and Restated Parent Guaranty [Methanol] dated as of December 7, 2001 by Enron in favor of SSBCT, SSB and Citibank (collectively, the "JT Holdings Claims");
d. E-Next. An amount not less than $2,182,681.39 in connection with certain financing arrangements with the Participation Agreement dated as of December 15, 2000, as amended and restated as of April 6, 2001 among ENA as the Development and Construction Manager, E-Next Generation LLC as the Developer, the wholly-owned subsidiaries of E-Next, certain certificate holders, Bank of America N.A., and Citibank, Deutsche Bank Securities, Inc. as co-arrangers and Agent, and (ii) the Guaranty Agreement dated as of December 15, 2000 by Enron in favor of E-Next Generation LLC and certain of its subsidiaries (collectively, the "E-Next Claims");
e. Letter of Credit. An amount not less than $11,982,000 in connection with, or related to, the U.S. $500,000,000 Letter of Credit and Reimbursement Agreement, dated as of May 14, 2001, among Enron, the banks named therein, JPMorgan and Citibank as Co-Administrative Agents, JPMorgan as Paying Agent and as Issuing Bank (the "Letter of Credit Claims");
f. Flagstaff. An amount not less than $72,872,000 in connection with the Slapshot Financing Transaction (the "Flagstaff Claims");
g. Miscellaneous Tort Claims. Certain unliquidated claims based on (i) constructive trust, (ii) damages, attorney's fees, expenses and costs including for or based upon (a) fraud, (b) misrepresentation, (c) subrogation, (d) indemnity, (e) contribution, (f) unjust enrichment, (g) constructive trust, (h) fraudulent conveyance, (i) failure to fulfill contractual and fiduciary obligations, (j) breach of implied covenants of good faith and fair dealing, (k) negligent undertaking, (l) making, causing or permitting to be made misleading statements regarding the businesses or financial condition of the Reorganized Debtors, (m) failure to take prudent and appropriate action regarding adverse business conditions affecting the business operation of the Reorganized Debtors, and (n) failure to require adequate financial and accounting controls for the Reorganized Debtors (collectively, the "Tort Claims").
Portions of Claims Unaffected By this Stipulation and Order
D. On or about March 14, 2005, the Reorganized Debtors filed an objection to BTM's Flagstaff Claims (Docket No. 24377) and on April 18, 2005, BTM filed a response in opposition to that objection (Docket No. 25274) (the foregoing papers, and all related papers and proceedings, collectively the "Flagstaff Objection Proceedings"). This Stipulation and Order does not address, affect or otherwise impact: BTM's Flagstaff Claims; the Tort Claims asserted by BTM in the Claims, to the extent they relate to BTM's Flagstaff Claims; the Flagstaff Objection Proceedings or any other issues related to BTM's Flagstaff Claims (collectively, the "Flagstaff Matters"). Any references in this Stipulation and Order to the Claims excludes the Flagstaff Matters.
The Reorganized Debtors assert that the Flagstaff Claims are duplicative of proof of claim numbers 11151, 11153 and 11154 filed by JPMorgan Bank, N.A., as agent. The Reorganized Debtors reserve the right to file a separate and additional objection to the Flagstaff Claims. This Stipulation and Order does not address or impact any of the issues related to the Flagstaff Matters.
Proofs of Claims Filed by the Agents
E. On October 11, 2002, JPMorgan, as agent, filed claim numbers 11224 and 11225 against Enron, each in the amount $284,500,000, in connection with the Brazos transaction (collectively, the "JPMorgan Brazos Claims"). The Reorganized Debtors assert that the Brazos Claims filed by BTM against Enron are included in, and duplicative of, the JPMorgan Brazos Claims.
F. On October 11, 2002, National Westminster Bank, Plc ("NatWest"), as agent, filed claim number 10906 against Enron in the amount of $237,731,494.96 in connection with the ETOL II financing transaction (the "NatWest ETOL Claim"). The Reorganized Debtors assert that the ETOL Claims filed by BTM against Enron are included in, and duplicative of, the NatWest ETOL Claim.
G. On October 11, 2002, State Street Bank and Trust Company of Connecticut, N.A., predecessor to Reliance Trust Company ("Reliance"), as trustee, filed claim numbers 10806 and 10807, both in the amount of $74,290,471.35, against Enron in connection with the JT Holdings financing transaction (the "Reliance JT Holding Claims"). The Reorganized Debtors assert that the JT Holding Claims filed by BTM against Enron are included in, and duplicative of, the Reliance JT Holding Claims.
H. On October 3, 2002, Credit Suisse First Boston ("CSFB"), as agent, filed claim numbers 6215 against ENA and 6216 against Enron, both in the amount of $25,586,195.42, in connection with the E-Next Financing Transaction (collectively, the "CSFB E-Next Claims"). The Reorganized Debtors assert that the E-Next Claims alleged by BTM are included in, and duplicative of, the CSFB E-Next Claims.
I. On October 11, 2002, JPMorgan, as agent, filed claim number 11166 against Enron in the amount of $374,456,329.00 in connection with the Letter of Credit (the "JPMorgan Letter of Credit Claim"). The Reorganized Debtors assert that the Letter of Credit Claims filed by BTM against Enron are included in, and duplicative of, the JPMorgan Letter of Credit Claim.
J. NatWest, Reliance, CSFB and JPMorgan are collectively referred to herein as the "Agents" and the JPMorgan Brazos Claims, NatWest ETOL Claim, Reliance JT Holding Claims, CSFB E-Next Claims and JPMorgan Letter of Credit Claim are collectively referred to herein as the "Agent Claims" and each singularly, an "Agent Claim".
Background Related to Stipulation With Agent Bank
K. The Reorganized Debtors assert that pursuant to the Stipulation and Order Authorizing JPMorgan, as Administrative Agent, to File Various Consolidated Proofs of Claim on Behalf of Certain Prepetition Lender Groups, entered by this Court on October 9, 2002 (the "JPMorgan Stipulation"), JPMorgan was specifically authorized to file the (i) JPMorgan Brazos Claims against Enron on behalf of the lenders thereto, including BTM, in connection with the Brazos financing transaction, and (ii) JPMorgan Letter of Credit Claim against Enron on behalf of the lenders thereto, including BTM, in connection with the Letter of Credit Agreement, which assertions BTM denies.
Objection to the Claims
L. On March 10, 2005, Enron filed an objection to the Claims (the "Objection", Docket No. 24242) on the grounds, among others, that the Claims are duplicative of, and included in, the Agent Claims. The hearing on the Objection is currently scheduled for July 7, 2005 (the "Hearing").
Pending Settlement Agreements
M. BTM has been advised that the Reorganized Debtors have reached settlements in principle with one or more of the respective Agents in connection with the CSFB E-Next Claims, NatWest ETOL Claim and JPMorgan Letter of Credit Claim, which are subject to documentation and approval by this Court.
Transferred Claim
N. On or about September 10, 2003, BTM sold and assigned to CSFB BTM's rights and interests, if any, in the Brazos financing transaction, which were subsequently sold and assigned to BZ Realty and BTM no longer has any interest in such claims. BZ Realty has consented to the expungement of the Brazos Claims as filed by BTM and will continue to assert its rights and interests, if any, in connection with the Brazos financing transaction through JPMorgan as part of the JPMorgan Brazos Claim.
O. The Parties have actively engaged in arms-length negotiations to resolve the Claims and have reached a good faith settlement for the treatment of the Claims, pursuant to the terms set forth below. Enron submits that this proposed resolution will benefit Enron and ENA's estates by eliminating unnecessary litigation costs and expenses.
P. NOW, THEREFORE, in consideration of the forgoing, and other good and valuable consideration the sufficiency and adequacy of which is hereby acknowledged by the Parties, the Parties, by their undersigned counsel, stipulate and agree as follows:
AGREEMENT
1. The Recitals are fully incorporated herein by reference.
2. BZ Realty agrees that the portions of the Claims identified as the Brazos Claims are withdrawn and expunged with prejudice.
3. Upon the entry of a final, non-appealable order (a) approving a settlement between the Reorganized Debtors and any of the Agents regarding the treatment in full of such Agent's respective Agent Claim in these bankruptcy cases or (b) allowing any of the Agent Claims for all purposes in these bankruptcy cases, then, in such event, that portion of BTM's Claims corresponding to any such Agent Claims that have been settled or allowed, as aforesaid, and the Tort Claims asserted by BTM in relation thereto, shall be automatically deemed withdrawn and expunged, with prejudice, without further order of this Court.
4. With respect to any such withdrawn and expunged portion of the Claims in accordance with paragraphs 2 and 3 above, BZ Realty as to the Brazos Claims and BTM with respect to the other Claims, waive all rights to amend such Claims or seek reconsideration of this Stipulation and Order under Section 502(j) of the Bankruptcy Code, and other rights to recovery in connection therewith, except as otherwise provided herein.
5. The Hearing on the Objection, currently scheduled for July 7, 2005, shall be indefinitely adjourned to a later date (if necessary), provided, however, that if the Reorganized Debtors conduct a hearing on an objection to any of the Agent Claims, the Reorganized Debtors' Objection to that portion of BTM's Claims corresponding to any such Agent Claims shall be heard on the same hearing date as the objection to the respective Agent Claims. The Reorganized Debtors shall provide written notification to the undersigned attorneys for BTM of the date of the Hearing on any objections to the Agent Claims and any response to the Objection (or such portion as shall be heard at the adjourned Hearing) shall be served and filed by BTM at least three business days prior to any such Hearing.
6. This Stipulation and Order is subject to the approval of the Bankruptcy Court after notice and a hearing (if necessary) as required by the Bankruptcy Code and applicable rules. This Stipulation and Order shall not become effective until (i) it is approved and "So Ordered" by the Bankruptcy Court, and (ii) such order becomes final and non-appealable. The entry of this Stipulation and Order by the Bankruptcy Court shall constitute the Bankruptcy Court's finding that due and adequate notice of the Stipulation and Order was given, and that good cause exists for granting the relief provided in the Stipulation and Order.
7. If this Stipulation and Order does not become effective pursuant to paragraph 6 above, (a) the Stipulation and Order shall be deemed null and void; (b) none of the Parties to the Stipulation and Order shall be deemed to have waived any rights, claims and/or defenses that it may have had that existed immediately before the execution of the Stipulation and Order; (c) the Parties shall be restored to their respective positions immediately before execution of the Stipulation and Order; (d) neither this Stipulation and Order nor any exhibit, document, or instrument delivered hereunder, nor any statement, transaction, or proceeding in connection with the negotiation, execution, or implementation of the Stipulation and Order, shall be (i) with prejudice to any of the Parties herein, (ii) deemed to be or construed as an admission by any of the Parties herein of any act, matter, proposition, or merit or lack of merit of any claim or defense, or (iii) referred to or used in any manner or for any purpose in any subsequent proceeding in connection with the Claims, or in any other action in any court or in any other proceedings (except as may be necessary to enforce the agreed adjournments or filing dates described herein), and (e) new dates for the Hearing on the Objection and the deadline to file any response to the Objection shall be set.
8. Notwithstanding anything to the contrary contained herein, nothing in this Stipulation and Order shall be deemed a waiver of BTM's or BZ Realty's rights, if any, to receive distributions in connection with any Claims or Agent Claims that are allowed pursuant to an order by this Court.
9. This Stipulation and Order may be executed in any number of counterparts or with detachable signature pages 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.
10. This Stipulation and Order shall be governed by the Bankruptcy Court and the laws of the State of New York, without giving effect to its conflict of law provisions. The Bankruptcy Court shall retain jurisdiction over any disputes arising hereunder.
11. This Stipulation and Order sets forth the entire understanding of the Parties pertaining to the subject matter hereof 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 Parties that is so-ordered by the Bankruptcy Court.