Opinion
Case No. 01-16034 (AJG), Jointly Administered.
May 24, 2005
ENERTECH SERVICES, INC., by and through its counsel, LAW OFFICES OF SAMUEL E. KRAMER, ESQ., Samuel E. Kramer (SK 6948), Law Offices of Samuel E. Kramer, New York, New York, ATTORNEYS FOR ENERTECH SYSTEMS, INC.
REORGANIZED DEBTORS by and through their counsel, WEIL GOTSHAL MANGES LLP, 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.
This Stipulation and Order (the "Stipulation and Order") is entered into by and between Enertech Systems, Inc. ("Enertech") and Enron Corp. ("Enron") and its affiliated reorganized debtor entities (collectively, the "Reorganized Debtors" and, together with Enertech, the "Parties").
RECITALS
A. Procedural History WHEREAS, commencing on December 2, 2001, and periodically thereafter, the Reorganized Debtors each 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").
WHEREAS, 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 Reorganized Debtors emerged from chapter 11.
B. Transactions between EESNA and USC WHEREAS, on or about February 11, 2000, Enron Energy Services North America, Inc. ("EESNA") entered into a Master Service Agreement (the "USC Agreement") with the University of Southern California ("USC") pursuant to which EESNA was to perform certain energy-saving infrastructure projects.
WHEREAS, in accordance with the USC Agreement, EESNA invoiced USC on a periodic basis for each of the various projects. EESNA has invoiced USC for all amounts due under the USC Agreement.
WHEREAS, USC has paid all of the invoices submitted by EESNA to USC under the USC Agreement.
C. Transactions between EESNA and Enertech WHEREAS, Enron Energy Services West, Inc. n/k/a EESNA ("EESNA") and Enertech are parties to that certain Master Subcontract for Design, Construction, and Related Services Agreement (the "Subcontract Agreement"), effective as of October 11, 1999.
WHEREAS, pursuant to the Subcontract Agreement, Enertech was to serve as one of EESNA's subcontractors for the work to be performed at USC. Under the terms of the Subcontract Agreement, such projects were to be further defined in project subcontracts issued under the Subcontract Agreement. Enertech and EESNA subsequently entered into several project subcontracts (the "Project Subcontracts"). WHEREAS, on or about April 30, 2001, Enertech and EESNA entered into Project Subcontract No. 16 (the "Project Subcontract No. 16") in connection with the Subcontract Agreement.
WHEREAS, in October to November 2001, Enertech and EESNA executed a Change Order No. 0001 to Project Subcontract No. 016 (the "Change Order", together with the Subcontract Agreement, the Project Subcontracts, and the Project Subcontract No. 16, the "Enertech Contract").
D. California Litigation WHEREAS, on or about April 26, 2002, Enertech filed a complaint against USC in the Superior Court of the State of California for the County of Los Angeles, which was assigned Case No. BC 272773 (the "California Lawsuit") asserting claims for approximately $120,000 against USC for breach of contract, foreclosure on a mechanics' lien, and quantum meruit.
E. Proofs of Claims and Claim Objections WHEREAS, on or about October 15, 2002, Enertech filed a proof of claim against Enron's bankruptcy estate in the amount of $118,015.64, which was assigned Claim No. 17493 (the "First Enertech Claim"). The First Enertech Claim is based on the work performed at the University of Southern California ("USC").
WHEREAS, on or about November 20, 2002, Enertech filed a proof of claim against Enron Energy Services North America Inc. ("EESNA") in the amount of $118,015, also purportedly relating to the work Enertech performed at USC, which was assigned Claim No. 21972 (the "Second Enertech Claim"). WHEREAS, on or about December 18, 2003, the Debtors filed their Twenty-Fourth Omnibus Objection to Proofs of Claim (Duplicate Claims and Amended or Superceded Claims) [Docket No. 14953] (the "24th Objection"), pursuant to which the Debtors objected to the First Enertech Claim on the basis that it was duplicative of the Second Enertech Claim and was filed against Enron, which was an incorrect Debtor.
WHEREAS, on or about February 5, 2004, the Court entered the Order Granting the Debtors' Twenty-Fourth Omnibus Objection to Proofs of Claim (Claims Based on Duplicate and Amended or Superceded Claims) [Docket No. 16030], pursuant to which, inter alia, the First Enertech Claim was disallowed and expunged in its entirety.
WHEREAS, on or about September 10, 2004, the Reorganized Debtors objected to the Second Enertech Claim in their Forty-Third Omnibus Objection to Proofs of Claim (the "43rd Objection) [Docket #20760], on the grounds that Enertech did not provide sufficient documentation to support the Second Enertech Claim and/or that the amount of the Second Enertech Claim did not match the books and records of the Reorganized Debtors.
WHEREAS, on or about October 13, 2004, Enertech filed its Opposition to Debtors' Forty-Third Omnibus Objection to Proofs of Claim (No Amount Due Per Debtors' Books and Records and Insufficient Proof) (the "Enertech 43rd Objection Response"). [Docket No. 21390].
F. Avoidance Actions Pending Against Enertech WHEREAS, on or about November 17, 2003, the Reorganized Debtors commenced an adversary proceeding against Enertech in this Court pursuant to section 548(a)(1)(B) of the Bankruptcy Code, seeking to avoid and recover fraudulent conveyances in the amount of $45,371.79 unrelated to the USC project, which was assigned Adv. No. 03-93007 (as amended, the "Enertech Avoidance Action"). On or about August 11, 2004, the Reorganized Debtors filed an amended complaint seeking to avoid two alleged preferential and/or fraudulent transfers regarding Enertech totaling $130,441.93.
G. Abandonment Motion, Response thereto, and Motion to Strike WHEREAS, on September 15, 2003, Enertech filed its Motion Pursuant to 11 U.S.C. § 554(b) for an Order Compelling Abandonment of Debtor's Interest in Movant's Claim Against the University of Southern California (the "Initial Abandonment Motion"). [Docket No. 12758].
WHEREAS, on March 2, 2005, Enertech filed its Motion Pursuant to 11 U.S.C. § 554(b) for an Order Compelling Abandonment of Debtor's Interest in Movant's Claim Against the University of Southern California (the "Second Abandonment Motion", together with the Initial Abandonment Motion, the "Abandonment Motion"). [Docket No. 23891].
WHEREAS, on May 2, 2005, the Reorganized Debtors filed their Response of Reorganized Debtors in Opposition to Motion of Enertech Systems, Inc. Pursuant to 11 U.S.C. § 554(b) for an Order Compelling Abandonment of Debtors' Interest in Movant's Claim Against the University of Southern California and Reply to Response to Debtors' Forty-Third Omnibus Objection to Proofs of Claim (No Amount Due Per Debtors' Books And Records And Insufficient Proof) (the "Response"). WHEREAS, on May 2, 2005, the Reorganized Debtors filed their Motion to Strike Affidavit Submitted in Support of the Motion of Enertech Systems, Inc. Pursuant to 11 U.S.C. § 554(b) for an Order Compelling Abandonment of Debtors' Interest in Movant's Claim Against the University of Southern California (the "Motion to Strike"). [Docket No. 25490].
WHEREAS, in light of the foregoing, and to avoid the expense and time of litigation, the outcome of which is uncertain, the Reorganized Debtors and Enertech desire, in accordance with the terms set forth herein, to (i) resolve the 43rd Objection with regard to the Second Enertech Claim, (ii) disallow the Second Enertech Claim, (iii) deny the Abandonment Motion with prejudice, and (iv) withdraw the Motion to Strike.
NOW, THEREFORE, IT IS HEREBY STIPULATED, CONSENTED TO AND AGREED by and between the Parties that:
1. The Parties hereby request that the foregoing recitals reflect 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. 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.
3. If this Stipulation and Order does not become effective pursuant to paragraph 2 above, (a) this 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 before the execution of the Stipulation and Order; (c) the Parties shall be restored to their respective positions immediately before execution of this Stipulation and Order; and (d) neither the 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 (i) prejudice any of the Parties hereto, (ii) be deemed 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) be referred to or used in any manner or for any purpose in any subsequent proceeding in connection with any litigation or dispute between the Parties.
4. The 43rd Objection with regard to the Enertech Second Claim, claim no. 21972, is GRANTED and such claim shall be and hereby is disallowed and expunged in its entirety with prejudice.
5. Upon the entry date of this Stipulation and Order, any proofs of claims or amounts scheduled on the Debtors' Schedules of Liabilities (the "Schedules") relating to the claims (i) asserted in the Enertech First Claim and the Enertech Second Claim or (ii) in connection with the Abandonment Motion, the USC Contract or any agreements between Enertech and the Reorganized Debtors, including the Enertech Contract, shall be disallowed and expunged, with prejudice.
6. The Abandonment Motion is hereby DENIED with prejudice.
7. The Motion to Strike is hereby withdrawn as moot.
8. The Reorganized Debtors agree that they will not assert that Enertech's defenses in the Enertech Avoidance Action are affected by this Stipulation and Order and the Parties expressly reserve all other rights and defenses in and in connection with the Enertech Avoidance Action, including all rights to pursue a claim pursuant to section 502(h) of the Bankruptcy Code and the Reorganized Debtors reserve all rights and defenses in connection therewith.
9. Enertech agrees that following entry of this Stipulation and Order, it will not serve any form of discovery on any of the Reorganized Debtors, including, but not limited to, interrogatories, requests for admissions, requests for production, and deposition notices for use in connection with the California Litigation.
10. With the exception of the Enertech Avoidance Action, this Stipulation and Order is a final and complete settlement between the Parties of any and all disputes between them, including, but not limited to, any disputes arising out of or related to the USC Agreement, the California Lawsuit, the First Enertech Claim, the Second Enertech Claim, the Abandonment Motion, and the Enertech Contract. The Parties each acknowledged that the facts contained in the Recitals are true and correct.
11. This Stipulation and Order shall be binding upon and shall inure to the benefit of the Parties and their legal representatives, predecessors, successors, and assigns.
12. This Stipulation and Order may be executed in counterparts by the Parties by either facsimile or original signatures.
13. This Court shall retain jurisdiction with respect to any and all issues or disputes that may arise in connection with this Stipulation and Order.
14. This Stipulation and Order shall be governed by, construed, and enforced in accordance with applicable federal bankruptcy law and the laws of the State of New York.
15. 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 the Parties.
SO ORDERED.