Opinion
Case No. 01-16034 (AJG) Jointly Administered.
June 3, 2005
Luc A. Despins (LD 5141), Matthew S. Barr (MB 9170), Paul D. Malek (PM 8574), MILBANK, TWEED, HADLEY McCLOY LLP, New York, NY, Attorneys to Reorganized Debtors.
This Stipulation and Consent Order (the "Stipulation") is entered into by and between Enron Corp. ("Enron"), one of the Reorganized Debtors in the above-captioned case, and Northern Gas Processing Limited ("NGPL" and, together with Enron, the "Parties" and each a "Party").
WHEREAS, commencing on December 2, 2001, and periodically thereafter, Enron and certain of its affiliates each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101- 1330 (as amended, the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), which chapter 11 cases have been procedurally consolidated for administrative purposes only;
WHEREAS, on or about April 28, 2004, NGPL filed a proof of claim (Claim No. 24765) amending and restating its original proof of claim (Claim No. 13041) and asserting a contingent and unliquidated claim against Enron (the "Claim");
WHEREAS, on January 31, 2005, Enron filed that certain Objection Of Enron Corp. To Proof Of Claim No. 24765 Filed By Northern Gas Processing Limited Pursuant To Claims Estimation Procedures (Estimation Objection No. 19) (the "Objection") (Docket No. 23282);
WHEREAS, the Parties desire to extend certain deadlines and modify certain other provisions under the procedures (the "Estimation Procedures") provided in this Court's Order, dated February 14, 2004, Pursuant To Sections 105(A), 363(B) And 502(C) Of The Bankruptcy Code And Federal Rules Of Bankruptcy Procedure 3018, 7042, And 9019, (1) Establishing Procedures To Estimate Unliquidated And Contingent Claims, (2) Establishing Procedures To Estimate Counterclaims, (3) Establishing Procedures To Compromise Claims And Counterclaims And (4) Fixing Notice Procedures And Approving Form And Manner Of Notice (the "Estimation Order") with respect to the Claim, the Objection and the hearing related thereto, all as set forth herein;
WHEREAS, the Parties desire to establish a schedule for discovery relating to the Claim;
WHEREAS, documents and other information ("Discovery Material") conveyed by a Party (the "Producing Party") to a receiving Party (the "Receiving Party") in connection with the Claim may contain confidential or proprietary information; and
WHEREAS, this Stipulation contains the terms agreed to by the Parties with respect to (1) the modification of response and hearing dates and other provisions of the Estimation Procedures with respect to the Claim and the Objection, (2) a schedule for the Parties to provide Discovery Material, (3) the establishment of confidentiality procedures with respect to Discovery Material, and (4) settlement discussions between the Parties.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by the undersigned, subject to the Bankruptcy Court's approval, as follows:
A. Modification of Estimation Procedures
1. Capitalized terms used but not otherwise defined in this Stipulation shall have the respective meanings given in the Estimation Order.
2. The deadline for NGPL to file its Statement of Claim shall be September 15, 2005 (not including the 15-day grace period provided pursuant to the Estimation Order).
3. The deadline for Enron to file a Statement of Position, if it chooses to do so, shall be thirty (30) days after the date NGPL files its Statement of Claim.
4. To the extent either Party desires to arrange a discovery conference or conferences with the Bankruptcy Court (which conference(s) may be telephonic or in-person) in accordance with Section F of the Estimation Order, such Party (or both Parties) may request that the Court conduct such a discovery conference or conferences at any time between the date that this Stipulation is approved by the Bankruptcy Court and October 31, 2005.
5. The Estimation Hearing shall be held on November 17, 2005, or as soon thereafter as a regularly scheduled omnibus hearing may occur, provided that prior to October 31, 2005, either Party may move the Court in writing, on notice to the other Party, to extend the date of the Estimation Hearing for up to six (6) weeks upon a showing that it requires such an extension to allow for additional discovery, subject to the other Party's right to object to such extension and be heard by the Court.
6. Except as specifically provided in this Stipulation, the provisions of the Estimation Procedures as set forth in the Estimation Order shall remain unmodified with respect to the Claim and the Objection.
7. Notwithstanding any of the provisions contained in this Stipulation, the Parties agree that they will negotiate with each other in good faith concerning the merits of the Claim from and after the Effective Date of this Stipulation, taking into account any contingency affecting the calculation of the Claim. The Parties, including commercial representatives of NGPL and Enron, will meet during July 2005 at the offices of Lovells, 900 Third Avenue, New York, New York 10022 at a specific time to be agreed to by the Parties to conduct good faith settlement discussions regarding the Claim and the Objection. Each of the Parties agrees to use its best efforts to accommodate the other's requests for scheduling additional negotiations and settlement discussions directly with their respective authorized commercial representatives, by telephone or in person, when requested by either Party, at mutually convenient times and locations.
B. Discovery
8. The following schedule and guidelines shall apply to discovery conducted by the Parties concerning the Claim:
(a) Rule 7026(a)(1), (d) and (f) of the Federal Rules of Bankruptcy Procedure (the "Rules"), regarding voluntary disclosures and mandatory meetings before scheduling conference/discovery plan, shall not be applicable.
(b) Prior to the Effective Date (as defined in paragraph 25 below) of this Stipulation, the Parties may make informal document requests, written interrogatories or requests to admit as provided in the applicable Rules, and all Discovery Materials produced prior to the Effective Date shall be subject to the confidentiality procedures set forth herein.
(c) NGPL shall produce the documents requested in paragraphs 1-2 of the Initial Information Request set forth in Exhibit A (the "Tolling Contract damages analysis" and the "Tolling Contract mitigation analysis")by no later than June 17, 2005. Subject to paragraph 8(f), NGPL shall produce the documents identified in paragraphs 3-13 of the initial information request set forth on Exhibit A hereto by no later than June 10, 2005. In this connection, NGPL acknowledges that it has received waivers (in favor of NGPL) of confidentiality obligations that may be owed by NGPL to EELP, Enron Capital Trade Resources Limited ("ECTRL"), Enron Europe Limited ("EEL"), Lloyds (Nimrod) Leasing Industries Limited, Lloyds TSB Maritime Leasing (No 9) Limited and the respective Administrators of ECTRL and EEL, being the parties to the Standstill Agreement dated June 21, 2002 in respect of EELP (such parties, collectively, the "Standstill Parties") with respect to the documents identified in paragraphs 3-13 of said initial information request. Either Party may make additional, written document and information requests ("Additional Information Requests") to the other relating to the Claim and the Objection. Responses to Additional Information Requests shall be due within ten (10) business days of the later of (i) receipt of an Additional Information Request and (ii) receipt of required consents to disclose or waivers of confidentiality obligations owing by the Producing Party in respect of such information. With respect to updates, new versions and modifications to the documents referred to in paragraphs 5 to 13 of the initial information request, NGPL will produce updates, new versions and modifications of such documents no later than five (5) business days from the date on which such updates, new versions and modifications are distributed to the Standstill Parties who are parties to such documents by the law firm that is in control of such documents. Where documents are withheld on grounds of privilege, the withholding Party shall serve a privilege log no later than ten (10) business days from the date of the relevant request. In the event a Party asserts that an Additional Information Request does not comply with Rule 7026(b) and the Parties cannot agree such an Additional Information Request, the Parties may, by application to the Bankruptcy Court on expedited notice, request that the Bankruptcy Court resolve such dispute.
(d) Subject to NGPL's timely meeting its obligations to Enron as set out in paragraph 8(c) supra, Enron agrees that no later than July 11, 2005, it will provide to NGPL (i)its comments with respect to the Tolling Contract damages analysis and Tolling Contract mitigation analysis so provided by NGPL pursuant to paragraph 8(c) supra, and (ii) its position on the monetary value of the Claim, and the reasons for such position.
(e) The documents produced by NGPL pursuant to paragraphs 1-2 of the Initial Information Request set forth in Exhibit A and any comments provided by Enron pursuant to paragraph 8(d) of this Stipulation are provided for settlement purposes only and their disclosure is subject to Federal Rule of Evidence 408.
(f) Broad document requests, such as those beginning with the phrase "All documents relating to" or words to that effect are prohibited, except that requests for all documents directly relating to a particular subject, such as a specified transaction or event, will be permitted. Ongoing document requests for "most current updates and revised drafts" shall be permitted and no specific Additional Information Requests shall be required with respect to such requests.
(g) Notwithstanding anything in this Stipulation to the contrary, NGPL shall use all reasonable efforts to obtain the consent or waiver of third parties, when required, to any information request or Additional Information Request hereunder, but shall not be obliged to disclose any such information to the extent that the consent or waiver of a third party to such disclosure is contractually required and such consent or waiver is not given; provided, however, that in its responses to the Initial Information Request set forth in Exhibit A and any Additional Information Request, NGPL shall identify the identity of any third party that fails to consent to the disclosure.
(h) On or before September 30, 2005, each Party shall provide the other with a list of all witnesses, including any experts, the Party intends to present at trial.
(i) On or before September 30, 2005, each Party shall provide the other with a report, pursuant to Bankruptcy Rule 7026(a)(2), including, but not limited to, a complete statement of all expert opinions to be expressed and the basis and reasons therefore.
9. Nothing in this Stipulation shall be deemed to limit either Party's right to seek to take depositions in connection with the Claim and the Objection, either upon mutual agreement of the Parties or upon motion or application to the Bankruptcy Court.
C. Confidentiality of Discovery Material
10. Any Producing Party may designate any Discovery Material as "Confidential" if the Producing Party believes, in good faith, that such Discovery Material contains non-public, confidential, proprietary, or commercially sensitive information that requires the protections provided for in this Stipulation ("Confidential Information"). The Parties shall use their best efforts to ensure that only Discovery Material containing confidential information is designated as "Confidential".
11. All Discovery Material containing Confidential Information shall be marked with the legend "CONFIDENTIAL" at the time copies are produced or such Discovery Material is otherwise made available to a Receiving Party with the legend "CONFIDENTIAL."
12. Inadvertent failure to designate material as Confidential at the time of production may be remedied by supplemental written notice. If such notice is given, all documents or materials so designated shall be fully subject to this Stipulation as if they had been initially designated as Confidential.
13. Nothing herein shall impair any Party's right to challenge, by motion or otherwise, a Producing Party's assertion of a privilege with respect to any Discovery Material.
14. Discovery Material shall be used by the Receiving Party solely for the purposes of resolving the Claim and the Objection and may not be used by the Receiving Party for any other purpose.
15. No Receiving Party shall disclose Confidential Information it receives in connection with these Proceedings except as permitted by this Stipulation and Order. Dissemination of Confidential Information shall be limited to the following persons, to the extent such persons need access to Confidential Information in connection with the analysis, negotiation or resolution of the Claim or the Objection:
a. Employees or directors of a Receiving Party, pursuant to paragraph 20 of this Stipulation;
b. the Bankruptcy Court, persons employed by the Bankruptcy Court and stenographers transcribing the testimony or argument at a hearing, trial or deposition in connection with the Claim and the Objection;
c. counsel and in-house counsel to the Receiving Party;
d. experts or consultants retained or consulted by counsel for the Receiving Party, pursuant to paragraph 21 of this Stipulation;
e. the Receiving Party's witnesses and their counsel at depositions or any hearing held in connection with the Claim and the Objection;
f. any other person that a Producing Party and a Receiving Party agree to in writing; and
g. clerical, paralegal and secretarial staff associated with any individual included under (c) above who such individual determines in good faith reasonably needs access to such materials in relation to these Proceedings.
16. In the event a Receiving Party wishes to file a document containing, disclosing, or in any way referring to Confidential Information with the Bankruptcy Court, that document shall be filed under seal in a sealed envelope marked with the caption of these proceedings and bearing the following statement:
CONFIDENTIAL
FILED UNDER SEAL PURSUANT TO STIPULATION AND ORDER DATED JUNE __, 2005. THIS ENVELOPE IS NOT TO BE OPENED NOR THE CONTENTS THEREOF DISPLAYED OR REVEALED EXCEPT BY OR AS DIRECTED BY THE COURT.
17. All documents so filed shall be maintained by the Clerk's Office separate from public records in these proceedings and shall be released only upon further order of the Bankruptcy Court.
18. To the extent depositions are taken, all deposition testimony shall be treated as Confidential Information unless otherwise agreed to by the Parties.
19. To the extent any Party has a reasonable basis to believe that a Party may discuss or otherwise disclose Confidential Information through oral argument or testimony at the Estimation Hearing, such Party shall request that the Bankruptcy Court hear such oral argument or testimony in camera and that the applicable portions of the publicly available hearing transcript be redacted.
20. Notwithstanding anything contained in paragraph 15, Confidential Information may be provided to employees and directors of a Party, provided that such employee or director may only use said information in connection with the Claim and the Objection. The Receiving Party shall be responsible for any breach of these confidentiality provisions by any of its employees and directors and by any of the persons referred to in paragraphs 15 (c)-(g), supra.
21. Notwithstanding anything contained in paragraph 15, Confidential Information may be provided to experts or consultants retained or consulted by counsel for the Parties in connection with the Claim and the Objection, and anyone working with or for experts or consultants retained or consulted by counsel in connection with the Claim and the Objection, if necessary for such expert or consultant to prepare a written opinion, to prepare to testify, or to assist counsel for the Parties, provided that such expert or consultant may only use said Confidential Information in connection with the Claim and the Objection. This Stipulation shall apply to any expert or consultant retained or consulted by the Parties. The Parties shall be responsible for any breach of these confidentiality provisions by any of their respective experts or consultants.
22. Should any Receiving Party wish to disclose any Confidential Information other than as set forth and permitted herein, such Receiving Party shall first obtain the written consent of the Producing Party's counsel. If such consent is not provided within five (5) business days of the request, the Receiving Party must apply to the Bankruptcy Court for an order permitting the disclosure, subject to such confidentiality or other protections as the Bankruptcy Court may direct. No such disclosure shall be made by the Receiving Party until the Bankruptcy Court rules upon any such application
23. This Stipulation shall not apply to documents that have been designated "Confidential" by a Producing Party if a Receiving Party lawfully received copies of such documents from sources other than the Producing Party.
24. This Stipulation and any designation of confidentiality shall be without prejudice to any Party's right to challenge at any time whether or not any particular information is in fact Confidential Information. On a hearing before the Court concerning such question, the Party asserting confidentiality shall have the burden to establish the same. Failure to challenge a claim of confidentiality shall not constitute waiver of such challenges subsequently raised. The confidentiality provisions of this Stipulation shall apply both to Discovery Materials produced pursuant to this Stipulation and to other discovery materials that may be produced in the course of additional discovery pursuant to the Estimation Procedures.
25. In the event that the Receiving Party disagrees with the designation by the Producing Party of any information as Confidential Information, the Parties will attempt to resolve such dispute on an informal basis before presenting the dispute to the Bankruptcy Court by motion or otherwise.
D. Miscellaneous
26. Modification. This Stipulation shall be without prejudice to the right of any Party to apply to the Bankruptcy Court for a modification of this Stipulation or such further protective order as justice may require. Notwithstanding the foregoing, the Parties to this Stipulation may agree in writing to modify any of the terms and/or obligations herein.
27. Bankruptcy Court Approval; Effective Date; Binding Effect. This Stipulation is expressly subject to and contingent upon its approval by the Bankruptcy Court, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to all Parties, and the Bankruptcy Court has approved and entered the Stipulation on the docket of the Bankruptcy Court (the "Effective Date");provided, however, that the confidentiality provisions set forth herein with respect to Discovery Materials produced prior to the Effective Date as contemplated by paragraph 8(b) hereof shall be binding on the Parties as of the date the Parties sign this Stipulation regardless of whether this Stipulation is ultimately approved by the Bankruptcy Court. The provisions of this Stipulation, including, without limitation, the confidentiality provisions herein, shall, absent further order of the Bankruptcy Court, continue to be binding throughout and after the conclusion of these proceedings, including without limitation any appeals. Except as expressly stated above with respect to the confidentiality of Discovery Materials produced prior to the Effective Date, if this Stipulation, or any portion hereof, is not approved by the Bankruptcy Court or if it is overturned or modified on appeal, this Stipulation shall be of no further force and effect, and, in such event, neither this Stipulation nor any negotiations and writings in connection with this Stipulation shall in any way be construed as or deemed to be evidence of or an admission on behalf of any Party hereto regarding any claim or right that such Party may have against any other Party hereto.
28. Non-Severability. Subject to the proviso in paragraph 27, the provisions of this Stipulation are mutually interdependent, indivisible and non-severable.
29. Counterparts. This Stipulation may be executed in one or more counterparts and by facsimile, all of which shall be considered one and the same agreement.
30. Retention of Jurisdiction. The Bankruptcy Court shall retain exclusive jurisdiction to interpret, implement and enforce the provisions of this Stipulation, and the Parties hereby consent to exclusive jurisdiction of the Bankruptcy Court with respect thereto. The Parties waive arguments of lack of personal jurisdiction or forum non-conveniens with respect to the Bankruptcy Court.
SO ORDERED.
EXHIBIT A Initial Information Request
Capitalized terms have the meanings assigned to them in EELP's Director's proposal for a Company Voluntary Arrangement, Seventh Draft, dated 14 March 2005.
In the case of documents that have not been finalized, please include the most recent drafts, and in the case of documents that are currently in effect, all amendments, restatements, modifications, supplements, waivers and material notices and correspondence with respect thereto. Please update your responses as necessary to ensure that they remain current.
1. Tolling Contract damages analysis calculated as of January 1, 2006, by AlixPartners, LLC, or other financial adviser to NGPL, together with list of assumptions in the model and support for market prices for the commodities, when applicable
2. Tolling Contract mitigation analysis calculated as of January 1, 2006, by AlixPartners, LLC, or other financial adviser to NGPL, together with list of assumptions in the model and support for market prices for the commodities, when applicable
3. Audited financial statements (balance sheet, income statement and cash flow statement) of NGPL for FY 2001 through FY 2003, and for FY 2004 (as soon as those for 2004 are available), plus unaudited quarterly financial statements for 2004 and for 2005 (as soon as each quarterly financial statement for 2005 is available)
4. 2005 Operating Plans (showing projected income and costs) for NGPL
5. New Gas Processing Agreement (or heads of terms/termsheet for said agreement(s)) (relating to J-block gas)
6. List of the contracts to be novated to SPV1 (see Appendix D to the CVA) that are also expected to be modified, supplemented, amended and/or restated after the Restructuring is completed. Summary explanation and copy of all such modifications, supplements, amendments or amendments and restatements
7. Asset Transfer Agreement
8. New Tolling Contract
9. New Common Facilities Agreement
10. Each of EGPL Corporate Services Agreement, Liquids Transfer Agreement, EGPL Share Option Agreement and EGPL Share Charge
11. Escrow Agreement
12. Amendments, supplements, modifications and restatements of the CVA and the Tolling Contract and the documents listed above, whether finalized or in draft form (but if in draft form, in the version most recently circulated to the other parties to such document by the law firm in control of such document)