Opinion
Case No. 01-16034 (AJG), Jointly Administered, Case No. 02-11267 (AJG), Jointly Administered
April 4, 2003
Martin J. Bienenstock, Brian S. Rosen, Melanie Gray, Martin A. Sosland, WEIL, GOTSHAL MANGES LLP, New York, New York, for the Debtors.
WHEREAS:
A. On December 2, 2001 (the "Enron Petition Date"), Enron Corp. and certain of its direct and indirect subsidiaries, as debtors and debtors in possession (collectively the "Enron Debtors") commenced cases under chapter 11 of title 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). On March 19, 2002 (the "EMC Petition Date"), Enron Mauritius Company ("EMC" or the "Debtor"), a Mauritius corporation, commenced its reorganization case (the "U.S. Case") in the United States by filing a voluntary petition (the "U.S. Petition") for relief under the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "U.S. Bankruptcy Court"). Pursuant to section 301 of the Bankruptcy Code, the filing of the U.S. Petition automatically "constitutes an order of relief" under the Bankruptcy Code. EMC continues to operate and manage its business and property as a debtor in possession pursuant to sections 1107(a) and 1108 in the U.S. Bankruptcy Code. EMC's chapter 11 case is being jointly administered with the chapter 11 case of the Enron Debtors.
B. On May 7, 2002, EMC filed a Petition (the "Mauritius Petition") before the Supreme Court of Mauritius (the "Mauritius Court"). On May 9, 2002, the Mauritius Court entered an order (the "Mauritius Order"), among other things, appointing Messrs Jayechund Jingree, Wilfrid Koon Kam King of KPMG in Mauritius, and Mr. Simon Lovell Clayton Whicker of KPMG in the Cayman Islands, as EMC's Joint Provisional Liquidators (the "JPLs"). A copy of the Mauritius Order is annexed hereto as Exhibit A.
C. The U.S. Case was commenced in the U.S. Bankruptcy Court for the purpose of effecting a better realization of the business and affairs of the Debtor pursuant to chapter 11 of the Bankruptcy Code.
D. The Mauritius Petition was presented and the JPLs were appointed in Mauritius to ensure the coordinated better realization of the business and affairs of the Debtor under the supervision of the Mauritius Court in accordance with the laws of Mauritius.
E. By its Administrative Order Under Sections 105(a) and 331 of the Bankruptcy Code Establishing Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Official Committee Members, dated January 17, 2002, the U.S. Bankruptcy Court established procedures for interim compensation and reimbursement of expenses for all attorneys, accountants, appraisers, auctioneers, or other professional persons (as those terms are used in section 327 of the Bankruptcy Code, collectively, the "Professionals") retained by the Enron Debtors and by official committees in the Enron Debtors' chapter 11 cases.
F. Paragraph (iii) (i) of the Mauritius Order provides that the JPLs have the power "to retain and employ barristers, Attorneys or solicitors and/or such other agents or professional persons as the JPLs deem fit, in Mauritius and elsewhere as the JPLs deem appropriate, for the purpose of advising and assisting in the execution of their powers."
G. Paragraph (iii) (j) of the Mauritius Order provides that the JPLs have the power "to render and pay invoices out of the assets of [the Debtor] for their own remuneration at their usual and customary rates (and this shall include all costs, charges and expenses of their Attorneys, counsel and all other agents, managers, accountants or other persons that the JPLs may employ)." In addition, paragraph (iii) (m) of the Mauritius Order provides that: "The JPLs shall be at liberty to submit to [the Mauritius Court] bills of costs for taxation of all costs, charges and expenses of those persons or firms employed by them . . .".
H. Paragraph (iii) (k) of the Mauritius Order provides that the JPLs have the power "to enter such protocol or other agreement as the JPLs deem appropriate for the coordination of these proceedings, the Chapter 11 Case and any other like proceedings for the winding up, restructuring and/or reorganization of other companies within the Enron Group, and to seek the approval of [the Mauritius Court] and/or the U.S. bankruptcy Court, as appropriate."
I. By its Order Supplementing Administrative Order dated January 17, 2002 Establishing Procedures for Interim Compensation And Reimbursement of Expenses of Professionals By Establishing Fee Committee, Directing Preparation of Professional Budgets and Formatting For Presentation of Billing Statements, dated April 26, 2002, the U.S. Bankruptcy Court, among other things, established a fee committee (the "Fee Committee") and authorized the appointment of John Silas Hopkins III to the Fee Committee as an applications analyst (the "Applications Analyst"), and authorized the Fee Committee and its employees to review and analyze interim and final fee applications filed by court-approved professionals, monitor whether each professional develops agreed budgets, implement reasonable procedures for efficiently reporting, and apply for fees and file advisory reports.
J. In order to promote cooperation and comity among the U.S. Bankruptcy Court and the Mauritius Court and to avoid jurisdictional disputes with respect to the payment of the fees and expenses of the JPLs, each of their respective professionals rendering service to them in Mauritius or elsewhere, not including any U.S. professionals (collectively the "Foreign JPL Professionals") and any U.S. professionals retained or to be retained by the JPLs in the U.S. (collectively the "U.S. JPL Professionals"), the Debtor and the JPLs wish to enter into this stipulation and order (the "Fee Protocol") regarding the procedures for the payment of fees and expenses of the JPLs, the Foreign JPL Professionals and the U.S. JPL Professionals.
K. The JPLs will file an equivalent application and proposed order with the Mauritius Court.
NOW, THEREFORE, it is agreed as follows:
1. The Mauritius Court shall have sole jurisdiction and power to determine the compensation of the JPLs and the Foreign JPL Professionals rendering services to the JPLs.
2. The JPLs and all Foreign JPL Professionals and the U.S. JPL Professionals shall be compensated for their services in accordance with the laws of Mauritius or such other orders of the Mauritius Court.
3. Except as otherwise provided herein, the fees and expenses of the JPLs, the Foreign JPL Professionals and the U.S. JPL Professionals shall be paid first from the assets of EMC and only if there is a shortfall, by Enron Corp. from funds contained in either of their prepetition bank accounts and any accounts opened by them postpetition (collectively, their "Debtor In Possession Accounts") without necessity of further order of the U.S. Bankruptcy Court upon approval of this Fee Protocol, and according to the terms of those orders which have been or may be entered by the Mauritius Court. As required under the Amended Order Authorizing Continued Use of Existing Bank Accounts, Cash Management System, Checks and Business Forms, and Granting Inter-Company Superiority Claims, Pursuant to 11 U.S.C. § 361, 363(E), 364 and 507(B), As Adequate Protection (the "Amended Cash Management Order"), dated February 25, 2002, the fees and expenses of the JPLs, the Foreign JPL Professionals and the U.S. JPL Professionals may only be paid by Enron Corp. or EMC, after notice and hearing, and upon approval of this Fee Protocol by the U.S. Bankruptcy Court. The Debtor and Enron Corp. shall be permitted to transfer funds (the "Transfers") to and from each of their Debtor In Possession Accounts in order to fund the payment of professional fees and expenses in accordance with this Fee Protocol. The Debtor and Enron Corp. shall keep and maintain accurate books and records of all of the Transfers, categorized as being for the JPLs, the Foreign JPL Professionals or the U.S. JPL Professionals, and provide details and summary information regarding such cash disbursements to the Official Committee of Creditors and other appropriate parties, as required by, and in accordance with, the Amended Cash Management Order. The Transfers shall constitute claims for administrative expenses (as that term is used in sections 503 and 507 of the Bankruptcy Code) of the transferors estates against the transferee's estate.
4. To provide an efficient and convenient manner to enable the Enron Debtors, the Committee and the United States Trustee (collectively, the "Estate Representatives") to review or comment on the fees and expenses of the JPLs and the Foreign JPL Professionals, the JPLs shall first submit any request for reimbursement of the fees and expenses of the JPLs and the Foreign JPL Professionals (the "Foreign JPL Fee Request") to the Estate Representatives by overnight delivery. No later than ten (10) business days from the date a Foreign JPL Fee Request is served, the Estate Representatives must advise the JPLs in writing whether or not they approve of or object to a Foreign JPL Fee Request. In the event that the Estate Representatives approve a Foreign JPL Fee Request, the JPLs may seek approval of such Foreign JPL Fee Request from the Mauritius Court and, if approved, the fees and expenses covered by such Foreign JPL Fee Request shall be paid by Enron Corp. or EMC from funds contained in either of their Debtor In Possession Accounts according to the terms of those orders which have been or may be entered by the Mauritius Court.
5. In the event that any of the Estate Representatives object to a Foreign JPL Fee Request, the parties agree in good faith to try and resolve any objections within five business days (or such other date that is mutually agreeable to the parties) from the date any such objections are served upon the JPLs. If such objections cannot be resolved, the JPLs shall file within three business days thereafter an appropriate pleading, including the Foreign JPL Fee Request (the "Contested Foreign JPL Fee Request") together with any objections from any of the Estate Representatives, with the Mauritius Court so that the matter can be heard at the first available hearing date; provided, however, the JPLs may seek approval of any fees and expenses which are not objected to from the Mauritius Court at the same time and, if approved, such fees and expenses shall be paid first from the assets of EMC and only if there is a shortfall, by Enron Corp. from funds contained in either of their Debtor In Possession Accounts without necessity of further order of the U.S. Bankruptcy Court according to the terms of those orders which have been or may be entered by the Mauritius Court. The JPLs shall have five business days from the date such pleading is filed to reply to any such objection.
6. Notwithstanding the foregoing, and solely to provide an efficient and convenient manner to enable the Estate Representatives to review or comment on the fees and expenses of the U.S. JPL Professionals, the JPLs shall first submit any request for reimbursement of the fees and expenses of the U.S. JPL Professionals (the "U.S. JPL Fee Request") to the Estate Representatives by overnight delivery. No later than ten (10) business days from the date a U.S. JPL Fee Request is served, the Estate Representatives must advise the JPLs in writing whether or not they approve of or object to a U.S. JPL Fee Request. In the event the Estate Representatives approve a U.S. JPL Fee Request, the JPLs may seek approval of such U.S. JPL Fee Request from the Mauritius Court and, if approved, the fees and expenses covered by such U.S. JPL Fee Request shall be paid by Enron Corp. or EMC from funds contained in either of their Debtor In Possession Accounts without necessity of further order of the U.S. Bankruptcy Court according to the terms of those orders which have been or may be entered by the Mauritius Court.
Such U.S. JPL Fee Request shall include a summary of the professional's total hours, hourly rate as well as detailed time records and a summary of expenses.
7. In the event that any of the Estate Representatives objects to a U.S. JPL Fee Request, the parties agree in good faith to try to resolve any objections within five business days (or such other date that is mutually agreeable to the parties) from the date any such objections are served upon the JPLs. If such objections cannot be resolved, the JPLs shall file within three business days thereafter an appropriate pleading, including the U.S. JPL Fee Request (the "Contested U.S. JPL Fee Request") together with any objections from any of the Estate Representatives, with the U.S. Bankruptcy Court so the matter can be heard at the next available hearing date (the "Hearing") in order to enable the U.S. Bankruptcy Court to issue its nonbinding ruling and recommendation to the Mauritius Court regarding the Contested U.S. JPL Fee Request; provided, however, the JPLs may seek approval of any fees and expenses which are not objected to from the Mauritius Court at the same time and, if approved, such fees and expenses shall be paid first from the assets of EMC and only if there is a shortfall, by Enron Corp. from funds contained in either of their Debtor In Possession Accounts without necessity of further order of the U.S. Bankruptcy Court according to the terms of those orders which have been or may be entered by the Mauritius Court. The JPLs shall have five business days from the date such pleading is filed to reply to any such objections. In addition, the Fee Committee and its employees, and/or the Applications Analyst shall have an opportunity to review and comment upon the Contested U.S. JPL Fee Request in order to assist the U.S. Bankruptcy Court with its nonbinding ruling and recommendation with respect to any Contested U.S. JPL Fee Request.
Upon the nonbinding ruling and recommendation of the U.S. Bankruptcy Court, in accordance with the procedures outlined above, the JPLs shall file a copy of the U.S. Bankruptcy Court's nonbinding ruling and recommendations with the Mauritius Court together with the Contested U.S. JPL Fee Request so that the Mauritius Court can ultimately decide the Contested U.S. JPL Fee Request in accordance with the laws of Mauritius or such other orders of the Mauritius Court. If at the Hearing the U.S. Bankruptcy Court declines to issue a nonbinding ruling and make any recommendations to the Mauritius Court with respect to a Contested U.S. JPL Fee Request, the JPLs shall be entitled to seek approval of the fees and expenses from the Mauritius Court and such fees and expenses of any U.S. JPL Professionals shall be paid first from the assets of EMC and only if there is a shortfall, by Enron Corp. from funds contained in its Debtor In Possession Accounts without necessity of further order of the U.S. Bankruptcy Court according to the terms of those orders which have been or may be entered by the Mauritius Court.
8. The JPLs, the Foreign JPL Professionals and the U.S. JPL Professionals and the Foreign JPL Professionals shall have the right and standing to (a) appear and be heard in the U.S. Bankruptcy Court with respect to any issues and matters relating to this Fee Protocol, including but not limited to any hearing which may be held in connection with a Contested U.S. JPL Fee Request, to the same extent as creditors and other interested parties domiciled in the forum country, subject to any local rules and regulations generally applicable to all parties appearing in the forum, and (b) file notices of appearance or other papers with the clerk of the U.S. Bankruptcy Court: provided, however, that any appearance or filing in the U.S. Bankruptcy Court with respect to any issues and matters relating to this Fee Protocol shall not form a basis for personal jurisdiction in the United States over the JPLs, the Foreign JPL Professionals or the U.S. JPL Professionals.
9. In the event that as a result of a Foreign JPL Fee Request and/or a US JPL Fee Request the cumulative fees and expenses of the Foreign JPL Professionals and the US JPL Professionals (the "JPLs Cumulative Professional Fees") will materially exceed any budget amounts that may have been provided by the JPLs to the Enron Debtors or their professional advisors, the JPLs shall, when submitting such request for approval of the JPLs' Cumulative Professional Fees, give notice of such fact to the Estate Representatives and enter into discussions with the Estate Representatives as may be required.
10. The Estate Representatives shall have the right and standing to (a) appear and be heard in the Mauritius Court with respect to any issues and matters relating to this Fee Protocol, including, but not limited to, any request for fees and expenses of the JPLs, to the same extent as creditors and other interested parties domiciled in the forum country, subject to any local rules or regulations generally applicable to all parties appearing in the forum, and (b) file notices of appearance or other papers with the Mauritius Court: provided, however, that any appearance by any of the Estate Representatives in the Mauritius Court with respect to any issues and matters relating to this Fee Protocol, including but not limited to, any request for fees and expenses of the JPLs, shall not form a basis for personal jurisdiction in Mauritius over the Estate Representatives, their representatives or professionals.
11. Neither the terms of this Fee Protocol, nor any actions taken under the terms of this Fee Protocol, shall prejudice or affect the powers, rights, claims and defenses of the Enron Debtors and their estates, the Committee, any of the Estate Representatives, the JPLs, the Foreign JPL Professionals, the U.S. JPL Professionals or any of the Enron Debtors' creditors under applicable law, including the United States Bankruptcy Code and the laws of Mauritius.
12. The Enron Debtors and the Committee agree to seek expeditious approval of this Fee Protocol from the U.S. Bankruptcy Court, and the Debtor and the JPLs agree to seek expeditious approval of this Fee Protocol from the Mauritius Court.
13. This Fee Protocol shall be effective upon approval by the U.S. Bankruptcy Court and the Mauritius Court.
14. The parties shall have the right to terminate this Fee Protocol upon approval of the U.S. Bankruptcy Court or the Mauritius Court on fifteen days' written notice to the other party to this Fee Protocol. Any termination shall be prospective only and shall not affect any of the transactions or fee and expense awards which were entered prior to the date this Fee Protocol shall have been terminated.
SO ORDERED: