Opinion
Case No. 01-16034 (AJG), Jointly Administered
May 8, 2003
Martin J. Bienenstock, Brian S. Rosen, WEIL, GOTSHAL MANGES LLP, New York, New York, Attorneys for the Debtors.
Upon the motion, dated March 26, 2003 (the "Motion"), of Enron Corp. ("Enron"), as debtor and debtor in possession, for an order, pursuant to sections 105 and 363 of title 11 of the United States Code (the "Bankruptcy Code"), authorizing and approving (a) any necessary and appropriate consent by Enron, by and through its subsidiaries and affiliates, to the sale (the "Sale Transaction") of all of the outstanding shares of common stock of CGAS, Inc. ("CGAS") to EnerVest Acquisitions, L.L.C. (the "Purchaser") in accordance with the terms and conditions of that certain Purchase and Sale Agreement (the "Purchase Agreement"), dated March 13, 2003, by and between the Purchaser, on the one hand, and McGarret XI, L.L.C. ("McGarret"), on the other hand, a copy of which is attached as Exhibit B to the Motion, and (b) the consummation of the transactions contemplated therein; and a hearing having been held before this Court on May 8, 2003 (the "Sale Hearing") to consider the Motion and the relief requested therein, including, without limitation, approval of the transactions contemplated in the Purchase Agreement; and any objection to the Motion having been withdrawn, overruled, or otherwise determined to be inapplicable; and all parties in interest having been afforded an opportunity to be heard at the Sale Hearing; and upon the Motion, the exhibits thereto, the evidence presented and the arguments made at the Sale Hearing, and all other proceedings had before the Court; and after due deliberation thereon, good and sufficient cause appearing therefor,
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.
IT IS HEREBY FOUND AND DETERMINED THAT:
A. The Motion constitutes a core proceeding and this Court has jurisdiction over the subject matter of this proceeding and the Motion pursuant to 28 U.S.C. § 157 and 1334.
B. Proper, timely, adequate and sufficient notice of the Motion, the relief requested therein, the form of order, and the Sale Hearing has been provided in accordance with the Court's Second Amended Case Management Order Establishing, Among Other Things, Noticing Electronic Procedures, Hearing Dates, Independent Website and Alternative Methods of Participating at Hearings, dated December 7, 2002 (the "Case Management Order"), Bankruptcy Rules 2002, 6004 and 9013, and Local Bankruptcy Rule 9013-1(c).
C. No further or other notice of the Motion, the Sale Hearing or the entry of this order is necessary under the circumstances.
D. CGAS, a non-debtor incorporated in Ohio, is a wholly owned subsidiary of McGarret, a non-debtor Delaware limited liability company. The managing member of McGarret is Joint Energy Development Investment, Limited Partnership ("JEDI"), a Delaware limited partnership indirectly controlled by Enron.
E. In the exercise of its sound business judgment, Enron, acting in its capacity as the indirect beneficial owner of the general partner of JEDI, commenced a competitive sale process to solicit bids for the purchase of CGAS. The sale process was conducted in a manner designed to yield the highest and best competitive bids for CGAS.
F. At the conclusion of the sale process, Enron, acting in its capacity as indirect beneficial owner of the general partner of JEDI, determined, in its sound business judgment, that the Purchaser's bid, as reflected in the Purchase Agreement, represented the best offer for CGAS.
G. The Purchase Agreement requires an order from this Court in the form set forth herein as a condition precedent to Closing on the sale of CGAS.
H. Enron has articulated good and sufficient reasons and sound business purpose and justification for its consent to the sale of CGAS by McGarret in that, among other things, (1) CGAS is not integral to or contemplated to be part of the Debtors' reorganization process, (2) the offer submitted by the Purchaser represents the highest and best offer that McGarret received for CGAS, and (3) upon consummation of the Sale Transaction, McGarret shall receive reasonably equivalent value and fair consideration for the sale of CGAS.
I. The relief requested in the Motion is in the best interests of Enron and the other Debtors, their estates and creditors.
THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Motion is granted in its entirety and in all respects.
2. All objections, if any, to the Motion or the relief requested therein, including, without limitation, the sale of the Shares to the Purchaser that have not been withdrawn, waived or settled, and all reservations of rights included therein, are overruled. Those parties who did not object, or who withdrew their objections, to the Motion are deemed to have consented pursuant to section 363(f)(2) of the Bankruptcy Code.
3. All recital paragraphs contained herein shall have the same force and effect as decretal paragraphs.
4. The approval and consent by Enron, by and through its subsidiaries and affiliates, to the sale of CGAS and the terms and conditions contemplated by the Transaction Documents (as that term is defined below) are hereby approved pursuant to sections 105 and 363(b) of the Bankruptcy Code.
5. Enron is authorized, pursuant to sections 105 and 363(b) of the Bankruptcy Code, to execute and deliver, or cause its subsidiaries and affiliates to execute and deliver, such documents and take such other actions as are necessary to effectuate Enron's approval and consent to the sale of CGAS and the terms and conditions contemplated by the Purchase Agreement. Neither the Debtors nor their estates, including any successor thereto, shall take any action to prevent, interfere with or otherwise enjoin consummation of the transactions contemplated in accordance with the Purchase Agreement.
6. Except as otherwise specifically provided in the Purchase Agreement, the sale of the Shares to the Purchaser pursuant to this Order and the Purchase Agreement will vest the Purchaser with good title to the Shares, free and clear of all liens, claims and encumbrances, and rights of setoff, deduction, netting and recoupment, which have, or could have, been asserted by any creditor or other party in interest, including the Debtors' estates, in connection with the Debtors' chapter 11 cases (the "Interests"), pursuant to section 363(f) of the Bankruptcy Code and will be a legal, valid and effective transfer of the Shares; provided, however, that any existing Interests (including the DIP Liens), if any, and the Interests of the Pension Benefit Guaranty Corporation (the "PBGC"), if any, shall be transferred and attached to the proceeds obtained for the Shares, with the same validity, enforceability, priority, force and effect that they now have as against the Shares and/or Assets, subject to the rights, claims, defenses and objections of Enron, the Seller and all other interested parties with respect to such Interests.
As defined in the Final Order Authorizing Debtors to Obtain Post-Petition Financing Pursuant to 11 U.S.C. § 105,361, 362, 364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1), dated July 2, 2002 (the "Final Order")
7. The proceeds of the sale shall be held in escrow pursuant to that certain escrow agreement by and between Enron, Enron North America Corp., JEDI, McGarret, Hawaii II 125-0 Trust, CIBC Inc., Canadian Imperial Bank of Commerce ("CIBC"), the Creditors' Committee and JPMorgan Chase Bank in the form attached as Exhibit "C" to the Motion (the "Escrow Agreement"). Subject to the representations by and agreement of CIBC announced on the record at the Sale Hearing concerning notice to the PBGC prior to the release of any funds held in escrow and the PBGC's right to object thereto, the proceeds shall only be released from escrow on the terms and conditions provided in the Escrow Agreement. Enron shall cause JEDI and McGarret to comply with the terms of the Escrow Agreement and this Order.
8. The terms of this Order shall be binding upon the Debtors and their estates, including, without limitation, Enron, the Debtors' creditors and all other parties in interest, and any successors of any such persons, including any trustee or examiner appointed in these cases or any subsequent or converted cases of the Debtors under chapter 7 or chapter 11 of the Bankruptcy Code.
9. The Transaction Documents may be modified, amended or supplemented by the parties thereto in accordance with the terms thereof without further order of the Court; provided, however, that, in connection therewith, the parties shall obtain the prior written consent of the Creditors' Committee, which consent shall not be unreasonably withheld; and, provided, further, that any such modification, amendment or supplement shall neither be material nor materially change the economic substance of the transactions contemplated hereby.
10. This Order shall be effective and enforceable immediately upon entry of this Order, pursuant to Bankruptcy Rule 6004(g).
11. The provisions of this order are nonseverable and mutually dependent.
12. The failure to specifically include any particular provisions of the Purchase Agreement and each of the agreements, documents and instruments executed therewith, including the Escrow Agreement (collectively, the "Transaction Documents"), in this Order shall not diminish or impair the effectiveness of such provisions, it being the intent of the Court that Enron's approval, consent to and implementation of the transactions contemplated in the Transaction Documents be approved in their entirety.
13. The Court shall retain exclusive jurisdiction (a) to enforce and implement the terms and provisions of this Order, the Transaction Documents, all amendments thereto, and any waivers and consents thereunder, (b) to compel delivery of the Purchase Price to McGarret in accordance with the terms and conditions of the Purchase Agreement, and (c) to resolve any disputes, controversies or claims arising out of or relating to the Transaction Documents. Except as otherwise expressly provided in the Transaction Documents, the Court shall retain exclusive jurisdiction over any and all disputes arising under or otherwise relating to the construction, performance and enforcement of the terms and conditions of the Transaction Documents.
14. Any conflict between the terms and provisions of this Order and the Purchase Agreement shall be resolved in favor of this Order.