Opinion
Case No. 01-1825 [RJN], Case No. 01-16034 [AJG]
August 7, 2003
TOGUT, SEGAL SEGAL LLP Bankruptcy Co-Counsel for Enron Corp., et al., New York, New York
Enron Energy Services, Inc. ("EESI") and Charles R. Goldstein, as Plan Administrator (the "Plan Administrator") of the estates of Diamond Brands Operating Corp., and its affiliates and successors ("Diamond Brands"), and Liquidating Trustee of DB Liquidating Trust (the "Trust") hereby stipulate and agree (the "Stipulation") as follows:
WHEREAS, on May 22, 2001 (the "Diamond Petition Date"), Diamond Brands, and its affiliates and subsidiaries, including Forster, Inc. ("Forster"), each filed with the United States Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court") their respective voluntary petitions for relief under Chapter 11 of title 11 of the United States Bankruptcy Code, 11 U.S.C. § 101-1330 (as amended, the "Bankruptcy Code") (collectively, the "DB Cases"); and
WHEREAS, on December 2, 2001 (the "EESI Petition Date"), EESI and certain of its affiliates (collectively, the "Enron Debtors") filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "New York Bankruptcy Court") (collectively, the "Enron Cases"); and
WHEREAS, prior to the Diamond Petition Date, EESI and the Maine Electric Consumer Cooperative, of which Forster was a member, entered into the Electric Energy Sales Services Agreement (the "Energy Agreement") that established, inter alia, the duties, rights and procedures pursuant to which EESI sold energy to all of the participants in the Energy Agreement, including Forster; and
WHEREAS, to secure its payment obligations to EESI under the Energy Agreement, Forster delivered a security deposit to EESI in the amount of $92,058 (the "Security Deposit"); and
WHEREAS, pursuant to section 4.3 of the Energy Agreement, EESI was required to hold the Security Deposit in an interest bearing account yielding an interest rate of four (4%) percent per annum or greater; and
WHEREAS, on March 26, 2001, Forster and EESI entered into an agreement pursuant to which EESI agreed to repurchase from Forster energy generation that exceeded Forster's load requirements at its facility located in Strong, Maine (the "Supplemental Agreement"); and
WHEREAS, on October 1, 2001, and prior to Forster's rejection of the Energy Agreement, EESI filed an initial secured proof of claim No. 136 in the Diamond Brands Cases with the Delaware Bankruptcy Court for an unspecified amount; and
WHEREAS, on January 28, 2002, EESI filed an amended and secured proof of claim No. 152 (the "Proof of Claim") in the Delaware Bankruptcy Court in the amount of $87,521.09, representing the total of unpaid invoices issued by EESI to Forster pursuant to the Energy Agreement; and
WHEREAS, EESI's Proof of Claim is secured by the Security Deposit; and
WHEREAS, the Security Deposit exceeds the amount sought by EESI in the Proof of Claim by the amount of $3,888; and
WHEREAS, on March 31, 2002, the Supplemental Agreement expired pursuant to its own terms; and
WHEREAS, on April 31, 2002, the Delaware Bankruptcy Court entered an Order rejecting the Energy Agreement; and
WHEREAS, on September 8, 2002, the New York Bankruptcy Court entered an Order rejecting the Energy Agreement; and
WHEREAS, on January 29, 2003, the Delaware Bankruptcy Court entered an Order (the "Confirmation Order") confirming Diamond Brands' joint plan of reorganization (the "Plan"); and
WHEREAS, pursuant to sections 4.10 and 11.8 of the Plan, on January 28, 2003, Charles Goldstein, managing director of Navigant Consulting, Inc., was designated to serve as Plan Administrator of Diamond Brands; and
WHEREAS, pursuant to the Plan and the Plan Administrator Agreement, the Plan Administrator has the express authority to, inter alia, resolve disputes concerning claims against the Diamond Brand estates, including disputes regarding the Proof of Claim; and
WHEREAS, pursuant to section 2.3 of the Plan, each holder of a secured claim, like the Proof of Claim, is to receive full satisfaction of its claim; and
WHEREAS, EESI and the Plan Administrator have reached an agreement regarding the disposition of the Security Deposit and the Proof of Claim upon the terms and conditions set forth below; and
WHEREAS, the Plan Administrator represents that he is authorized to enter into this Stipulation; and
NOW THEREFORE, in consideration of the foregoing, EESI and the Plan Administrator, on behalf of the Diamond Brands estates and the Trust hereby agree and stipulate as follows:
1. The terms and conditions of this Stipulation, and the obligations of the parties to perform hereunder, shall become effective only upon entry of this Stipulation as an Order of the New York Bankruptcy Court (the "Stipulation Effective Date").
2. On the Stipulation Effective Date and subject only to the provisions contained in paragraph "3" below, EESI shall be authorized to retain and apply the Security Deposit and any interest earned thereon for its own benefit which shall fully and finally satisfy the Proof of Claim, and EESI and Diamond Brands, and their respective successors, affiliates and representatives shall have no other or further claims against one another on account of the Proof of Claim, the Security Deposit, the Energy Agreement and/or the Supplemental Agreement.
3. Within five (5) days after the Effective Date, EESI shall pay to the Trust $3,888 in immediately available funds (the "EESI Payment") which represents the difference between the Proof of Claim and the Security Deposit.
4. If EESI determines after undertaking diligent efforts that the funds comprising the Security Deposit have not been commingled with its funds or that such funds are traceable and capable of segregation, then such funds shall be retained by EESI and neither disbursed nor used until the earlier to occur of (i) agreement by and between EESI and the Committee with respect to the release of such proceeds and (ii) further order of this Court, except to the extent required to repay the DIP Obligations (if any) pursuant to and in accordance with the DIP Order.
As defined in the Order Authorizing, Pursuant to 11 U.S.C. § 105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), and 364(d)(1), Amendment of DIP Credit Agreement to Provide for Extension of Post-Petition Financing, dated May 8, 2003.
5. This Stipulation may be amended by the parties hereto; provided, however, that, in connection therewith, the parties shall obtain the prior written consent of the Official Committee of Unsecured Creditors in the Enron Cases, which consent shall not be unreasonably withheld; and provided, however, that any such amendment shall neither be material in nature nor change the economic substance of the terms hereof.
6. Each party has cooperated or had the opportunity to participate in the preparation of this Stipulation and any ambiguities shall not be construed against either party.
7. The parties hereto represent and warrant to each other that: they are authorized to execute this Stipulation; each has full power and authority to enter into and perform in accordance with the terms of this Stipulation; and this Stipulation is duly executed and delivered and constitutes a valid and binding agreement in accordance with its terms subject only to approval by the New York Bankruptcy Court.
8. This Stipulation may be executed and delivered in any number of original or facsimile counterparts, each of which shall be deemed an original, but which together shall constitute one and the same instrument.
9. The New York Bankruptcy Court shall retain jurisdiction over the parties hereto and this Stipulation, including, without limitation, for the purposes of interpreting, implementing and enforcing its terms and conditions.