Opinion
Case #01-72167-DHA, APN 04-07073.
September 21, 2004
R. Clinton Stackhouse, Jr., Chapter 7 Trustee,
Cecelia Ann Weschler, Office of the U.S. Trustee, Counsel for Hopkins Manufacturing.
ORDER APPROVING COMPROMISE
THIS MATTER came before the Court upon the Chapter 7 Trustee's Application for Approval of Compromise, and based upon the representations of the Trustee, it appears to the Court and the Court finds as follows:
1. R. Clinton Stackhouse, Jr., ("Trustee") was appointed Chapter 7 Trustee in this case and is presently serving.
2. Trustee filed a Complaint initiating this adversary proceeding which sought to avoid an alleged preferential payment to Hopkins Manufacturing Corp. in the amount of $49,582.37.
3. Trustee settled this and similar litigation using the following general approach:
(a) Trustee offered this settlement only where he deemed it appropriate to effect a quick, certain resolution rather than prolonged litigation with its inherent risk cost and delay;
(b) Where applicable, demonstrated new value was subtracted from the amount claimed by Trustee on a dollar for dollar basis, assuming such new value was demonstrated to the satisfaction of Trustee;
(c) On account of defenses asserted under 11 U.S.C. § 547 as well as the general factors listed in Paragraph 3(a) a 50% discount was given against the amount claimed by Trustee after any new value credit;
(d) Payment of the discounted amount must be paid within 30 days of any order approving the particular settlement;
(e) After receiving the negotiated amount, Trustee will dismiss with prejudice each case settled in this manner;
4. Additional or more specific terms to this particular settlement are set forth in the attached Exhibit A.
5. Notice of this settlement was sent on August 6, 2004 to all creditors and parties in interest allowing 20 days to object to or request a hearing upon the proposed settlement and no objection to this settlement has been filed with the Court or received by Trustee.
6. The amount of the compromise figure in this adversary proceeding, to be paid by the Defendant, Hopkins Manufacturing Corp., within 30 days of the entry of this Order is $24,500.00.
7. The defendant by its signature hereby accepts the courts jurisdiction over the parties to this adversary proceeding and consents to the agreement set forth herein.
It is therefore ADJUDGED, ORDERED and DECREED that the compromise as described hereinabove is approved, the parties shall promptly and timely abide by terms of the compromise as set forth herein, and the Trustee is authorized to proceed as set forth above; and
It is FURTHER ORDERED that copies of this order, when entered, be sent to R. Clinton Stackhouse, Jr., Esq., P.O. Box 3640, Norfolk, VA 23514; Cecelia Ann Weschler, Esq., 200 Granby Street, Room 625, Norfolk, VA 23510; and to Jeffrey Rhodes, Esq., Dickstein, Shapiro, Morin Oshinsky, LLP, 2101 L Street, N.W., Washington, D.C. 20037.
EXHIBIT A SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release ("Agreement") is entered into this 28TH day of July, 2004, by and between R. Clinton Stackhouse, Jr., Trustee of the bankruptcy estate (the "Estate") of Trak Auto Corporation ("Plaintiff" or "Stackhouse") and Hopkins Manufacturing Corporation ("Hopkins" and together with Plaintiff, the "Parties" and each a "Party").
WHEREAS, on July 5, 2001 (the "Petition Date"), Trak Auto Corporation ("Trak" or "Debtor") filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Title 11 of the United States Code, the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia ( In re Trak Auto Corporation, No. 01-72167) (the "Bankruptcy Case"); and
WHEREAS, on May 19, 2003, the Bankruptcy Case converted to Chapter 7 and R. Clinton Stackhouse, Jr. was appointed as Chapter 7 Trustee; and
WHEREAS, on May 18, 2004, Plaintiff commenced the adversary proceeding styled Stackhouse v. Hopkins Manufacturing Corp. (In re Trak Auto Corp.), Adv. No. 04-07073-DHA (the "Adversary Proceeding") by filing a complaint (the "Complaint") against Hopkins seeking the recovery of $49,582.37 as an alleged preferential transfer pursuant to section 547 of the Bankruptcy Code; and
WHEREAS, on June 23, 2004, Hopkins timely filed its Answer in the Adversary Proceeding and therein raised various defenses to the Complaint; and
WHEREAS, Hopkins disputes the allegations made by the Trustee in the Adversary Proceeding and denies that the Trustee is entitled to the relief requested, or to any relief, against Hopkins; and
WHEREAS, in order to avoid the costs and attendant risks of litigation, the Parties have decided to resolve the claims asserted in the Complaint upon the terms and conditions provided in this Agreement; and
WHEREAS, Plaintiff and Hopkins each have carefully considered the terms of this Agreement and, after having had the opportunity to consult with their respective counsel, have determined that this Agreement is fair and reasonable and supported by adequate consideration.
NOW THEREFORE, Plaintiff and Hopkins agree as follows:
1. In full and final settlement of Plaintiff's claims against Hopkins, Hopkins agrees to pay to Plaintiff and Plaintiff agrees to accept the sum of Twenty-Four Thousand Five Hundred and No/100 Dollars ($24,500.00) (the "Settlement Payment"). The Settlement Payment shall be made by check payable to "R. Clinton Stackhouse, Jr., Trustee" and shall be delivered to Stackhouse, Smith Nexsen at the address indicated below within 10 days after the Effective Date (as defined in paragraph 3 herein) of this Agreement.
EXHIBIT A
2. Upon receipt and clearance of the Settlement Payment, Plaintiff shall file a consent order dismissing with prejudice the Adversary Proceeding.
3. The Parties understand and acknowledge that this Agreement is subject to approval by the Court in the Bankruptcy Case and that this Agreement shall not become final, effective or binding upon the Parties until entry of a final order that is not subject to appeal or stay (the "Final Order"). The effective date of this Agreement shall be the date that is eleven (11) days after the entry of the Final Order in the Bankruptcy Case (the "Effective Date").
4. Neither this Agreement nor any of its provisions, nor any correspondence related to the negotiation of this settlement or the drafting or approval of this Agreement, shall constitute an admission of liability by either Party to this Agreement.
5. As of the Effective Date of this Agreement, and except as to the enforcement of this Agreement, Hopkins hereby releases and forever discharges the Trustee and the Estate, and their predecessors, successors, representatives and assigns, from any and all claims (including, without limitation, any claims arising under 11 U.S.C. § 502(h)), actions, obligations, damages, losses, damages or liabilities that it had, now has, or hereafter may have against or with respect to the Estate, whether known or unknown, contingent or non-contingent, liquidated or unliquidated, existing from the beginning of the world through the Effective Date of this Agreement.
6. As of the Effective Date of this Agreement, and except as to the enforcement of this Agreement, the Trustee, on behalf of the Estate and its principals, agents, predecessors, successors, assigns, affiliates and representatives, hereby releases and forever discharges Hopkins, its employees, officers, directors, principals, agents, shareholders, affiliates, predecessors, successors, and assigns, from any and all claims, actions, obligations, damages, losses, damages or liabilities that they or any one of them had, now have or hereafter may have against or with respect to Hopkins, whether known or unknown, contingent or non-contingent, liquidated or unliquidated, existing from the beginning of the world though the Effective Date of this Agreement.
7. This Agreement contains the entire agreement and understanding between the Parties pertaining to the subject matter of this Agreement and supersedes and replaces all prior and contemporaneous negotiations, agreements and proposed agreements, written or oral. This Agreement may be modified only by a writing signed by each of the Parties or their duly appointed agents.
8. Each of the Parties acknowledges that it has read all of the terms of this Agreement and has entered into those terms voluntarily and without duress.
9. Each of the Parties acknowledges that this Agreement is a compromise and settlement of disputed claims and that neither Party admits, and each expressly denies, any liability on its part.
10. This Agreement shall be deemed to have been jointly drafted by the Parties and shall be construed accordingly; no provision shall be construed or interpreted for or against either of the Parties.
11. The individuals signing this Agreement on behalf of the Parties represent and warrant that they are duly authorized and fully competent to do so.
12. This Agreement shall be governed by and construed in accordance with the laws of the State of Virginia without giving effect to any choice or conflict of law provision or rule (whether of the State of Virginia or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Virginia.
13. The Parties acknowledge that each and every covenant, warranty, release and agreement contained herein shall inure to the benefit of, and be binding upon, the principals, agents, subsidiaries, employees, officers, directors, assigns, and successors in interest (including any third party purchasers) of the Parties, including but not limited to the Trustee, the Estate, any Chapter 11 or Chapter 7 Trustee or Examiner heretofore or hereafter appointed, and further including any other trustee or statutory committee heretofore or hereinafter appointed.
14. This Agreement may be executed by the Parties on separate counterparts each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same instrument. Any executed copy of this Agreement delivered by confirmed facsimile shall be deemed to be binding to the same extent as an original executed copy of this Agreement.
For R. Clinton Stackhouse, Jr., Trustee in the Chapter 7 Case of Trak Auto Corporation:
R. Clinton Stackhouse, Jr. VA Bar No. 19358 STACKHOUSE, SMITH NEXSEN P.O. Box 3640 Norfolk, VA 23514 Tel: (757) 623-3555 Fax: (757) 624-9245 Trustee in the Chapter 7 Case of Trak Auto Corporation
For Hopkins Manufacturing Corporation:
David Schumacher Vice President, Finance CFO Hopkins Manufacturing Corporation 428 Peyton Street Emporia, Kansas 66801-1157