Opinion
Case No: 02-5-9150-JS, Adv. Pro. No: 05-1657-JS.
March 6, 2008
Lawrence J. Yumkas, 06357, Rosenberg | Martin | Greenberg, LLP, Baltimore, Maryland, Attorneys for Sean C. Logan, Trustee.
Joel I. Sher, 00719, Shapiro Sher Guinot Sandler, Baltimore, Maryland.
John A. Braun, Richard Jamison, BALTIMORE FREEPORT CENTER, LTD.
ECO ATLANTIC, INC. FREEPORT LOGISTIC SERVICES, INC.
Sean C. Logan, Chapter 7 Trustee in the bankruptcy case of Transcom Terminals, Ltd., by his undersigned counsel, and John A. Braun, III, Richard Jamison, Baltimore Freeport Center, Ltd., Eco Atlantic, Inc., and Freeport Logistic Services, Inc. (collectively, the "Defendants"), for themselves and by their respective undersigned counsel, do hereby enter into this Stipulation and Consent Order:
WHEREAS, Transcom Terminals, Ltd., the Debtor ("Transcom" or the "Debtor"), filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Code") on June 7, 2002 ("Petition Date"). On May 4, 2004 ("Conversion Date"), the Court entered an Order converting this to a Chapter 7 case;
WHEREAS, Sean C. Logan is the Chapter 7 Trustee ("Trustee") of the bankruptcy estate of Transcom, having been appointed after an election at a meeting of creditors held on June 21, 2004;
WHEREAS, until the Conversion Date, the Debtor was a stevedoring and warehousing company doing business in Baltimore City, Maryland;
WHEREAS, the Debtor's only remaining unliquidated asset is this pending adversary proceeding captioned Sean C. Logan, Trustee, et al. v. John A. Braun, III, et al., Adversary Proceeding No: 05-1657-JS (the "Adversary Proceeding"). The Adversary Proceeding seeks to recover damages from insider fiduciaries who, the Trustee alleged, could not account for the valid business purpose of over $1.2 million in transfers from the Debtor to those insiders and/or their affiliates during the Debtor's prepetition insolvency and after the Petition Date;
WHEREAS, the Adversary Proceeding was commenced by the Trustee and by South Highland Avenue, LLC ("South Highland"), the holder of significant allowed Chapter 11 administrative expense claims;
WHEREAS, the Court dismissed South Highland as a Plaintiff, permitting the Trustee to pursue the Adversary Proceeding, most recently in the form and substance of the Trustee's Second Amended Complaint (the "Complaint")
WHEREAS, the Defendants dispute vigorously and deny the allegations that the Trustee has made against them in the Complaint and are prepared to contest them at trial, but for the settlement described herein;
WHEREAS, the parties have already incurred significant costs in pursuing and defending against efforts to dismiss the Complaint and in discovery;
WHEREAS, the parties agree that discovery between now and trial will be extensive, expensive, and time-consuming, requiring the depositions of several fact witnesses and experts;
WHEREAS, the Trustee and the Defendants have negotiated in good faith and at arms length to resolve the Adversary Proceeding pursuant to the terms of this Stipulation and Consent Order;
WHEREAS, having taken into consideration the expense of further litigation, the difficulty in pursuing litigation that has been pending for so long, the risk of not prevailing in the litigation, the risk of prevailing in the litigation but facing likely appeals and the risks of collection of a judgment, the Trustee has determined that it is in the best interest of the Debtors' estates to settle the Adversary Proceeding pursuant to the terms provided herein;
WHEREAS, the Trustee is satisfied that he can obtain and collect no higher amount in settlement than that which has been offered by the Defendants;
NOW, THEREFORE, it is stipulated and agreed by and between the Trustee and the Defendants, and it is hereby ORDERED, ADJUDGED, and DECREED by the Court that:
1. This Court has jurisdiction over this proceeding and the parties and property affected hereby pursuant to 28 U.S.C. § 1334 and Federal Rule of Bankruptcy Procedure 9019. This is a core proceeding as defined in 28 U.S.C. § 157(b)(2). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
2. Sufficient and adequate notice of the Motion to Approve this Stipulation and Consent Order has been given pursuant to Bankruptcy Rule 9019. No further notice of, or hearing on, the relief sought in this Stipulation and Consent Order is necessary or required.
3. The stipulations set forth above form an integral and substantive part of this Stipulation and Consent Order and are incorporated herein.
4. The settlement of the Adversary Proceeding pursuant to the terms set forth below is in the best interest of the Debtors' estates.
5. The Defendants collectively shall pay the Trustee, on behalf of the bankruptcy estate of Transcom Terminals, Ltd., the sum of Eighty Five Thousand Dollars ($85,000) (the "Settlement Amount") pursuant to terms described below, which terms shall include a right to satisfy the Settlement Amount by paying $65,000 on or before the thirtieth (30th) day following the Court's entry of this Stipulation and Consent Order.
6. Terms: Commencing on or before the thirtieth (30th) day following the Court's entry of this Stipulation and Consent Order, Defendants John Braun and Richard Jamison, jointly and severally shall be obligated to pay the Settlement amount by making $10,000 payments every 60 days until the Settlement Amount is paid in full. The Settlement Amount shall be reduced to Sixty-Five Thousand Dollars if and to the extent the Defendants pay this amount to the Trustee in full within 30 days following the Court's entry of this Stipulation and Consent Order. As a condition to this Stipulation and Consent Order, Mssrs. Braun and Jamison shall each sign a Consent to Judgment in the form of Exhibit 1 to the Motion (the "Consents to Judgment"). The Trustee shall hold such Consents to Judgment in escrow and shall not file them in this Adversary Proceeding until and unless Braun and Jamison default on their payment obligations hereunder.
7. The Effectiveness of this Stipulation and Consent Order is conditioned upon Tydings and Rosenberg's waiver of all claims against the Debtor's estate arising from or related to fees and expenses incurred as counsel to the Debtor and/or the Defendants.
8. Effective upon the Trustee's receipt of the Settlement Amount in full, the Trustee, his successors, assigns, administrators and agents hereby release, acquit and forever discharge the Defendants, their officers, directors, shareholders, agents and attorneys, from any and all claims, actions, causes of action, demands, rights, damages, costs, defenses, and debts of whatsoever kind of nature, whether at law, in equity, or mixed, known or unknown, which the Debtor's estate has, may have, or hereafter may have, relating to or arising from any of the actions, omissions, occurrences or transactions described in the Adversary Proceeding from the beginning of time to the date of this release. It is specifically intended that this release shall be a General Release.
9. Effective upon the Trustee's receipt of the Settlement Amount in full, the Defendants and their successors, assigns, administrators and agents hereby release, acquit and forever discharge the Trustee and the Debtors' bankruptcy estates, and their respective officers, directors, shareholders, agents and attorneys, from any and all claims, actions, causes of action, demands, rights, damages, costs, defenses, and debts of whatsoever kind of nature, whether at law, in equity, or mixed, known or unknown, which the Defendants may have held, or hereafter may have, relating to or arising from any actions, omissions, occurrences or transactions arising from and/or relating to the Adversary Proceeding or this Bankruptcy Case from the beginning of time to the date of this release. It is specifically intended that this release shall be a General Release.
10. Nothing in the foregoing releases shall be deemed to alter, release or waive the Parties' rights and obligations pursuant to this Stipulation and Consent Order.
11. The Parties represent and warrant that (i) they have read and understand the terms of this Stipulation and Consent Order, (ii) they have been represented by counsel with respect to this Stipulation and Consent Order and all matters covered by and relating to it, and (iii) the Parties to this Stipulation and Consent Order have entered into this Stipulation and Consent Order for reasons of their own and not based upon representations of any other party hereto.
12. This Stipulation and Consent Order does not constitute an admission by any of the Defendants to any violation of any statute, regulation, or contract, or of any fact, condition, circumstance, violation of law, or standard of liability in law or equity, arising out of or in any way related to the subject matter described in this Stipulation and Consent Order. This Stipulation and Consent Order is being entered into by the Parties solely to settle and compromise any and all disputes within the scope of this Stipulation and Consent Order. This Stipulation and Consent Order and any settlement discussion related hereto shall be subject to Federal Rule of Evidence 408 and any other applicable confidentiality rule and, as such, shall not be admissible in any proceeding, whether by claim or defense, as evidence or an admission of any kind, except that in a proceeding to enforce the provisions of this Stipulation and Consent Order, any settlement discussions shall be admissible as evidence solely for the purposes of that proceeding.
13. Each of the Parties shall pay its own respective costs and attorneys' fees incurred with respect to the Adversary Proceeding and this Stipulation and Consent Order.
14. The Parties hereto agree promptly to execute any further and additional documents and to take all further steps necessary to effectuate the terms and intent of this Stipulation and Consent Order.
15. This Stipulation and Consent Order may be amended, modified or supplemented only by written agreement of the Parties hereto executed by all of the Parties and approved by the Court. No provision of this Stipulation and Consent Order may be waived except in a writing signed by the Party against whom such waiver is sought to be enforced.
16. This Stipulation and Consent Order constitutes the entire agreement and supersedes any prior written and/or verbal agreements between the Trustee and Defendants.
17. By this Stipulation and Consent Order, each of the Parties submits to the jurisdiction of the Bankruptcy Court for any action to enforce or interpret this Stipulation and Consent Order.
18. This Stipulation and Consent Order may be executed in counterparts and all such counterparts when so executed shall together constitute the final Stipulation and Consent Order as if one document had been signed by all of the Parties. This Stipulation and Consent Order may be executed by facsimile copy and each signature thereto shall be and constitute an original signature, again as if all Parties had executed a single original document.
19. This Stipulation and Consent Order shall be construed and interpreted in accordance with the laws of the State of Maryland. This Stipulation and Consent Order shall not be construed against any of the Parties but shall be given a reasonable interpretation.
20. Should a court of competent jurisdiction deem any provision of this Stipulation and Consent Order illegal, invalid or otherwise unenforceable, in whole or in part, the remainder of this Stipulation and Consent Order shall be valid and enforceable to the fullest extent permitted by law.
21. This Stipulation and Consent Order is binding upon and inures to the benefit of the Parties hereto and their respective parent corporations, subsidiaries, affiliates, directors, officers, agents, employees, stockholders, heirs, executors, administrators, legal representatives, predecessors, successors and assigns.
22. This Stipulation and Consent Order shall be construed without regard to any presumption or other rule of law requiring construction against the Party who caused it to have been drafted.
23. The court shall enter an order administratively closing this case until the earlier to occur of the Trustee's notice of receipt of payment of the Settlement Amount in full, or filing by the Trustee of the Consent Judgments.