Opinion
Case No. 02-13533 (AJG), (Jointly Administered).
June 14, 2005
YOUNG CONAWAY STARGATT TAYLOR, LLP, Robert S. Brady, Maureen D. Luke, Wilmington, Delaware, Timothy W. Walsh, Esq., DLA Piper Rudnick Gray Cary US LLP, New York, New York, — and — WINSTON STRAWN LLP, Michael E. Emrich, C. MacNeil Mitchell, Piero Tozzi, New York, New York, Co-Counsel for the Plan Trustee.
Eric B. Miller, Esq., Heather A. Klink, Esq., DLA Piper Rudnick Gray Cary US LLP, Baltimore, Maryland, Attorneys for Debtors and Reorganized Debtors.
KLETT ROONEY LIBBER SCHORLING, A Professional Corporation, Mark R. Ownes, Wilmington, Delaware, — and — DLA PIPER RUDNICK GRAY CARY US LLP, Eric Miller, Esquire, Heather A. Klink, Esquire, Baltimore, MD, Counsel for MCI, Inc.
Upon consideration of the Settlement Agreement by and between MCI WorldCom Communications, Inc. and Brent C. Williams, Plan Trustee for the Touch America Liquidating Trust resolving all outstanding claims between the parties pursuant to the terms and conditions of the Settlement Agreement attached hereto as Exhibit A and incorporated herein by reference; the Court having determined that the Settlement Agreement is the best interests of the estate; and sufficient cause appearing therefore; it is hereby,
ORDERED that the Settlement Agreement is approved in its entirety.
SETTLEMENT AGREEMENT BETWEEN THE TOUCH AMERICA PLAN TRUSTEE AND MCI WORLDCOM COMMUNICATIONS, INC.
Brent C. Williams, plan trustee (the "Plan Trustee") for the liquidating trust established pursuant to the confirmed Amended Liquidating Chapter 11 Plan (the "Touch America Plan") of Touch America Holdings, Inc. et al. ("Touch America") and MCI WORLDCOM Communications, Inc. ("MCI"), as successor in interest to WorldCom, Inc. ("WorldCom"), pursuant to the WorldCom Debtors' Modified Second Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the "WorldCom Plan") by and through their undersigned counsel, hereby enter into the following settlement agreement (the "Settlement Agreement"):
The affiliates of Touch America Holdings, Inc. that also filed for bankruptcy protection are: Entech LLC, Touch America Intangible Holding Company, LLC, Touch America Purchasing Company, LLC, American Fiber Touch, LLC, Sierra Touch America, LLC, and Touch America, Inc.
WHEREAS, Touch America and WorldCom were parties to certain agreements pursuant to which, Touch America and WorldCom provided telecommunications services to each other (collectively, the "WorldCom Contracts");
WHEREAS, the WorldCom Contracts included that certain Systems and Capacity Agreement dated May 21, 1996, as amended on July 1, 1997, September 17, 1997, November 6, 1997, August 31, 1999 and March 24, 2000 (the "SCA");
A. The Touch America Bankruptcy Cases
WHEREAS, on June 19, 2003 (the "Touch America Petition Date"), Touch America filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware (the "Delaware Court");
WHEREAS, on August 10, 2003, the Delaware Court entered an order (the "Sale Order") approving the sale of a substantial portion of the Debtors' assets to 360-networks Corporation ("360"), pursuant to an asset purchase agreement between the Debtors and 360 (the "360 Asset Purchase Agreement");
WHEREAS, in accordance with the terms of the 360 Asset Purchase Agreement, Touch America sought to assume and assign the SCA to 360, and WorldCom raised formal and informal objections to such assumption and assignment;
WHEREAS, the SCA was assumed and assigned to 360 with the consent of WorldCom, with the parties reserving their rights with respect to their respective claims;
WHEREAS, WorldCom filed a proof of claim in the Debtors' bankruptcy cases, seeking a prepetition unsecured claim in the amount of $3,133,237.00, allegedly owed to WorldCom by Touch America under the WorldCom Agreements ("WorldCom Claim No. 202"), to which the Plan Trustee has filed a limited objection (the Plan Trustee's Limited Objection");
WHEREAS, on December 16, 2003, the Motion of WorldCom, Inc. for Relief from Automatic Stay for Cause to Exercise Right of Set off Against Debtors (the "MCI Setoff Motion") was filed, whereby MCI sought authority to setoff amounts owed by MCI to Touch America against amounts owed by Touch America to MCI;
WHEREAS, on March 11, 2004, the Debtors and the official committee of unsecured creditors appointed in the Touch America cases (the "Committee") filed a joint objection to the MCI Setoff Motion and thereafter, on March 29, 2005, the Plan Trustee filed an amended objection to the MCI Setoff Motion;
WHEREAS, on March 26, 2004, WorldCom filed the Motion of WorldCom, Inc. for Relief from the Automatic Stay to Terminate Contracts for Post-petition Defaults and the Motion of WorldCom, Inc. to Compel Immediate Payment of Administrative Expense Claim in the Touch America cases, asserting that Touch America owed WorldCom in excess of $1,134,041.31 as an administrative claim for post-petition services provided to Touch America by WorldCom (the "WorldCom Administrative Claim Motion");
This motion was subsequently withdrawn by WorldCom.
WHEREAS, on May 13, 2004, Touch America and the Committee filed a Joint Objection of Debtors and Committee to the WorldCom Administrative Claim Motion;
WHEREAS, the Delaware Court entered an Order confirming the Touch America Plan on October 6, 2004. The Touch America Plan became effective on October 19, 2004 (the "Touch America Effective Date") and pursuant to the Touch America Plan, as of the Effective Date, a plan trust (the "Plan Trust") was established, Chanin Capital Partners ("Chanin") was appointed Plan Trustee, all of the Debtors' assets, causes of action, claims, rights and interests, including the Touch America Prepetition Claims and the Touch America Administrative Claim, succeeded, transferred and vested in the Plan Trust, and a Plan Oversight Committee was established. With one exception, the members of the Plan Oversight Committee are the same as the members of the Committee;
In May 2005, Brent. Williams resigned from Chanin Capital Partners and relocated his practice to Saybrook Capital, LLC. Given his in-depth knowledge of these cases and thus the benefit to the Debtors' estate to have him continue to represent the estate, the Plan Oversight Committee has agreed by written resolution, in accordance with the Plan Trust Agreement, to the retention of Brent Williams as successor Plan Trustee, effective as of May 1, 2005.
WHEREAS, on December 20, 2004, the Delaware Court approved a consensual Scheduling Order, which provided for the orderly resolution of the pending matters between Touch America and MCI in the Touch America cases; B. The Bankruptcy Cases of WorldCom, Inc.
WHEREAS, WorldCom and certain affiliates of WorldCom filed petitions for relief under chapter 11 of the United States Bankruptcy Code in the Southern District of New York (the "New York Court") on July 21, 2002 and November 8, 2002;
WHEREAS, the WorldCom Plan was confirmed by Order dated October 31, 2003 and became effective on April 20, 2004 (the "WorldCom Effective Date"). Pursuant to the WorldCom Plan, the SCA was assumed by MCI as of the WorldCom Effective Date;
WHEREAS, Touch America filed two proofs of claim in the WorldCom bankruptcy cases, Claim No. 22581 in the amount of $954,202.61 for telecommunications services rendered by Touch America to WorldCom pursuant to the SCA and Claim No. 23460 in an unliquidated amount as the assignee of Qwest Communications Corp. ("Qwest") under a certain telecommunications agreement between Qwest and WorldCom (collectively, "Touch America's Prepetition Claims");
WHEREAS, the Plan Trustee also asserts that MCI, as successor in interest to WorldCom pursuant to the confirmed WorldCom Plan, owes approximately $895,963.62 to Touch America on account of post-petition services that Touch America provided to WorldCom under the SCA (the "Touch America Administrative Claim");
WHEREAS, on November 12, 2004, the Touch America Plan Trustee's Motion to Compel Payment of Cure Claim ("Touch America's Motion to Compel") was filed in the WorldCom cases, which asserts that all amounts owed to Touch America by MCI under the SCA are required to be paid in full because the SCA was assumed pursuant to the WorldCom Plan;
WHEREAS, on or about October 15, 2004, MCI filed the Reorganized Debtors' Seventy-first Omnibus Objection to Proofs of Claim Asserting Setoff Rights Listed on the Attached Exhibit A and the Debtors' Seventy-sixth Objection to Proofs of Claim
(Domestic Telco Claims), pursuant to which, MCI objected to Touch America's Prepetition Claims (collectively, the "MCI Claims Objections").
WHEREAS the Touch America Plan Trustee filed its Response to the MCI Claims Objections on March 28, 2005;
WHEREAS, on February 18, 2005, the New York Court approved a consensual Scheduling Order, which provided for the orderly resolution of the pending matters between Touch America and MCI in the WorldCom cases;
WHEREAS, the Plan Trustee and MCI (collectively, the "Parties" and individually, a "Party") wish to resolve all of the claims of the Parties in their respective bankruptcy proceedings and any other claims between the Parties, including, but not limited to, the MCI Setoff Motion, MCI's Administrative Claim Motion, Touch America's Motion to Compel Payment of Cure Claim, the Plan Trustee's Limited Objection and the MCI Claims Objections, without further dispute on the terms and conditions set forth below;
Agreement
NOW THEREFORE, intending to be legally bound, the Parties agree as follows:
1. Within two (2) business days following the last to occur of (i) approval of this Settlement Agreement by a final Order of the Delaware Court or (ii) approval by the New York Court of this Settlement Agreement by the "so ordering" of this Settlement Agreement having become final and non-appealable, the Plan Trustee shall pay $1.1 million to MCI (the "Settlement Payment") by wire transfer as follows:
Bank One ABA Routing Number: 071000013 Account Number: 5800501 Account Name: MCI WorldCom Bank Address: 1 Bankr One Plaza Chicago, IL 60670
2. Receipt of the Settlement Payment by MCI shall be in full and final satisfaction of, and the Parties, their predecessors, and successors and assigns shall be deemed to have released each other from, any cure, administrative expense, pre-petition, preference or rejection damages claim, or any other claim now known or unknown, filed or unfiled, of any type or nature whatsoever, that one Party (and its predecessors, successors and assigns, and estates) has against the other (and its predecessors, successors and assigns, and estates), from the beginning of time to the date hereof.
3. Upon the Delaware Court's final approval of this Settlement Agreement, the following shall be deemed to have occurred in the Touch America cases: (i) the MCI Setoff Motion shall be deemed withdrawn, (ii) the Plan Trustee's Limited Objection to MCI's claims shall be deemed resolved; (iii) WorldCom Claim No. 202 shall be deemed withdrawn with prejudice; and (iv) WorldCom's Administrative Claim Motion shall be deemed withdrawn with prejudice.
4. Upon the New York Court's final approval of this Settlement Agreement by the Settlement Agreement having been "so-ordered" and such order having become final and non-appealable, the following shall be deemed to have occurred in the WorldCom cases: (i) the Touch America Motion to Compel shall be deemed withdrawn, (ii) the MCI Claims Objections shall be deemed resolved and (iii) the Touch America Prepetition Claims shall be deemed withdrawn with prejudice.
5. Nothing contained herein shall constitute an admission of any kind or nature on the part of either Party hereto. If this Settlement Agreement is not approved by either the Delaware Court or the New York Court, then the Parties shall revert automatically to their pre-settlement positions, and the terms of this Settlement Agreement shall be of no force or effect and shall not be admissible for any purpose, approval of this Settlement Agreement being a condition to the effectiveness of this Settlement Agreement.
6. This Settlement Agreement may be executed in counterparts, including by facsimile, each of which shall be deemed an original, but together shall constitute one and the same document.
7. The undersigned represent that they are duly authorized to execute this Settlement Agreement.
8. This Settlement Agreement may not be amended, modified or supplemented, without the prior written consent of the Parties hereto.
9. This Settlement Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their predecessors, successors and assigns, and estates.