Opinion
Case No. 02-13533 (AJG), Jointly Administered
December 30, 2003
Andrew H. Sherman, SILLS CUMMIS RADIN TISCHMAN EPSTEIN GROSS, P.A., New York, NY, for Time Warner Telecom Holdings, Inc.
Adam P. Strochak, WEIL, GOTSHAL MANGES LLP, New York, NY, for the Debtors
WHEREAS, on July 21, 2002 (the "Petition Date") and November 8, 2002, WorldCom, Inc. and certain of its direct and indirect subsidiaries commenced cases under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") and continued to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code; and
WHEREAS, on October 31, 2003, the Court entered an Order Confirming the Debtors' Modified Second Amended Joint Plan of Reorganization (the "Plan"); and
WHEREAS, Time Warner Telecom Holdings, Inc. ("TWTH") is a provider of various telecommunications services and an affiliate of Time Warner Telecom ("TWTC") and Time Warner, Inc.; and
WHEREAS, TWTC and UUNET Technologies, Inc. ("UUNET"), one of the Debtors herein, are parties to a contract, dated November 3, 1999, for UUNET's purchase of, and TWTC's provision of, certain Central Office Wide Area Network services (the "COWAN Contract"); and
WHEREAS, UUNET and Time Warner, Inc., are parties to a certain Internet Services Agreement, dated October 11, 1999, which together with the Service Order set forth the terms and conditions for the provision of UUdirect T3 Tiered Service by UUNET to TWTH (the "T3 Contract"); and
WHEREAS, on or about October 15, 2003, the Debtors filed a Plan Supplement, pursuant to which the Debtors rejected the COWAN Contract; and
WHEREAS, the T3 Contract provides, in relevant part as follows: "if UUNET terminates one or more COWAN sites pursuant to Section 8 of Schedule B of the COWAN agreement, or if UUNET breaches its obligations with respect to one or more COWAN sites pursuant to Section 9 of Schedule B of the COWAN Agreement, Customer may terminate without penalty an equal number of T3 connections ordered thereunder"; and
The T3 Contract defines "Customer" as TWTH.
WHEREAS, on November 26, 2003, TWTH filed a Motion for Entry of an Order Pursuant to Section 362(d) of the Bankruptcy Code Modifying Automatic Stay to Allow the Exercise of Contract Rights (the "Lift Stay Motion") seeking authorization to terminate the T3 connections ordered under the T3 Contract; and
WHEREAS, the Debtors and TWTC entered into a Settlement Agreement (the "Settlement Agreement") approved by this Court by Order dated September 26, 2003; and
WHEREAS, TWTC filed various proofs of claim in accordance with the terms of the Settlement Agreement, including proofs of claim Nos. 36455, 36356, 36457, 36458, 36459, 36474, 36475, 36476, 36477, 36478, 36479, in the amounts of $1,585,828.17, $655,812.42, $146,954.91, $620,973.96, and $1,277,462.77 (the "Resolved Proofs of Claim"), all of which are resolved by the agreements of parties memorialized herein; and
WHEREAS, the Debtors and TWTH wish to resolve the Lift Stay Motion as set forth below;
IT IS HEREBY STIPULATED, AGREED AND ORDERED AS FOLLOWS:
1. The automatic stay of section 362 of the Bankruptcy Code is modified such that TWTH is authorized to terminate all connections and services ordered under the T3 Contract as of December 16, 2003, pursuant to the terms thereof without incurring any penalty.
2. The effective date of the rejection of the COWAN Contract shall be June 26, 2003.
3. TWTC shall provide the Debtors a credit of $1,173,333.33 (the "Credit"), which represents an amount equal to the monthly recurring charges billed by TWTC, under the COWAN Contract between June 26, 2003 and October 15, 2003.
4. TWTC shall be entitled to offset $567,726.49 against the Credit such that net Credit due to the Debtors by TWTC shall be $605,606.84. under the COWAN Contract and shall applied as directed by the Debtors to TWTC.
5. TWTC is granted, pursuant to section 502 of the Bankruptcy Code, an allowed general unsecured claim in the amount of $1,173,333.33, which represents monthly recurring charges under the COWAN Contract billed by TWTC (but will be credited back as per paragraph 3 above) to the Debtors, between June 26, 2003 and October 15, 2003.
6. TWTC is granted, pursuant to section 502 of the Bankruptcy Code, an allowed general unsecured claim in the amount of $1,162,175.27, which represents termination liability stemming from the rejection of the COWAN Contract.
7. TWTC is granted, pursuant to section 502 of the Bankruptcy Code a general unsecured claim for rejection damages in connection with the Columbus rings in the amount of $620,973.96.
8. TWTC is granted, pursuant to section 502 of be Bankruptcy Code a general unsecured claim for rejection damages for various circuit rejections filed on November 12, 2003 in the amount of $146,954.91.
9. The Resolved Proofs of Claim shall be amended or otherwise conformed to reflect the amounts set forth as allowed claims herein and duplicate claims shall be withdrawn. TWTH and TWTC shall cooperate with the Debtors and execute such additional documents as may be necessary to effectuate the amendment, disallowance, or expungement of the Resolved Proofs of Claim in accordance with the agreements set forth herein as to the amounts and types of claims allowed.
10. Except as expressly set forth herein, neither the execution of this Stipulation nor anything contained herein shall be deemed a waiver of limitation of the parties' rights.
11. This Stipulation may be executed in counterparts and by facsimile, and all such counterparts shall constitute one stipulation.
12. This Stipulation constitutes the entire agreement between the parties with respect to the subject matter hereof. No prior or contemporaneous agreement may be used to alter the terms of the Stipulation.
13. This Stipulation may be modified only in a writing signed by the party to be charged with such modification.
14. The signatories to this Stipulation represent that they have been duly authorized to execute this Stipulation.
15. This Stipulation shall inure to the benefit of and be binding upon TWTH as well as the Debtors and each of their successors and assigns, including without limitation, any Chapter 11 or Chapter 7 Trustee appointed herein.
16. This Stipulation is subject to the approval of the Bankruptcy Court. The parties agree to use reasonable efforts to obtain the approval of the Bankruptcy Court as quickly as possible.
17. In the event the Bankruptcy Court declines to approve this Stipulation, neither this Stipulation nor any part thereof may be used by any party for any purpose, except to enforce this provision.
SO ORDERED.