Opinion
Case No. 02-13533 (AJG), (Jointly Administered)
May 23, 2003
Upon consideration of the motion, dated March 21, 2003, of Federal Insurance Company ("Federal") for Adequate Protection Pursuant to Section 363 of the Bankruptcy Code in and to Certain Funds and to Limit Debtors' Use of Such Funds, or, in the Alternative, to Compel the Debtors to Assume or Reject Certain Executory Contracts Under Section 365 of the Bankruptcy Code (the "Motion"), the objection thereto filed by the Debtors (the "Objection"), the joinder in the Debtors' objection by the Official Committee of Unsecured Creditors, and the argument of counsel at a hearing on the Motion held on April 22, 2003, and for the reasons stated on the record, it is hereby
ORDERED that the Motion is denied without prejudice; and it is further
ORDERED that the Debtors are authorized to enter into an amendment of the Inmate Calling Agreement (hereinafter referred to as the "ICA") with the County of Oakland, Michigan, as more fully described in the Motion and the Objection (the "Oakland County Amendment"); and it is further
ORDERED that Federal shall not terminate the surety bond covering the Oakland County ICA on account of the Oakland County Amendment, with all other rights, remedies and defenses being reserved to Federal; and it is further
ORDERED that the Debtors are authorized to enter into an amendment of the ICA with the New York State Department of Correctional Services ("NYDOCS"), as described in the Objection, and Federal shall not terminate the surety bond covering the NYDOCS ICA on account of such amendment, with all other rights, remedies and defenses being reserved to Federal; and it is further
ORDERED that upon a showing in this Court by Federal that it has paid a loss to an ICA counterparty covered by a Federal surety bond, the Debtors shall treat Federal as the subrogee to the claims of the applicable ICA counterparty against the Debtors with respect to such loss, provided, however, that nothing herein shall modify Federal's rights and obligations as respects the applicable ICA counterparty; and it is further
ORDERED that upon a showing in this Court by Federal that it has suffered a loss and acquired a right to, and protectable interest in: (i) post-petition commissions paid by the Debtors to Oakland County under the Oakland County ICA, as amended, or (ii) post-petition commissions paid by the Debtors to NYDOCS under the NYDOCS ICA, as amended, then Federal is entitled to "adequate protection" pursuant to 11 U.S.C. § 361 and 363, and this Order shall be without prejudice to Federal's right to recover from the Debtors the additional post-amendment revenues retained by the Debtors to the extent that either the Oakland County Amendment or the NYDOCS ICA, as amended, results in a decrease in the amount of the post-amendment commissions payable to either Oakland County or NYDOCS; and it is further
ORDERED that this Order is entered without prejudice to the rights of the Debtors or any counter-party to an ICA to object to any and all legal and equitable rights or interests that Federal may assert in post-petition commissions or revenues under any ICA covered by a Federal surety bond, and nothing herein shall be construed as implying that Federal has any such rights or interests; and it is further
ORDERED that nothing in this Order shall be construed as authorizing or approving the Debtors' assumption of the Oakland County ICA, the NYDOCS ICA, or any other ICA, under section 365 of the Bankruptcy Code.