Opinion
Case No. 02 B 13533 (AJG)
August 1, 2003
A hearing having been held on April 22, 2003 (the "Hearing") to consider the motion (the "Motion") of WorldCom, Inc., and certain of its direct and indirect subsidiaries, as debtors and debtors in possession (collectively, the "Debtors"), for an order pursuant to section 362 of title 11 of the United States Code (the "Bankruptcy Code") granting the Motion of the Debtors to enforce the automatic stay against the actions (the "Declaratory Judgment Actions") of Continental Casualty Company ("Continental") and Twin City Fire Insurance Company ("Twin City") in order to preserve the Debtors' rights to excess directors and officers and blended liability insurance policies (the "Policies") and their proceeds; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. § 1408 and 1409; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at the Hearing; and the Court having considered the responses and opposition filed to the Motion and having heard the statements in opposition to the relief requested; and the Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and the Court further having determined that the arguments presented by Continental and Twin City concerning the Debtors' interest in the Policies presumes the outcome of the Adversary Proceeding commenced by the Debtors in this Court to establish their interest in the Policies and also presumes the outcome of the contested confirmation hearing scheduled in this case; and the Court having further determined that, under the circumstances of this case, there is no compelling reason or justification for the Court to speculate as to the outcome of the litigation or the confirmation hearing which is scheduled to commence next month; and the Court having concluded that the Policies issued to the Debtors which include entity coverage for the Debtors and reimbursement to the Debtors of indemnifications costs are property of the estates; and the Court further having concluded that the Declaratory Judgment Actions filed by Continental and Twin City in the Southern District of New York seek to determine the viability of the Policies which are property of the estate; and the Court having determined that despite the argument presented by Continental and Twin City to the effect that they are only seeking relief against the directors and officers in the Declaratory Judgment Actions, the practical effect of the relief they seek would be to rescind the Policies that are property of the estate and each of which is an integrated document; and the Court having further determined that such Declaratory Judgment Actions should not have been commenced without first obtaining relief from the automatic stay and, therefore, such actions are void ab initio; and the Court having further determined that the relief afforded herein is in the best interests of the Debtors and their estates and creditors; and upon all of the proceedings had before the Court and after due deliberation and sufficient cause appearing therefor, it is hereby
ORDERED that the Motion is granted to the extent set forth herein; and it is further
ORDERED that the automatic stay provision of section 362 of the Bankruptcy Code extends to the Declaratory Judgment Actions filed by Continental and Twin City in the United States District Court for the Southern District of New York; and it is further
ORDERED that the Declaratory Judgment Actions filed by Continental and Twin City are void ab initio and any further actions regarding the viability of the Policies are stayed pursuant to section 362 of the Bankruptcy Code.