Opinion
Case No. 02-13533 (AJG), (Jointly Administered)
December 2, 2003
Marcia L. Goldstein, Esq, Lori R. Fife, Esq., Alfredo R. Perez, Esq., Adam P. Strochak, Esq., WEIL, GOTSHAL MANGES LLP, New York, NY, for Debtors and Debtors in Possession
J. Stephen Ravel, Esq., KELLY, HART HALLMAN, P.C., Austin, TX, for Grande Communications Networks, Inc.
This Stipulation and Agreed Order (this "Stipulation") is made as of the 2nd day of December, 2003, by and between WorldCom, Inc. and certain of its direct and indirect subsidiaries (collectively, the "Debtors"), including MCI WorldCom Network Services, Inc. ("MCI Network"), as debtors and debtors in possession, and Grande Communications Networks, Inc. ("Grande"), by and through their respective undersigned counsel.
I.
WHEREAS, on July 21, 2002 (the "Commencement Date") and November 8, 2002, WorldCom, Inc. and certain of its direct and indirect subsidiaries (collectively, the "Debtors"), including MCI WorldCom Network Services, Inc. ("MCI Network") commenced cases under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). By order dated July 22, 2002 and subsequent orders, the Debtors' chapter 11 cases have been consolidated for procedural purposes and are being jointly administered. The Debtors have continued to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.
WHEREAS, on October 31, 2003, the Court entered its Order Confirming the Debtors' Modified Second Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code (the "Plan"). Capitalized terms not defined herein shall have the meanings ascribed to them in the Plan.
WHEREAS, on May 10, 1999, an MCI Network predecessor and a Grande predecessor entered into a Telecommunications Services Agreement (as amended from time to time, the "Services Agreement").
WHEREAS, on January 28, 2003, and June 16, 2003, MCI Network and Grande entered into, respectively, the Seventh Amendment to Services Agreement and the Eighth Amendment to Services Agreement (collectively, the "Post-Petition Amendments").
WHEREAS, Grande contends that the Post-Petition Amendments constitute a post-petition contract and that the Debtors have breached that contract, thereby giving rise to a claim for damages, including cancellation fees owing under thereunder (collectively, the "Claim").
WHEREAS, on October 15, 2003, Grande filed its Motion for Allowance and Payment of Junior Superpriority Administrative Expense Claim, as amended on November 10, 2003 (collectively, the "Motion") by which Grande sought allowance and payment of the Claim as a Junior Superpriority Administrative Expense Claim pursuant to Sections 503(b) and 507(a) of the Bankruptcy Code and the Court's Amended Order Pursuant to Sections 105(a) and 366(b) of the Bankruptcy Code Authorizing WorldCom to Provide Adequate Assurance to Utility Companies dated October 2, 2002.
WHEREAS, on October 15, 2003, the Debtors filed a Plan Supplement by which they purported to reject the Services Agreement, which the Debtors contend is a pre-petition contract, the breach of which gives rise to a Class 6 General Unsecured Claim under the Plan.
WHEREAS, to resolve the Claim and the Motion, the Debtors and Grande have negotiated this Stipulation in good faith and at arms' length and desire that it shall be binding on each of them.
II.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Debtors and Grande, that:
1. The Motion is hereby granted in part as set forth by the terms of this Stipulation. Except for the relief granted herein, all other aspects of the Motion are denied.
2. Grande shall be allowed an administrative expense claim in the amount of FIVE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($5,500,000.00) (the "Administrative Expense Claim"). The Debtor shall pay the Administrative Expense Claim to Grande by making payment to the following attorney trust account:
Credit: Frost Bank ABA#: 114000093 Further credit: Kelly, Hart Mailman, P.C. Account Number Frost Bank Account No. 230102210
Unless the Order approving this Stipulation is expressly stayed, the Debtors shall pay the Administrative Expense Claim on or before the eleventh (11th) calendar day after the Court's entry of the Order approving this Stipulation.
3. Grande is hereby granted an allowed Class 6 General Unsecured Claim in the amount of NINE MILLION 00/100 DOLLARS ($9,000,000.00) (the "Class 6 Claim"), to be paid in accordance with the terms of the Plan. Payment to Grande on its allowed Class 6 Claim shall be made at the earliest date allowed under the Plan. Upon receipt of the cash payment described in paragraph 2 above, Grande shall amend the proof of claim it filed on November 26, 2003, to reflect only the Class 6 Claim.
4. The above-described Administrative Expense Claim and Class 6 Claim shall be in full and complete satisfaction of the Claim. For and in consideration of the agreements of the Debtors as stated in this Stipulation, Grande, on behalf of itself and its successors and assigns, does hereby release, acquit, and forever discharge the Debtors and each of them; all successors and assigns of each of the Debtors; all predecessors of each of the Debtors; all officers, directors, shareholders, agents, representatives, consultants, attorneys, and employees of each of the Debtors and of each of the Debtor's predecessors, successors and assigns, of and from any and all claims, demands, actions, liabilities, obligations, costs, expenses, and causes of action, past, present, or future, known or unknown, relating to payment for services, including without limitation contractual minimum commitments and cancellation fees, under the Services Agreement, as amended.
5. For and in consideration of the agreements of Grande as stated in this Stipulation, the Debtors and each of them, on behalf of themselves and their respective successors and assigns, do hereby release, acquit, and forever discharge Grande; all successors and assigns of Grande; all predecessors of Grande; all officers, directors, shareholders, agents, representatives, consultants, attorneys, and employees of Grande and of Grande's predecessors, successors and assigns, of and from any and all claims, demands, actions, liabilities, obligations, costs, expenses, and causes of action, past, present, or future, known or unknown, relating to payment for services, including without limitation contractual minimum commitments and cancellation fees, under the Services Agreement, as amended.
6. Each person who executes this Stipulation represents that he or she is duly authorized to execute this Stipulation on behalf of the respective parties hereto and that each such party has full knowledge and has consented to this Stipulation.
7. This Stipulation may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument and it shall constitute sufficient proof of this Stipulation to present any copy, copies or facsimiles signed by the parties hereto to be charged.
8. This Stipulation, and the terms and conditions contained herein, are subject to the approval of the Court and shall insure to the benefit of Grande and its successors and assigns and to the benefit of the Debtors and their successors and assigns, including, without limitation, a trustee, if any, appointed under chapter 7 or 11 of the Bankruptcy Code. Should a hearing be necessary to obtain Court approval of this Stipulation, such hearing shall be held on December 2, 2003 at 10:00 a.m.
IT IS SO ORDERED.