Opinion
Case No. 02-13533 (AJG), (Jointly Administered)
April 29, 2003
ORDER ESTABLISHING AND AUTHORIZING PROCEDURES FOR THE REJECTION OF CERTAIN CIRCUITS
A hearing having been held on April 29, 2003 (the "Hearing") to consider the motion, dated March 18, 2003 (the "Motion"), of WorldCom, Inc. and certain of its direct and indirect subsidiaries, as debtors and debtors in possession (collectively, "WorldCom" or the "Debtors"), for entry of an order pursuant to sections 105 and 365(a) of title 11 of the United States Code (the "Bankruptcy Code") establishing procedures for the rejection of certain Circuits (as defined below); and due notice of the Motion having been given in accordance with the Court's case management order, dated July 29, 2002, and it appearing that no other or further notice need be given; and upon the Motion, the papers filed in support thereof, the responses thereto, if any, the record of the Hearing, and all proceedings had before the Court; and the Court having found and determined that the relief requested in the Motion is an exercise of the Debtors' sound business judgment and is in the best interests of the Debtors, their estates, and their creditors; and after due deliberation and sufficient cause appearing therefor; it is
ORDERED that the Motion is granted as modified herein; and it is further
ORDERED that the following procedures for the Debtors' rejection of Circuits pursuant to section 365(a) of the Bankruptcy Code are authorized, approved, and established in the Debtors' chapter 11 cases:
a. In order to disconnect any circuit that (i) was ordered prior to July 21, 2002; (ii) was purchased pursuant to state or federal tariff; (iii) was ordered for a term of not less than thirty (30) days; (iv) provides capacity less than or equal to DS3; (v) was purchased from SBC Communications, Inc., BellSouth Telecommunications, Inc., Verizon Communications Inc., ATT, or Qwest Communications Corporation, or any of their respective subsidiaries or affiliates (collectively, the "Providers"); and (vi) is determined by the Debtors, in the exercise of their business judgment, to be unnecessary and/or burdensome to the Debtors' ongoing business operations (collectively, the "Circuits") the Debtors shall submit to the relevant Provider a disconnect notice (the "Disconnect Notices") in the ordinary course of the Debtors' business and in accordance with the affected Provider's currently existing tariffs and/or other procedures, including, but not limited to, Access Service Requests, Local Service Requests, or equivalent level of detail regarding each Circuit, or such modified procedures that are mutually agreed upon in writing by the Debtors and the affected Provider. The Circuit identified in a Disconnect Notice shall be disconnected pursuant to the terms of the tariff and/or contract governing the Circuit.
b. Within sixty (60) days from the date of entry of this Order, the Debtors shall file and serve upon the Providers a notice identifying (i) all Circuits for which the Debtors have submitted Disconnect Notices between July 21, 2002 and date of entry of this Order, (ii) the date the Debtors submitted such valid Disconnect Notices to the relevant Provider, and (iii) the name of the Debtor entity that purchased such Circuits (the "Initial Notice").
c. With respect to Circuits for which the Debtors submit a Disconnect Notice after the date of entry of this Order, the Debtors shall file and serve upon the Providers a quarterly notice, not less than thirty (30) days or more than ninety (90) days following the end of each calendar quarter, identifying (i) all Circuits disconnected within the preceding quarter, (ii) the date the Debtors submitted a valid Disconnect Notice for each Circuit, and (iii) the name of the Debtor entity that purchased each such Circuit (each a "Subsequent Notice"). The Debtors' designation on either the Initial Notice or any Subsequent Notice of the Debtor entity that purchased each Circuit shall not be binding upon the Providers.
d. The Providers shall have the right to object to the rejection of any Circuit on any ground, including, without limitation, that any Circuit identified on the Initial Notice or any Subsequent Notice is governed by a contract that applies to multiple Circuits, services, or facilities. Objections, if any, to the Initial Notice or any Subsequent Notice must be filed, served upon, and actually received by counsel to the Debtors within fifteen (15) business days following the date of filing of the Initial Notice or Subsequent Notice, as applicable, or within such other time period as the Debtors and the objecting Provider agree. The hearing on any such objection shall be conducted at the next available omnibus hearing in these cases that is at least five (5) business days after such objection is filed and served upon the Debtors, or at such later omnibus hearing as the Debtors and the objecting Provider agree.
e. If no objection to an Initial Notice or a Subsequent Notice is timely received, then the contract governing each Circuit identified on the Initial Notice and any Subsequent Notice shall be deemed rejected effective as of the effective date of the Disconnect Notice received for each such Circuit; provided, however, that if the disconnect date specified in a Disconnect Notice does not provide the Provider with sufficient time to disconnect the applicable Circuit in the ordinary course of Provider's business, the effective date shall be the date of actual disconnection in the ordinary course of business of such Provider.
f. If a timely objection to an Initial Notice or a Subsequent Notice, as applicable, is received, and the Court ultimately upholds the Debtors' determination to reject the applicable Circuit(s), then the applicable Circuit(s) shall be deemed rejected as of the date set forth in the order approving the rejection.
g. Claims arising out of the rejection of Circuits identified in an Initial Notice or Subsequent Notice must be filed with Bankruptcy Services LLC, the Court-approved claims processing agent, on or before (i) the date that is forty-five (45) days after the filing of the Initial Notice or Subsequent Notice, as applicable, (ii) such other date as agreed upon in writing by the Debtors and the applicable Provider, or (iii) such other date as determined by the Bankruptcy Court (each a "Circuit Quarterly Claim").
and it is further;
ORDERED that, pursuant to section 365(a) of the Bankruptcy Code, the Debtors' rejection of Circuits in accordance with the procedures set forth in this Order is approved; and it is further
ORDERED that the Debtors are authorized to execute and deliver all instruments and documents, and take such other actions, as may be necessary or appropriate to implement and effectuate the procedures as approved by this Order; and it is further
ORDERED that after the last Agreement (as defined in the SONET Ring Orders previously entered by the Court) between the Debtors and BellSouth is rejected pursuant to the SONET Ring Orders, BellSouth shall have thirty (30) days to file claims for rejection damages resulting from the rejections authorized by the SONET Ring Orders; and it is further
ORDERED that, for procedural purposes only, each Provider shall (i) be authorized to file its (a) Circuit Quarterly Claim and (b) any claims arising from the Debtors' rejection of any Provider's agreement(s) other than Circuits (the "Non-Circuit Agreements") (regardless of whether such Non-Circuit Agreements were rejected prior to or after the date hereof) in the chapter 11 case of WorldCom, Inc. (Case No. 02-13533 (AJG)) and (ii) affix to such claim(s) a list identifying the name and case number of each Debtor entity against which such claims(s), or portions thereof, are asserted, and each such claim, or portion thereof, shall have the force and effect as if it was filed as a separate claim in each of the Debtor cases so indicated; and it is further
ORDERED that, notwithstanding this Order, ATT reserves any and all rights, in accordance with any plan of reorganization, the Bankruptcy Code, and any other applicable Orders in these chapter 11 cases, to file any claims for damages, requests for administrative expenses, and/or other claims pursuant to the terms of such plan of reorganization, the Bankruptcy Code, or such other Orders; and it is further
ORDERED that, in the event that ATT files a request for payment of an administrative expense arising from the rejection of a Circuit pursuant to this Order (the "Request for Payment") and such Request for Payment is later determined by the Court to be a rejection damage claim (the "Rejection Damage Claim"), ATT shall not be barred from filing a proof of claim on account of the Rejection Damage Claim solely on account of having failed to include the Rejection Damage Claim in the applicable Circuit Quarterly Claim; provided, however, that the foregoing shall apply only to the extent that the Request for Payment is filed within ninety (90) days from the date of filing of the Initial Notice or Subsequent Notice identifying the Circuit(s) that are the subject of the Request for Payment; and it is further
ORDERED that the requirement under Rule 9013-1(b) of the Local Bankruptcy Rules for the Southern District of New York for the filing of a memorandum of law is waived.