Opinion
Case No. 02-13533 (AJG), (Jointly Administered)
May 5, 2003
Marcia L. Goldstein, Esq., Lori R. Fife, Esq., Alfredo R. Perez, Esq., Adam P. Strochak, Esq., WEIL, GOTSHAL MANGES LLP, New York, NY, Attorneys for Debtors and Debtors In Possession.
Howard M. Levine, Esq., SUSSMAN SHANK LLP, Portland, Oregon, Attorneys for Billing Concepts, Inc.
STIPULATION AND ORDER RESOLVING PRECAUTIONARY MOTION OF BILLING CONCEPTS, INC. FOR RELIEF FROM STAY
WHEREAS, WorldCom, Inc. and certain of its subsidiaries (together, "WorldCom" or the "Debtors") commenced these chapter 11 cases on July 21, 2002 (the "Petition Date");
WHEREAS, on or about December 27, 1997, Debtor WorldCom, Inc. entered into a One Plus Billing and Information Management Services Agreement (the "Billing Agreement") with Billing Concepts, Inc. ("Billing Concepts");
WHEREAS, the original term of the Billing Agreement ended on or about December 22, 2000;
WHEREAS, the Billing Agreement has been extended from time to time;
WHEREAS, pursuant to the Billing Agreement certain billing records for telecommunications services are transferred to Billing Concepts, and Billing Concepts processes the billing records and transfers them to the appropriate Local Exchange Carrier ("LEC") for collection from the end user customers liable for the bill;
WHEREAS, the LECs pay to Billing Concepts the applicable payments in accordance with each LEC's billing and collection agreement with Billing Concepts.
WHEREAS, pursuant to the Billing Agreement, Billing Concepts remits payments as instructed by the Debtors, less applicable fees, charges, chargebacks, assessments, adjustments, and reserves as set forth in Sections 4-6, 8, 9, 11, 13, 14, and elsewhere in the Billing Agreement (collectively, the "Billing Concepts Adjustments");
WHEREAS, on July 22, 2002, Billing Concepts created separate accounts to segregate the billing records created prior to the Petition Date from those created after the Petition Date and, since that date, has maintained separate accounts for pre- and post-petition billing records;
WHEREAS, in order to protect its asserted rights of recoupment and/or setoff in connection with the Billing Agreement after the Petition Date, Billing Concepts placed an administrative hold on certain amounts payable under the Billing Agreement;
WHEREAS, on or about July 29, 2002, Billing Concepts filed a Precautionary Motion for Relief from Stay (the "Motion") seeking a determination that its rights to deduct the Billing Concepts Adjustments from amounts payable under the Billing Agreement are in the nature of recoupment, and therefore not subject to the automatic stay, or, in the alternative, for relief from the automatic stay to permit it to apply both pre- and post-petition Billing Concepts Adjustments against amounts payable by Billing Concepts under the Billing Agreement; and
WHEREAS, the Debtors and Billing Concepts have agreed to resolve the Motion on the terms set forth herein.
THEREFORE, it is hereby stipulated, agreed, and ordered that
1. The Motion is withdrawn without prejudice.
2. Billing Concepts is authorized to retain and apply the Billing Concepts Adjustments, whether arising from telecommunication services provided prepetition or postpetition, and deduct the Billing Concepts Adjustments from either or both prepetition or postpetition obligations due from Billing Concepts under the Billing Agreement. In connection therewith, Billing Concepts is authorized to deduct the Billing Concepts Adjustments, whether arising from telecommunications services provided prepetition or postpetition, from any payments due or to become due from Billing Concepts under the Billing Agreement.
3. Billing Concepts is authorized to consolidate accounts and reserves held on account of prepetition billing records with accounts and reserves held on account of postpetition billing records.
4. Billing Concepts is authorized to continue to hold reserves as permitted under the Billing Agreement.
5. Billing Concepts is authorized to continue to make payments due under the Billing Agreement as directed by the Debtors, and the Debtors shall continue to manage and account for such payments through their centralized cash management system in accordance with the Order Pursuant to Sections 105(a) and 364 of the Bankruptcy Code Authorizing Debtors to (i) Continue Centralized Cash Management System and (ii) Maintain Existing Bank Accounts and Business Forms dated July 23, 2002.
6. As adequate protection, and notwithstanding anything to the contrary in the Interim Order (I) Authorizing Postpetition Secured Super-Priority Financing Pursuant to Sections 105, 362, 364(c)(1), 364(c)(2), 364(c)(3), and 507 of the Bankruptcy Code, (II) For Authorization to Grant Intercompany Super-Priority Claims and Junior Liens Pursuant to Sections 361, 363(e), 364(c)(3) and 507 of the Bankruptcy Code, and (III) Scheduling a Final Hearing Pursuant to Bankruptcy Rule 4001(b), 4001(c) and 4001(d) entered on July 23, 2002, and the final order entered on October 15, 2002, (individually and collectively, the "DIP Financing Order"), Billing Concepts' rights to retain, deduct and apply the Billing Concepts Adjustments provided for in this Stipulation and Order is and shall at all times be superior to any claim, lien, right, or interest granted in the DIP Financing Order or to be granted under any other interim or final order for postpetition financing, adequate protection, or the use of cash collateral.
7. The Debtors acknowledge and agree that nothing in this Stipulation and Order is intended to be, nor can be construed or relied upon as evidence of any release or waiver of any of Billing Concepts' rights, remedies, or defenses under the Billing Agreement, any other document executed in connection therewith, applicable nonbankruptcy law, or the Bankruptcy Code.
8. Except as expressly modified by the provisions of this Stipulation and Order, all terms and conditions of the Billing Agreement shall remain in full force and effect in accordance with their terms.
9. The relief set forth herein is granted nunc pro tunc to the Petition Date.
SO ORDERED.