Opinion
Case No. 02-13533, (Jointly Administered).
July 22, 2003.
Jennifer L. Dumas, Davis Wright Tremaine LLP, Seattle, WA, Attorneys for Key Corporate Capital Inc.
Eric B. Miller, Matthew M. Bacsaidi, Piper Rudnick LLP, Baltimore, MD, Special Counsel for the Debtors and Debtors in Possession.
STIPULATED ORDER APPROVING SETTLEMENT AGREEMENT
This Stipulation of Settlement (the "Stipulation") is entered into this 30 day of June, 2003, by and between Key Corporate Capital Inc. ("KCCI") and WorldCom, Inc. ("WorldCom") and each of the debtors in the above-captioned jointly administered cases (collectively, the "Debtors"), by and through their undersigned attorneys.
A. On July 21, 2002 and November 8, 2002 the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
B. On July 22, 2002, this Court entered an order granting the Debtors' request to procedurally consolidate and jointly administer each of the Debtors' cases under Case No. 02-13533.
C. KCCI is the ultimate party in interest and a lessor under four lease agreements (the "Key Leases") with the Debtors whereby the Debtors leased from KeyCorp Leasing, Ltd. ("Key Leasing"), a division of KCCI, approximately $31 million in telecommunications and other equipment (the "Leased Equipment").
D. On October 30, 2002, KCCI filed its Motion to Compel Debtors to Assume or Reject Equipment Leases, including the Key Leases.
E. On December 5, 2002, the Debtors filed their Objection to the Motion of Key Corporate Capital Inc. to Compel Debtors to Assume or Reject Equipment Leases.
F. On January 15, 2003, this Court denied KCCI's Motion to Compel without prejudice.
G. On April 30, 2003, WorldCom filed a Notice of Rejection for one of the Key Leases.
H. On June 23, 2003, KCCI and WorldCom entered into a settlement whereby WorldCom agreed to purchase from KCCI the Leased Equipment on the terms set forth in the attached Settlement Agreement (the "Settlement Agreement").
I. On October 8, 2002, this Court signed the Order Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code and Bankruptcy Rule 9019(b) Authorizing the Establishment of Procedures to Settle Certain Prepetition and Postpetition Claims (the "Settlement Procedures Order").
J. The Settlement Procedures Order authorizes the Debtors to settle certain matters, including those involving the Key Leases, upon limited notice to the following parties: the U.S. Trustee, the attorneys for the Corporate Monitor, the attorneys for the postpetition lenders, the U.S. Attorney's Office and the attorneys for the Creditors' Committee (collectively, the "Notice Parties"). If no objection to the proposed settlement is received from the Notice Parties within ten days of notice, the Settlement Procedures Order provides that the proposed settlement will be deemed authorized without further order of this Court.
K. On June 18, 2003, WorldCom gave notice of the proposed Settlement Agreement to the Notice Parties. There has been no objection in response to the notice.
L. The Settlement Agreement provides, among other things:
. . . the Debtors, their successors, assigns, heirs, agents, and attorneys hereby release and forever discharge KCCI and its respective officers, employees, shareholders, agents, representatives, attorneys, successors and assigns from and against all actions, causes of action, claims, suits, debts, damages, judgments, liabilities, and demands whatsoever, whether matured or unmatured, whether at law or in equity, whether before a local, state or federal court or state or federal administrative agency or commission, and whether now known or unknown, liquidated or unliquidated, that the Debtors now have or may have had, or thereafter claim to have, on behalf of themselves, or any other person or entity, relating in any way to or arising out of the [Key] Leases.
Settlement Agreement, § 2.2 (the "Release").
M. The Release is intended to be binding on all Debtors, and WorldCom believes that it has authority to bind all other Debtors to the terms of the Settlement Agreement, including the Release.
N. Although the Settlement Procedures Order is sufficient to finalize the Settlement Agreement without a further order of the Court, out of an abundance of caution, KCCI seeks confirmation by and through this Stipulation that the Settlement Agreement is binding on all Debtors.
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among KCCI and the Debtors:
1. All of the Debtor parties that are not a party to the Settlement Agreement or the Key Leases are bound by the Release and the other terms and conditions of the Settlement Agreement.
2. This Stipulation may not be amended or modified except by subsequent agreement in writing signed by KCCI and WorldCom.
3. This Stipulation shall constitute the entire agreement between the Parties in respect of the subject matter hereof and shall supersede any previous negotiations, commitments and writings with respect to such subject matter.
4. This Stipulation shall be binding upon all successors and assigns of the Parties hereto.
5. This Stipulation may be executed in one or more counterparts, all of which shall be considered one and the same document.
6. KCCI and the Debtors represent that (x) this Stipulation (i) has been duly and validly authorized, executed and delivered by each such Party, and (ii) is the legal, valid and binding obligation of each such Party; and (y) each Party has full power and authority to execute, deliver and perform its obligations hereunder.