Opinion
Case No. 02-13533 (AJG), Jointly Administered
August 26, 2003
Alfredo R. Perez, Marcia L. Goldstein, Esq. (MG 2606), Lori R. Fife, Esq. (LF 2839), WEIL, GOTSHAL MANGES LLP, New York, NY, for the Debtors and Debtors in Possession
Peter A. Zisser, Elaine Kaplansky, Esq. (EK 5273), Stephen E. Bogorad, Esq., Richard E. Lear, Esq., HOLLAND KNIGHT LLP, New York, New York for Veritas, LLC, Red New York E Partnership, and Red Memphis F Partnership
This Stipulation and Order ("Stipulation") is made as of this 26th day of August, 2003, by and between WorldCom, Inc. ("WorldCom") and certain of its direct and indirect subsidiaries, as debtors and debtors in possession (collectively, the "Debtors") and Veritas, LLC, Red New York E Partnership and Red Memphis F Partnership (collectively, "Veritas"), by their respective undersigned counsel.
Pursuant to this Stipulation, the Debtors and Veritas hereby agree and stipulate as follows:
RECITALS
WHEREAS, on July 21, 2002 (the "Commencement Date") and November 8, 2002, the Debtors commenced cases under chapter 11 of title 11 of the United States Code (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. By order dated July 22, 2002 and subsequent orders, the Debtors' chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered;
WHEREAS, on May 9, 2003, the Debtors filed their Motion Pursuant to Sections 105, 107, 362, 363, 365, and 1146(c) of the Bankruptcy Code and Rules 6004(g), 6006(d) and 9018 of the Federal Rules of Bankruptcy Procedure for Entry of (I) Order (the "Auction Procedures Order") (A) Establishing Procedures For Debtors' Proposed Auction of Certain Assets Utilized for the Provision of Wireless Telecommunications Services via MMDS, MDS, WCS, and ITFS Spectrum, (B) Approving "Break-Up Fee" and Expense Reimbursement Arrangements With Proposed Purchaser, (C) Establishing Date and Time for Sale Hearing, (D) Approving the Filing Under Seal and Maintaining of Confidentiality of Certain Confidential Schedules to Asset Purchase Agreement, and (E) Approving Form and Manner of Notices and (II) Order (the "Sale Order") (A) Approving the Terms and Conditions of Asset Purchase Agreement for the Sale of Certain Assets Utilized for the Provision of Wireless Communications Services via MMDS and Related Spectrum, (B) Authorizing the Sale of Assets Free and Clear of All Liens, Claims and Encumbrances, and (C) Authorizing and Approving the Assumption and Assignment of Certain Executory Contracts and Unexpired Leases in Connection Therewith;
WHEREAS, Veritas and WorldCom Broadband Solutions, Inc. ("WBS"), a Debtor herein, are parties to four (4) certain leases identified in the Motion for Reconsideration (defined below) as the Boston Lease, Washington Lease, Memphis Lease, and New York Lease (collectively, the "Leases");
WHEREAS, on July 22, 2003, the Court entered the Order Pursuant to Sections 105, 363, 365 and 1146(c) of the Bankruptcy Code and Bankruptcy Rules 6004(g) and 6006(d)(A) Approving the Terms and Conditions of Asset Purchase Agreement for the Sale of Certain Assets Utilized in the Provision of Wireless Communications Services Via MMDS and Related Spectrum, (B) Authorizing the Sale of Such Assets Free and Clear of Liens, Claims and Encumbrances, and (C) Authorizing and Approving Assumption and Assignment of Executory Contracts and Unexpired Leases in Connection Therewith (the "Sale Order");
WHEREAS, pursuant to the Sale Order, the Debtors are authorized to assume and assign certain contracts and leases identified on Exhibit "A" to the Sale Order, including the Leases. Under the terms of the Sale Order, payment of the cure amounts set forth on Exhibit "A" to the Sale Order is deemed to constitute, under section 365 of the Bankruptcy Code, full, complete and final satisfaction of the Debtors' obligation to cure all defaults under such contracts and leases and to compensate for any actual pecuniary loss resulting from any such default, and no other amounts are or shall be due to the non-Debtor parties in connection with the assumption by the Debtors and assignment to the purchaser of such contracts and leases;
WHEREAS, Veritas has filed a Motion for Reconsideration of the Sale Order (the "Motion for Reconsideration"), asserting that the Sale Order should be revised so as to, inter, alia, provide that the Sale Order (i) does not absolve Debtors of their obligations to cure post-petition defaults under the Leases that occurred after Debtors sent the notice of proposed cure amounts on May 9, 2003, and (ii) does not conclusively establish, as the amounts set forth in Exhibit A to the Sale Order, the cure amounts that must be satisfied in connection with an assumption of the Leases between Veritas and WBS;
WHEREAS, the Debtors reserve the right to dispute the amount required to cure defaults, if any, under the Leases asserted by Veritas;
WHEREAS, the Debtors reserve the right to dispute the amount of damages, if any, that would arise from the Debtors' rejection of the Leases.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged, the parties hereto stipulate and agree as follows:
1. Upon the entry of this Stipulation by the Court and subject to the provisions of this Stipulation, Veritas shall withdraw the Motion for Reconsideration, with prejudice, except as set forth herein.
2. Notwithstanding any provision in the Sale Order to the contrary, the cure amounts set forth in Exhibit A to the Sale Order do not conclusively establish the cure amounts for the Leases, and the Sale Order does not absolve or release Debtors from their obligations to cure any post-petition defaults under the Leases or to make any post-petition payments required under the Leases.
3. In the event that the Debtors elect to assume, or assume and assign, one or more of the Leases, (a) the parties shall attempt to reach an agreement on the amount of the payment necessary to cure any default under each of the Leases assumed and, if they are unable to do so, the Bankruptcy Court for the Southern District of New York shall determine such cure amount, if any, provided, however, that the failure of Veritas to object to any of the cure amounts set forth in Exhibit A to the Sale Order shall not be considered by the Court in any dispute as to the amount necessary to cure any defaults under any of the Leases assumed by the Debtors, provided, further, however, that any cure required to be provided shall be subject to all provisions of the Bankruptcy Code and subsequent orders of this Court.
4. Notwithstanding any provision of the Sale Order to the contrary, Veritas' claims, if any, for post-petition payments due under any of the Leases shall not be released, discharged or enjoined in any fashion by the entry of the Sale Order or this Stipulation, and Veritas shall have the right to file a motion seeking post-petition payments under any of the Leases as an allowed administrative claim and/or pursuant to section 365(d)(10) of the Bankruptcy Code, and the Debtors shall have the right to oppose any such motion; provided, however, that the failure of Veritas to object to any of the cure amounts set forth in Exhibit A to the Sale Order shall not be considered by the Court in adjudicating any such motion or opposition thereto.
5. This Stipulation is entered without prejudice to Veritas' right to file a claim arising from the rejection of the Leases, nor shall it be construed to be a waiver by any of the Debtors or any other parties in interest of any right to object on any grounds to any claims or proofs of claim filed or to be filed by Veritas, including a claim arising from the rejection of the Leases.
6. Nothing herein shall be construed to affect the claims or priorities of creditors other than Veritas in these bankruptcy proceedings. IT IS SO ORDERED.
IT IS SO ORDERED.