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HomeMy WebLinkAbout1974-01-14 60 AB ORDER' � Y3 p/ , • 6a Aa F Introduced by Councilor CITY OF BANGOR (TITLE.) QDrbgrr, .Authorizing. City Manager. and. City. free surer -to -Sign _.. Pur hase, Sale and loan Agreement BY the City Council of the City o%Bangor: ORDERED, THAT the City Manager and the City Treasurer be authorized to sign a Purchase, Sale and Loan Agreement between the City of Bangor and Depositors Trust Company dated the 14th day of January, 1974 and that this agreement be certified as having the approval of the City of Bangor by its City Council, AND BE 7 FURTHER ORDERED that this agreement will terminate Immediately upon dental of the relief or action requested In application by the Trustee dated December 21, 1973, or on March 1, 1974 if such relief or action shall not have been granted by the Court and any order of the Court thereon has not become final by that date. )!!!�. 60 AB f IN CITY COU14, 197 ReceiCIL Januave 14, 1999 / . Received under following yeen¢ion o£ te:Pa by the orsiyes vote: 0 RDE R Councilors voting Resor gold a cc i, BigneySyeirS, ECouncil s voerson, Needham. Titley Council Councilors voting n Gass. Councilor us d f om voting. . the lor order" Belton excused the voting. 1`ye odor' AVLA¢.Qi4Y Mapagn=,y ,gitY Tre9§� to„ then PASSED by the a voting Yes o3' n0 vote: Bigamy,Ora voting yes: ,$ygn,{usoh; sale 6 Ipa�,A:)Y;, , Needhcci,am, Bigamy, CouDrencilor Henvoting Needham, Speirs. Councilor voting x no: Gass. Councilor xcu ed from aysent otin / Introduced and Councilor Bellow excused from voting. Y ��� CITY C 'G i 0000 Ln3�n�— PURCHASE, SALE AND LOAN AGREEMENT AGREEMENT made this 15th day of January, 1979, by and between DEPOSITORS TRUST COMPANY, a Maine banking corporation with a place of business at Augusta, Maine (hereinafter sometimes referred to as "DTC") and the CITY OF BANGOR, a body corporate and politic, located in the County of Penobscot and State of Maine (hereinafter sometimes referred to as "Bangor"). WITHESSETH: WHEREAS, DTC and Bangor entered into a Management Agree- ment dated August 11, 1972 covering interests in Bangor International Airport (BIR) formerly held by Trans -East Air, INC., (TEA) and pledged to DTC as collateral security for certain loans then in default with DTC now in possession as a secured creditor; and WHEREAS, on August 29, 1972, a Creditors Petition was initiated against Trans -East Air, Inc. resulting in a Chapter X proceeding under the Bankruptcy Act, which is currently pending; and WHEREAS, it now appears that the Chapter X proceeding may be concluded in the near future in a manner which appears acceptable to the parties, at least as to the major collateral held by DTC on TBA•s secured loans; and WHEREAS, DTC claims to be awed approximately $671,662.53 on account of its loans to TEA pursuant to said loan agreements, and WHEREAS, DTC and Bangor are both desirous of terminating said Management Agreement upon satisfactory conclusion of the Chapter X proceeding; and WHEREAS, the DTC desires to sell the major collateral it seised from Trans -East Air, Inc.; and WHEREAS, Bangor desires to acquire said collateral so as to become fixed base operator at Bangor International Airport, WHEREAS, Bangor also has certain rights under "Consent to Assignment of Trans -East Air, Inc. Lease to Depositors Trust Company" dated January 24, 1972, and WHEREAS, the parties desire to terminate the Chapter X proceedings of TEA to the extent that the proceedings affect the premises and operation of BIA and to terminate the management Agreement effective within thirty days after appropriate final decree is entered, and WHEREAS, the parties have negotiated a compromise with the Chapter X Trustee of many of the conflicting claims of the parties and the Trustee, and approval of said compromise by the Bankruptcy Court has been applied for by the Trustee by Application dated December 21, 1973, a copy of which is attached hereto as "Exhibit A", NOW THEREFORE, the parties agree: 1. On or before the closing data Bangor will render to DTC an accounting as to all turbo fuels pumped by Bangor pursuant to the terms of said Management Agreement as agent to DTC and pay to DTC: (a) An amount equal to nine -tenths cent (.009) per gallon of turbo fuels pumped in full satisfaction of DTC's claim to the proceeds received and accrued, but not paid to DTC through June 30, 1973 (but in no event shall this amount be less than $129,604.36 previously acknowledged by Bangor due to DTC and not paid by Bangor to DTC); and (b) All sums due on account of the Aircraft Conditional Sales Contracts and Floor Plan Loans, to the date of closing; and (c) An amount equal to nine -tenths cent ($.009) per gallon for all turbo fuel pumped by Bangor as -2- agent for DTC from August 1, 1973 to November 30, 1973, and an amount equal to five -tenths cent ($.005) Per gallon thereafter to the date of closing. 2. Upon termination of the Management Agreement and upon satisfaction by Bangor of its obligations under paragraph 1, DTC agrees to assign, transfer and convey to Bangor or its nominee upon the condition that Bangor will fulfill the obligations under- taken hereby in accordance with the terms hereof; (a) All of its interest in the proceeds of the Management. Agreement; and (b) All of its interest in and to the T&A -Bangor lease agreements and any assignments thereon held by DTC; and (c) All of its interest in and to the TEA -Exxon agreements and any assignments thereon held by DTC; and (d). All of its right, title and interest in the equipment, contract rights and all other assets seised from TEA excluding accounts receivable and aircraft, and (e) A general release of all liability Of Bangor to DTC ,order the Management Agreement. 3. DTC agrees to lend and Bangor covenants and agrees to pay to DTC the principal am of $457,395.16, less the amount paid by Bangor to DTC under Paragraph 1(c) above (the balance) with interest on the balance from July 1, 1973 at the rate of four and one-half percent (4 1/28) per annum, said balance and interest thereon to be amortized in monthly installments at the rate of nine -tenths cent ($.009) per gallon for all turbo fuels pumped by Bangor or its successor in operation at BIA during the months of May, June, July, August, September, October and November and -3- five -tenths cent ($.005) per gallon during the months of December, January, February, March and April, with the right of Bangor to prepay without penalty the whole or in part said balance; said monthly installments shall first be applied. to interest and the remainder to principal and shall commence on the 10th day of the month following the closing and continue on the 10th day of each month thereafter until the balance due hereunder and all accrued interest thereon shall be paid. 4. In addition, at closing and as part of the settlement of the Management Agreement from the proceeds of the Management Agreement, Bangor will reimburse DTC $7,565.00 for audited insurance premiums paid by OTC for liability insurance for the protection of OTC and Bangor October 6, 1972 - 73. 5. The am of $124,000.00 shall be paid to the TEA Chapter I Trustee: $2,324.00 from the proceeds of the Management Agreement, $40,559.00 from DTC and the balance of $01,117.00 by Bangor. 6. As a condition precedent to the OTC's obligations hereunder and to provide in part an adequate cash flow as and for a debt service cushion, Bangor agrees to renegotiate its current Hudson equipment lease along the lines currently under discussion between Bangor, DTC and Hudson. 7. Closing shall be held at a time and place mutually convenient to the parties on the tenth day after an Order of the Bankruptcy Court granting all of the relief sought in said Application of the Trustee becomes final, (if that day be on a Saturday, Sunday or holiday, the next working day thereafter) ("the closing date") or on such other day as the parties may agree, provided:, (a) That the content and effect of the order is satisfactory to both parties; (b) That Exxon Corporation (Exxon) enters into new -4- written agreements with the City covering the same subject matters as those which existed between Trans - East Air, Inc. and Exxon on August 12, 1972, upon terms, rights, privileges and obligations mutually acceptable W each of them; and (c) That, in addition, appropriate amendments satisfactory to Bangor and Exxon are to be made in agreements existing between Bangor and Exxon. 8. Parties agree to furnish each other certificates of approval of the foregoing as to Depositors Trust Company by its Board of Directors and as to the City of Bangor by its City Council. Bangor further agrees to provide DTC with the opinion of its counsel that the obligations undertaken by Bangor hereunder e the duly authorized and binding obligations by the City of Bangor. 9. This Agreement will terminate immediately upon denial of the relief or action requested in Application by Trustee, dated December 21, 1973, or on March 1, 1914f if such relief or action shall not have been granted by the Court or if any order of the court thereon has not become final by that date or if Bangor and Exxon have failed to enter into the agreements referred to in paragraphs ](b) and ](c) above. This Agreement shall be governed by the laws of the State of Maine. WITNESS WHEREOF, the parties hereto have executed this Agreement as an Agreement under seal in duplicate originals as of the day and year first above written. witness: CITY OF BANGOR By Its Treasurer DEPOSITORS TRUST COMPANY Its Executive vice Presltt -5- J EXHIBIT A IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF MAINE NORTHERN DIVISION In the Matter of In Proceedings for the Reorganization of a Corporation TRANS -EAST AIR, INC. Under Chapter X No. BE72-251ND Debtor. APPLICATION BY TRUSTEE TO COMPROMISE CONTROVERSY. WITH CITY OF BANGOR WITH REGARD TO ITS APPLICATION TO VACATE STAY ORDER AND FOR ORDER AUTHORIZING LESSOR TO ENTER LEASED PREMISES AND REPOSSESS AND ENJOY SAME AS IF LEASE HAD NOT BEEN MADE To the Honorable Edward T. Gignoux, Judge of the United States District Court for the District of Maine: The application of Edward H. Reith respectfully represents: 1. A petition for the reorganization of Trans -East Air, Inc., said debtor, pursuant to Chapter X of the Bankruptcy Act, was approved on October 4, 1972., 2. On October 13, 1972 your applicant was appointed Trustee of said debtor and qualified on October 16, 1972 and is now acting as such trustee, 3. The trustee has received proposals from several parties concerning a proposed plan relating to the reorganization of the corporation. All of the proposals received relate to a sale of assets by the estate and no proposal has been received whichwould ,result in reorganization of the present corporation. d. The City of Bangor filed an Application To Vacate Stay 'Order And For Order Authorizing Lessor To Enter Leased Premises And Repossess And Enjoy .Same As If Lease Had Not Been Made, to which application an answer was filed by the trustee. In its application the city asserts a right to terminate the lease between it and the Corporation covering the facilities at the airport pursuant to certain provisions contained therein relating to the effect of bankruptcy or the appointment of a receiver of the Corporation's property. This matter is. pending on the docket of this Court. S. The trustee has received from the City of Bangor an offer to compromise the controversy arising out of its said application, a Copy of said offer in compromise being attached hereto. 6. .Under the proposed compromise the trustee would receive a payment of $124,000.00 in cash, less $2,324.00 which is the amount to be paid to the appraiser retained by the trustee. An order would be entered allowing the city's application to vacate stay order and for order authorizing lessor to enter leased premises and repossess and enjoy same as if lease had not been made, and the city would then repossess all of the facilities at the airport covered by the leases to the Corporation. The trustee would dis- claim any interest in the equipment covered by the security. agreement between the Corporation and Depositors Trust Company and reject the Aviation Agency Agreement and Aviation Products Sales Agreement dated July 16, 1969 between the Corporation and Humble Oil and Refining Company (now Exxon Corporation); provided, however, that Exxon Corporation shall agree to withdraw its secured claim against, the Corporation and to release it from any claim for damages arising out of the rejection of said agreements.. The Depositors Trust Company will withdraw its claim arising out of its loans made to the Corporation on January 25, 1972 and May 23, 1972 and the City of Bangor will withdraw all of its proofs of claim, except those relating to unpaid taxes and to port and landing fees not paid over to the city although collected by the Corporation, which claims are filed in this court' under numbers 84, 115 and 117. 7. The city will retain the surplus earned in the operation at the airport since August 12, 1972 and will assume all outstanding obligations incurred since that data. Neither the City nor Deposi- tors Trust Company will file any claim against the estate for any expenses incurred by either of them in the nature of administrative costs or costs of preservation of assets of the estate. The city will make a payment to Depositors Trust Company equal to $.009 per gallon of turbo fuel sold from August 12, 1972 to June 30, 1973. This is estimated to amount to about $194,482.57. 0£ this amount $64,878.00 has been previously paid by the city to the bank under the management agreement between them as fuel pumpage fees through October 1972, which payment has been credited by the bank on the _ amount due from the Corporation on the two loans. This would leave abalance of approximately $129,604.36 to be paid by the city to the bank in cash at this time. The balance of the bank's claim after deducting the additional payment to be made at this time would amount to about $536,962.58 as of November 30, 1973 according to the bank's figures, including interest, expenses and attorneys fees. Of this balance the city has agreed to pay the bank a total of approximately $458,000.00 over a period of time, together with interest on the unpaid balance of said sum from July 1, 1973, this payment to be calculated according to a formula calling for the payment of set sums for each gallon of turbo fuel sold by the city in the commercial aviation operation. 8. The trustee has received an appraisal of the operation conducted by the Corporation at the airport. A value has been placed upon this operation as a going concern. The value as placed upon the Corporation by the appraiser would not be sufficient to pay all of the secured claims as filed if the bank's claim is found to be secured. It would appear that the. bank is secured with regard to the - assignment of accounts receivable, amounts becoming due under the Humble Oil Aviation Agency and Fuel Sales Agreement and with regard to the equipment used in the Corporation's operation at the airport. If the application of the city to reenter the premises was resolved in favor of the city it would appear that there would be few assets. remaining in the estate and such assets as did remain 'would be of limited value. The trustee in his report regarding plan of reorganization dated December 21, 1973 has set forth his comments regarding certainproposals made to him by other parties. The present business situation at the airport is complicated by the uncertainties concerning the availability of fuel. The business formerly conducted at the airport by the Corporation is to some degree speculative in that the majority of the business arises out of fuel sales and services to four or five large cus- tomers and the loss of any one or two of them would have a tremen- dously adverse effect upon the situation. The trustee is of the opinion that it is not feasible to reorganize the present corporation and that any plan would have to involve a sale of assets and an ultimate liquidation of the Corporation. If the litigation with the city was resolved in Favor of the trustee it would appear that the amount which could reasonably be assumed to be obtainable by sale of such assets would not pay all of the secured claims if the claims as filed were found to be secured. The trustee is of the opinion that the prospect of the litigation with the city being resolved in his favor is subject to doubt and would probably not be more than an even chance. Additionally the litigation necessary to finally adjudicatethe interests of the city, the bank and Exxon Corporation would be lengthly and in view of the fact the fuelo- supply contract has about five years to run such a passage of time , would erode the value of the property to a considerable extent. .Taking into account these various factors and in particular the risks of litigation the trustee is of the opinion. that the offer in compromise attached hereto is an equitable settlement and taking into account the interests of all creditors, both priority and unsecured, it is in the best interests of the creditors. 9. The trustee is willing to compromise the controversy with the City of Bangor upon the terms set forth above and recommends it. WHHHBFOHH the trustee prays that this Honorable Court approve the compromise of said controversy upon the terms herein set forth. Dated: December 21, 1973. Trustee