HomeMy WebLinkAbout2000-11-27 01-41 ORDERItem No. n - r
Date: November 22 2000
Item/Subject ORDER, Authorizing City Manager to Execute Settlement Agreement
-- Business Express, Inc.
Responsible Department: Legal
In 1996 Business Express was forced into Chapter 11 Bankruptcy. In 1997 the Cre llwhs Trustee filed a
complaint alleging that Me City had received preferential payments, flaw not made in the ordinary
course of business or according to ordinary business terms, which resulted in a finandal detriment to the
bankrupts estate and other creditors. Byte complaint the Creditor's Trustee sought W recover
approximately $39,000 In payments received by the City.
At the time of the filing of the bankmp" the City had a daim of $109,000. The bankruptcy plan
approved by the Court provides for payment of 20% all unsecured claims. This is actually more man we
often get in these cases. We have negotiatetl a compromise on the amount claimed by the Creditor's
Trustee as a preferential payment to about half of the $39,000 originally sought. This settlement
agreement memorializes that compromise.
The Finance Committee recommended approval at its meeting held on November 20, 2000.
Department Head
City Manager
Associated Information: SettlemaH Agreement
Budget Approval:
Mnance Director
Legal Approval:
City Solicitor
XvirPassageueEd ror
_First Reading Page 1 of 9
Referral
^.� Assignetlw Coorreilor ParnM1am November 27. 2000
C .v
CITY OF BANGOR
MILE.) ORDER, Authorizing City Manager to Execute Settlement Agreement
-- Business Express, Inc.
By to 0fy Cor 0 ofine Cry Ofaermar:
ORDERED,
WHEREAS, there Is currently pending litigation brought by the Credhors' Committee
In the Bankruptcy Court which seeks to recover money paid to the City of Bangor by
Business Express, Inc; and
WHEREAS, the City has also Bled a claim in Bankru" Court for money allegedly
due from Business Bcpress, Inc; and
WHEREAS, creditors will not receive 100% of their claims through the Bankruptcy
proceedings; and
WHEREAS, a compromise of the litigation is In the best interest of all parties
concerned,
NOW, THEREFORE, By the City Council of the City of Bangor:
ORDERED, THAT the Cily Manager Is hereby authorized, on behalf of the City of
Bangor, to execute a settlement agreement with the Creditors' Trust of Business
Express, Inc. in a form substantially the same as that attached hereto.
m CITE MWI1
Awent et 27. 2000
Passed
CI CL88E
01-61
ORDER
Title, Auehortising city Banger to
execute Settlement Agreement - Business
express. Int.
Assigned to
N kv FdLA�
Councilor
SETTLEMENT AGREEMENT
This Settlement Agreement is made this_ day of�
between Stephen S. Cray, Creditors' Trustee of the Business Express, Inc. Creditors'
Trust (which trust is hereinafter referred to as the "Creditors' Trust') established pursuant
to the Second Amended Joint Plan of Reorganization of Business Express, Inc. and Saab
Aircraft of America, Inc., Enthrone Leasing, Inc. and Saab Aircraft Credit AS,
confirmed April 15, 1997 (the `Plan") and City of Bangor having a piece of business at
73 Harlow Street, Bangor, Maine 04401.
RECITALS
WHEREAS, on January 22,1996 (the "Petition Date"), Saab Aircraft of America,
Inc., Paidarook Leasing, Inc. and Saab Aircraft Credit AB filed an involuntary Reunion in
the United States Bankruptcy Court for the District of New Hampshire against Business
Express, Inc. (the "Debtor") intrinsic to Chapter I I of the United States Bankruptcy
Code (the "Code') and thereby commenced Case No. 96-10130-JEY (the `Bankruptcy
Case"); and
WHEREAS, on April 15, 1997 the Court entered an Order Confining Second
Amended Joint Plan of Reorganization (the "Confirmation Order) by which it confirmed
the Plan; and
WHEREAS, under the Plan and the Confirmation Order, the Creditors' Trust was
organized by Declaration OPTrust dated May 22,1997 in order to liquidate and distribute
chain assets for the benefit of the Debtor's general unsecured creditors; and
otr2
WHEREAS, the Creditors' Trust was vested with, among other things, all right,
title and interest in causes of action held by the estate to avoid and recover pref nfial
transfers pursuant to §547 of the Cade; and
WHEREAS, upon investigation of the Debtor's books and records, the Creditors'
Trustee determined that the Creditors' Trust held alleged prA ence clams against the
City of Bangaq and
WHEREAS, on or about October 13,1997 the Creditors' Trustee commenced
adversary proceeding No. 9]-01190-1 V (the "Adversary Pmceediag'7 by filing
Complaint To Avoid And Recover Preferential Transt'ers (the "Complaint") against City
of Bangor in order to recover alleged preferential transfers in the amount of $38,906.78;
and
WHEREAS, City of Bangor has filed an Answer To Complaint To Avoid And
Recover Preferential Transfers in which it has restated certain statuary defenses to the
Complaint pursuant to Cade §§547(c)(2) and 547(c)(4); and
WHEREAS, the paries have agmed to resolve the preference claims asserted by
the Creditors' Trustee under the terms and conditions set fonh herein, which the parties
believe achieve the same result as would be achieved if the preference issues and City of
Bangor's defenses thereto were fully litigated.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Creditors' Trustee and City of Bangor
hereby agree as follows:
I. CONSIDERATION.In hall satisfaction of my liability of City of Bangor
to the Creditors' Trustee far prepetition avoidable preferential traysfus which were
-2-
ot-u
alleged, or could have been alleged in the Complaint, City of Banger hereby agrees in
waive $92,704.00 of its allowed general unsecured claim (which allowed claim totaled
$109,196.26) and to forego any distribution from the Creditors' Trust which it would
have otherwise have been entitled to under the Plan on account of the waived portion of
such allowed claim City of Bangor and the Creditors' Trustee agree and acknowledge
that this settlement is without prejudice to the balance of City of Bangor's allowed
general unsecured claim (i.e. $16,492.26) (the "Allowed Unsecured Claim Balance
which shall be paid pursuant to the terms of the Plan from the assets of the Creditors'
Trust. City of Bangor agrees and acknowledges that it shall not be entitled to any further
claim against the Debtor's bankruptcy estate as a result of it having waived a portion of
its allowed general unsecured claim as consideration for settlement of the Creditors'
Trustee's alleged preference claim.
2. DISNIISSALOFADVER YPROCEEDB G. Uponreceiptofan
executed copy ofthis Settlement Agreement and payment of the som set forth in Section
1, the Creditors' Trustee shall forthwith file a stipulation of dismissal in form and
substance mutually acceptable to the patties dismissing the Adversary Proceeding with
prejudice.
3. RELEASES. In consideration of the mutual inventors contained herein,
and for other good mod valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
3.1. Releassof ChvofBaneor. The Creditors' Tmetce hereby releases,
remises suit forcer discharges City of Bangor, its attorneys, agents, successors and
assigns from all debt%demands, actions, causes of action, suits, accounts, cavernous,
-3-
contracts, agreements, damages and all claims and liabilities of every demure heretofore
unsung, with respect to preferences or other avoidable transfers, including, without
limitation, any and all chains the Creditors' Trustee has asserted or mould have asserted
against City of Bangor in the Complaint.
3.2. Release of She Creditors'Trustee. City of Bangor hereby releases,
remises and forever discharges the Creditors' Trustee, the Creditors' Trust and the
Debtor's bankruptcy estate, their attorneys, agents, successors and assigns from aR debts,
demands, actions, causes of action, suits, accounts, cevernmmv, contracts, agreements,
damages and all claims mad liabilities of every nature heretofore arising, provided
however, that City of Bangor does tot release the Creditors' Trustee and the Creditors'
Trust Got the Creditors' Trust's obligation to make a distribution to City of Bangor on
accoart of its Allowed Unsecured Claim Balance pursuant to the terms of the Plan.
4. REPRESENTATION AND WARRANTIES. The parties to this
Agreement hereby represent, warrant and agree as follows:
4.1. Leeal Advice Each party received independent legal advice from
its attorneys with respect 10 the advisability of making the settlement provided for herein
and with respect to fie advisability of making this Agreement.
4.2. Review ofArrmement Each party acknowledges that it has read
this Agreement and uvders[eMs the contents hereof.
4.3. No Assignment- Each party has not herebfore assigned,
transferred, or greeted or purported to assign, transfer, or great any of the claims, rights,
demands or causes of action disposed of by this Agreement.
<-
ot-4I
4.4. Forgoer Assurances. Each party shall execute all further additional
documentation which is reassembly required to carry out the provisions of this
Agreemen.
4.5. Due Authority. The undersigned hereby warrant and represent that
they are duly authorized to execute this Agreement on behalf of the parties hereto.
5. MISCELLANEOUS.
5.1. Choice of law. This Agreement shall be deemed to have been
executed and delivered within the State of New Hampshire, and to the extent nate law
applies, the rights and obligations of the parties hereto shall be consrued and enforced in
accordance with, and governed by, the laws of the Some of New Hampshire.
5.2. Entire Anreement. This Agreement is the entire agreement among
the parties with respect to the subject molter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions. This Agreement may be
amended only by a signed agreement in writing.
5.3. Parties Bound. This Agreement is binding upon and shall inure to
the benefit of the parties hereto, their respective assigms, hems and successors in interest.
5.4. Construction, In any construction to he made of this Agreement,
the same shall not be wnstruN against any party.
5.5. Csuntenarts This Agreement may be execmed in counterparts,
and when each party has signed and delivered at least one such counterpart, each
counterpart shall be deemed an original and, when taken together with other signed
counterparts, shall constitute one agreement, which shall be binding upon and ci festive as
an all parties.
-5-
5.6. Time is Of The Essen Each obligation of each party under this
Agreement is material, and time shall be of the essence with respect to each such
obligation.
5.7. Costs Each of the parties agrees that it shall bear its own costs
incurred in connection with the Adversary Proceeding, the settlement thereof and the
preparation and execution of this Agreement.
S.S. Validity ofPro"' In the event that any one portion of this
Agreement (other than the payment obligation and releases) shall be determined to be
unenforceable by a Court of competentjurisdiction than the remaining portions shall
remain enforceable in accordance with their terms as if the unenforceable provisions were
never contained within this Agreement
5.9. Headings. The section headings used throughout this Agreement
are for orgarumtioosl purposes only and shall not be construed w have substantive
meanings.
5.10. Sgrdidential The terms of this Settlement Agreement are
confichanial and may only be disclosed m thud parties upon prior written approval of
each party hereto or upon disclosure as required by order of a Court of competent
jurisdiction.
-6-
This document is executed as a document under seal as of the date first written
above.
WITNESS:
nuw.�.u�ueiwn-M*au.00c. loan
q.
BUSINESS EXPRESS, INC.
CREDITORS'TRUST
By: Stephen S. Gray, Creditors' Tmstee
CITY OF BANGOR