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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