ML032510879
| ML032510879 | |
| Person / Time | |
|---|---|
| Site: | Diablo Canyon  |
| Issue date: | 08/28/2003 |
| From: | Bane M Deutsche Bank Trust Co Americas, Kelley, Drye & Warren, LLP |
| To: | Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California |
| References | |
| 01-30923-DM | |
| Download: ML032510879 (6) | |
Text
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.9 10 11 12 13 14 MARK I. BANE
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ERIC R WILSON (CA State Bar No. 192220)
KELLEY DRYE & WARREN LLP 101 Park Avenue New York, New York 10178 Telephone:
(212) 808-7800 Facsimile:
(212) 808-7897 ROBERT C. SHIENFELD' REED SMITH CROSBY HEAFEY LLP 355 South Grand Avenue Los Angeles, California 90071 Telephone:
213) 457-8030 Facsimile:
(213) 457-8080 Attorneys for SATELLITE SENIOR INCOME FUND, SATELLITE SENIOR INCOME FUND II, and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Successor Administrative Agent UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION 15 16 17 18 19 20 21 22 23 24 25 26 In re:
PACIFIC GAS AND ELECTRIC COMPANY, a California corporation, Debtor.
Case No. 01-30923-DM Chapter:
I OBJECTIONS, PURSUANT TO 11 U.S.C.
§§ 1129(a)(1), 1129(a)(3), 1129(a)(7),
1129(a)(8), 1129(a)(11) 1129(b)(1), 1129(b)(2)
AND FED. R. BANKR. P. 9014, OF SATELLITE SENIOR INCOME FUND, SATELLITE SENIOR INCOME FUND II AND DEUTSCHE BANK TRUST COMPANY AMERICAS TO CONFIRMATION OF PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE FOR PACIFIC GAS AND ELECTRIC COMPANY DATED JUNE 27, 2003 Objection Deadline:- September 2, 2003 Time:
4:00 p.m. (Pacific Time)
Place:
235 Pine Street, 22 Floor San Francisco, California Judge:
Hon. Dennis Montali 27 28 Ia Admitted pro hac vice.
NYO1IWULSEt860242.4 Q*00I OBJECTION5 OF SATELLITE SENIOR INCOME FUND, SATELLITE SENIOR INCOME FUND I! AND DEUTSCHE BANK TRUST COMPANY AMERICAS TO PLAN OF REORGANIZATION
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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KELLEY DRYE &
WARREN LLP I PARKAV4Mt NDw YCMo NY 1M78 Satellite Senior Income Fund, Satellite Senior Income Fund II, as beneficial interest holders (together, "Satelite") and Deutsche Bank Trust Company Americas, as Successor Administrative Agent ("Deutsche," and together with Satellite, "Claimants'), under that certain reimbursement agreement dated May 1, 1996 (the "Rabobank ReimbursementAgreement"),
hereby submit their objections (collectively, the "Objections"), pursuant to sections 1129(a)(1),
1129(a)(3), 1129(a)(7), 1129(a)(8), 1129(a)(1 1), 1129(b)(1), and 1129(b)(2) of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (as amended, the "Bankruptcy Code")2 and Rule 9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), to confirmation of Plan of Reorganization Under Chapter 11 of the Bankruptcy Code for Pacific Gas and Electric Company, dated June 27, 2003 (as amended and modified, the "Plan') filed by the Pacific Gas and Electric Company as debtor and debtor-in-possession (the "Debtor"), PG&E Corporation
("PG&E Corp.," and together with the Debtor, "PG&E), and the Official Committee of Unsecured Creditors (the "Committee" and, together with PG&E, the "Plan Proponents").
CLAIMANTS' CLAIMS AGAINST DEBTOR AND THE TREATMENT OF SUCH CLAIMS UNDER THE PLAN Deutsche, as successor administrative agent,3 and Satellite, as beneficial interest holders, have general unsecured claims (as that term is defined in section 101(5) of the Bankruptcy Code) (collectively, the "Claims'>) against the Debtor, which include, but are not limited to, sums due and owing under the Rabobank Reimbursement Agreement and all agreements related to the Rabobank Reimbursement Agreement, including a letter of credit agreement (all such agreements collectively, the "ReimbursementAgreements"), together with fees, costs and expenses (the "ReimbursementAgreement Sums"), pre-petition interest on the Reimbursement Agreement Sums, post-petition interest on the Reimbursement Agreement Sums and compound interest on these amounts (collectively, "Claimants' Claims"). Under the Plan, 2
Unless otherwise indicated, all section references are to the Bankniptcy Code.
In addition to being the successor administrative agent, Deutsche is also a beneficial interest holder of Claims derived from and with respect to the Reimbursement Agreements (as defined below) and of other Claims based on similar reimbursement agreements by and between the Debtor and various entities.
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OBJECTIONS OF SATELUTE SENIOR INCOME FUND, SATELLITE SENIOR INCOME FUND II AND DEUTSCHE BANK TRUST COMPANY AMERICAS TO PLAN OF REORGANIZATION
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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27-28 KELLEY DRYE &
WARREN LLP 101 PARKAvEAe NEW YCFP.J NY 10178 Claimants' Claims are classified as Class 4(f) claims (Prior Bond Claims). See Plan at Article I, § 1.1. The Plan purports to leave Class 4(f) claims unimpaired (as that term is defined in Bankruptcy Code section 1124) by satisfying in cash the principal amount of the Class 4(f) claims and by calculating interest due on such Claimants' Claims at a fluctuating rate of interest without compounding. See Plan at Article 4, § 4.12.
CLAIMANTS OBJECT TO THE PROPOSED TREATMENT OF THEIR CLAIMS UNDER THE PLAN In no way limiting any of their Objections or waiving any of their rights or remedies at law or equity, Claimants dispute the proposed treatment of Claimants' Claims under the Plan. On March 27, 2002, the Court approved a settlement (the "Unsecured Claims Settlement") which established the minimum interest rate and interest calculation scheme that must be employed by the Debtor's estate in calculating payments due to unsecured creditors under the Plan. Notwithstanding the Unsecured Claims Settlement, under the Plan, the Plan Proponents fail to provide Claimants with the requisite treatment. Further, the Plan Proponents, as proponents of a plan of reorganization seeking to satisfy the financial obligations of a solvent chapter 11 estate, have failed to abide by all of their financial obligations to Claimants under the Reimbursement Agreements, the Bankruptcy Code, common law and at equity. Specifically, the Plan Proponents and the Plan fail to provide Claimants with (a) an appropriate rate of interest pursuant to the Unsecured Claims Settlement, (b) payment of all the agent's fees and expenses, including, but not limited to, reasonable attorneys' fees and expenses, and (c) an economic recovery that would have been realized by Claimants had the Debtor not filed for bankruptcy protection from its creditors.
Claimants assert that the failure of the Plan to provide the foregoing relief violates both the law of this bankruptcy case established by the Court through the Unsecured Claims Settlement, as well as the provisions of the Bankruptcy Code.4 Claimants' Objections are presented in summary, "bullet point" fashion pursuant to the Discovery Protocol and Trial Scheduling Order on the PG&EVOCC Plan of Reorganization signed by the Court on August 8, 2003 (the "Discovery Protocol) which provides at paragraph 4: "Objections to the PG&E/OCC Plan shall briefly state the grounds on which each objection is based in a manner which is sufficient to give notice to the proponents of the NYoJWRLSEAs6M242.4 3
OBJECTIONS OF SATELLITE SENIOR INCOME FUND, SATELLiTE SENIOR INCOME FUND IAND DEUTSCHE BANK TRUST COMPANY AJAERICAS TO PLAN OF REORGANIZATION
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OBJECTIONS Subject to the reservations set forth in this pleading, Claimants respectfully assert the following Objections to the Plan under the following sections of the Bankruptcy Code:
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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 KELLEY DRYE &
WARREN LLP I01PAW2AVENUE NEW YauMNY 10178 1129(a)(1) 1129(a)(3) 1129(a)(7)
Section 1 129(a)(1) is not satisfied because the Plan violates Bankruptcy Code sections 1122 and 1 123(a)(1), (2) and (4), (a) by failing to provide Claimants with (i) a fixed rate of interest, (ii) compound interest, (iii) payment of all fees and expenses, (b) by failing to make Claimants economically whole to the degree Claimants would be if the Debtor had not filed for bankruptcy protection, and (c) by providing for disparate treatment between Class 5 claims and Class 4(f) claims. The Plan also violates section Bankruptcy Code 365(cX2) by attempting to reinstate the Reimbursement Agreements and the Prior Bonds (as that term is defined in the Plan).
The Plan is proposed in bad faith to the extent that the Plan violates sections 1129(a)(1) and 1123(a)(1), (2) and (4) because the Plan (a) fails to provide Claimants with (i) a fixed rate of interest, (ii) compound interest, (iii) payment of all fees and expenses, (b) fails to make Claimants economically whole to the degree they would be if the Debtor had not filed for bankruptcy protection, (c) provides for unequal treatment of similarly situated creditors (holders of Class 5 claims and Class 4(f) claims) in a manner that violates the law of this bankruptcy case as established by the Court through its approval of the Unsecured Claims Settlement and is inconsistent with the underlying objectives and purposes of the Bankruptcy Code, and (d) purports to reinstate the Reimbursement Agreements and the Prior Bonds in violation of section 365(c)(2).
The Plan is further proposed in bad faith because (a) PG&E's representatives made representations to creditors regarding the treatment of unsecured claims under a plan of reorganization that are not contained in the Plan and (b) PG&E determined not to provide Class 5 treatment to holders of Class 4(f) claims because PG&E had adequate support for a plan and Class 4(f) was not needed to accomplish the necessary vote to support a plan.
The Plan fails to provide for the Claimants to receive (a) a fixed rate of interest, (b) compound interest, (c) payment of all fees and Plan of the nature of the objections, but shall NOT include a memorandum of legal or factual points and authorities or other discussion of the legal theories for the objection."
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OBJECTIONS OF SATELLrE SENIOR INCOME FUND, SATELLIE SENIOR INCOME FUND I AND DEUrSCHE BANK TRUST COMPANY AMERICAS TO PLAN OF REORGANIZATION
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9 10 11 12 13 14 15 16 17 18 19 20 21 expenses or (d) full economic recovery, ie., to be made whole to the same degree they would if the Debtor had not filed for bankruptcy protection and, therefore, Claimants will not receive property of a value, as of the Effective Date (as that term is defined in the Plan), that is greater than the amount they would receive if this solvent debtor were liquidated under chapter 7 of the Bankruptcy Code.
1129(a)(8) 1129(a)(1 1) 1129(b)(1) & (2)
The Claimants are impaired under section 1124 because the Plan (a) fails to provide Claimants with (i) a fixed rate of interest, (ii) compound interest, (iii) payment of all fees and expenses, and (b) fails to make Claimants economically whole to the degree they would if the Debtor had not filed for bankruptcy protection and, therefore, Claimants should have been given the opportunity to vote to accept or reject the Plan and the Court cannot confirm the Plan unless the "cramdown" provisions of the Bankruptcy Code are satisfied.
The Plan is not feasible as required by this section because, inter alia, the Plan provides for the reinstatement of the Reimbursement Agreements and the Prior Bonds (as defined in the Plan) in violation of section 365(c)(2).
The Plan discriminates unfairly and is not fair and equitable because the Plan (a) fails to provide Claimants with (i) a fixed rate of interest, (ii) compound interest, and (iii) payment of all fees and expenses, and (b) fails to make Claimants economically whole to the degree they would if the Debtor had not filed for bankruptcy protection and, therefore, Claimants will not receive property of a value, as of the Effective Date (as that term is defined in the Plan),
equal to the amount of their claims, and junior claimants and equity will receive or retain property on account of their claims.
In addition to the foregoing Objections, Claimants reserve the right to join in the objections to confirmation of the Plan filed by other holders of Claims and interests.
22 23 24 25 26 27 RESERVATION OF RIGHTS Claimants contend that the Objections are sufficient to give the Plan Proponents and all parties in interest notice of the nature of Claimants' Objections. The foregoing notwithstanding, Claimants reserve all of their rights to expand, amend, modify or supplement the Objections, and all procedural and substantive rights including, but not limited to, the right to submit a memorandum of legal or factual points under the Bankruptcy Code, the Federal Rules of NY0IW1LSEiA6242.4 5
OBJECTIONS OF SATELLrrE SENIOR INCOME FUND, SATELTE SENIOR INCOME FUND 1I AND DEUTSCHE BANK TRUST COMPANY AMERICAS TO PLAN OF REORGANZATION 28 KELLEY DRYE &
WARREN LLP 1M PAKAVENUE NEW YoM NY 1078
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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Civil Procedure, the Bankruptcy Rules, and the Discovery Protocol in connection with or related to the Plan or the bankruptcy case.
CONCLUSION For the reasons set forth herein, Claimants respectfully request that (a) the Objections be sustained, (b) confinmation of the Plan be denied, and (c) Claimants be awarded such other and further relief as this Court shall deem just and proper.
DATED: August 28,2003 KELLEY DRYE & WARREN LLP MARK I. BANE.
ERIC R. WILSON By Mark I. Bane Attorneys for SATELLITE SENIOR INCOME FUND, SATELLITE SENIOR INCOME FUND II, and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Successor Administrative Agent 28 KELLEY DRYE &
WARREN LLP 101 PAWAVENE NEW YomtNY 10178 NYO1I/WILSE/860242A 6
OBJECTIONS OF SATELLITE SENIOR INCOME FUND, SATELLITE SENIOR INCOME FUND U AND DEUTSCHE BANK TRUST COMPANY AMERICAS TO PLAN OF REORGANIZATION