ML20011E557

Forwards Us Bankruptcy Court for Eastern District of Tennessee Orders & Memorandum on Debtors Motion to Alter or Amend Order & Opinion Re Status of Sales Agreement Between DOE & Alchemie.Doe Believes Agreement Expired on 890821

ML20011E557
Person / Time
Site:	05000000, 05000603, 05000604
Issue date:	02/08/1990
From:	Hall J ENERGY, DEPT. OF
To:	Swift J NRC
References
NUDOCS 9002160084
Download: ML20011E557 (16)

Text

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Department of Energy bb

.j .g Oak Ridge Operations P.O. Box 2001 -

%y g. Oak Ridge. Tennessee 37831- 8510 February 8, 1990 t

Mr. Jerry J. Swift U.S. Nuclear Regulatory Commission Mail-Stop 6H3' Washington, D.C. -20555

Dear Mr. Swift:

ALCHEMIE You have asked the Department of Energy (DOE) to apprise the Nuclear Regulatory Commission of the status of the Sales Agreement (Contract No.

DE-R005-880R21776) between DOE and A1ChemIE.

Modification No. M017 extended the term of the Sa's: Agreement to August 15, 1989. There have been no subsequent momications to the contract. On August 16, 1989, the U.S. Bankruptcy Judge issued an Order.

denying a motion by AlchemlE for the Court to extend the term of the contract. On October 24, 1989, the Court modified its order slightly to hold that, due to subsequent events, the contract was in effect until

-August 21, 1989. .By letter dated August 16, 1989. DOE advised Anderson County Bank that the contract had expired by its own terms on August 15,

=1989, and was not extended.

As reflected in Modification No. M017, the Orders of the Bankruptcy Court, and DOE's letter to Anderson County Bank, it was and continues to be DOE's position that the Sales Agreement between DOE and AlchemIE expired as of August 15,- 1989, or no later than August 21, 1989.

All _of. the above, however, is moot since AlChemlE has been in a liquidating Chapter 7 since October 20, 1989, and is no longer in business. The Chapter 7 trustee is in the process of selling AlChemIE's assets.

Sincerely, M

James C. Hall Assistant Manager for Enrichina Operations

Enclosures:

Modification No M017 ((

L Order, dated 8/16/89 Order, dated 10/24/89 l Letter, dated 8/16/89, Lynch to Griffin .

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Department of Energy  :

A Oak Ridge Operations

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CONTRACT NO. DE R005 880R23776 MODiflCAT10N NO. M0l? -

July 14, 1989 Mr. Stephen A. Irving Chairman, Board of Directors AlChem1E Corporation Pine Ridge Office Park i Suite 202-B 702 South Illinois Avenue Oak-Ridge, Tennessee 37830 '

Dear Mr. Irving:

EXTENSION OF CENTRIFUGE EQUIPMENT AGREEMENT AND BILL OF SALE

.This modification is made in order to extend the termination date of the contract in paragraph 4.c. from July 34, 1989 to August 15, 1989, to allow time for DOE to review AlchemIE's proposal dated June 30, 1989 and for A1ChemlE to complete certain contract requirements.

", If this modification is acceptable to you, please indicate your

- acceptance in the space provided below and return one copy to this office.. .

Sincerely, UNITED STATES OF AMERICA BY: SECRETARY OF ENERGY-BY: ,

LLUY f'~ l TITLE: CotRRActN3 c.:nc! g ACCEPTED:

AlchemIE, Inc.

BY: Ca. J.,t TITLE: [d6

} DATE: 7/ / 7 / 9C1

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IN THE UNITED STATES' BANKRUPTCY COURT FOR THE EASTERN- .]

DISTRICT OF TENNESSEE 1 In re .

Case No. 3-89-01695 L 1 ALL CHEMICAL ISOTOPE s ENRICHMENT, INC.

l-a/k/a ALCHEMIE, INC. - 1 i

Debtor l I

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ORDER l ..

l This matter came on for an expedited hearing on 1

the 15th day of August, 1989, on the " Motion To Extend h

The Termination Date of A. Contract" filed, by the debtor , 1 on August. 11, 1989; upon the " opposition of United-l l States To Debtor's ' Motion To Extend The- Termination  ;

Date Of A Contract" filed August- 15, 1989; and the l-court, at the close of the evidence, having' stated

. orally in open court findir.gs of fact and conclusions of law as . required by Fed. R. Bankr. P. 7052; it is-t accordingly ORDERED that the debtor's " Motion To Extend.

The Termination Date of A contract" shall be and is DENIED.

t ENTER: August 16, 1989 BY THE ,

e' 4 RICHARD ST .R, JR.

United States Lankruptcy Judge esp des

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" IN THE UNITED STATES BAN'tRUPTCY COURT FOR THE EASTERN DISTRICT OF TENNESSEE 4

In re Case No. 3-89-01695 ,

ALL CHEMICAL ISOTOPE ENRICHMENT, INC.

a/k/a ALCHEMIE, INC.

Debtor i

1 ORDEB In accordance with the Memorandum .. led this date, the debtor's " Motion To Alter Or Amend An Order An

[ sic] Opinion" filed August 25, 1989, it granted in 1

part and. denied in part. It is accordingly ORDERED as follows:

1. The .4emorandum Opinion dictated by the cour t orally from the bench at the conclusion of the hearing held August 15, 1989, on the_ debtor's " Motion To Extend The Termination Date Of A Contract" is AMENDED- in the manner set forth in ~ the Memorandum accompanying thi9 Order.

2. The debtor's " Motion To Alter Or Amend An Order An [ sic] Opinion" is DENIED insofar as the debtor hh h -

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ii . . requests the court ~ to alter or amend its order of August 16, 1989~.

ENTER: ~ October 24, 1989, BY THE COURT

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RICHAR/ STAIR, A

JR.

United States Bankruptcy Judge l

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U.S. ATTY EDTN PAGE.OR- l

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF TENNESSEE l

In re i

,M Case No. 3-89-01695 ALL CHEMICAL ISOTOPE ENRICHMENT,.INC. [

a/k/a ALCHEMIE, INC.

Debtor l

MEMORANDUM ON DEBTOR'S MOTION TO ALTER. l OR AMEND AN ORDER AND OPINION .

APPEARANCES: Heiskell, Donelson, Beatman, Adams, '

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Williama & Kirsch David E. Fielder, Esq. j Suite 600, Plaza Tower i

Knoxville, TN 37929 Attorneys for Debtor John W. Gill, Jr., Esq. l United States Attorney Pamela G. Steele, Esq.,

Assistant United States Attorney l

P.O. Box B72 j Knoxville, TN 37901  !

Attorney for United States of America RICHARD STAIR, JR.

UNITED STATES BANKRUPTCY JUDGE I

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t The'debtr>r on August 25, 1989, filed a " Motion To Alter or Amend An order An [ sic) Opinion" (Motion). By ,

Motion the debtor seeks an order altering this L' amending findings of fact and conclusions of law >

dictated f rom the banch (Memnrandum Opinion) at the-conclusion 'of a hearing held August 15, 1989.1 The debtor _ also requests the court to al.te r or amend its ,

Order _ emanating from the August 15 hearing which was entered August 16, 1989. The August 16 Order denied a motion of the . debtor requesting an extension of time to -

" Centrifuge Equipment Agreement And perform under a Bill Of Sale" ( Agreement) executed by it and the United 4

States- Department of Energy (DOE) on November 20, 1987.

The debtor's motion, filed August 11, 1989, sought an order extending the sixty-day period provided under 11 .

U.S.C.A. S 108(b) (West Supp. 1989).2 4

1 1 The Memorandum Opinion was transqribed and filed s August 21, 1989, "nunc pro tunc-for August 15, 1989."

2 Bankruptcy Code 5 108(b) provides: ,

(b) Except as provided in subsection herein),

(a) of this section (inapplicable if order applicable nonbankruptcy law, an entered in a nonbankruptcy proceeding, or an agreement fixes a period within which the (Footnote Continued)

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The ' court , in its Memorandum opinion, found that DOE, a ' governmental unit" as defined . under 11' U.S.C. A.

6 10)(26) (West Supp. 1989), had - not filed a proof of claim and had not, therefore, waived sovereign immunity U.S.C.A. 106(a) (West 1979), The court under 11 S l

f urther concluded that in the absence of a waiver of provided under 5 106(a), ]

sovereign immunity as 4

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debtor or an individual protected under section 1201 or 1301 of this title may. file any pleading, demand, notice,. or proof of claim or loss, cure a default, or perform any other similar act, and such period has not L

expired before the date of the filing of the i petition, the trustee may only file, may be, cure, the before or perform, as the case ,

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( 1 ) . ~ the end of such period, including 3 i

any suspension of such pe riod occurring on or after the commencement of the cases or -i (2) 60 days after the order for relief.

.11 U.S.C.A. S 108(b) (West Supp. 1989).

as between 'the debtor and DOE, The Agreement extende6, required the debtor to meet certain 4 conditions on or before August 15, 1989. The debtor filed its voluntary petition under Chapter 11 of108(b) title 11 on June 20, 1987. Application of code $

served to extend the debtor's time to would have ,

perform under the Agreement through August 19, 1989, a Saturday. Giving effect to Bankruptcy Rule 21, 9006(a),

1989, had through August the debtor would have within which to perform.

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L Bankruptcy Code S 108(b) had no application tothe

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November 20, 1987 Agreement. The court accordingly found that the Agreement terminated by its terms on

!: August.15, 1989. The court further determined that if 5 108(b) were to apply, the period for the debtor to under the Agreement could not be extended perform beyond the sixty day period provided in that section.

In its Motion, the debtor contends that the court .1 erred in finding that 6 108(b) had no application to l its Agreement with DOE. For- reasons hereafter discussed, the August 15, 1989 Memorandum opinion, as transcribed, will be amended. However, the order entered August 16, 1989, denying the debtor's motion ..

.i for an extension of time under $ 108(b) will not be l amended.

I In its response to the debtor's Motion filed c

l September 18, 1989, DOE acknowledges that on August 23, i

1989, it waived sovereign immunity when it filed an objection to an agreed order proposed by the debtor and i Anderson County Bank in connection with a separate i

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proceeding.3 Response _ of United States To Debtor's.

Motion To Alter Or Amend An order And/or opinion, at pp. 2 & 4 The waiver by DOE of its claim of sovereign ,

immunity has retroactive application to the. date of the filing of the debtor's Chapter 11 petition on June 20, 1989. WJM, Inc. v. Massachusetts Dept. of Public_

Welfare, 840 F.2d 996, 1004 t.1st Cir. 1988).

l Accordingly, the November 20, 1987 Agreement between 1

the debtor and DOE is subject to the provisions of Code.

5 108(b). The debtor's right to perform under the .;

Agreement therefor extended sixty days from June 20, 1989, or through August 21, 1989, giving offeet to L

Bankruptcy Rule 9006(a).

The court in its August 15, 1989 Memorandum opinion may be seen to have construed 5 106(a) too narrowly by appearing to have limited its application to those situations in which a governmental unit files 3 DOE agrees with the debtor that the filing of a formal proof of claim is not a prerequisite to a waiver of sovereign immunity by a governmental unit under Code

$ 106(a). Gower v. Farmers Home Administration __(In re Davisi, 20 B.R. 519 (Bankr. M.D. Ga. 1982) (There is no requirement of filing proof of claim as a prerequisite for relief against the government under 5 106); Inslaw, L Inc. v. United States (In re Inslaw, Inc.), 76 B.R. 224 (Bankr. D. D.C. 1987) (citing In re Davis; In re Lile, 96 B.R. 81 (Bankr. S.D. Tex. 1989)).

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'... 1 a proof of claim. In view of DOE's acknowledged waiver of sovereign immunity on August 23, 1989, the court  ;

need not address the issue of whether the evidence at the August 15, 1989 hearing was sufficient to permit a j finding that DOE waived sovereign immunity under -;

5 106(a) within the context of those factore considered by the In re Davis, In re Inslaw, Inc., and In re Lile .

courts.4 L

The Memorandum opinion dictated from the bench on August 15, 1989, as transcribed, is amended in a manner L consistent with the findings set forth herein, with ,

respect to the issue of sovereign. immunity under  !

106(a). The court's analysis of its ability to 5

extend the time within which the debtor could perform L

under the November 20, 1987 Agreement beyond the sixty-day period set forth in 5 108(b) remains unchanged. To the extent the debtor seeks an. order altering or amending the August 16, 1989 order denying its motion for an extension of time under S 100(b), its motion will be denied.

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! An appropriate order will be entered.  :

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i FILED: October 24, 1989. j BY THE COURT l

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RICHiiRD STAIR, J .

United States Bankruptcy Judge 1

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, Department of Energy j i l Ook Rideo Operations i P.O. Box 2001 1 Oak Ridee. Tennessee 37:31 8755 i

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August 16, 1989 ,

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Mr. James F. Griffin, President  !

Anderson County Bank 101 South Main Street ,

Clinton, Tennessee 37716 *

Dear Mr. Griffin:

SALES AGREEMENT (CONTRACT NO. DE-R005 880R21776)

Sales Agreement (Contract No. DE-R005 880R21776) between the Department of Energy (DOE) and All Chemical Isotopes Enrichment Company, Inc.

(Alchem!E) expired of its own terms yesterday, August 15, 1989, and was not extended. The enclosed letter of August 11, 1989, from DOE to Alchem!E contains some details you might find useful about the expiration of the Sales Agreement.

The Escrow Agreement dated May 4,1988, executed by Alchem!E and the  :

Bank of Anderson County, with DOE's approval, provides in part as follows:

3.c) If AlChem!E obtains ownership of the unclassified gas centrifuge equipment but does not obtain ownership of the classified equipment, then, upon submission of aroof thereof to the Escrow Agent, the escrow funds stall be disbursed upon demand to ,

USDOE, t

d) For purposes of this Agreement, " Proof" shall be defined as an instrument signed by USDOE and attesting to the Escrew Agent the appropriate disposition of funds.

This is to inform you officially that the Sales Agreement between DOE and AlchemIE expired of its own terms on August 15, 1989, without AlChemIE having obtained ownership of the classified equipment. DOE hereby officially demands that the funds in the escrow account be disbursed to it by Anderson County Bank by making a wire transfer of the funds today, August 16, 1989. The wire transfer should be made to the Federal Reserve Bank of New York for credit to DOE Oak Ridge. The following information is provided for use in making the wire transfer:

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, , Mr. James F. Griffin 2- August 16, 1989 t

Receiving Bank TREASURY DEPARTMENT i Line 2 - Receiver DFlf (To Bank) 021030004 Line 5 Rec DF1 Name & Product Code 1REAS NYC/CTR/

Line 6 - Third Party Information BNF /AC-89185369 OBI DOE i l

Oak Ridge. TN OR9 Invoice No.  !

Sales Doc No. DE R005-880R21776  ;

Sincerely, Robert E. Lynch Contracting Officer ,

t Enclosure '

cc w/ enclosure:

Dr. A. Andrew Carey, President AlChemIE, Oak Ridge, TN 37831 1

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P. O. Boa t i o.A Rep. Temessee 3783b8650 August 11, 1989 Dr. A. Andrew Carey, President All Chemical Isotopes Enrichment Company, Inc.

Pine Ridge Office Park, Suite 202B '

702 Illinois Avenue ,

Oak Ridge Tennessee 37B31

Dear Dr. Carey:

CENTRITUCE EQUIPRENT AGREEMENT AND BILL OF SA1.E Tho' Sales Agreement for removal of excess equipment at the cas  :

Centrifuge Enrichment Plant (CCEP) between the Department of Energy '

(DOE) and All Chemical Isotopes Enrichment Company, Inc. (A1ChemIE) expires August 15, 1989, and will not be extended by the DOE. This Agreement was executed on November 20, 1987, for a one year period and ,

has been extended by DOE fifteen times to allow AlchemIE time to meet its contractual commitments to the DOE.

A1ChemIE has title to the unclassified equipment at the CCEP as -

specified in the Sales Agreement, but no classified equipment has been or vill be transferred to A1ChemIE. The unclassified equipment owned by A1ChemIE must be promptly removed from the GCEP by A1ChemIE. DOE vill impose storage charges for unclassified equipment remaining past the date contained in the Equipment Removal Schedule which was agreed to by A1ChemIE and the DOE on September 29, 1988 .

The DOE decision not to extend the Sales Agreement past August 15, 1989.,

is based substantially on the continuing failure of AlchemIE to meet .

i contractual commitments to the DOE, and the clear indication that A1ChemIE is in no position nov or in the foreseeable future to meet those commitments.

1. AlchemIE has not met the Equipment Removal Schedule which was agreed to by AlchemIE and the DOE on September 29, 1988.

2. Financial assurance, including a bond to cover decommissioning and i

! decontamination of A1 Chem 1E equipment and financial protection ,

(insurance) for the DOE relative to AlchemIE utilitation of I centrifuge equipment, has not been received by the DOE. The fact that AlchemIE's very recent attempt to produce a bond resulted in an alleged fraudulent bond being executed raises doubts about the Corporation's ability to meet this requirement in any event.

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t Dr. A. Andrew Carey 2 August 11, 1989 3.

A1CheaIE has not met the removal schedule as contained in Contract Mod. 7. dated January 11, 1989, which specified machine removal vould begin in April 1989 and be completed by June 1990. ,

4 A1ChemIE has not provided the DOE an adequate centrifuge hardware  !

disposal plan following the DOE comments transmitted to AlchemIE en  !

Tebruary 27, 1989, on the initial plan, or a revision to the plan  ?

based on A1ChemIE's more recent commercial plans, i

The DOE must meet its obligations to the Defense 1,ogistics Agency (DLA) '

to make available to the DIA the buildings at the CCEP beginning October 1990. To meet this schedule, the DOE must immediately begin removal of classified equipment at the CCEP. Continuing the Sales Agreement with  ;

A1ChemIE vould interfere with that commitment. Such interference cannot

' be considered by DOE since there are no indications AlchemIE is in a position to fulfill the commitments that would result from an extension of the Sales Agreement.

In view of failure to remove equipment from CCEP as scheduled, the -

absence and apparent inability of AlchemIE to provide the required ,

financial assurances, and AlchemIE's failure to meet other contract '

conditions and its apparent inability to meet those in the future, this letter is to inform you that DOE vill not further extend the Sales Agreement beyond August 15, 1989 In accordance with the terms of the Escrov Agreement dated May 4, 1988, and executed by A1ChemIE and the '

Bank of Anderson County with approval of the DOE, the funds in escrov ,

agreement shall become the property of the DOE without requirement of any legal action [ Paragraph B. (iii)).

In addition to not extending the Sales Agreement with AlchemIE, the DOE will discontinue discussions with AlchemIE on the sale of centrifuge equipment contained in and the lease of the Centrifuge Plant Demonstration Facility located at the Oak Ridge caseous Diffusion Plant.

Sincerely,

- . Hall M stant Manager for Enriching Operations 4

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