Stipulation between the Debtors and Milagros Ponce to Modify the Automatic Stay
The Debtors propose to enter into a stipulation with Milagros Ponce (the “Claimant”). According to papers filed with the Court, the Claimant is a plaintiff in a lawsuit against certain of the Debtors and non-debtors (the “Non-Debtor Defendants”) that is pending in the Supreme Court of the State of New York, Bronx County (the “Action”). Before the bankruptcy filing, certain of the Non-Debtor Defendants asserted cross-claims and/or counterclaims against certain of the Debtors in the Action. The trial in the Action is scheduled to begin on January 17, 2012.
The Claimant has requested, and the Debtors have agreed to modify the automatic stay solely to the limited extent necessary to enable the Claimant to prosecute the Action to final judgment or settlement. The Claimant may attempt to recover any liquidated final judgment or settlement solely from the insurance coverage, if any, available under one or more insurance policies issued to the Debtors that cover the Action (the “Available Coverage”). Moreover, the Claimant will not be allowed to recover from any party for intentional conduct or punitive damages. Any judgment or settlement in the Action will be reduced by (i) the amount of any deductible or self-insured retention (i.e., the dollar amount specified in an insurance policy that must be paid by the insured before the insurance policy will respond to a loss) under the relevant insurance policy; and (ii) any share of liability under the relevant insurance policy of any insolvent or non-performing insurer or co-insurer. Finally, the automatic stay will not be modified and will continue to be in force with respect to the Non-Debtor Defendant claims.
The stipulation will be presented to the Court on January 13, 2012 at 12:00 noon (Eastern). Objections are due by January 13, 2012 at 11:30 a.m. (Eastern).
Stipulation between American Airlines and Koch Supply & Trading to Assume Amended ISDA Master Agreement
American Airlines, Inc. (“American”) proposes to enter into a stipulation with Koch Supply & Trading, LP (“Koch”) to assume an amended derivatives agreement. Koch and American are parties to a certain ISDA Master Agreement dated as of November 10, 2005 (the “Agreement”), pursuant to which American hedges certain of its jet fuel costs. The Court already authorized American to perform under these types of agreements, but Koch alleged that the bankruptcy filing constitutes an event of default under the Agreement and, therefore, Koch has a right to terminate the Agreement. The purpose of the proposed stipulation is to enable American to continue hedging its jet fuel costs through Koch uninterrupted. In order to do so, the parties have agreed to amend the Agreement by requiring, among other things:
(i)certain increases in the requirement to provide credit support;
(ii)the elimination of the bankruptcy filing as an event of default;
(iii)the addition of certain events of default relating to conversion of the chapter 11 case to a chapter 7 case or dismissal of the chapter 11 case, the appointment of a trustee (i.e., a court appointed official who essentially becomes the CEO of the debtor, exercising day-to-day control as he or she deems appropriate) or examiner with expanded powers (i.e., an official appointed by the bankruptcy court to investigate issues or problems identified with the debtor), and other actions taken by American or a third party during the chapter 11 case; and
(iv)the addition of various acknowledgements regarding waiver of the automatic stay.
In addition, Koch’s lien with respect to American’s collateral provided under the Agreement will be unquestionably effective against the Debtors and will take first priority over other liens on the same collateral. Although American currently does not owe Koch any cure amounts with respect to the Agreement, the stipulation also provides that American’s liabilities and any amounts American owes under the Agreement will be treated as administrative expenses and will be entitled to high priority payment under the Bankruptcy Code. Finally, American will have no recourse to recover any payments or transfers to Koch under the Agreement.
The stipulation will be presented to the Court on January 13, 2012 at 12:00 noon (Eastern). Objections are due by January 13, 2012 at 11:30 a.m. (Eastern).