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) ) ) ) ) ) ) ) Chapter 11 Case No. 05-55927 (SWR) (Jointly Administered) (Tax Identification #13-3489233) Honorable Steven W. Rhodes
STIPULATION BY AND AMONG TEXTRON FINANCIAL CORPORATION AND THE DEBTORS REGARDING INTERIM ADEQUATE PROTECTION FOR OBLIGATIONS DUE UNDER EQUIPMENT LEASE This Stipulation regarding the Motion and Memorandum of Law of Textron Financial Corporation for an Order Requiring Debtors to Cure All Post-Petition Defaults and Timely Perform All Post-Petition Obligations Under Unexpired Personal Property Lease Pursuant to 11 U.S.C. § 365(d)(10) [Docket No. 1794] (the “Motion”) is made as of December 13, 2005, by and between the above-captioned debtors (collectively, the “Debtors”) and Textron Financial Corporation (“Textron”). WHEREAS, on May 17, 2005 (the “Petition Date”), each of the Debtors filed a voluntary petition for relief with this Court under chapter 11 of title 11 of the United States Code (the
The Debtors in the jointly administered cases include: Collins & Aikman Corporation; Amco Convertible Fabrics, Inc., Case No. 05-55949; Becker Group, LLC (d/b/a/ Collins & Aikman Premier Mold), Case No. 05-55977; Brut Plastics, Inc., Case No. 05-55957; Collins & Aikman (Gibraltar) Limited, Case No. 05-55989; Collins & Aikman Accessory Mats, Inc. (f/k/a the Akro Corporation), Case No. 05-55952; Collins & Aikman Asset Services, Inc., Case No. 05-55959; Collins & Aikman Automotive (Argentina), Inc. (f/k/a Textron Automotive (Argentina), Inc.), Case No. 05-55965; Collins & Aikman Automotive (Asia), Inc. (f/k/a Textron Automotive (Asia), Inc.), Case No. 05-55991; Collins & Aikman Automotive Exteriors, Inc. (f/k/a Textron Automotive Exteriors, Inc.), Case No. 05-55958; Collins & Aikman Automotive Interiors, Inc. (f/k/a Textron Automotive Interiors, Inc.), Case No. 05-55956; Collins & Aikman Automotive International, Inc., Case No. 05-55980; Collins & Aikman Automotive International Services, Inc. (f/k/a Textron Automotive International Services, Inc.), Case No. 05-55985; Collins & Aikman Automotive Mats, LLC, Case No. 05-55969; Collins & Aikman Automotive Overseas Investment, Inc. (f/k/a Textron Automotive Overseas Investment, Inc.), Case No. 05-55978; Collins & Aikman Automotive Services, LLC, Case No. 05-55981; Collins & Aikman Canada Domestic Holding Company, Case No. 05-55930; Collins & Aikman Carpet & Acoustics (MI), Inc., Case No. 05-55982; Collins & Aikman Carpet & Acoustics (TN), Inc., Case No. 05-55984; Collins & Aikman Development Company, Case No. 05-55943; Collins & Aikman Europe, Inc., Case No. 05-55971; Collins & Aikman Fabrics, Inc. (d/b/a Joan Automotive Industries, Inc.), Case No. 0555963; Collins & Aikman Intellimold, Inc. (d/b/a M&C Advanced Processes, Inc.), Case No. 05-55976; Collins & Aikman Interiors, Inc., Case No. 05-55970; Collins & Aikman International Corporation, Case No. 05-55951; Collins & Aikman Plastics, Inc., Case No. 05-55960; Collins & Aikman Products Co., Case No. 05-55932; Collins & Aikman Properties, Inc., Case No. 05-55964; Comet Acoustics, Inc., Case No. 05-55972; CW Management Corporation, Case No. 05-55979; Dura Convertible Systems, Inc., Case No. 05-55942; Gamble Development Company, Case No. 05-55974; JPS Automotive, Inc. (d/b/a PACJ, Inc.), Case No. 05-55935; New Baltimore Holdings, LLC, Case No. 0555992; Owosso Thermal Forming, LLC, Case No. 05-55946; Southwest Laminates, Inc. (d/b/a Southwest Fabric Laminators Inc.), Case No. 05-55948; Wickes Asset Management, Inc., Case No. 05-55962; and Wickes Manufacturing Company, Case No. 05-55968.
“Bankruptcy Code”), and have continued to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. WHEREAS, on or about December 18, 2001, debtor Collins & Aikman Automotive Exteriors, Inc., and Collins and Aikman Automotive Interiors, Inc., collectively as “Lessee” (“Subject Debtors”) and Textron (as assignee from IAC Tax V, LLC), as “Lessor,” signed and delivered to one another an instrument named “Equipment Lease” (the “Subject Instrument”), pursuant to which, among other things, Textron enabled the Debtors to acquire possession of and control over the equipment specified on Exhibit A to the Subject Instrument (collectively, the “Equipment”), on the terms and conditions set forth in the Subject Instrument. The Equipment encompasses a significant portion of the equipment and machinery used for Debtors’ trim business and is located in several of Debtors’ operating plants. For calendar year 2005, monthly payments under the Subject Instrument are in the amount of approximately $1,320,967.12 each, and are due on the 18th day or each month. WHEREAS, Textron contends, and the Debtors dispute, among other things, that the Subject Instrument is a true lease by its express terms and otherwise, that Textron retains title to the equipment and that the payments due to it under the Equipment Lease are lease payments. The Debtors contend, and Textron disputes, that the Subject Instrument by its express terms and otherwise is a purchase money financing transaction pursuant to which the Subject Debtors acquired title to the Equipment and that the payments due to Textron under the Subject Instrument are not lease payments but are, instead, deferred installments of a portion of the purchase price for the Equipment. The Debtors further contend that because the Subject
Instrument expressly defines itself as a purchase money financing transaction and secured loan and expressly identifies the Subject Debtors as the owners of the Equipment, it is Textron that is seeking to recharacterize the Subject Instrument. WHEREAS, since September 2005, the Debtors have not made any payments under the Subject Instrument to Textron. The Debtors contend, and Textron disputes, that if the Subject
Instrument is a lease, the Subject Debtors have made all monthly payments to Textron required pursuant to 11 U.S.C. §365(d)(10) through November 2005. WHEREAS, on or about November 21, 2005, Textron filed the Motion. The hearing on the Motion has been adjourned at the request of the Debtors from December 8, 2005 until January 5, 2006. WHEREAS, the parties have commenced negotiations for a complete and final resolution of the various disputes arising under or relating to the Subject Instrument. In order to facilitate those negotiations, the parties have agreed, subject to the entry of an order approving and adopting this Stipulation as an order of the Court, that the hearing on the Motion should be adjourned to February 16, 2006, the next omnibus hearing date for matters in this case and that, pending this Court’s ruling on the Motion, the Subject Debtors should make interim adequate protection payments to Textron, on the terms and conditions set forth in this Stipulation. NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby stipulated and agreed to by and between the parties, as follows: 1. Adequate Protection. As interim adequate protection for Textron’s interest in the
Equipment, (a) the Subject Debtors will timely make the monthly payments due Textron under the Subject Instrument on December 18, 2005 and January 18, 2006, each in the amount of $1,320,967.12 (collectively, the “Interim Payments”); and (b) the Subject Debtors will comply with all of their obligations under, and honor all of Textron’s rights under, the Subject Instrument, excepting only that (i) the Subject Debtors shall not be in default of this Stipulation on account of any failure to pay money not expressly required by the terms of this Stipulation and (ii) nothing in this Stipulation requires the turnover, delivery or surrender of the Equipment to Textron absent further Court order. Without limiting the generality of the foregoing, as
adequate protection for Textron’s interest in the Equipment, the Subject Debtors shall inspect, maintain, repair and insure the Equipment to the extent required by and in strict compliance with the requirements for same as set forth in the Subject Instrument and applicable law and the Debtors shall permit Textron to exercise the auditing and inspection rights afforded to it under the Subject Instrument and applicable law. It is expressly agreed and understood that the Interim Payments shall constitute interim adequate protection of Textron’s interest in the Equipment only through and including February 16, 2006 (“Termination Date”). The parities hereto may agree in writing to extend the terms of this Stipulation beyond the Termination Date upon mutually agreed terms and conditions to be set forth in such subsequent writing. 2. Claim Priority. This is an adequate protection stipulation under, without
limitation, 11 U.S.C. § 362. As such, if, notwithstanding the adequate protection afforded by this Stipulation, Textron has, or comes to have, a claim under 11 U.S.C. § 507(a)(2), such claim shall have the priority afforded by 11 U.S.C. § 507(b). 3. Continuance of Hearing Date on Motion. Upon entry of an order approving this
Stipulation, the parties shall promptly file, and shall be deemed to have filed, a stipulation for an order adjourning the hearing on the Motion until 2:00 p.m. on February 16, 2006. If for any reason the Court does not issue a ruling on that date, the Subject Debtors may continue to make the monthly payments due under the Subject Instrument without further order of this Court, such payments to be treated as adequate protection payments under Section 1 of this Stipulation. 4. Reservation of Rights. Except as expressly provided herein, the Debtors and
Textron reserve and preserve all rights under applicable agreements, the Bankruptcy Code and applicable law. Without limiting the generality of the foregoing, nothing in this Stipulation, or in
the performance of its terms and conditions, or in the acceptance of performance of its terms or conditions: (a) adversely affects, estops, prohibits or waives either the Debtors’ or
Textron’s contentions, claims, allegations and defenses with respect to the true nature of the Subject Instrument; (b) constitutes an admission by Textron that its interests in the Equipment are
adequately protected by the provisions of this Stipulation; (c) constitutes an admission by the Debtors that the amount of the payments
agreed to in this Stipulation is necessary to adequately protect Textron’s interest in the Equipment; (d) adversely affects, estops, prohibits, limits or waives any right which
Textron may have under the Bankruptcy Code to seek relief in addition to the relief prayed for in the Motion; (e) adversely affects, estops, prohibits or waives any right which Textron may
have to prosecute the Motion or to seek remedies under the Subject Instrument as lessor, secured creditor or otherwise, such as, without limitation, seeking repossession of the Equipment, asserting claims for monetary damages under the Subject Instrument or, if the Subject Instrument is deemed to be a disguised financing instrument, asserting its rights in these jointly administered cases as secured, unsecured or partially secured creditor, as the case may be; (f) adversely affects, estops, prohibits or waives any right which Textron may
have to oppose any relief sought by any of the Debtors from this Court, including without limitation a request by the Debtors to confirm a plan or to substantively consolidate; or
will (i) bind Textron to the terms of any reorganization plan, or (ii)
constitute a waiver of Textron's rights under Sections 506(b) and 507(b) of the Bankruptcy Code or of the Debtors or of any other party in interest with respect thereto. Without limiting the generality of the foregoing, each of the parties reserves their claims and contentions concerning the proper application of payments made to Textron made in connection with this Stipulation. 5. Entire Agreement. This Stipulation constitutes the entire agreement between the
parties with respect to the subject matter hereof, and no prior or contemporaneous agreement may be used to alter the terms of the Stipulation. 6. Modifications. This Stipulation may be modified only in a writing signed by each
of the parties hereto. 7. Authority for Stipulation. The signatories to this Stipulation represent that they
have been duly authorized by their clients to execute this Stipulation. 8. Bankruptcy Court Approval. This Stipulation is subject to the approval of the The Debtors shall submit this Stipulation for the Bankruptcy Court’s
approval within five (5) business days following the execution of the Stipulation by the parties. In the event the Bankruptcy Court declines to approve this Stipulation, neither this Stipulation nor any part thereof may be used by any party for any purpose, except to enforce this provision. 9. Binding Effect. This Stipulation shall be binding upon the Debtors, Textron and
each of their successors and assigns. [Remainder of page intentionally left blank]
KERR, RUSSELL AND WEBER, PLC
KIRKLAND & ELLIS LLP
/s/ James E. DeLine William A. Sankbeil (P19882) James E. DeLine (P45205) 500 Woodward Ave., Ste. 2500 Detroit, MI 48226 Telephone: (313) 961-0200 Facsimile: (313) 961-0388
/s/ Marc J. Carmel Richard M. Cieri (NY RC 6062) Citigroup Center 153 East 53rd Street New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 -andDavid L. Eaton (IL 3122303) Ray C. Schrock (IL 6257005) Marc J. Carmel (IL 6272032) 200 East Randolph Drive Chicago, Illinois 60601 Telephone: (312) 861-2000 Facsimile: (312) 861-2200
-andPILLSBURY WINTHROP SHAW PITTMAN LLP Craig A. Barbarosh (CAL 160224) 650 Town Center Drive, 7th Floor Costa Mesa, CA 92626 Telephone: (714) 436-6800 Facsimile: 714-436-2800 -andWilliam B. Freeman (CAL 137276) 725 South Figueroa Street, Suite 2800 Los Angeles, CA 90017-5406 Telephone (213) 488-7100 Facsimile: 213-629-1033 Co-Counsel for Textron Financial Corporation
-andCARSON FISCHER, P.L.C. Joseph M. Fischer (P13452) 300 East Maple Road, Third Floor Birmingham, Michigan 48009 Telephone: (248) 644-4840 Facsimile: (248) 644-1832 Co-Counsel for the Debtors
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