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was first entered into in 1981; the Call Agreement was entered into in 2001. Although the Partnership Agreement was amended at the same time as the Call Agreement was entered into, the parties did not execute a new Partnership Agreement, they merely substituted one partner for another. Second, the agreements relate to different subject matters. "When considering whether separate documents should be read as one agreement, a court may analyze the parties' intent by reviewing the purpose of each agreement." Here, although the Call Agreement and the Partnership Agreement are related, the agreements each pertain to different subject matters and each include a provision providing its separate purpose. If the parties intended for the agreements to be one agreement, they could have included merger or cross-default provisions in either agreement, rather than having an integration clause in the Call Agreement. Third, the agreements are not between the same parties. "Although the parties are related, they are separate entities, and this weighs in favor of finding separate agreements." Fourth, the Call Agreement contains an integration clause. Under both NY and Georgia law, the presence of an integration clause cuts against the argument that the agreements were intended to be one. Fifth, the Partnership Agreement continues even if the Call Agreement is terminated. Under the terms of the agreements themselves, if ACSC does not exercise its option under the Call Agreement, the Partnership continues until it can be sold. Sixth, the agreements were not consideration for one another. Seventh, the agreements have different choice of law and dispute resolution provisions. Under the Call Agreement, NY law governs and certain disputes are to be arbitrated. Under the Partnership Agreement, Georgia law governs and no disputes may be submitted to arbitration. Eighth, the various amendments that took place with the agreements were designed to keep the agreements separate. Ultimately, the court said that "[m]any transactions involve the simultaneous negotiation and execution of multiple agreements embodied in multiple documents, which are almost always related, but relatedness alone does not warrant the undoing of a structure purposefully chosen by the parties. While no single item here may be determinative of the issue, the above considerations, taken together, lead me to conclude that the parties intended to, and did, make separate agreements. Therefore, the Debtors are free to move for the rejection of the Call Agreement."
(2) The court then concluded that the Call Agreement was executory. Here, if ASCS does not exercise the option, each party in turn has the right to market the Partnership for sale as a going concern. The underperformed obligations "are clearly material, as they related to the root or essence of the contract." Furthermore, the court said that the indemnification, tax, and capital contribution requirements of the Call Agreement also cut in favor of finding that it is an executory contract. And, lastly, the Debtors properly exercised their business judgment in rejecting the Call Agreement. The option price is higher than the value of ANI. Therefore, the rejection is granted.
Facts: Before the court were two motions. One was filed by the official equity committee seeking to retain Tudor Pickering Holt & Co Securities, Inc. ("Tudor") as valuation consultant to the equity committee. The second motion was filed by the official committee of unsecured noteholders of the debtors seeking to retain Houlihan Lokey Howard & Zukin Capital, Inc. ("Houlihan") as financial advisors to the noteholders. Together, these two motions will be referred to as the "Retention Motions." On May 1, 2009, Energy Partners, Ltd. and related affiliates filed for chapter 11. Eleven days later, the debtor requested and received permission to hire Parkman Whaling LLC ("PW") as their financial advisors. PW was paid $75,000 a month and its job was to calculate an enterprise valuation of the debtor. On May 15, 2009, the debtor filed its disclosure statement and Birch Run Capital, LLC ("Birch Run") objected based on, inter alia, PW's valuation. Under PW's report, equity had no value. Birch Run also got a valuation report under which equity got some value. By order of the court, the second amended disclosure statement referred to both the PW valuation as well as Birch Run's valuation. On July 13, 2009, the equity committee filed its motion to employ Tudor. And, basically in response to the equity committee's motion, on July 14, 2009, the noteholders filed their own motion to employ Houlihan. Bank of America, N.A., as agent for itself and on behalf of the Prepetition Secured Lenders filed objections to the Retention Motions on the grounds that: (i) the fees are too high, (ii) the fees are nonrefundable, (iii) the fees are to be paid from the debtors' cash collateral, and (iv) the budget would be violated if cash collateral were used to pay
©2010 Leif M. Clark
