In re Apex Oil Co.

• Decision Date: 16 August 1990
• Docket Number: Bankruptcy No. 87-03804-BSS.
• Parties: In re APEX OIL COMPANY, et al., Debtors.
• Court: United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Eastern District of Missouri

118 B.R. 683 (1990)

In re APEX OIL COMPANY, et al., Debtors.

Bankruptcy No. 87-03804-BSS.

United States Bankruptcy Court, E.D. Missouri, E.D.

August 16, 1990.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Robert Jay Moore, Howard J. Weg, Gendel, Raskoff, Shapiro & Quittner, Clayton, Mo., Dennis A. Ferrazzano, Barack, Ferrazzano and Kirschbaum, Chicago, Ill., for debtors.

Lloyd A. Palans, Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., Examiner.

Steven N. Cousins, Armstrong, Teasdale, Kramer, Vaughan & Schlafly, St. Louis, Mo., for Unsecured Creditors Committee.

James C. Cole, Office of the U.S. Trustee, St. Louis, Mo.

Leonard Jaques, Alan Kellman, The Jaques Admiralty Law Firm, Detroit, Mich.

Gerald A. Rimmel, Deborah Benoit, Susman, Schermer, Rimmel & Schfrin, Clayton, Mo.

Christian C. Onsager, Faegre & Benson, Denver, Colo Stephen Lerner, Bruce Zirinsky, Brian Rosen, Weil, Gotshal & Manges, New York City.

Kenneth J. Mallin, Coburn, Croft & Putzell, St. Louis, Mo.

Michael Reed, Pepper, Hamilton & Scheetz, Philadelphia, Pa.

Robert H. Brownlee, Thompson & Mitchell, St. Louis, Mo., for Chemical Bank.

Roger Ferree, Baker, Hostetler, McCutchen & Black, Los Angeles, Cal.

Clark Oil & Refining Corp., Howard Roin, David Curry, Mary Donohue, Mayer, Brown & Platt, Chicago, Ill.

David A. Warfield, Husch, Eppenberger, Donohue, Cornfeld & Jenkins, St. Louis, Mo.

Joel A. Kunin, Carr, Korein, Tillery, Kunin, Montroy, Glass & Bogard, East St. Louis, Ill.

Douglas Hommert, Lewis, Rice & Fingersh, St. Louis, Mo.

John Evans, Audrey Fleissig, Peper, Martin, Jensen, Maichel & Hetlage, St. Louis, Mo.

Frederick J. Dana, Asst. U.S. Atty., St. Louis, Mo.

AMENDED OPINION AND ORDER OF CONFIRMATION

BARRY S. SCHERMER, Bankruptcy Judge.

The hearing under section 1128(a) of the Bankruptcy Code and Bankruptcy Rule 3020(b) to consider confirmation of the First Amended Joint Partially Consolidating Plan Of Reorganization Dated February 8, 1990 (the "Plan"), as filed by Apex Oil Company and its 53 affiliated entities (the "Debtors") in its printed form¹, and as modified at and before the entry of the order confirming the Plan (the "Confirmation Order"), commenced on March 28, 1990, when it was continued to April 24, 1990. On that date the hearing was again continued to May 23, 1990. Hearings regarding the confirmation of the Plan took place on May 23, 24, 29, and 30, July 20, and August 6, 1990. All appearances made at the hearing are identified in the distribution list attached to this opinion. All capitalized terms used herein shall have the meanings set forth in the Plan, unless otherwise defined herein.

Upon consideration of the Plan, the evidence submitted at the confirmation hearing, the arguments of counsel, the memoranda and affidavits filed in support of confirmation of the Plan, all objections to confirmation of the Plan that were timely filed and served and any memoranda or affidavits filed in support thereof, and the records and files in the Reorganization Case, the Court makes the following Findings of Fact and Conclusions of Law:

JURISDICTION

The proceeding with respect to confirmation of the Plan is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(L). The Court has jurisdiction over the Debtors' Chapter 11 cases pursuant to 28 U.S.C. §§ 157(a) and 1334, and Local Rule 29 of the United States District Court for the Eastern District of Missouri. The Court is authorized to make the Findings of Fact and Conclusions of Law set forth herein and to enter the Confirmation Order. The Court has jurisdiction over and the authority to approve every provision in the Plan and any amendment or modification thereto. The Court further finds that the Debtors qualify as "debtors" pursuant to section 109 of the Bankruptcy Code and are appropriate proponents of the Plan under section 1121(c) of the Bankruptcy Code.

FACTS

A. General Facts

Each of the Debtors, other than Novelly Oil Co. and Goldstein Oil Co., filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on December 24, 1987. Novelly Oil Co. and Goldstein Oil Co. filed their voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on October 11, 1988. The Debtors' Chapter 11 cases have been procedurally consolidated and jointly administered. The Debtors have continued to operate their businesses during the reorganization case as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. All of the Debtors are wholly-owned direct or indirect subsidiaries of Apex Oil Company except that: 1) Debtors Novelly Oil Co. and N.I.C. Holding Company are wholly-owned subsidiaries of Non-Debtor Affiliate N. Oil Company; 2) Debtors Goldstein Oil Co. and G.I.C. Holding Company are wholly-owned subsidiaries of Non-Debtor Affiliate S.C.R. Investment Co.; and 3) Debtor Glacier Bay Transportation Corporation is owned 81% by Debtor Trinidad Corporation and 19% by Marine Investment Company of Delaware.

On August 4, 1988, this Court entered an Agreed Order pursuant to which the Debtors, Clark Oil Trading Company ("COTC"), and the Secured Lender Group settled certain significant and fractious claims among them relating to substantive consolidation of COTC into the Debtors' Estates. The settlement, among other things,

1. contributed to the stabilization of the Debtors\' operations;

2. eliminated certain significant Claims of COTC against the Debtors;

3. provided for the release of COTC from Claims that could be asserted by the Debtors and their Estates or the Secured Lender Group; and

4. provided for certain significant payments by COTC to the Debtors, including the payment on a monthly basis of the greater of $125,000 or 35% of COTC\'s Cumulative Net Profit. The payments were to terminate upon confirmation of a plan of reorganization.

On November 8, 1988, the Court entered its Order And Judgment Authorizing And Approving Apex's Execution, Delivery And Performance Of Asset Purchase Agreement And Note Purchase Agreement With AOC Acquisition Corporation, pursuant to which the Asset Sale to AOC under the AOC Acquisition Agreement was approved. The Asset Sale closed on November 22, 1988, and cleared the way in the case for the negotiation, proposal, and confirmation of the Plan by, among other things,

1. giving control over the more than $500,000,000 in secured claims of the Secured Lender Group and Mellon Bank, N.A. to the Debtors, their Estates, and certain Non-Debtor Affiliates, as their interests appeared in the assets that were transferred to AOC in connection with the Asset Sale;

2. providing for AOC\'s assumption of certain significant liabilities of the Debtors, the settlement of certain significant Claims against the Debtors at the expense of AOC, and

3. obtaining the payment of approximately $25,000,000 in cash, including the guaranty of a certain minimum level of retained working capital sufficient to maintain the Debtors\' operations.

On June 14, 1989, the Examiner filed his "Statement Of Investigation Of Causes Of Action Available To The Estates" which, as later supplemented and amended, became the "Examiner's Report" (the "Report"). In the Report, the Examiner concluded that although the Debtors' Estates had several possibly meritorious Claims against certain Non-Debtor Affiliates, protracted litigation of these Claims was not in the best interest of the Estates and their creditors. Thus, the Report contained a strong recommendation that the Claims be settled rather than litigated. Certain Non-Debtor Affiliates subsequently filed their responses to the Report (as later supplemented and amended, the "Responses"), denying almost every allegation and conclusion made in the Examiner's Report and challenging the legal analysis relied upon by the Examiner in reaching his conclusions.

Between March 28 and April 10, 1990, the Debtors filed, in final, printed form, the Disclosure Statement-Information Regarding The Debtors' First Amended Joint Partially Consolidating Plan Of Reorganization Dated February 8, 1990 (the "Disclosure Statement"), the Plan, the Ballots For Classes and the accompanying Instructions (the "Ballots"), and The Summary Of The Plan And Disclosure Statement (the "Summary"). This Court held that the Disclosure Statement and the Summary contained adequate information within the meaning of section 1125 of the Bankruptcy Code. On May 30 and 31, 1990, the Debtors filed the Trust Indenture and the Memorandum of Undertaking. On August 6, 1990, the Creditors' Committee (the "Committee") stated on the final day of the confirmation hearing that both were acceptable in form and substance.² On July 19, 1990, the Debtors filed the Disbursing Agent Agreement. This, too, proved reasonably acceptable in both form and substance to the Committee.

Copies of the Disclosure Statement, the Summary, the Ballots, and the Disclosure Order were properly and timely mailed to all known creditors, equity security holders, and other parties in interest in accordance with the Disclosure Order. Notice of the hearing on the confirmation of the Plan was published in appropriate newspapers of local and national circulation. Thus, the Court finds that the Debtors have complied with all necessary procedural requirements related to the above documents as prescribed by the Bankruptcy Code.

B. Objections to Confirmation

Prior to the confirmation hearing, numerous parties filed objections (and in certain instances supplemental objections) to the Debtors' Plan. Those raising such objections are as follows:

1. Banque Paribas;

2. Jackie DeGraw;

3. Four Hundred Seven (407) individuals on whose behalf the Maritime Asbestosis Legal Clinic ("MALC"), a division of the Jaques Admiralty Law Firm, has filed asbestos-related personal injury claims (collectively the "Asbestosis Claimants")

4. Merrill McGahan, et al. (collectively the "Alaska Claimants")

5. Northwestern National Insurance Company ("Northwestern National");

6. State of

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