In re Connector 2000 Ass'n Inc.

• Decision Date: 01 April 2011
• Docket Number: No. 10–04467–dd.,10–04467–dd.
• Citation: 447 B.R. 752
• Court: U.S. Bankruptcy Court — District of South Carolina
• Parties: In re CONNECTOR 2000 ASSOCIATION, INC., Debtor.

447 B.R. 752

In re CONNECTOR 2000 ASSOCIATION, INC., Debtor.

No. 10–04467–dd.

United States Bankruptcy Court, D. South Carolina.

April 1, 2011.

Lindsey Carlbert Livingston, William Harold Short, Jr., Haynsworth Sinkler Boyd, PA, Stanley H. McGuffin, Columbia, SC, for Debtor.

ORDER CONFIRMING DEBTOR'S FIRST AMENDED PLAN FOR ADJUSTMENT OF DEBTS PURSUANT TO CHAPTER 9 OF THE BANKRUPTCY CODE

DAVID R. DUNCAN, Bankruptcy Judge.

This matter is before the Court for confirmation of Connector 2000 Association, Inc.'s (“Debtor”) chapter 9 plan (“Plan”). Thomas Stoeckmann filed an Objection to Confirmation of Debtor's Plan on March 11, 2011. A hearing was held on Debtor's Plan on March 25, 2011. Based on the findings of fact and conclusions of law stated on the record at the hearing and set forth in further detail below, Debtor's chapter 9 Plan is confirmed.

HISTORY AND BACKGROUND OF DEBTOR

The Debtor, formed in 1996, is a South Carolina nonprofit corporation organized as a “public benefit corporation” under the South Carolina Nonprofit Corporation Act of 1994, as amended. The Debtor was formed to assist the South Carolina Department of Transportation (“SCDOT”) in the financing, acquisition, construction, and operation of turnpikes, highway projects, and other transportation facilities.

In 1996, Debtor entered into a license agreement (the “License Agreement”) with the South Carolina Department of Transportation (“SCDOT”) to finance, acquire, construct, and operate an approximately 16 mile toll highway (the “Southern Connector”) and related roadways. The License Agreement extends for a period of 50 years.

To finance the Southern Connector, the Debtor issued $200,177,680 original principal amount of Connector 2000 Association, Inc. Toll Road Revenue Bonds (Southern Connector Project, Greenville, South Carolina), Series 1998A, B and C (the “Bonds”) on February 11, 1998 to finance the construction of the Southern Connector. At the time the Bonds were issued, a traffic and revenue study estimated the future utilization of the road and toll revenues and operating expenses of the Debtor. The actual traffic on the highway and toll revenues received by the Debtor have been substantially less than projected. Debtor does not receive sufficient toll revenues to pay debt service on the bonds. Prior to January 1, 2010, such shortfalls had been covered by withdrawals from reserve accounts maintained by the trustee under the trust indenture. On January 1, 2010 the Debtor defaulted in the payment of principal and interest on the bonds.

Previously, the Debtor had engaged a traffic and revenue consultant to prepare a series of toll rate studies to advise the Debtor regarding the toll rates necessary to maximize toll revenue from the Southern Connector. Each such study concluded that, even if the recommendations of the consultant are effected, projected toll revenues would be insufficient to pay principal and interest on the Bonds in full. Efforts to negotiate a financial accommodation or find a legislative solution through an extension of the term of the License Agreement failed. Debtor turned to chapter 9 of the Bankruptcy Code seeking relief.

DEFINITIONS

The Court has adopted certain definitions from Debtor's Plan and Disclosure Statement to aid in interpreting this order such that the meaning of the terms are consistent between the Plan, Disclosure Statement, and Order. The definitions adopted by the Court are the following:

1. “Allowed Claim” shall mean any prepetition Claim against the Debtor, proof of which was filed on or before the Bar Date, or any Claim that appears in the List of Creditors filed by the Debtor and which is not listed by the Debtor as disputed, contingent, or unliquidated as to amount, and, in either case, a Claim as to which no objection as to the allowance thereof has been interposed by the Debtor on or before 60 days after the Effective Date or, if such objection has been interposed, on the date which there has been entered a Final Order allowing such Claim; provided, however, that the Claims represented by the Bonds are deemed Allowed Claims, without duplication and without the need to file a proof of claim.

2. “Allowed Administrative Claim” shall mean any right to payment constituting a cost or expense of administration of the Case allowed under Sections 503(b) and 507(a)(2) of the Bankruptcy Code.

3. “Amended and Restated Bonds” shall collectively mean the Series 2011A Bonds, Series 2011B Bonds, and Series 2011C Bonds, the material terms and conditions of which will be set forth in the Amended Trust Indenture and filed with the Bankruptcy Court as part of the Plan Supplement.

4. “Amended Trust Indenture” shall mean the Original Trust Indenture as modified and amended in connection with the Plan.

5. “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended.

6. “Bankruptcy Court” shall mean the United States Bankruptcy Court for the District of South Carolina.

7. “Bonds” shall collectively mean the Toll Road Revenue Bonds (Southern Connector Project, Greenville, South Carolina), Series 1998A, 1998B and 1998C issued on February 11, 1998 pursuant to the Original Trust Indenture, to finance the construction of the Southern Connector, including Capital Appreciation Bonds, Senior Bonds and Subordinate Bonds as defined below.

8. “Bondholders” shall mean beneficial owners of the Bonds or the Amended and Restated Bonds, as applicable.

9. “Case” shall mean the Debtor's Chapter 9 bankruptcy case, captioned In re Connector 2000 Association, Inc., Chapter 9 Case No. 10–04467–DD.

10. “Claim(s)” shall mean Claim as defined in 11 U.S.C. § 101(5).

11. “Commencement Order” shall mean the order the Court entered on June 28, 2010 entitled Amended Order Upon Commencement of Chapter 9 Case Establishing Certain Deadlines and Notice of Commencement of Case, of the Automatic Stay and of the Order for Relief.

12. “Confirmation” shall mean the entry by the Court of an order confirming the Plan in accordance with Section 943 of the Bankruptcy Code.

13. “Confirmation Order” shall mean that order entered by the Court confirming the Plan in accordance with Section 943 of the Bankruptcy Code.

14. “Debtor” shall mean Connector 2000 Association, Inc.

15. “Disclosure Statement” shall mean First Amended Disclosure Statement to the First Amended Plan for Adjustment of Debts, as modified, supplemented and amended, which is the disclosure document describing the Plan which was filed by the Debtor, approved by the Court, and distributed to the various Classes under the Plan as provided in Section 901 and 1125 of the Bankruptcy Code.

16. “Effective Date” shall mean that date upon which all of the covenants and conditions contained in Article VII of the Plan have been satisfied, which shall occur on or before sixty (60) days from entry of the Confirmation Order or such other date as extended by order of the Court.

17. “Final Decree” shall mean the order of the Court entered after the Effective Date and after the Case is fully administered, closing the Case.

18. “Goldman” shall mean Goldman Sachs & Co.

19. “Lehman Brothers” shall mean Lehman Brothers, Inc.

20. “License Agreement” shall mean the document entitled “License Agreement by and between South Carolina Department of Transportation, an agency of the State of South Carolina (“SCDOT”) and Connector 2000 Association, Inc. A South Carolina Non-profit Corporation (“Association”) Dated February 11, 1998,” whereby SCDOT granted the Debtor rights and obligations to finance, acquire, construct, and operate an approximately 16 mile fully controlled access toll highway known as the Southern Connector and to construct the South Carolina Highway 153 Extension.

21. “Net Revenues” shall mean, for any Fiscal Year preceding a Bond Payment Date, the Revenues received in such Fiscal Year less the Operating Costs paid in such Fiscal Year.

22. “New License Agreement” shall mean the License Agreement as amended by the First Amendment to the License Agreement being executed in connection with the Plan.

23. “New Waterfall” shall mean the schedule and priorities for distribution by the New Trustee of funds in the Revenue Fund in accordance with the terms of the Amended Trust Indenture and the Plan.

24. “Original Trust Indenture” shall collectively mean the Master Indenture of Trust and a First Supplemental Indenture of Trust, each dated as of February 1, 1998 between the Debtor and First Union National Bank, as predecessor in trust to U.S. Bank National Association, as trustee, pursuant to which the Bonds were issued to finance the construction of the Southern Connector, and the Second Supplement.

25. “Petition Date” shall mean June 24, 2010, the date on which the Debtor filed its petition under Chapter 9 of the Bankruptcy Code. 26. “Plan” shall mean the First Amended Plan filed by Debtor dated November 23, 2010, and as it may be amended.

27. “Plan Releasee(s)” shall mean any person or entity that is released from the claims of or liabilities to any creditor or party in interest pursuant to the Plan.

28. “Projected Net Revenues” shall mean (i) projected revenues for the Southern Connector for the relevant year, as set forth in Figure 4.4.2 of the Traffic and Revenue Report for Southern Connector dated May 4, 2009, prepared by Stantec Consulting Services Inc., less (ii) the reorganized Debtor's projected Operating Costs for such year, as determined by increasing the aggregate amount of expenses set forth in the Debtor's Annual Budget for 2010 (less certain extraordinary expenses) by 3.0% per annum for each year after 2010.

29. “Revised Traffic Study” shall mean the May 4, 2009 Traffic and Revenue Study prepared by Stantec Consulting Services, Inc.

30. “SCDOT” shall mean the South Carolina Department of Transportation, acting as agent of the State of South Carolina.

31. “Senior Bonds” means Bonds of a Series that are designated under the Amended Trust Indenture or in a...