Pg 1 of 14 Presentment Date and Time: March 28, 2018 at 11:00 a.m. (Eastern Time) Objection Deadline: March 21, 2018 at 4:00 p.m. (Eastern Time) Hearing Date and Time (Only if Objection Filed): March 28, 2018 at 11:00 a.m. (Eastern Time) WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Gary T. Holtzer Robert J. Lemons Garrett A. Fail David N. Griffiths Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------ x In re : Chapter 11 : WESTINGHOUSE ELECTRIC COMPANY : Case No. 17-10751 (MEW) LLC, et al., : : : Debtors. 1 : (Jointly Administered) : ------------------------------------------------------------ x NOTICE OF PRESENTMENT OF DEBTORS MOTION PURSUANT TO 11 U.S.C. 365(a) FOR ENTRY OF AN ORDER AUTHORIZING THE DEBTORS TO ASSUME AGREEMENT WITH CERADYNE, INC., AS AMENDED 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, if any, are: Westinghouse Electric Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions LLC (1921), PaR Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster Construction Inc. (1673), Stone & Webster, Inc. d/b/a WECTEC Global Project Services Inc. (8572), Stone & Webster International Inc. (1586), Stone & Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited (N/A), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions, Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC (N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168), WECTEC LLC (6222), WECTEC Staffing Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse Industry Products International Company LLC (3909), Westinghouse International Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961). The Debtors principal offices are located at 1000 Westinghouse Drive, Cranberry Township, Pennsylvania 16066.
Pg 2 of 14 PLEASE TAKE NOTICE that on March 28, 2018 at 11:00 a.m. (Eastern Time), the attached Motion Of Debtors Pursuant To 11 U.S.C. 365(a) For Entry Of An Order Authorizing The Debtors To Assume Agreement with Ceradyne, Inc., as Amended (the Motion ) will be presented to the Honorable Michael E. Wiles, in the United States Bankruptcy Court for the Southern District of New York, located at One Bowling Green, New York, New York 10004 (the Bankruptcy Court ), for approval and signature. PLEASE TAKE FURTHER NOTICE that any responses or objections ( Objections ) to the Motion must be in writing, shall conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules, and shall be filed with the Bankruptcy Court (a) by attorneys practicing in the Bankruptcy Court, including attorneys admitted pro hac vice, electronically in accordance with General Order M-399 (which can be found at www.nysb.uscourts.gov), and (b) by all other parties in interest, on a CD-ROM, in text-searchable portable document format (PDF) (with a hard copy delivered directly to Chambers), in accordance with the customary practices of the Bankruptcy Court and General Order M-399, to the extent applicable, and served in accordance with General Order M-399 and the Order Pursuant to 11 U.S.C. 105(a) and Fed. R. Bankr. P. 1015(c) and 9007 Implementing Certain Notice and Case Management Procedures, dated April 4, 2017 [ECF No. 101], so as to be filed and received no later than March 21, 2018 at 4 p.m. (Eastern Time) (the Objection Deadline ). PLEASE TAKE FURTHER NOTICE that, if a written Objection is timely filed and served, a hearing (the Hearing ) will be scheduled and held to consider the Motion before the Honorable Michael E. Wiles in the Bankruptcy Court. PLEASE TAKE FURTHER NOTICE that if no Objections to the Motion are received by the Objection Deadline, the Debtors may, on or after the Objection Deadline, submit 2
Pg 3 of 14 to the Bankruptcy Court an order substantially in the form of the proposed order annexed to the Motion, which order may be entered with no further notice. Dated: March 13, 2018 New York, New York /s/ Robert J. Lemons Gary T. Holtzer Robert J. Lemons Garrett A. Fail David N. Griffiths WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attorneys for Debtors and Debtors in Possession 3
Pg 4 of 14 Presentment Date and Time: March 28, 2018 at 11:00 a.m. (Eastern Time) Objection Deadline: March 21, 2018 at 4:00 p.m. (Eastern Time) Hearing Date and Time (Only if Objection Filed): March 28, 2018 at 11:00 a.m. (Eastern Time) WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Gary T. Holtzer Robert J. Lemons Garrett A. Fail David N. Griffiths Attorneys for Debtors and Debtors in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------x In re : : Chapter 11 WESTINGHOUSE ELECTRIC : COMPANY LLC, et al., : Case No. 17-10751 (MEW) : Debtors. 2 : (Jointly Administered) --------------------------------------------------------x MOTION OF DEBTORS PURSUANT TO 11 U.S.C. 365(a) FOR ENTRY OF AN ORDER AUTHORIZING THE DEBTORS TO ASSUME AGREEMENT WITH CERADYNE, INC., AS AMENDED TO THE HONORABLE MICHAEL E. WILES, UNITED STATES BANKRUPTCY JUDGE: 2 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, if any, are: Westinghouse Electric Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions LLC (1921), PaR Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster Construction Inc. (1673), Stone & Webster, Inc. d/b/a WECTEC Global Project Services Inc. (8572), Stone & Webster International Inc. (1586), Stone & Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited (N/A), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions, Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC (N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168), WECTEC LLC (6222), WECTEC Staffing Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse Industry Products International Company LLC (3909), Westinghouse International Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961). The Debtors principal offices are located at 1000 Westinghouse Drive, Cranberry Township, Pennsylvania 16066.
Pg 5 of 14 Westinghouse Electric Company LLC ( Westinghouse ) and certain of its affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (collectively, the Debtors ), respectfully represent as follows in support of this motion (the Motion ): Background 1. On March 29, 2017 (the Petition Date ), each Debtor commenced with this Court a voluntary case under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ). The Debtors are authorized to continue to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these chapter 11 cases. 2. The Debtors chapter 11 cases are being jointly administered for procedural purposes only pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). 3. On April 7, 2017, the United States Trustee for Region 2 appointed the Official Committee of Unsecured Creditors (the UCC ) pursuant to section 1102 of the Bankruptcy Code. On October 2, 2017, the Trustee filed an amended notice of appointment [ECF No. 1431] removing South Carolina Electric & Gas Company from the list of unsecured creditors appointed to serve on the UCC. On December 19, 2017, the U.S. Trustee filed a second amended notice of appointment [ECF No. 1954] removing Georgia Power Company from the UCC. 4. Additional information regarding the Debtors business, capital structure, and the circumstances leading to the commencement of these chapter 11 cases is set forth in the Declaration of Lisa J. Donahue Pursuant to Rule 1007-2 of the Local Bankruptcy Rules for the Southern District of New York, sworn to and filed on the Petition Date [ECF No. 4]. 2
Pg 6 of 14 5. By order dated February 22, 2018 [ECF No. 2632], the Court approved the Modified First Amended Disclosure Statement for the Joint Chapter 11 Plan of Reorganization (as it may be amended, modified, or supplemented, the Disclosure Statement ) and authorized the Debtors to solicit votes with regard to the acceptance or rejection of the Debtors Modified First Amended Joint Chapter 11 Plan of Reorganization (as it may be amended, modified, or supplemented, the Plan ). A hearing (the Confirmation Hearing ) to consider the confirmation of the Plan has been scheduled for March 27, 2018. The Purchase Agreement 6. Westinghouse and Ceradyne, Inc., a Delaware corporation ( Ceradyne, and together with Westinghouse, the Parties ), are parties to that certain Purchase Agreement of Enriched Boron Integral Fuel Burnable Absorber Targets and Related Products, dated April 1, 2015 (the Agreement ). Pursuant to the Agreement, Ceradyne supplies Westinghouse with integral fuel burnable absorber targets and related products (the Products ) for use in Westinghouse s various nuclear operations. The term of the Agreement is set to expire on March 31, 2018. 7. Ceradyne is the sole supplier of the Products, which are necessary for Westinghouse s continued operations. In the past, Westinghouse s efforts to find and qualify a different supplier for the Products have been unsuccessful. Consequently, the Debtors seek to extend the term of the Agreement with Ceradyne. As a condition of extending the term of the Agreement, Ceradyne requested that the Debtors assume the Agreement. 8. The Parties negotiated Amendment No. One to Purchase Agreement (the Amendment ), extending the term of the Agreement to March 31, 2020 (the Extension Term ). 3
Pg 7 of 14 9. In addition, the Parties agreed that the price of the Products would not increase in 2018. The original Agreement called for a 5% price increase starting in 2018. The removal of this price increase which will result in savings for the Debtors. Furthermore, Ceradyne has agreed to amend the payment terms for the Products, agreeing to no longer require prepayment in the Extension Term. Jurisdiction 10. The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before the Court pursuant to 28 U.S.C. 1408 and 1409. Relief Requested 11. By this Motion, Westinghouse requests entry of an order, pursuant to section 365, authorizing the Debtors to assume the Agreement, as amended by the Amendment. A proposed form of an order granting the relief requested herein is annexed hereto as Exhibit A (the Proposed Order ). Assumption of the Agreement as Amended is in the Best Interests of the Debtors Estates 12. The Debtors assumption of the Agreement, as amended by the Amendment, should be approved under section 365(a) of the Bankruptcy Code. Section 365(a) of the Bankruptcy Code provides, in pertinent part, that a debtor in possession subject to the court s approval, may assume or reject any executory contract... of the debtor. 11 U.S.C. 365(a). 13. The standard to be applied by a Court in determining whether an executory contract or unexpired lease should be assumed is the business judgment test, which is premised upon the debtor s business judgment that assumption would be beneficial to its estate. See Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d 1095, 1099 (2d 4
Pg 8 of 14 Cir. 1993); see also Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1311 (5th Cir. 1985) ( More exacting scrutiny would slow the administration of the debtor s estate and increase its cost, interfere with the Bankruptcy Code s provision for private control of administration of the estate, and threaten the court s ability to control a case impartially ); In re Helm, 335 B.R. 528, 538 (Bankr. S.D.N.Y. 2006) ( The decision to assume or reject an executory contract is within the sound business judgment of the debtor-in-possession.... ). 14. Courts generally defer to a debtor s business judgment in assuming an executory contract, and upon finding that a debtor has exercised its sound business judgment, approve the assumption under section 365(a) of the Bankruptcy Code. See Nostas Assocs. v. Costich (In re Klein Sleep Prods., Inc.), 78 F.3d 18, 25 (2d Cir. 1996); Orion Pictures, 4 F.3d at 1099; In re Child World, Inc., 142 B.R. 87, 89 90 (Bankr. S.D.N.Y. 1992). 15. The business judgment standard is not a strict standard; it requires only a showing that either assumption or rejection of the executory contract will benefit the debtor s estate. See Official Comm. of Subordinated Bondholders v. Integrated Res., Inc. (In re Integrated Res., Inc.), 147 B.R. 650, 656 (S.D.N.Y 1992); Comm. of Asbestos-Related Litigants v. Johns- Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) (where the debtor articulates a reasonable basis for its business decisions, courts will generally not entertain objections to the debtor s conduct). 16. Furthermore, when assuming an executory contract, section 365(b) of the Bankruptcy Code requires a debtor to cure any defaults under the contract or provide adequate assurance that it will promptly cure these defaults. See 11 U.S.C. 365(b)(1)(A). 17. Westinghouse is seeking to assume the Agreement in order to extend the original term of the Agreement by two years and to improve payment terms for Westinghouse, as 5
Pg 9 of 14 described above. The Debtors submit that assuming the Agreement is a sound exercise of the Debtors business judgment. 18. As stated above, in accordance with section 365(b) of the Bankruptcy Code, before the Debtors can assume the Contract, they must cure any defaults thereunder. See 11 U.S.C. 365(b)(1)(A). Westinghouse and Ceradyne agree that the amount to cure existing defaults under the Agreement, as required by section 365(b)(1)(A) of the Bankruptcy Code, is $219,598.00 (the Cure Payment ). Westinghouse intends to make the Cure Payment to Ceradyne promptly upon the entry of this Court s order granting the relief requested herein. 19. Ceradyne filed Proof of Claim No. 1887 in Westinghouse s case on August 25, 2017 for $219,598.00. The Parties agreed that assuming the Agreement and making the Cure Payment to Ceradyne would satisfy any and all of Ceradyne s prepetition claims against Westinghouse based on the Agreement, including Ceradyne s Proof of Claim No. 1887. 20. Furthermore, Ceradyne has consented to the assumption and amendment of the Agreement, as described herein. Waiver of Bankruptcy Rule 6004(a) and Rule 6004(h) 21. To the extent it applies, Westinghouse seeks a waiver of the 14-day stay under Bankruptcy Rule 6004(h). As explained above, the Agreement is set to expire on March 31, 2018. Accordingly, sufficient cause exists to justify the waiver of the 14-day stay imposed by Bankruptcy Rule 6004(h), to the extent such stay applies. Notice 22. Notice of this Motion will be provided in accordance with the Order Pursuant to 11 U.S.C. 105(a) and Fed. R. Bankr. P. 1015(c), 2002(m), and 9007 Implementing Certain Notice and Case Management Procedures [ECF No. 101]. The Debtors submit that, in 6
Pg 10 of 14 view of the facts and circumstances, such notice is sufficient and no other or further notice need be provided. 23. No previous request for the relief sought herein has been made by the Debtors to this or any other Court. WHEREFORE the Debtors respectfully request entry of the Proposed Order granting the relief requested herein and such other and further relief as is just. Dated: March 13, 2018 New York, New York /s/ Robert J. Lemons Gary T. Holtzer Robert J. Lemons Garrett A. Fail David N. Griffiths WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attorneys for Debtors and Debtors in Possession 7
Pg 11 of 14 Exhibit A Proposed Order
Pg 12 of 14 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------x In re : : Chapter 11 WESTINGHOUSE ELECTRIC : COMPANY LLC, et al., : Case No. 17-10751 (MEW) : Debtors. 1 : (Jointly Administered) --------------------------------------------------------x ORDER PURSUANT TO 11 U.S.C. 365(a) APPROVING ASSUMPTION OF THE AGREEMENT AS AMENDED WITH CERADYNE, INC. Upon the Motion, dated March 13, 2018 (the Motion ), of the above-captioned debtors and debtors in possession (collectively, the Debtors ), pursuant to section 365 of the Bankruptcy Code, for an order approving the assumption of (1) that certain Master Lease Agreement, dated February 8, 2010 between Westinghouse Electric Company LLC ( Westinghouse ) and Ceradyne, Inc., the Agreement ), as amended by Amendment No. 1 to Purchase Agreement (the Amendment ), all as more fully set forth in the Motion [ECF No. ]; and the Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. 157 and 1334 and the Amended Standing Order of Reference M 431, dated January 31, 2012 (Preska, C.J.); and consideration of the Motion and the relief requested 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, if any, are: Westinghouse Electric Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions LLC (1921), PaR Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster Construction Inc. (1673), Stone & Webster International Inc. (1586), Stone & Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited (N/A), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions, Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC (N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168), WECTEC Global Project Services Inc. (8572), WECTEC LLC (6222), WECTEC Staffing Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse Industry Products International Company LLC (3909), Westinghouse International Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961). The Debtors principal offices are located at 1000 Westinghouse Drive, Cranberry Township, Pennsylvania 16066.
Pg 13 of 14 therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C. 1408 and 1409; and due and proper notice of the Motion having been provided, and it appearing that no other or further notice need be provided; and the Court having held a hearing on the Motion; and all objections to the Motion, if any, having been withdrawn, resolved, or overruled; and the Court having found and determined that the relief sought in the Motion is in the best interests of the Debtors, their estates, creditors, and all parties in interest, and that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and after due deliberation and sufficient cause appearing therefor, IT IS HEREBY ORDERED THAT: 1. The Motion is granted. 2. The Debtors are authorized to cure existing defaults under the Agreement, as required by section 365(b)(1)(A) of the Bankruptcy Code, in the amount of $219,598.00 (the Cure Payment ), promptly after this Court s entry of this Order. The Cure Payment shall be in full satisfaction of all prepetition and pre-assumption amounts owed by Westinghouse under the Agreement. 3. Ceradyne s Proof of Claim No. 1887 filed in Westinghouse s chapter 11 case is hereby satisfied and expunged with prejudice, and the Debtors, the Debtors claims and noticing agent, Kurtzman Carson Consultants LLC, and the Clerk of this Court are authorized to take all actions necessary or appropriate to give effect to this Order. 4. Pursuant to section 365 of the Bankruptcy Code, the Debtors assumption of the Agreement as amended by the Amendment is hereby approved. 5. The requirements of Bankruptcy Rule 6004(h) are waived, and this Order shall be immediately effective and enforceable upon its entry. 2
Pg 14 of 14 6. The Debtors are authorized to execute, deliver, implement, and fully perform any and all obligations, instruments, and documents and to take any and all actions reasonably necessary or appropriate to perform all obligations contemplated by the Agreement as amended by the Amendment. 7. Notwithstanding anything to the contrary contained herein, any payment to be made or authorization contained hereunder shall be subject to the requirements imposed on the Debtors under any interim or final orders approving the DIP Loans (as defined in the Final DIP Order 2 ) and the budget approved thereunder. To the extent there is any conflict between this Order and any order approving the Debtors postpetition credit facility or budget, the terms of the Final DIP Order or budget, as applicable, shall govern. 8. The Debtors are authorized to take all actions that are necessary or appropriate to implement the relief granted in this Order. 9. This Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation and/or enforcement of this Order. Dated:, 2018 New York, New York HONORABLE MICHAEL E. WILES UNITED STATES BANKRUPTCY JUDGE 2 See Final Order (I) Authorizing Debtors to Obtain Senior Secured, Superpriority, Postpetition Financing, (II) Granting Liens and Superpriority Claims Pursuant to Bankruptcy Code Sections 105, 362, 363, 364 and 507, Bankruptcy Rules 2002, 4001, 6004, and 9014 and Local Rule 4001-2 and (III) Granting Related Relief dated May 26, 2017 [ECF No. 565] (as amended from time to time, the Final DIP Order ). 3