Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 1 ofdate 10 Filed: 11/23/2016 Docket #0951 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION In re: SHERWIN ALUMINA COMPANY, LLC, et al.,1 Debtors. ENTERED 11/23/2016 Chapter 11 Case No. 16-20012 (Jointly Administered) David R. Jones ORDER (A) APPROVING WIND DOWN PROCEDURES INCLUDING (I) PROCEDURES FOR SALE OF CERTAIN ASSETS, (II) PROCEDURES FOR ABANDONMENT OF CERTAIN ASSETS, AND (III) RETENTION OF CERTAIN CONSULTANTS; AND (B) GRANTING RELATED RELIEF 776 (Docket No. ) Upon the expedited motion (the Motion )2 of the above-captioned debtors and debtors in possession (collectively, the Debtors ) for entry of an order (this Order ) approving certain Wind Down Procedures and related relief, all as more fully set forth in the Motion; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334; and this Court having found that this is a core proceeding pursuant to 28 U.S.C. 157(b)(2); and that this Court may enter a final order consistent with Article III of the United States Constitution; and this Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. 1408 and 1409; and this Court having found that the relief requested in the Motion is in the best interests of the Debtors estates, their creditors, and other parties in interest; and this Court having found that the Debtors notice of the Motion and opportunity for a hearing on the Motion were appropriate under the circumstances and no other notice need be provided; and this Court having reviewed the Motion 1 The debtors in these chapter 11 cases, along with the last four digits of each debtor s federal tax identification number, are: Sherwin Alumina Company, LLC (2376); and Sherwin Pipeline, Inc. (9047). The debtors service address is: 4633 Highway 361, Gregory, Texas 78359. 2 Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Motion. 1 ^1620012161123000000000004,0+7 $R«
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 2 of 10 and having heard the statements in support of the relief requested therein at a hearing before this Court (the Hearing ); and this Court having determined that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: The Wind Down 1. The Motion is granted as set forth herein. 2. The Debtors are authorized to conduct the Wind Down, including winding down their operations, dismantling the Facility, and taking actions necessary to accomplish the foregoing, and engage Consultants, each without further order of the Court. Asset Sale Procedures 3. Pursuant to section 363(b) of the Bankruptcy Code, the Debtors are authorized to sell or transfer Assets outside the ordinary course of the Debtors business without further order of the Court in accordance with the following Wind Down Procedures: a. With regard to sales or transfers of Assets in any individual transaction or series of related transactions to a single buyer or group of related buyers with a net sale price 3 of less than or equal to $1 million: i. the Debtors are authorized, with the prior written consent of the Prepetition Lender and CCA, to consummate such transactions if the Debtors determine in the reasonable exercise of their business judgment that such sales are in the best interest of the estates, without further order of the Court, subject to the procedures set forth herein; ii. iii. any such transactions shall be free and clear of all liens with such liens attaching only to the sale proceeds with the same validity, extent, and priority as immediately prior to the transaction; the Debtors shall, at least 10 business days prior to closing such sale or effectuating such transfer, provide a Sale Notice to the Sale Notice Parties; 4 3 For purposes of the Wind Down Procedures, net sale price shall refer to the Debtors estimate of the net proceeds of any sale transaction less any associated costs and expenses. 2
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 3 of 10 iv. the content of the notice sent to the Sale Notice Parties for the sale of Assets shall consist of: (a) identification of the Assets being sold or transferred; (b) identification of the purchaser of the assets; and (c) the purchase price; v. if no written objections are filed on the Court s docket by the Sale Notice Parties within 10 business days of service of such Sale Notice, the Debtors are authorized to consummate such transaction immediately; vi. vii. if a written objection is received from a Sale Notice Party within the notice period that cannot be resolved, the relevant Assets shall only be sold upon withdrawal of such written objection or further order of the Court; and good faith purchasers of assets pursuant to the Wind Down Procedures shall be entitled to the protections of section 363(m) of the Bankruptcy Code, in each case without prior order of the Court. 4. Sales to insiders (as that term is defined in section 101 of the Bankruptcy Code), including any affiliate of Commodity Funding, LLC or Corpus Christi Alumina LLC, are excluded from this Order. 5. No objection to the relief requested in the Motion combined with no timely objection to the sale or transfer of Assets in accordance with the terms of this Order shall be determined to be consent to such sale or transfer within the meaning of section 363(f)(2) of the Bankruptcy Code. 6. Sales and transfers of Assets are free and clear of all liens, with such liens attaching to the proceeds of such sale or transfer with the same validity, extent, and priority as had attached to such Assets immediately prior to such sale or transfer. 7. Sales of Assets shall be deemed arm s-length transactions entitled to the protections of section 363(m) of the Bankruptcy Code. 8. The Debtors shall file a written report on the Court s docket, beginning with the calendar month ending on October 31, 2016, and, for each calendar month thereafter, no later than the tenth (10th) business day of the following month, concerning any such sales made during the 4 For purposes of this Order, the term Sale Notice Parties and Abandonment Notice Parties shall be deemed to include Reynolds Metals Company, LLC ( Reynolds ) and Gregory Power Partners LLC ( GPP ). 3
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 4 of 10 prior calendar month pursuant hereto, including the names of purchasing parties and the types and amounts of the sales. 9. Notwithstanding anything to the contrary in the Sale Notice, this Order, and/or any applicable sale agreement, the proposed sale does not release, nullify, or enjoin the enforcement rights of any governmental unit under applicable non-bankruptcy law to which the buyer would be subject as the owner or operator of the property after the closing date of sale, and the buyer reserves all rights and defenses with respect to any such liability under applicable law, other than asserting that the buyer is free of any such liability pursuant to this Order. Nothing contained in the Sale Notice, this Order, and/or any applicable sale agreement releases the buyer of the property from its obligation to comply with any applicable licensing, permitting, registration, authorization, or approval requirements of or with respect to a governmental unit. 10. Notwithstanding anything to the contrary in this Order, any Asset Sale shall be subject to, and shall not be free and clear of, any and all of the easements of record (collectively, the Easements but excluding the Temporary Easement (defined below)) held by Nashtec, LLC ( Nashtec ) under that certain Special Warranty Deed from Sherwin Alumina, L.P. now known as Sherwin Alumina Company LLC to Nashtec, L.P. now known as Nashtec LLC, dated December 17, 2004, as recorded in the land records for the County of San Patricio, Texas, on January 5, 2005, at File No. 539596 ( Deed ), except that the Asset Sale shall be free and clear of the Temporary Construction Easement (as defined in the Deed) which Temporary Construction Easement has already been canceled. Upon the effective date of a chapter 11 plan, or the closing of any Asset Sale involving property that is subject to an Easement, whichever occurs first, (i) the Debtors, as owners/sellers of the real property referenced in the Deed and, if applicable, the purchaser ( Purchaser ) shall each be deemed to agree and acknowledge that any such Easement is valid and 4
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 5 of 10 binding in all respects, and (ii) Nashtec LLC shall dismiss with prejudice its pending adversary proceeding against the Debtors (the Adversary Proceeding ). In the event a sale of all property referenced in the Deed does not occur and/or a chapter 11 plan does not become effective, Nashtec LLC s rights to proceed with the Adversary Proceeding are fully preserved with respect to such property. Abandonment of Assets 11. Subject to the procedures contained herein, the Debtors are authorized pursuant to section 554(a) of the Bankruptcy Code to abandon Assets without further order of the Court, with the prior written consent of the Prepetition Lender and CCA; provided that any single Asset abandoned by the Debtors pursuant to this Order shall have a market value of less than or equal to $250,000 (if an Abandonment Notice specifies that the Debtors are not aware that such Asset was subject to an environmental remediation obligation) or $75,000 (if an Abandonment Notice specifies that the Debtors are aware that such Asset was subject to an environmental remediation obligation). Any such abandonment of Assets shall be in accordance with the following procedures: a. the Debtors shall provide an Abandonment Notice to the Abandonment Notice Parties; b. such Abandonment Notice shall include a certification signed by an officer, agent, or representative of the Debtors and shall: (i) contain a description in reasonable detail of the Assets to be abandoned, including a general description of how the Debtors used such Asset; (ii) set forth the Debtors reasons for such abandonment; (iii) identify the entity to whom the Assets are being abandoned (if any); (iv) include an estimate of the fair market value of the Asset or Assets to be abandoned; (iv) set forth whether the Debtors are aware if the particular Asset was subject to an environmental remediation obligation; and (v) identify the net compensation (if any) that the Debtors will receive on account of the abandonment; c. if no Abandonment Notice Party objects to an abandonment in writing within 14 business days of service of such Abandonment Notice, the Debtors may immediately proceed with the abandonment; and 5
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 6 of 10 d. if an objection is timely received, and cannot be resolved consensually, then such Asset will not be abandoned except upon further order of the Court after notice and a hearing. Retention of Consultants 12. The Debtors are authorized, in the Debtors reasonable business judgment, to engage the Consultants from time to time in connection with the Wind Down. 13. The Consultants may be current or former employees of Glencore and/or its affiliates (such as the Prepetition Lender, CCA or others). 14. The Debtors are authorized, in the Debtors reasonable business judgment, to pay reasonable compensation to the Consultants, in accordance with any engagement or other agreements with such Consultants, without further order of this Court. Notice Matters 15. The Debtors shall, in accordance with the procedures set forth herein, notify Daniel L. Biller, Sullivan & Cromwell LLP, 125 Broad Street, New York, New York 10004, billerd@sullcrom.com, counsel to Corpus Christi Liquefaction, LLC, Corpus Christi LNG, LP, Cheniere Energy, Inc., and their respective affiliates (collectively, Cheniere ) and their counsel of any sale, transfer, disposition, or abandonment of real property, real property interests or fixtures in the counties of Nueces County, Texas and San Patricio County, Texas. Cheniere, the Debtors, and the Prepetition Lender reserve all rights to the protections afforded under the Bankruptcy Code or applicable non-bankruptcy law, and solely to Cheniere, the right to object to such sale, transfer disposition, or abandonment on any basis provided under the Bankruptcy Code or applicable nonbankruptcy law. This Order shall not be construed as a determination of the validity or seniority of Cheniere s property interests, and all parties rights are expressly reserved with respect to a determination of such rights. 6
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 7 of 10 16. The Sale Notice with regard to the sale or transfer of Assets substantially in the form attached to the Motion as Exhibit B is hereby authorized and approved. 17. The Abandonment Notice with regard to the abandonment of Assets substantially in the form attached to the Motion as Exhibit C is hereby authorized and approved. 18. Service of the Sale Notice or the Abandonment Notice, as applicable, is sufficient notice of the sale, transfer, or abandonment of such Assets, as applicable. 19. With respect to all sale transactions consummated pursuant to this Order, this Order shall be sole and sufficient evidence of the transfer of title to any particular buyer, and the sale transactions consummated pursuant to this Order shall be binding upon and shall govern the acts of all persons and entities who may be required by operation of law, the duties of their office, or contract, to accept, file, register, or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any of the property sold pursuant to this Order, including without limitation, all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, administrative agencies, governmental departments, secretaries of state and federal, state, and local officials, and each of such persons and entities is hereby directed to accept this Order as sole and sufficient evidence of such transfer of title and shall rely upon this Order in consummating the transactions contemplated hereby. GPP Matters 20. Notwithstanding the authority granted to the Debtors in this Order, this Order shall not be deemed to authorize the Debtors to take any act in connection with the Wind Down that may be reasonably expected to negatively affect GPP s ability, consistent with past practice and applicable law, to generate electricity for the Texas public power grid through the operation of its 550-megawatt natural-gas powered electric generation power plant in Gregory, Texas. 7
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 8 of 10 21. Prior to the later of (a) December 31, 2016, and (b) the consummation of a sale of substantially all of the Debtors assets whether pursuant to section 363 of the Bankruptcy Code or pursuant to a chapter 11 plan of liquidation (the Outside Date ), and without waiving any of the Debtors or GPP s respective claims, rights, or defenses with respect to Reynolds Metals Company, the Debtors shall not be required to provide any services provided for in the Energy Services Agreement, dated as of June 30, 1998 (as amended, modified, or supplemented from time to time, the ESA ); provided that, prior to the Outside Date, the Debtors will provide to GPP: (i) the Potable Water Services 5 ; and (ii) sanitary sewage services in accordance with past practices but only for so long as the Debtors are providing such sanitary sewage services at the Sherwin facility. GPP shall on a monthly basis reimburse the Debtors for their actual out of pocket fees and expenses attributable to the delivery of the Potable Water Services and sanitary sewage services to GPP (as such fees and expenses may be reasonably apportioned) as provided herein. 22. Upon entry of this Order, the Debtors and GPP shall be deemed to agree and acknowledge that no Debtor is, and shall not be deemed to be, an operator of a public water system and shall not be responsible for compliance with any legal requirements relating to Drinking Water Standards Governing Drinking Water Quality or Reporting Requirements for Public Water Systems with respect to the Potable Water Services or otherwise. For the avoidance of any doubt, the entry of this Order is without prejudice to the rights of any party (including the Debtors, GPP, Corpus Christi Alumina LLC, and Commodity Funding, LLC) regarding the Rejection Notice, the ESA, and the Debtors chapter 11 cases, and all such rights are fully reserved and preserved in all respects. 5 Potable Water Services means the non-potable water from the San Patricio Municipal Water District to be delivered by the Debtors, to the extent permitted by applicable law, to GPP via the water lines that the Debtors previously used to deliver potable water to GPP. Such water shall not be potable and shall not be used for human consumption or safety showers, but may be used for fire protection and other non-potable uses. 8
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 9 of 10 23. The entry of this Order is not a waiver or an adjudication of any rights, claims, or defenses of Reynolds with respect to the ESA, and Reynolds reserves all rights, claims, and defenses that it may have. Further, Reynolds does not consent to paragraphs 20 through 22 of this Order, and Reynolds does not consent to the entry into any post-petition agreement that prejudices Reynolds or impairs Reynolds rights or defenses. Miscellaneous Matters 24. Nothing in this Order shall limit the Debtors rights to use, sell or lease any property of the estate in the ordinary course of the Debtors business. 25. The Debtors are authorized to pay fees, expenses, compensation, and other costs incurred in connection with the Wind Down (including commission fees to agents, brokers, auctioneers, and liquidators, as well as the compensation of the Consultants). 26. Notice of the Motion as provided therein shall be deemed good and sufficient notice of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Bankruptcy Local Rules are satisfied by such notice. 27. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 28. All time periods set forth in this Order shall be calculated in accordance with Bankruptcy Rule 9006(a). 29. Notwithstanding anything contained in the Motion or this Order, the relief granted herein shall be subject in all respects to the terms of any order governing the use of cash collateral or access to postpetition financing entered in these chapter 11 cases. 30. Notwithstanding the relief granted in this Order and any actions taken pursuant to such relief, nothing in this Order shall be deemed: (a) an admission as to the validity of any claim 9
Case 16-20012 Document 951 Filed in TXSB on 11/23/16 Page 10 of 10 against a Debtor entity; (b) a waiver of any party s right to dispute any claim on any grounds; (c) a promise or requirement to pay any claim; (d) an implication or admission that any particular claim is of a type specified or defined in this Order or the Motion; (e) a request or authorization to assume any agreement, contract, or lease pursuant to section 365 of the Bankruptcy Code; or (f) a waiver of the rights of the Debtors, the Prepetition Lender, or any provider of postpetition financing to the Debtors under the Bankruptcy Code or any other applicable law. 31. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion. 32. This Court retains exclusive jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Order. Dated:, 2016 Corpus Signed: Christi, November Texas 23, 2016. THE HONORABLE DAVID R. JONES UNITED STATES BANKRUPTCY JUDGE DAVID R. JONES UNITED STATES BANKRUPTCY JUDGE 10