Free Respone to Objections - District Court of Delaware - Delaware

Case 1:04-cv-01494-JJF Document 71-2 Filed O2/21/2006 Page1 0f4
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Case 1 :04-cv-01494-JJF Document 71 -2 Filed O2/21/2006 Page 2 of 4
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January 27, 2006
Alan W. l<.ornberg, Esq.
Paul, Weiss, Riikind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York. New York 10019-6064
Re: In re North Western Corporation,
Bankruptcy Case No. 03-12872 {JLP)
Dear Alan:
We write on behalf of NorthWestern Corporation ("NorthWestern") in response
to your letter dated January 23, 2006 (the “Letter"), addressed to NorthWestern’s Board of
Directors (the "Board").
NoithWestern has at all times acted in an manner consistent with its obligations
under the Plan, and we reject your allegations to the contrary. Nevertheless, we feel it necessary
to reply only to at few of your unfounded accusations.
First, the comments concerning the structure of the January 2005 proposed
settlement with Magten Asset Management Corporation ("Magten") do not merit a detailed S
discussion at this point in time. The structure of that former proposed settlement is no longer
viable, despite the appeal of the order denying approval ofthe settlement, given the distribution
of shares and cancellation of warrants that have already occurred pursuant to the Plan. We do i
not agree, however, with what appears to be an evenexpanding interpretation ofthe Plan l
Committees `“rights" with respect to the approval of proposed settlements under the terms of the i
Plan and the Plan (.?ommittee’s By-Laws. While the Plan Committee has the right to object to i
proposed settlements, it does not have the power to preclude NorthWestem from negotiating or 2
entering, into settlements, subject to the approval ofthe Bankruptcy Court.
With regard to the Plan Committees motion for surplus distributions, the
Bankruptcy Court has denied the Plan Committees request and detemiined that no distributions E
of shares held in reserve for disputed claims will be pennitted until resolution of the Magten {
litigation. While the Plan Committee is not pleased with this outcome, NorthWestern must ;
comply with the decision ofthe Bankruptcy Coun. NorthWestern acted responsibly and in a
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Case 1 :04-cv-01494-JJF Document 71 -2 Filed O2/21/2006 Page 3 of 4
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manner consistent with its duties under the Plan in connection with the surplus distribution
motion: Northwestern advised the Court of the status ofrernaining claims and applicable
reserves trom which such claims could be satistied, and stood ready to make any distribution,
partial or otherwise. which the Bankruptcy Court directed. There is no basis upon which the
Plan Committee cart accuse Northwestern of any improper conduct.
To the contrary, it is the Plan Committee which bears responsibility tor the denial
ot` its request tbr a surplus distribution ofthe shares held in reserve. As the Bankruptcy Court
made clear at the January ll, 2006 hearing, the Plan Committees continued obstruction ofany
resolution ot` the QUIPS claims has directly resulted in the Court’s refusal to permit the
distribution of any purported ‘“surplus" trom the disputed claims reserve while those claims
remain outstanding.
The Platt Committee’s actions have put Northwestern in the unenviable position
oi` expending corporate resources in order to preside over a battle between competing third
parties rather than one that is worth waging for the sake oi`Nortl1western’s own economic
interests and all ot` its shareholders. While the Plan Committee has consistently opposed any
resolution ofthe Magten litigations -— including now raising the specter of threatened action
against the Board it` it settles contrary to the Plan Cornmittee’s wishes — it does so at the expense
ofthe Reorganized Debtor, which bears the full burden and potentially enormous cost of
defending numerous protracted litigations. Despite the Plan Committee’s vehement advocacy of
its own interests, the Board simply cannot ignore its obligations to the corporation itself and all
of its shareltoldcrs in order to appease the Plan Committee by placing the interests offornter
unsecured creditors above all others.
Nevertheless Northwestern understands the interests ot` the Plan Committee in
seeking to maximize the return for its constituents. Northwestern is committed to achieving the Q
best possible resolution or settlement ofthe Magten litigation. To that end Northwestern looks
forward to any constructive input from the Platt Committee. including suggestions for ways to
minimize the financial burden ofthe continuing litigation. ·
ln sum, Northwestern has at all times acted responsibly and with the utmost good I
faitlt and consideration of both its obligations under the Plan and its general corporate i
governance obligations to all ot` its constituencies, and it will contintte to do so. t
Jos » hl . Prxjéz g
cc: Thomas J. Knapp, E-sq. (By E·l\’lail: tom.l~:napp@ rthwesterncom) E
(Northwestern Corporation) I
Jesse ll. Austin. lll. Esq. (By E-Mail: jessaustin@pattlhastingscom) i
Karol K. Dcnniston. Esq. (By E-Mail: kclenniston@paulhastingscom)
(Paul. Hastings, .lanol`sl Z(t7—‘l5‘)3vI i
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Case 1:04-cv-01494-JJF Document 71-2 Filed O2/21/2006 Page 4 of 4
Cuwns, MAL.L.ET*PREV5)‘.Z»T. C¤t:r 5. Mosua LLP
Steven .I. Rcismzm. Esq. (By Hand Dt-:liv€:ry)
(Curtis. Mztllct-Prcvust. Colt & Moslc LLP)
Filibcrto Agusti, Esq. (By E—Mail: FAgusti(é21stcpt0c.cc>m)
(Stcpmc & Johnson LLP)
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