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Case 1:04-cv-01389-JJF Document 61-3 Filed 07/12/2005 Page 1 of 4
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Case 1:04-cv-01389-JJF Document 61-3 Filed 07/12/2005 Page 2 of 4
LEXSEE 2005 U.S. DIST. LEXIS 12427
In re ENRON CORP., et al., Reorganized Debtors. UPSTREAM ENERGY
SERVICES, as Agent for Certain Texas Gas Producers, Appellant, v. ENRON
CORP., etal., THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF
ENRON CORP., et al., Appellees.
04 Civ. 8883 (VM)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK
2005 U.S. Dist. LEXIS 12427
June 23, 2005, Decided
June 24, 2005, Filed
PRIOR HISTORY: Upstream Energy Servs. v. Enron bring it into fruition. The agent failed to diligently pursue
N. Am. Corp. (ln re Enron N. Am. Corp.), 312 B.R. 27, a stay ofthe continuation order, nor did it seek expedited
2004 U.S. Dist. LEXIS 14603 (S.D.N.Y., 2004) review of its appeal from the district court.
CASE SUMMARY: OUTCOME: The appeal was dismissed.
CORE TERMS: entity, moot, confirmation,
PROCEDURAL POSTURE: Appellant gas producers' constunmation, effective, exculpation, rendered moot,
agent appealed the confinnation order of the United inequitable, appointment, negotiation, transferred,
States Bankruptcy Court for the Southern District of negotiated, confirmation hearing, additionally,
New York entered as part of the Chapter ll bankruptcy participated, reorganized, consummated, affiliated,
proceedings of appellee debtor and its reorganized exculpated, equitable, entirety, strong presumption,
entities. failure to obtain, applicable law, indemnification,
reorganization, authorization, postpetition, unidentified,
OVERVIEW: The agent represented gas producers who shareholders
had sold natural gas to the debtor and had not been paid
for those shipment. After about two years of LexisNexis(R) Headnotes
negotiations, the negotiating parties agreed on a plan.
The agent filed many objections to the plan and the
bankruptcy court permitted the objecting parties to Bankruptcy Lnw>Crcdit0r C'!ntrns& Objections
collect discovery concerning the plan. The agent failed to [HN1] To be an authorized agent of a multiple grouping,
participate in the discovery. The plan was eventually Fed. R. Bank. P. 2019 requires that every person
accepted and the agent appealed. The sole issue that was purporting to represent more than one creditor in a
on appeal as the enforceability of the exculpation Chapter 11 reorganization case file a verified statement
provision that was contained in the confirmation plan. setting forth the names and addresses of the creditors, the
The district court found the entirety of the agent's appeal nattue and amount of the claims and the relevant facts
had been rendered equitably moot by the substantial and circumstances surrounding the employment ofthe
confirmation of the plan. All property proposed by the "agent." Only when an agent has express authorization
plan to be transferred had been transferred and all equity may he file a claim on behalf of another.
interests in the debtor proposed to be cancelled had been
cancelled. To remove the exculpation provision would be Bankruptcy Law > Practice & Proceedings > Appcnts
inequitable to all those who participated in good faith to

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2005 U.S. Dist. LEXIS 12427, *
Constitutional Law > The Judiciary > Case or and create an unmanageable, uncontrollable situation for
Controversy >Mootness the bankruptcy court; (d) the parties who would be
[HN2] Mootness doctrine has two aspects in the context adversely effected by the modification have notice of the
of a bankruptcy appeal. First, there exists the U.S. Const, appeal and an opportunity to participate in the
art. Ill concern that the court consider only actual cases proceedings; and (e) the appellant pursued with diligence
and controversies. U.S. Const. art. III, § 2. When, all available remedies to obtain a stay of execution ofthe
pending an appeal from the judgment of a lower court, objectionable order if the failure to do so creates a
and without any fault of the defendant, an event occurs situation rendering it inequitable to reverse the orders
which renders it impossible for the appellate court, if it appealed from.
should decide the case in favor of the plaintiff, to grant ·
him any effectual relief whatever, the court will not COUNSEL: [*1] For Upstream Energy Services as
proceed to a formal judgment, but will dismiss the Agent for Certain Texas Gas Producers, Appellant: Barry
appeal. Second, the court must consider whether, even A. Brown, Houston, TX.
though effective relief could conceivably be fashioned,
implementation of that relief would be inequitable. For The Official Committee of Unsecured Creditors of
Where such inequity exists in the implementation of the Enron Corp., Appellee: Susheel Kirpalarri, Matthew
remedy sought, the appeal is rendered moot. Scott Barr, Milbank, Tweed, Hadley & McCloy, L.L.P.,
New York, NY.
Bankruptcy Law > Chapter ii (Reorgartization) >
Automatic Stay For Enron Corp., Appellee: Brian Scott Rosen, Weil,
Bankruptcy Law > Practice & Proceedings > Appeals Gotshal & Man ges LLP, New York, NY.
Constitutional Law > The Judiciary > Case or
Controversy > Mootrtess J UDGES: Victor Marrero, U,S.D.J.
[I-IN3] With regard to mootness of a bankruptcy appeal,
in the context of a bankruptcy order that has been OPINIONBY: Victor Marrero
_ substantially consummated, there fairly exists a "strong
presumption" that appellants challenges have been OPINION:
rendered moot due to their inability or unwillingness to DECISION AND ORDER
seek a stay. It 1S inherently improbable, once there has
been "substantial consummation," that an appellate court - _ , .
will be able to fashion effective relief. "Substantial VICTOR M·‘*RRER°= Umtcd States Dlsmct Judge'
confirmation" is defined in the Bankruptcy Code as: (A) On November 9, 2004, Upstream Energy Services
transfer of all or substantially all of the property ("Upstream"), appearing as an agent for certain Texas
proposed by the plan to be transferred; (B) assumption gas producers ("Texas Producers"), appealed the Order
by the debtor or by the successor to the debtor under the of the United States Bankruptcy Court for the Southern
plan of the business or of the management of all or District of New York (the "Bankruptcy Court") entered
substantially all of the property dealt with by the plan; on July 15, 2004 (the "Confirmation Order") as a part of
and (C) commencement of distribution under the plan. Il the Chapter ll bankruptcy proceedings of appellees
U.S.C.S.§ ll0l(2). Enron Corp. and certain of its affiliated reorganized
debtor entities (collectively, "Enron") confirming the
Bankruptcy Law > Chapter Ii (Reorganization) > Supplemental Modified Fifth Amended Joint Plan of
Postconjtrntation Affiliated Debtors Pursuant to Chapter ll of the United
Bankruptcy Law > Practice & Proceedings > Appeals States Bankruptcy Code, and Related Relief (the "Plan").
Constitutional Law > The Judiciary > Case or Enron filed a Motion to Dismiss Upstream's [*2] appeal
Controversy >Mootrress as moot on January 19, 2005, which was joined by
[HN4] With regard to appeal of a Chapter ll plan, appellees The Official Committee of Unsecured
notwithstanding the presumption of mootness, Creditors of Enron Corp., et al. (collectively, the
constitutional and equitable considerations dictate that "Creditors' Committee") on January 20, 2005.
substantial consummation will not moot an appeal if all . .
of the following circumstances exist: (a) the court can Ga May 20’ 20O5’ the pimps mfgrmcd th`? Cass
still order some effective relief; (b) such relief will not that they Zagieed that the malomy at ISSUES mscq by
area the rc-emergence of are debtor as a revnarrzea Upstream “? "S ?l’l’°“l,“""`€ ‘“°°‘= ed "“""‘F’.S°l° ‘SS“°
corporate entity; (c) such relief will not unravel intricate rcmE]mu;,g m this SCUOD Wis [lh? cgforiieabéglgié, 0]. [EB
transactions so as to knock the props out from under the lgflhgollEl§;]'E]§£)n°°£,l];;l];i01]§) Lgétcrofrols
authorization for every transaction that has taken place Weil, Gotshal & Mangcs LLP to the Com: dated May

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2005 U.S. Dist. LEXIS 12427, *
20, 2005 ("May 20 Letter"), at 2.) Because the Court n3 Upstream's failure to submit the required
finds that Upstream's appeal as to this provision is also disclosures under Bankruptcy Rule 2019 raises
moot, the Court dismisses Upstrearrrs appeal in its the question of whether these unidentified Texas
entirety. Gas Producers in fact have consented to this
agency relationship in relation to the bankruptcy.
L BACKGROUND As stated in In re Ionosphere Clubs, Inc.,
The Chapter 11 bankruptcy of Enron was one of the
largest in history, and most of the facts of those [HNI] to be an authorized agent of
proceedings are irrelevant to the appeal at hand. a multiple grouping, Bankruptcy
Therefore, only facts necessary for the resolution of the Rule 2019 requires that every
present dispute are recited herein. person purporting to represent
more than one creditor in a
A. UPSTREAM'S CLAIM AGAINST ENRON nl Chapter l 1 reorganization case file
a verified statement setting forth
nl The details of Upstream's relationship g;d§§I£€§hg?gu;_C;d;§§S;;1§l;tdgi
with Enron are more fully described in the the clainjls and the relevant fm
opinions rendered on the issue of whether and circumstances Smounding the
Upstream's claim is secured or unsecured. See In .. ..
re Enron N. Am. carp., 312 an. 27 (s.o.N.Y. gE$°§;§t£fat;;n,alffsntéxlérésé
2004) ("Upstream Security II"); In re Enron authorization ma he mc a claim
Corp., et al., 302 B.R. 455 (Bankr. S.D.N.Y. on behalfofanctger
2003) ("Upstream Security I"). Familiarity with `
tht=S—=¤¤¤¤¤¤51S¤SS¤msd· 101 B.R. s44, xsi-52 (Bahia. s.D.1~1.Y. 1989)
[ *3] (internal quotation marks and citations omitted).
In October 2001, Upstream entered into a series of
agreements with Enron North America Corp. ("ENA") B- ENRON'$ CHAPTER ll PROCEEDINGS
gat {hr d—‘=l·r·‘=¤# sf temtgl g;SEj¤RENj5;¤ Ilisrsmtst The emee debtors, which at eee time eemeiieee
thm] ' Upstream Segumy ’ 3 ` at ` H cgw-Eg approximately 180 affiliated debtor entities, each filed
cs? agrccmcmi psu-cam Rctg, as Rn agent Or C for Chapter ll bankruptcy beginning on December 2,
undisclosed and heretofore unidentified Texas Producers. 200] in the United Smeg Bankruptcy [,,5] Court for the
? I,d‘ m§6;l‘ ]§NAbr€°ifw€d th? ga; but EY rzagg? site Southern District of New York. n4 All of the affiliated
avgig lc O; R}? mgcy m céicm gr bl. ’ Twas debtor entities' Chapter 11 cases were consolidated for
Em c tg pai] Or I *15*1 lgmims F fcglt, C ,0 tflgaégi administrative purposes before Judge Arthur J. Gonzalez.
beciqle uc`, P?}-Fmegogg a mo 0 agm Hgh ET (Findings of Fact a11d Conclusions of Law Confirming
as l°“’V '“ W as ““ figcm °‘“ 'E °"“*‘ the Plan, detect July 15, 2004 (the srtnatnge op1¤1e¤·· or
Pt<=·dm·· si which Upstream stems were ssdlsclmd ··neeieee Op") at 7 included as Appendix Item 11 to
principals that held title to the gas delivered under the Appellees, Mém) `
October agreements. Upstream Security II, 312 B.R. at `
29.
n4 Not al] of the Enron entities filed for
. bankruptcy on December 2, 2001. The individual
C 1*2 fishers is je gjsstd stages? tg the filing eeeee for the various debtor entities are
we On ls app`? PRS pin-cam lst C cms listed in the Notice of Occurrence of Effective
Producers for which it is acting as the agent. As Dam and Deadline for the Filing of Claims for
Dowd m the Appellees Ripiy M°m9mndum’ Administrative Expenses, which is included as
Upstream has not revealed this infomation to the Appendix Item 14 to Appellees. Memcmndum me
EEE? 2?;l;cr’(S?c ii`};-gglrgsq Law in Support of Motion to Dismiss Upstrearn's
Mem. of Law in Response to Upstrearrrs Opp'11 tg Qflglfgj dmd Janumy 19, 2005 ( APP°u€°S
Motion to Dismiss Appeal, dated March 9, 2005 ` '
("App¤11¢¤s' Reply Mcm."}, at 14 n.10.) [*4]
After approximately two years of negotiations
between Enron, the Creditors' Committee and the ENA