Motion to Approve Stipulation/Settlement (Partial) and Compromise of Chapter 11 Trustees Motion Pursuant to Section 506(c) With Respect to MSR Sale Expenses. Notice Served on 11/12/2012, Filed by Joel I. Sher. Responses due by 12/6/2012.
Introduction
By way of the Surcharge Motion the Trustee seeks to recover from the encumbered proceeds of the sale of the Debtors’ contractual mortgage servicing rights (the “Servicing Portfolio”) certain out-of–pocket costs and expenses incurred by the Debtors’ in the preservation and disposition of the Servicing Portfolio, as well as an amount to be reserved for the future payment of a trustee commission when the same is awarded by the Court. The Trustee now seeks approval of a partial settlement of the Surcharge Motion pursuant to which the Trustee, the Official Committee of Unsecured Creditors (the “Committee”), Credit Suisse Securities (USA) LLC, as collateral agent on behalf of itself and certain Counterparties (as hereinafter defined), and the Counterparties have agreed that certain funds will immediately be paid to the Debtors from the encumbered proceeds in satisfaction of the Trustees claims for reimbursement of the Debtors’ out-of–pocket costs and expenses incurred by the Debtors’ estates. The partial settlement does not resolve the Trustee’s remaining claim that a portion of the sale proceeds should be reserved for the payment of a trustee commission when awarded by the Court. The
consummation of the proposed settlement will afford the Debtors’ estate a significant recovery, as well as obviate the time, expense and uncertainty engendered by further litigation with respect to the matters resolved in the partial settlement. As the Trustee believes the terms of the partial settlement are reasonable and in the best interests of the Debtors’ estates, he requests that the partial settlement be approved.
The Partial Settlement
In order to avoid the expense and delay of litigating the issues raised in the Surcharge Motion solely with respect to the claims related to the Sale Expenses, the Trustee, the Collateral Agent, the Counterparties and the Committee have agreed, subject to the approval of the Court, to amend the MSR Litigation Settlement Agreement as follows:
a. From the Surcharge Reserve the Trustee will transmit the sum of $666,500.00 to the operating account of the Debtors free and clear of all liens, encumbrances and security interests of the Collateral Agent and the Counterparties;
b. From Surcharge Reserve, the Trustee will transmit the sum of $413,318.67 to the Collateral Agent for distribution to the Counterparties in accordance with the MSR Litigation Settlement Agreement; and
c. The Trustee will continue to reserve the sum of $2,253,359.78 in the Surcharge Reserve account, pending agreement or other resolution as to the amount of the reserve for the MSR Sale Commission.1
1 The reserve for the eventual payment of a trustee commission has been adjusted upward to reflect the additional sums distributed to the Collateral Agent under the terms of the MSR Litigation Settlement Agreement.
Source: Epiq Systems [Docket 1702]
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