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Home My WebLink About10160RESOLUTION NO. 10160 A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF PUEBLO AND LYNN HAHN- MARTINEZ, CHAPTER 7 TRUSTEE OF THE BANKRUPTCY ESTATE OF UNIVERSAL BOILER WORKS, INC., RESOLVING ALL CLAIMS BETWEEN THE PARTIES WITH RESPECT TO REAL PROPERTY AND IMPROVEMENTS LOCATED AT 31841 EXCELLENCE AVENUE, PUEBLO, COLORADO BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, that: SECTION 1. This Settlement Agreement between Pueblo, a Municipal Corporation, and Lynn Hahn - Martinez, Chapter 7 Trustee of the bankruptcy estate of Universal Boiler Works, Inc., a copy of which is attached hereto, having been approved as to form by the City Attorney, is hereby approved. SECTION 2. The president of the City Council is hereby authorized to execute said Settlement Agreement in the name of the City in substantially the same form as attached, and the City Clerk is hereby directed to attest same and affix the seal of the City thereto. SECTION 3. Upon execution, the City Attorney is authorized to file the Settlement Agreement on behalf of the City in the bankruptcy proceeding of Universal Boiler Works, Inc., Case No. 03- 24314, United States Bankruptcy Court, District of Colorado, and to take such other action as is necessary to obtain approval of the Settlement Agreement in said proceeding. INTRODUCED June 28. 2004 P ED Background Paper for Proposed RESOLUTION AGENDA ITEM # DATE: June 28, 2004 DEPARTMENT: Law Department TITLE A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF PUEBLO AND LYNN HAHN- MARTINEZ, CHAPTER 7 TRUSTEE OF THE BANKRUPTCY ESTATE OF UNIVERSAL BOILER WORKS, INC., RESOLVING ALL CLAIMS BETWEEN THE PARTIES WITH RESPECT TO REAL PROPERTY AND IMPROVEMENTS LOCATED AT 31841 EXCELLENCE AVENUE, PUEBLO, COLORADO ISSUE Should the City approve and enter the proposed Settlement Agreement with the Trustee in the bankruptcy proceeding of Universal Boiler Works, Inc., Case No. 03- 24314, United States Bankruptcy Court, District of Colorado (the "Bankruptcy Proceeding ")? RECOMMENDATION Approve the Settlement Agreement. BACKGROUND Universal Boiler Works, Inc. (" UBW ") owes the City approximately $512,000.00 with respect to Sales and Use Tax Capital Improvement Project Funds previously advanced to UBW in May of 1999. The repayment of these funds is secured by a deed of trust on certain real property and improvements located at 31841 Excellence Avenue, Pueblo, Colorado (the "Property "). UBW also owes the City approximately $4,000 with respect to the Airport combined service fees which amount is not secured (the "Service Fee "). In July of 2003, UBW filed the Bankruptcy Petition. To date, the Bankruptcy Court has refused the City's request for relief from the automatic stay to permit City to foreclose its interest in the Property. This refusal is based upon the objections of the trustee and the value of the Property, which is maintained by the Trustee to be in excess of $670,000. It is in the best interest of the City to obtain relief from the automatic stay and to proceed with foreclosure of the City's interest in the Property. The Settlement Agreement affects this goal in the most expeditious manner possible. By execution of the Settlement Agreement, the City will be releasing the bankruptcy estate and debtor from any claims of the City. Given the value of the Property, the amount of City's unsecured claim, i.e. the Service Fee, and the anticipated payment to unsecured creditors in the Bankruptcy Proceeding, the value of the City's claims being released is negligible. FINANCIAL IMPACT Without execution of the Settlement Agreement, the Property will remain in the bankruptcy estate with no current benefit to the City. JUN -08 -2004 TUE 10;22 AM CR &L FAX N0, 303 661 9555 P. 02/04 THIS SFT ° IZFMF,'NT RGRF$MENT is made and entered by and between Lynn llahn- Martinez,, Chapter 7 Trustee of the bankruptcy estate of Universal Boiler Works, Inc. ( "Trustee "), on the one huid, and Pueblo, a Municipal Corporation ( "Pueblo "), on the other hand, in frill and final settlement of all clainns between them, including claims relating to certain commercial reil property legally described as Lot 40, Pueblo Memorial Airport htdustrial Park Subdivision anti all improvements thereon. Pueblo County, Colorado, connttonly known as 31841 Excellence Avenue, Pueblo, Colorado 81001 (the "Property "). WI1EM - AS, Universal Boiler Works, Inc. (the "Debtor ") tiled a voluntary Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Colorado on July 23, 2003, Case No. 03- 24314 -ABC (the "Ratlkruptcy Case "), and Lynn I1alm- Martinez was appointed Chapter 7 "trustee of the Debtor's bankntptcy estate. WHL:RF,AS, the Properly is encumbered by a Decd of Trust from the Debtor to Pueblo, which secures a Promissory Note dated September 15, 1999, in the original face amount of $250,000, and an Agreement dated May 24, 1999, in the original principal amount of $300,000. The antowd owed under the Promissory Note and Agreement as of July 9, 2003 was $510,428. WIIEREAS, on July 14, 2003, a Lease Agreement for the Property was cxccuted by and between the Debtor and Universal Boiler Works Acquisition Corporation (the "'tenant "), wider which the Tcnant was obligated to pay rent at the rate of $2,509.96 per month for the Property. The Trustee has collected the sum of $24,046.92 from the Tenant in rent for the Property. WHERAS, the Tenant has exercised its option to terminate the Lease Agreement as of June 3Q 2004, and has vacated the Property. The Trustee asserts the Tenant owes rent for the months of May and Rune 2004. WHEREAS, Coopenccat -MQS, inc. has filed a mechanics' lien encumbering the Property_ WHEREAS, the Trustee, on tine one hand, and Pueblo, on the other hand, desire to settle all issues between them relating to the Property in order to avoid the time delay, risk, expense and uncertainly which would be incurred by litigating. NOW, TFif RCFOR ;, in consideration of the mutual promises and covenants contained herein, the Trustcu and Pueblo hereby agree as follows: 1. The Trustee agrees to full and complete relief front the Automatic Stay imposed by 11 U.S.C.'. Section 362(a) with respect to the Property in favor of Pueblo. Nothing contained in this Sell/ement Agreement shall constitute or be deemed to constitute a waiver or release or Pueblo's interest and daxl of trust in ttte Properly and its right to foreclose upon the Property. 2. The Trustee agrees to transfer any and all of the estate's interests in the Property to Pueblo Development Foundation, n Colorado non -profit corporation, via a T'rustee's Dt-cd, subject JUN -08 -2004 TUE 10;23 AM CR &L FAX N0. 303 661 9555 P. 03/04 to all csistinb liens, interests and encumbrances. 3. The Trustee shall retain the rent from the Property in the amount of $24,096.92, for the benefit of the estate. 4. This Srttletnertl Agreement is contingent upon Bankruptcy Court approval ill the Debtor's Bankruptcy Case, which the Trustee shall endeavor to obtain. '17tis Setilerrrent Agreeneerrt is further contingent upon the bankruptcy Court entering an Order granting fitll and complete relief from the Automatic Stay imposed by 1 l U.S-C. Section 362(a) with respect to the Property in favor of Pueblo, 5. Upon Bankruptcy Court approval of this Settlement AF,rreentc„t, the Trustee and bankruptcy ostate release, discharge and relinquish any and all claims, demands, daulages, liabilitics, actions or causes of action, which they have or may have against Pueblo, and Pueblo, and its respective officers, directors, shareholders, successors, assigns, affiliates and gents, and Pueblo releases, discharges ,utd relinquishes any and all claims, demands, damages, liabilities, actions or causes of action, which it has or may have against the Trustee and the Debtor, and their respective officers, directors, shareholders, successors, assigns, affiliates and agents, including any proof of claims it filed in the Bankruptcy Case. 6. This Settle acrrt Agrcement shall be governed by the laws of the State of Colorado. 7. This Sellkweut Agreement constitutes the entire agreement of the parties. There arc uo other promises, agreements, inducements or obligations other than those contained herein. This ,5ettle"tcrrt Agreement supersedes all previous communications, representations or agreements, cifhcr verbal or written, between or among the parties hereto. S. Mach party signing this Settlentertt 49reentent acknowledges she or it has carcrully reviewed the terms and conditions of this Settlement Agreement has been satisfactorily advised by counsel and other professionals with respect to the terms and conditions of this Settlentetrl Avreentent or has had the opportunity to retain counsel and other professionals and has signed this Srnleurenl A�•rcerncnt voluntarily of his free act, understanding all of die consequences. 9. The parties hereto agree that, if there is any breach of this Settlement Agrecmetrt, the prevailing party shall be entitled to recover reasonable attorney's fees and costs expendett in enforcing this Settlement Agrooment. 10. This Settlement Agreement is not, and shall not be construed, as evidence of or as ,in admission by the parties luxeto of any liability on any ol'their respective parts. 11. This Selllt'arwtt AgMer rent is not intended to, nor shall it be construed to recognize or create any rights of any kind in any third party. -1- JOIN -04 -2004 FR I 12:36 PM CRU FAX N0. 303 661 9555 P. 04/08 Date(!: J tme 2004. STATE, OF COLORADO, ( IN'1'Y OF PtIf.01.0. V n j Hahn-M� ,er j� artinez, . ' tStec al B Works, Inc. ) Sworn, sulneriberl and acknowledged More me this day of June. 2004, by Lynn lialui- Martiuez, , as (:hapter 7 "1'rustcc of ilnivcrsal Sodcr Works. lnc. My cmmunissiou expires: L – JA Ve 1 4 (tilvtL) No Public — Dntrtii: June 2004- - - _2a_, - Pucblo SrA•r�, of CAL 0RAM_ ) CoUN'nr of _.�UFSLQ- ) � SU11SCRIBEL) AND SWORN TO Inforo nx lb" Zvl� day of 4vw, 2004 by _. Randy_ThurSUn - -- — as_ ___p�^ pc�id n± n •- c4ty-- COUAC- iT - -of Pucblo. My commission cxprts: _ 8-- 1--l-007 (Smi LAO- No Public