UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION ) ) ) ) ) ) ) ) In re: FIRSTENERGY SOLUTIONS CORP., et al.,1 Debtors. Chapter 11 Case No. 18-50757 (Request for Joint Administration Pending) Hon. Judge Alan M. Koschik MOTION OF THE DEBTORS FOR ENTRY OF AN ORDER AUTHORIZING THE DEBTORS TO REJECT CERTAIN LEASE AGREEMENTS The above-captioned debtors and debtors in possession (collectively, the “Debtors”) hereby move (the “Motion”) for the entry of an order substantially in the form attached hereto as Exhibit B (the “Order”), authorizing the Debtors to reject the Facility Leases (as defined below) and certain other related executory contracts and other leases described below and set forth on Exhibit A hereto (collectively with the Facility Leases, the “Lease Agreements”2), nunc pro tunc to the date of the filing of this chapter 11 petition (the “Petition Date”). In support of this Motion, the Debtors respectfully state as follows: 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: FE Aircraft Leasing Corp. (9245), case no. 18-50759; FirstEnergy Generation, LLC (0561), case no. 18-50762; FirstEnergy Generation Mansfield Unit 1 Corp. (5914), case no. 18-50763; FirstEnergy Nuclear Generation, LLC (6394), case no. 1850760 FirstEnergy Nuclear Operating Company (1483), case no. 18-50761; FirstEnergy Solutions Corp. (0186); and Norton Energy Storage L.L.C. (6928), case no. 18-50764. The Debtors’ address is: 341 White Pond Dr., Akron, OH 44320. 2 The Lease Agreements include the Participation Agreements, the Facility Leases, the Site Subleases, the Pass-Through Trust Agreement, and the Guarantees, each of which is defined below. The Debtors’ exclusion from this Motion of any Operative Document, as defined in the Participation Agreements, or of any other agreement related to or concerning the Facility or the Mansfield Plant as defined below, should not be construed as an intent to assume any such agreements under 11 U.S.C. § 365, and the Debtors reserve all rights with respect to any later assumption or rejection thereof. 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 1 of 21 JURISDICTION AND VENUE 1. The United States Bankruptcy Court for the Northern District of Ohio (the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2). 2. Venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. 3. The statutory bases for the relief requested herein are section 365 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”) and Rule 6006 of the Federal Rules of Bankruptcy Procedure. RELIEF REQUESTED 4. With the assistance of their legal and financial advisors, the Debtors have engaged in an extensive review of the Lease Agreements, the operation of the Facility (as defined below), and the development of the Debtors’ business plan and have concluded that (i) the Lease Agreements are financially burdensome and unprofitable, and (ii) the Debtors’ continued performance under the Lease Agreements would be a significant impediment to a successful restructuring. Accordingly, the Debtors seek to reject the Lease Agreements at the outset of these chapter 11 cases, effective as of the Petition Date. BACKGROUND 5. The Debtors are direct or indirect subsidiaries of non-Debtor FirstEnergy Corp. (“FE Corp.”), a power generation and distribution company headquartered in Akron, Ohio. FE Corp.’s businesses include two principal divisions of subsidiaries, one composed of regulated business and the other composed of unregulated businesses. See Declaration of Donald R. Schneider in Support of Chapter 11 Petitions and First Day Motions (“Schneider Decl.”), ECF 2 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 2 of 21 No. 55, ¶ 4.3 The unregulated business provides energy-related products and services to retail and wholesale customers. Id. The Debtors’ unregulated business includes the ownership and/or operation of certain fossil fuel generation facilities and coal-fired and nuclear power plants. 6. Debtor FirstEnergy Generation, LLC (“FG” or “Lessee”) is a direct, wholly owned-subsidiary of Debtor FirstEnergy Solutions Corp. (“FES”), which, in turn, is a direct subsidiary of FE Corp. Declaration of Donald A. Moul In Support of Motion of the Debtors for Entry of an Order Authorizing the Debtors to Reject Certain Lease Agreements (“Moul Decl.”) ¶ 1. FG owns and/or operates a number of fossil fuel generation facilities, including the Mansfield Plant (as defined below). A. The Mansfield Sale and Leaseback Transaction and the Lease Agreements 7. Pursuant to a series of leases with certain owner trusts (collectively, the “Facility Leases”), FG is lessee of a 93.825% undivided interest in Unit 1 (the “Facility”) of the Bruce Mansfield plant (the “Mansfield Plant”), a three-unit coal-fired generating facility located in Shippingport, Pennsylvania with net demonstrated capacity of 2,490 MWs. Id. ¶ 7, Ex. 1. The Facility Leases were entered into on July 1, 2007 and, absent early termination, will expire on June 13, 2040. Id. Ex. 1 § 3.1. 4 Only the Undivided Interest in the Facility is subject to the Facility Leases. 8. FG owns the remaining 6.175% of the Facility not subject to the Facility Leases. Schneider Decl. ¶ 31; Moul Decl. ¶ 9. Additionally, FG owns Units 2 and 3 of the Mansfield Plant, as well as all of the common and shared facilities of the Mansfield Plant. Moul Decl. ¶ 9. 3 The Schneider Declaration has been filed contemporaneously herewith and is incorporated by reference as if fully set forth herein. 4 FG subsequently assigned its leasehold interest in the Facility to FG subsidiary FirstEnergy Generation Mansfield Unit 1 Corp. (“FGMUC”), which operates the Facility and Units 2 and 3 of the Bruce Mansfield plant. Schneider Decl. ¶ 320. FGMUC is a Debtor and a movant hereunder. 3 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 3 of 21 FG operates all three units of the Mansfield Plant pursuant to an Operating Agreement, dated June 1, 1976, between and among FG and certain of FE Corp.’s non-debtor affiliates, which generally provides that FG will operate and maintain the Mansfield Plant according to certain terms and conditions and allocate certain costs among the Units of the Plant. Id. Ex. 2. 9. The Facility Leases were executed as part of a 2007 sale and leaseback transaction (the “Mansfield Sale-Leaseback Transaction”). The Mansfield Sale-Leaseback Transaction is governed by six substantially identical Participation Agreements (the “Participation Agreements”) dated June 26, 2007 and setting forth the manner in which the parties intend to participate in the transaction, the conditions precedent to such participation, the representations and warranties of the parties, and certain covenants and indemnities of the parties in connection with the transaction.5 Id. Ex. 3. 10. Pursuant to the Participation Agreement and other operative Mansfield Sale- Leaseback Transaction documents, FG sold six separate portions of its ownership interest (each portion referred to in the operative documents as an, and referred to collectively here as the, “Undivided Interest”), together representing a 93.825% interest in the Facility, to six Delaware statutory trusts (the “Lessor Trusts”), for a total purchase price of approximately $1.3 billion.”6 Id. ¶ 11, Ex. 3 at 1-2, Ex. 4. The Lessor Trusts, in turn, leased their interests in the Facility back to FG pursuant to the Facility Leases. Moul Id. ¶ 11, Ex. 3 at 1-2. 11. As part of the Mansfield Sale-Leaseback Transaction, FG retained ownership of the real property underlying the Facility (the “Facility Site”). Id. ¶ 12. FG leased the Facility 5 At the time of the Mansfield Sale-Leaseback Transaction, FG was doing business under the name FirstEnergy Generation Corp. 6 The Lessor Trusts are Mansfield 2007 Trusts A-F. Mansfield 2007 Trusts A and F each purchased interests representing 16.8885% of the ownership interest of the Facility. Mansfield 2007 Trusts B through E each purchased 15.012% interests. 4 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 4 of 21 Site to the Lessor Trusts for an initial term through June 13, 2051 pursuant to six separate “Site Leases.” Id. Ex. 5. Each Lessor Trust, as Site Lessee, then subleased the Facility Site back to FG as Site-Sublessee for an initial term through June 13, 2040, the termination date of the Facility Leases, pursuant to separate “Site Subleases.” Id. Ex. 6. 12. The Lessor Trusts’ purchases of the Undivided Interest were funded by equity investments from “Owner Participants,”7 who are the equity owners of the Lessor Trusts. Id. ¶ 14, Ex. 3 at 1-2. The Owner Participants’ investment was financed through a public offering of pass-through trust certificates (the “Pass-Through Trust Certificates”) sold to qualified buyers (the “Pass-Through Trust Certificateholders”). Id. ¶ 14. The proceeds from such sale were used to purchase debt instruments (the “Lease Notes”) issued by the Lessor Trusts. Id. The Lease Notes are secured by, inter alia, the Lessor Trusts’ right, title and interest in and to the Undivided Interest, the Facility Leases, and the Site Subleases. Schneider Decl. ¶ 37; Moul Decl. ¶ 14, Ex. 3 at 1-2. 13. Wilmington Savings Fund Society, FSB acts as indenture trustee (the “Indenture Trustee”) under Indentures of Trust, Open-End Mortgage and Security Agreement, dated July 1, 2007 (as amended from time to time) and entered into with each Lessor Trust.8 Moul Decl. Ex. 7. Wilmington Savings Fund Society, FSB also serves as trustee (the “Pass-Through Trustee”) and holds the Lease Notes for the benefit of the Pass-Through Trust Certificateholders under a 7 MetLife Capital, Limited Partnership (“MetLife”), is the current Owner Participant of Mansfield 2007 Trusts A-E. BM1, LLC (“BM1”), a Delaware limited liability company controlled by Bankers Commercial Corporation is the current Owner Participant of Mansfield 2007 Trust F. The original Owner Participants at the time of the Mansfield Sale-Leaseback were Hillbrook Corp., an affiliate of AIG Financial Products Corp. (Lessor Trusts A-E) and BM1. MetLife acquired the interest of Hillbrook Corp. and became the Owner Participant for Lessor Trusts A-E in August 2009. 8 Upon information and belief, Wilmington Savings Fund Society, FSB succeeded and replaced the original Pass-Through Trustee, the Bank of New York Trust Company, N.A., pursuant to agreement dated November 17, 2017. 5 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 5 of 21 Pass-Through Trust Agreement dated June 26, 2007 (as amended from time to time, the “PassThrough Trust Agreement”) with FG as Lessee and FES as Guarantor.9 Id. ¶ 16 , Ex. 8. 14. As Lessee of the Facility, FG makes semi-annual lease payments to the Lessor Trusts in accordance with a payment schedule annexed to the Facility Leases. Id. Ex. 1 § 3.23.5, Schedules 1-A – 1-C. FG’s rent payments are made directly to the Indenture Trustee and are used by the Lessor Trusts to support principal and interest payments on the Lease Notes and the Pass-Through Trust Certificates and equity distributions to the Owner Participants. Id. § 3.5. The aggregate principal currently outstanding on the Pass-Through Trust Certificates is $769 million. Schneider Decl. ¶ 59. 15. Pursuant to six substantially identical guarantees dated July 1, 2007 (the “Guarantees”), FES guaranteed FG’s obligations under the Facility Leases and certain other agreements associated with the Mansfield Sale-Leaseback Transaction in favor of the Lessor Trusts, the Owner Participants, the Indenture Trustee, the Pass-Through Trustee, and certain parties indemnified under the terms of the Participation Agreement. Moul Decl. Ex. 9. 16. In addition, pursuant to six substantially identical Tax Indemnity Agreements (the “Tax Indemnity Agreements”) dated July 1, 2007, FG agreed to indemnify each Owner Participant for certain adverse tax consequences related to the Mansfield Sale-Leaseback Transaction. Id. Ex. 10. 17. An illustration of the structure of the Mansfield Sale-Leaseback Transaction is below. 9 Upon information and belief, Wilmington Savings Fund Society, FSB succeeded and replaced the original Indenture Trustee, the Bank of New York Trust Company, N.A., pursuant to agreement dated November 17, 2017. 6 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 6 of 21 Id. ¶ 19. B. The Facility’s Revenue and Expenses 18. Under the current and foreseeable circumstances, it is extremely unlikely that continued operation of the Facility pursuant to the Facility Leases will be economic for FG. In order for the Facility to be profitable and viable as part of the Debtors’ ongoing business plan, FG, in operating the Facility, must earn revenue sufficient to cover its rent payments on the Facility Lease, as well as its operating costs and necessary capital expenditures. Id. ¶ 21. As detailed below, these costs are currently materially greater than the Facility’s revenue. The likelihood of this changing is extremely remote, largely because the Facility competes with natural gas-fired generators, which generate electricity at significantly lower costs. Id. As a higher-cost generator subject to federal and state environmental regulations, which further increase costs for coal-reliant producers, the Facility is at a severe disadvantage in the competitive marketplace. Id. 7 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 7 of 21 19. The Debtors generate revenue from the Facility by selling the Facility’s generation capacity in (i) the wholesale electricity market, and (ii) the spot energy market in the region commonly referred to as the “PJM region,” which includes all or parts of Pennsylvania, Ohio, and certain other states. See Schneider Decl. ¶¶ 11, 15. Wholesale pricing for electricity in the PJM market is determined through capacity and spot-market auctions conducted by PJM Interconnection LLC (“PJM”), the regional transmission organization that controls the wholesale electricity market for the PJM region. See id. 20. In the spot market, producers and wholesalers submit bids indicating the minimum price at which they are willing to sell or buy energy, respectively, at a specific time. Based on the bids received, PJM determines the market-clearing price using the uniform price auction method. Id. ¶ 11. Under this method, the market price for energy is set by the intersection of supply offers and demand bids. Id. This uniform price is the market clearing price (where supply and demand intersect) and is constantly in flux, from one time interval to the next, and from one location to another. See id. PJM then calls upon producers to generate and sell energy as needed with the producers offering lower prices being called upon before more expensive producers. See id. 21. The uniform price auction’s price setting structure means that, if demand is low or if there is significant supply of low-cost producers, the resulting market clearing price is lower. Id. In these circumstances, higher-cost producers are less profitable, may generate less electricity, and may be required to sell power at a loss in some periods due to operational constraints that limit flexibility to quickly change production levels in response to price changes. Id. 8 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 8 of 21 22. In the capacity market, generators do not sell electricity itself, but rather the ability and commitment to produce electricity when necessary. Id. ¶ 12. Capacity markets are intended to promote grid reliability by procuring, often several years in advance, the appropriate amount of capacity needed to meet predicted energy demand. Id. PJM conducts capacity auctions to determine the set of resources that is needed to meet annual demand and the price those needed resources will be paid for committing to make their generation facilities available. Id. The generators that “clear” the capacity auction receive a commitment to be available to produce electricity during the corresponding “delivery year,” which is typically about three years in the future. Id. This commitment involves a requirement to offer the contracted generation capacity into the energy market each day during the delivery year. Id. 23. Changes in the market and increased regulatory compliance costs have had a profound impact on companies that rely on coal to generate power, and have challenged the economic competitiveness of coal-fired plants. Id. ¶ 17. 24. Further, on January 10, 2018, a fire damaged a scrubber, stack, and other property and systems associated with Units 1 and 2 of the Mansfield Plant. Schneider Decl. ¶ 94; see also FE Corp., Current Report (Form 8-K) (Jan. 10, 2018). The fires were controlled and extinguished with the help of local fire departments, and there were no major injuries to plant personnel or the response team. Id. 25. Following the event, FES and FG assembled a group (the “Mansfield Recovery Team”) composed of individuals from operations, insurance groups, senior management, legal advisors, and other FES advisors. Schneider Decl. ¶ 95. The Mansfield Recovery Team has started a structural analysis of Units 1 and 2, mobilized a supply chain team, engaged experts to evaluate essential equipment, reached out to the Pennsylvania Department of Environmental 9 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 9 of 21 Protection, and taken appropriate steps to prepare a claim and pursue recovery from applicable insurance policies. Id. Plant personnel are evaluating the extent of damage to the plant. Id. At this time, management is unable to estimate the operational and financial impacts of the fire on Mansfield Units 1 and 2. Id. 26. It is simply not economically feasible or justifiable for the Debtors to continue to perform under the Lease Agreements. Moul Decl. ¶ 23. In 2017, the Debtors’ total expenses to lease and operate the Facility were $207 million, with revenue of only $117 million—a $90 million shortfall.10 Id. The Debtors’ management and advisors have not yet developed updated financial projections that incorporate the effects of the January 2018 fire because the Mansfield Recovery Team’s analysis is ongoing. Id. However, as illustrated below, even before the fire, absent rejection, the Facility was projected to have a cash flow shortfall in 2018 of approximately $104 million. Id. ($’s in millions) 2017 2018 Revenue (Energy and Capacity) $117 $115 Total Operating Expenses & Capital Expenditures (134) (123) Rent Payments (73) (96) Cash Flow, Annual (90) (104) Id. ¶ 23. 27. Even considering various restructuring options, there is no realistic scenario in which the Debtors can continue to perform under the Lease Agreements and not experience debilitating losses. Id. ¶ 24. In addition to cash payments totaling approximately $71 million 10 These amounts reflect costs associated with the Facility, based on an allocation of aggregate costs associated with the operation of the Mansfield Plant. 10 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 10 of 21 due on June 1, 2018, the Debtors’ future rent payment obligations under the Lease Agreements include an additional $25 million in 2018, $95 million in 2019, and $68 million in 2020. Id. Thereafter, the Debtors’ aggregate obligations will total $959 million from 2020 through the expiration of the Facility Leases in 2040. Id. Such onerous payment obligations dwarf any potential cash flow that could be generated from the Facility over the remaining terms of the Facility Leases. Id. 28. In addition to massive lease payments due under the Facility Leases, the Lease Agreements also obligate the Debtors to make significant capital expenditures with respect to the Facility. Id. ¶ 25, Ex. 1 §§ 7, 8. The Debtors must maintain the Facility, at the Debtors’ expense, in accordance with “prudent industry practice” and to that end, must make “repairs, renewals, replacements, betterments and improvements” to the Facility. Id. § 7.1. Likewise, the Debtors are responsible for complying with all environmental and other governmental regulations, including making modifications to the Facility that are required by such regulations. Id. §§ 7.3, 8. The Debtors project that the capital expenditures and operations and maintenance costs required to meet their obligations under the Lease Agreements will be significant, totaling approximately $40 million in 2018. Moul Decl. ¶ 25. Such obligations, the vast majority of which could be avoided if the Lease Agreements are terminated, would hinder the Debtors’ ability to restructure their businesses and would exacerbate the Debtors’ financial burdens in the near and long term. Id. 29. The Facility is not essential to the Debtors’ business. Id. ¶ 26. FG owns Units 2 and 3, the other two units at the Mansfield Plant. Id. Those units may be operated independent of Unit 1 and have generation capacity sufficient to fulfill FG’s capacity-generation obligations in the PJM market. Id. The Debtors will not be harmed if the Lease Agreements are terminated; 11 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 11 of 21 indeed, the Debtors’ business will benefit because some portion of the projected cash outflows associated with the Lease Agreements can be reinvested in the Debtors’ business. Id. C. The Debtors’ Pre-Petition Discussions with the Participating Lease Parties and the Mansfield Issues Protocol 30. Prior to the Petition Date, the Debtors commenced discussions with various parties with interests in the sale-leaseback transaction, including Owner Participant MetLife, the Indenture Trustee, and an ad hoc group of certain holders of pass-through certificates issued in connection with Mansfield Sale-Leaseback Transaction (the “Mansfield Certificate Holders Group” and collectively with MetLife and the Indenture Trustee, the “Participating Lease Parties”). Schneider Decl. ¶ 89. A number of these parties entered into non-disclosure agreements with the Debtors, and over the past seven months, have conducted substantial due diligence on the Debtors’ operations, financial condition, and long term business plan, including having access to a data room populated by the Debtors and attending diligence sessions relating to various topics of interest. Id. The Debtors have had discussions with the advisors, and in some instances principals, for these parties regarding various issues arising in connection with the Debtors’ operations at the Bruce Mansfield Plant, including the January 10, 2018 fire. Id. 31. On March 30, 2018, the Debtors and the Participating Lease Parties entered into the Joint Stipulation Concerning Rejection of Rejected Operative Documents, Schedule and Protocol for Determination of Claims of Mansfield Parties, and Other Matters Related to Bruce Mansfield Unit 1 (the “Mansfield Issues Protocol,”) Exhibit C to Process Support Agreement, Exhibit C to the Schneider Declaration, ECF No. 55-4.11 The Mansfield Issues Protocol provides that the Participating Lease Parties shall consent to, or agree not to object to, the relief requested BM1, Owner Participant for Mansfield 2007 Trust F, is not a party to the Mansfield Issues Protocol at this time. 11 12 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 12 of 21 herein, subject to the terms and conditions set forth therein, and governs the procedural mechanism and schedule through which the Debtors and the Participating Lease Parties shall seek to resolve any claims concerning the Lease Agreements or arising from the rejection of the Lease Agreements. The Mansfield Issues Protocol also lays out certain agreements and understandings between the Debtors and the parties thereto concerning the operation and transition of the Facility and insurance issues related to the January 2018 fire. APPLICABLE AUTHORITY 32. Section 365(a) of the Bankruptcy Code provides that a debtor in possession “subject to the court’s approval, may . . . reject any executory contract or unexpired lease of the debtor.” 11 U.S.C. § 365(a). “This provision allows a trustee to relieve the bankruptcy estate of burdensome agreements which have not been completely performed.” Stewart Title Guar. Co. v. Old Republic Nat’l Title Co., 83 F.3d 735, 741 (5th Cir. 1996) (citing In re Muerexco Petroleum, Inc., 15 F.3d 60, 62 (5th Cir. 1994)). Bankruptcy courts have broad authority and considerable discretion under this provision. See In re Dow Corning Corp., 280 F.3d 648, 656 (6th Cir. 2002). 33. The Supreme Court has recognized that “the authority to reject an executory contract” is not merely incidental, but rather it “is vital to the basic purpose of a Chapter 11 reorganization, because rejection can release the debtor’s estate from burdensome obligations that can impede a successful reorganization.” NLRB v. Bildisco & Bildisco, 465 U.S. 513, 528 (1984). Courts have similarly held that “[t]he right of a debtor in possession to reject certain contracts is fundamental to the bankruptcy system because it provides a mechanism through which severe financial burdens may be lifted while the debtor attempts to reorganize.” Westbury 13 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 13 of 21 Real Estate Ventures, Inc. v. Bradlees, Inc. (In re Bradlees Stores, Inc.), 194 B.R. 555, 558 n.l (Bankr. S.D.N.Y. 1996). A. Rejection of the Lease Agreements is a Proper Exercise of the Debtors’ Business Judgment 34. The “business judgment” standard applies to determine whether the rejection of an executory contract or unexpired lease should be authorized. See Phar-Mor, Inc. v. Strouss Bldg. Assocs., 204 B.R. 948, 951-52 (N.D. Ohio 1997) (“Whether an executory contract is ‘favorable’ or ‘unfavorable’ is left to the sound business judgment of the debtor.”); In re Fashion Two Twenty, Inc., 16 B.R. 784, 787 (Bankr. N.D. Ohio 1982) (adopting business judgment standard as “proper standard” to determine motion for rejection); Bildisco & Bildisco, 465 U.S. at 523 (acknowledging business judgment is “traditional” standard for rejection of executory contracts). 35. A debtor’s rejection of an unexpired contract satisfies the “business judgment” standard where, as here, such rejection would benefit the estate. See In re Pesce Baking Co., Inc., 43 B.R. 949, 956 (Bankr. N.D. Ohio 1984) (“A court will approve the rejection of an executory contract under the business judgment test if rejection would benefit the debtor’s estate); Sharon Steel Corp. v. National Fuel Gas Distrib. Corp. (In re Sharon Steel Corp.), 872 F.2d 36, 40 (3d Cir. 1989) (affirming lease rejection where it “would benefit the estate”); In re HQ Global Holdings, 290 B.R. 507, 511 (Bankr. D. Del. 2003) (“Under the business judgment standard, the sole issue is whether the rejection benefits the estate.”). 36. Where a debtor reasonably exercises business judgment, courts will routinely approve the assumption or rejection of executory contracts or unexpired leases. See, e.g., Certified Class of Ohio Res. Customers of Level Propane Gases (In re Level Propane Gases, Inc.), 297 B.R. 503, 509 (Bankr. N.D. Ohio 2003), aff’d, No. 02-16172, 2007 WL 1821723 14 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 14 of 21 (N.D. Ohio June 22, 2007) (granting rejection where debtors “set forth a sound business judgment”); In re Fashion Two Twenty, Inc., 16 B.R. at 787 (same); Phar-Mor, Inc., 204 B.R. at 952 (“Courts should generally defer to a debtor’s decision whether to reject an executory contract”); Summit Land Co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981) (holding that absent extraordinary circumstances, court approval of a debtor’s decision to assume or reject an executory contract “should be granted as a matter of course”). 37. As discussed above, and in the Moul and Schneider Declarations, in an effort to maximize the value of their estates and reduce their administrative costs in these chapter 11 cases, the Debtors have reviewed their overall operations and have determined, in their business judgment, that the Lease Agreements are burdensome and provide no economic value to their estates. Moreover, the Debtors, in the exercise of their business judgment, have determined that the Lease Agreements are not necessary for the Debtors’ restructuring efforts. Indeed, the cost of continuing to perform under the Lease Agreements would be great enough to threaten the viability of the Debtors’ restructuring efforts. Rejection of the Lease Agreements is therefore a sound exercise of the Debtors’ business judgment and will benefit the estates and their creditors. B. Nunc Pro Tunc Relief Should be Granted 38. The Debtors request that the Court deem rejection to have retroactive effect to the date of the filing of this motion on April 1, 2018. Bankruptcy Code section 105 grants the Court expansive equitable powers to fashion any order or decree that is necessary to carry out the provisions of the Bankruptcy Code. 11 U.S.C. § 105(a). This includes a grant of nunc pro tunc relief on a debtor’s motion to reject a lease, where the court finds that such relief is equitable. In re Stonebridge Techs., Inc., 430 F.3d 260, 273 (5th Cir. 2005) (“most courts have held that lease rejection may be retroactively applied”); Pac. Shores Dev., LLC v. At Home Corp. (In re At 15 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 15 of 21 Home Corp.), 392 F.3d 1064, 1071 n.9 (9th Cir. 2004) (bankruptcy court may exercise equitable powers to approve retroactive rejection “when necessary or appropriate to carry out the provisions of” section 365); Thinking Machs. Corp. v. Mellon Fin. Servs. Corp. # 1 (In re Thinking Machs. Corp.), 67 F.3d 1021, 1028 (1st Cir. 1995) (bankruptcy courts may approve retroactive rejection “when the balance of the equities preponderates in favor of such remediation”). 39. A bankruptcy court’s decision to grant retroactive relief is based upon the facts and circumstances of each case. See In re Thinking Machs., 67 F.3d at 1029 n. 9. Courts base this determination on equitable considerations, such as the potential harm to the estate if retroactive relief is denied, the absence of delay on the part of the debtor in moving for relief, and whether there is any prejudice to the lessor’s ability to relet the property. See, e.g., At Home Corp., 392 F.3d at 1073 (affirming retroactive grant of rejection where debtor moved for rejection “immediately upon filing its bankruptcy petition” and scheduled a hearing “virtually as soon as possible”); Duke Realty Ltd. P’ship v. N. Metro Mill Work Distribs. (In re Manis Lumber Co.), 430 B.R. 269, 278 (Bankr. N.D. Ga. 2009) (exercising discretion to approve retroactive rejection of lease to reduce unnecessary burdens on estate where doing so did not prejudice the landlord’s real interests); BP Energy Co. v. Bethlehem Steel Corp., No. 02 CIV. 6419 (NRB), 2002 WL 31548723, at *6 (S.D.N.Y. Nov. 15, 2002) (affirming nunc pro tunc rejection where above-market gas-purchase contract would have caused harm to the debtor’s estate and creditors). 40. Here, the Court’s decision whether to grant rejection of the Lease Agreements on a nunc pro tunc basis has potentially significant consequences to the Debtor’s estate. As further discussed in the Schneider Declaration, the Debtors are subject to liquidity constraints. See 16 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 16 of 21 Schneider Decl. ¶¶ 5, 102-06. Performance under unprofitable, non-essential contracts such as the Lease Agreements, for any period of time, will hamper the Debtors’ efforts to maximize value and pursue a value-maximizing restructuring for the benefit of their estates. 41. In addition, the Debtors plan to seek to have claims for damages from lease rejection capped pursuant to Bankruptcy Code section 502(b)(6). However, if nunc pro tunc relief is denied, the counterparties to the Lease Agreements could claim that rent accruing from the Petition Date until the date it is granted should be treated as an administrative expense, not subject to the cap. Denial of retroactive relief could thus harm the Debtors’ estate and their other creditors by increasing the Debtors’ administrative expenses. See At Home Corp. 392 F.3d at 1075 (court may consider “amount of rent owing under the contract” when deciding motion for retroactive rejection); In re New Meatco Provisions, LLC, No. 2:13-bk-22155-PC, 2013 WL 3760129, at *6 (Bankr. C.D. Cal. Jul. 16, 2013) (that “amount of rent that would accrue . . . as an administrative expense is no small sum” weighed in favor of granting retroactive rejection).12 42. For the reasons described above, the Debtors have not delayed in seeking to reject the Lease Agreements, but moved for rejection immediately upon filing for chapter 11 relief. Indeed, the Debtors provided the Participating Lease Parties with advance notice of the relief requested herein. These facts support granting retroactive relief. In re At Home Corp., 392 F.3d at 1072-73 (granting retroactive effect in part because debtor filed its motion on the first day of the case and scheduled the hearing for the “earliest practicable date”) (citing In re Thinking Machines, 67 F.3d at 1028). 43. Finally, there is no legitimate basis for delaying rejection, and the Lessor Trusts, the Indenture Trustee, and the Pass-Through Certificateholders will suffer no material prejudice 12 The Participating Lease Parties have agreed, pursuant to the Mansfield Issues Protocol, to consent to (or not to object to) rejection of the Lease Agreements on a nunc pro tunc basis. 17 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 17 of 21 from a grant of retroactive relief. The Debtors’ decision to reject the Lease Agreements is a proper exercise of their business judgment, as further discussed above. Granting this relief nunc pro tunc to the Petition Date will not prejudice the parties to the Lease Agreements because, regardless of when rejection is deemed effective, the Debtors may not transfer control of, sell, or sublet the Facility unless they have obtained necessary federal regulatory approval.13 Further, as discussed above, the Debtors and the Participating Lease Parties have agreed, pursuant to the Mansfield Issues Protocol, to a protocol for resolving any claims arising in connection with the relief sought herein and to work cooperatively with respect to the operation and transition of the Facility, and insurance issues related to the January 2018 fire. RESERVATION OF RIGHTS 44. Nothing contained in this Motion or any actions taken by the Debtors pursuant to the relief granted in the Order is intended or should be construed as: (a) an admission as to the validity of any particular claim against a Debtor entity; (b) a waiver of the Debtors’ rights to dispute any particular claim on any grounds; (c) a promise or requirement to pay any particular claim; (d) an implication or admission that any particular claim is of a type specified or defined in this Motion; (e) a request or authorization to assume any agreement, contract, or lease pursuant to Bankruptcy Code section 365; or (f) a waiver or limitation of any of Debtors’ rights under the Bankruptcy Code or any other applicable law. 13 Section 203 of the Federal Power Act (“FPA”) requires that public utilities, such as the Debtor Lessees, obtain prior authorization from FERC before transferring ownership or control of facilities such as the Facility, and each of the Lessor Trusts (or any other entity designated to own and control the Facility in lieu of the Lessor Trusts), who will become a “public utility” upon acquiring control of the Facility, must obtain authorization from FERC pursuant to the FPA to sell electric energy at wholesale or engage in transmission of electric energy in interstate commerce. See 16 U.S.C. §§ 824b(a)(1)(A), 824b(a)(1)(D), 824(e); Calpine Fox, 116 F.E.R.C. ¶ 61,261 at P1 (2006). 18 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 18 of 21 NOTICE 45. No trustee, examiner or official committee has been appointed in the Debtors’ chapter 11 cases. Notice of this Motion has been served on the following parties and/or their counsel, if known, via facsimile, overnight delivery, e-mail, and/or hand delivery: (a) the Office of the U.S. Trustee for the Northern District of Ohio; (b) the entities listed on the Consolidated List of Creditors Holding the 50 Largest Unsecured Claims filed pursuant to Bankruptcy Rule 1007(d); (c) counsel to the Bank of New York Mellon Trust Company, N.A., in its capacity as indenture trustee under various indenture agreements; (d) counsel to UMB Bank, National Association, in its capacity as indenture trustee, paying agent, and collateral trustee under various indenture agreements, including, without limitation, certain pollution control revenue bond indentures and certain first mortgage bond indentures, and trust agreements; (e) counsel to Wilmington Savings Fund Society, FSB, in its capacity as indenture trustee and pass through trustee under various indenture agreements and trust agreements in connection with the Bruce Mansfield Unit 1 sale-leaseback; (f) counsel to the Ad Hoc Group of Holders of the 6.85% Pass Through Certificates due 2034; (g) counsel to the ad hoc group of certain holders of (i) pollution control revenue bonds supported by notes issued by FG and NG and (ii) certain unsecured notes issued by FES (collectively, the “Ad Hoc Noteholder Group”); (h) counsel to FirstEnergy Corp.; (i) counsel to MetLife Capital, Limited Partnership; (j) the District Director of the Internal Revenue Service; (k) the Securities and Exchange Commission; (l) the Office of the United States Attorney for the Northern District of Ohio; (m) the United States Environmental Protection Agency; (n) the Nuclear Regulatory Commission; (o) the United States Department of Energy; (p) the Federal Energy Regulatory Commission; (q) the Office of the Attorney General for Ohio; (r) the Office of the Attorney General for Pennsylvania; (s) the Office of the Attorney 19 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 19 of 21 General for Illinois; (t) the Office of the Attorney General for Maryland; (u) the Office of the Attorney General for Michigan; (v) the Office of the Attorney General for New Jersey; (w) the National Association of Attorneys General; (x) counsel for the Owner Trustee for the Lessor Trusts; (y) BM1, LLC; and (z) Bankers Commercial Corporation. The Debtors submit that, in light of the nature of the relief requested, no other or further notice need be given. CONCLUSION WHEREFORE, the Debtors respectfully request that the Court (i) enter an order, in a form substantially similar to Exhibit B attached hereto, deeming the Lease Agreements rejected as of the date of the filing of this Motion on April 1, 2018, and (ii) grant such other and further relief as the Court deems appropriate. 20 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 20 of 21 Dated: April 1, 2018 Respectfully submitted, /s/ Marc B. Merklin_______ BROUSE MCDOWELL LPA Marc B. Merklin (0018195) Kate M. Bradley (0074206) Bridget A. Franklin (0083987) 388 South Main Street, Suite 500 Akron, OH 44311-4407 Telephone: (330) 535-5711 Facsimile: (330) 253-8601 mmerklin@brouse.com kbradley@brouse.com bfranklin@brouse.com - and - AKIN GUMP STRAUSS HAUER & FELD LLP Ira Dizengoff (pro hac vice admission pending) Lisa Beckerman (pro hac vice admission pending) Brad Kahn (pro hac vice admission pending) Sean E. O’Donnell (pro hac vice admission pending) Rachel J. Presa (pro hac vice admission pending) One Bryant Park New York, New York 10036 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 idizengoff@akingump.com lbeckerman@akingump.com bkahn@akingump.com sodonnell@akingump.com rpresa@akingump.com - and Scott Alberino (pro hac vice admission pending) Kate Doorley (pro hac vice admission pending) 1333 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telephone: (202) 887-4000 Facsimile: (202) 887-4288 salberino@akingump.com kdoorley@akingump.com Proposed Counsel for Debtors and Debtors in Possession 21 18-50757-amk Doc 64 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 21 of 21 EXHIBIT A 1. Participation Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; Mansfield 2007 Trust A, as Lessor; U.S. Bank Trust National Association, as Trust Company; Hillbrook Corp., as Owner Participant, The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Indenture Trustee; and The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Pass Through Trustee. 2. Participation Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; Mansfield 2007 Trust B, as Lessor; U.S. Bank Trust National Association, as Trust Company; Hillbrook Corp., as Owner Participant, The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Indenture Trustee; and The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Pass Through Trustee. 3. Participation Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; Mansfield 2007 Trust C, as Lessor; U.S. Bank Trust National Association, as Trust Company; Hillbrook Corp., as Owner Participant, The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Indenture Trustee; and The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Pass Through Trustee. 4. Participation Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; Mansfield 2007 Trust D, as Lessor; U.S. Bank Trust National Association, as Trust Company; Hillbrook Corp., as Owner Participant, The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Indenture Trustee; and The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Pass Through Trustee. 5. Participation Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; Mansfield 2007 Trust E, as Lessor; U.S. Bank Trust National Association, as Trust Company; Hillbrook Corp., as Owner Participant, The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Indenture Trustee; and The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Pass Through Trustee. 6. Participation Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; Mansfield 2007 Trust F, as Lessor; U.S. Bank Trust National Association, as Trust Company; Bankers Commercial Corporation, as Owner Participant, The Bank of New York Trust Company, N.A., not in its 18-50757-amk Doc 64-1 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 1 of 3 individual capacity, except as expressly provided, but solely as Indenture Trustee; and The Bank of New York Trust Company, N.A., not in its individual capacity, except as expressly provided, but solely as Pass Through Trustee. 7. Facility Lease Agreement, dated as of July 1, 2007, between Mansfield 2007 Trust A, as Lessor, and FirstEnergy Generation Corp., as Lessee. 8. Facility Lease Agreement, dated as of July 1, 2007, between Mansfield 2007 Trust B, as Lessor, and FirstEnergy Generation Corp., as Lessee. 9. Facility Lease Agreement, dated as of July 1, 2007, between Mansfield 2007 Trust C, as Lessor, and FirstEnergy Generation Corp., as Lessee. 10. Facility Lease Agreement, dated as of July 1, 2007, between Mansfield 2007 Trust D, as Lessor, and FirstEnergy Generation Corp., as Lessee. 11. Facility Lease Agreement, dated as of July 1, 2007, between Mansfield 2007 Trust E, as Lessor, and FirstEnergy Generation Corp., as Lessee. 12. Facility Lease Agreement, dated as of July 1, 2007, between Mansfield 2007 Trust F, as Lessor, and FirstEnergy Generation Corp., as Lessee. 13. Site Sublease, dated as of July 1, 2007, between Mansfield 2007 Trust A, as Site Sublessor, and FirstEnergy Generation Corp., as Site Sublessee. 14. Site Sublease, dated as of July 1, 2007, between Mansfield 2007 Trust B, as Site Sublessor, and FirstEnergy Generation Corp., as Site Sublessee. 15. Site Sublease, dated as of July 1, 2007, between Mansfield 2007 Trust C, as Site Sublessor, and FirstEnergy Generation Corp., as Site Sublessee. 16. Site Sublease, dated as of July 1, 2007, between Mansfield 2007 Trust D, as Site Sublessor, and FirstEnergy Generation Corp., as Site Sublessee. 17. Site Sublease, dated as of July 1, 2007, between Mansfield 2007 Trust E, as Site Sublessor, and FirstEnergy Generation Corp., as Site Sublessee. 18. Site Sublease, dated as of July 1, 2007, between Mansfield 2007 Trust F, as Site Sublessor, and FirstEnergy Generation Corp., as Site Sublessee. 19. Pass Through Trust Agreement, dated as of June 26, 2007, among FirstEnergy Generation Corp., as Lessee; FirstEnergy Solutions Corp., as Guarantor; and The Bank of New York Trust Company, N.A., not in its individual capacity, but solely as Pass Through Trustee. 20. Guaranty, dated as of July 1, 2007, made by FirstEnergy Solutions Corp., as Guarantor. (Trust A) 2 18-50757-amk Doc 64-1 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 2 of 3 21. Guaranty, dated as of July 1, 2007, made by FirstEnergy Solutions Corp., as Guarantor. (Trust B) 22. Guaranty, dated as of July 1, 2007, made by FirstEnergy Solutions Corp., as Guarantor. (Trust C) 23. Guaranty, dated as of July 1, 2007, made by FirstEnergy Solutions Corp., as Guarantor. (Trust D) 24. Guaranty, dated as of July 1, 2007, made by FirstEnergy Solutions Corp., as Guarantor. (Trust E) 25. Guaranty, dated as of July 1, 2007, made by FirstEnergy Solutions Corp., as Guarantor. (Trust F) 3 18-50757-amk Doc 64-1 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 3 of 3 EXHIBIT B [Proposed Order] 18-50757-amk Doc 64-2 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 1 of 5 UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION In re: FIRSTENERGY SOLUTIONS CORP., et al.,1 Debtors. ) ) ) ) ) ) ) ) Chapter 11 Case No. 18-50757 (Request for Joint Administration Pending) Hon. Judge Alan M. Koschik ORDER GRANTING DEBTORS’ MOTION PURSUANT TO SECTION 365 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULE 6006 FOR ENTRY OF AN ORDER AUTHORIZING THE DEBTORS TO REJECT THE LEASE DOCUMENTS Upon the motion (the “Motion”) of the above-captioned debtors and debtors in possession (collectively, the “Debtors”), for entry of an order authorizing, but not directing, the Debtors to reject the Facility Leases and certain other related executory agreements and unexpired leases as set forth therein (collectively, the “Lease Agreements”), effective nunc pro tunc to the Petition Date; all as more fully set forth in the Motion; and upon the Declaration of Donald A. Moul in Support of Motion of the Debtors for Entry of an Order Authorizing the Debtors to Reject Certain Lease Agreements (the “Moul Declaration”); and the Court having found that it has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334; and the Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b); and the Court having found that venue of the cases and the Motion in this district is proper pursuant to 28 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: FE Aircraft Leasing Corp. (9245), case no. 18-50759; FirstEnergy Generation, LLC (0561), case no. 18-50762; FirstEnergy Generation Mansfield Unit 1 Corp. (5914), case no. 18-50763; FirstEnergy Nuclear Generation, LLC (6394), case no. 1850760 FirstEnergy Nuclear Operating Company (1483), case no. 18-50761; FirstEnergy Solutions Corp. (0186); and Norton Energy Storage L.L.C. (6928), case no. 18-50764. The Debtors’ address is: 341 White Pond Dr., Akron, OH 44320. 18-50757-amk Doc 64-2 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 2 of 5 U.S.C. §§ 1408 and 1409; and the 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 the Court having found that the Debtors provided appropriate notice of the Motion and the opportunity for a hearing on the Motion under the circumstances; and the Court having reviewed the Motion and having heard the statements in support of the relief requested therein at a hearing, if any, before the Court (the “Hearing”); and the 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 the Court; and after due deliberation and sufficient cause appearing therefor; IT IS HEREBY ORDERED THAT: 1. the Motion is granted as set forth herein; 2. Pursuant to section 365 of the Bankruptcy Code, the Lease Agreement listed on Exhibit A annexed hereto are deemed rejected nunc pro tunc to the Petition Date. 3. 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 against a Debtor entity; (b) a waiver of the Debtors’ 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 waiver or limitation of the Debtors’ rights under the Bankruptcy Code or any other applicable law; (f) an admission that any of the Lease Agreements are integrated with any other contract or lease; (g) a waiver by the Debtors or the parties to the Lease Agreements of their right to assert that the Lease Agreements were terminated prior to the Petition Date; or (h) a concession or evidence that the Lease Agreements 18-50757-amk Doc 64-2 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 3 of 5 identified herein have expired, been terminated, or otherwise currently are not in full force and effect. 4. The Debtors are authorized, but not directed, to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion. 5. Notice of the Motion as provided therein shall be deemed good and sufficient. 6. Notwithstanding the possible applicability of Bankruptcy Rules 7062, 9014 or otherwise, the terms and conditions of this Order shall be immediately effective and enforceable upon its entry. 7. The Court retains exclusive jurisdiction with respect to all matters arising from or related to the implementation of this Order. 8. The granting of this Order, and any party’s consent thereto, shall not be used against any party in connection with any argument or dispute concerning the characterization of the Lease Agreements or claims arising in connection therewith. ### 18-50757-amk Doc 64-2 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 4 of 5 SUBMITTED BY: /s/ BROUSE MCDOWELL LPA Marc B. Merklin (0018195) Kate M. Bradley (0074206) Bridget A. Franklin (0083987) 388 South Main Street, Suite 500 Akron, OH 44311-4407 Telephone: (330) 535-5711 Facsimile: (330) 253-8601 mmerklin@brouse.com kbradley@brouse.com bfranklin@brouse.com - and - AKIN GUMP STRAUSS HAUER & FELD LLP Ira Dizengoff (pro hac vice admission pending) Lisa Beckerman (pro hac vice admission pending) Brad Kahn (pro hac vice admission pending) Sean E. O’Donnell (pro hac vice admission pending) Rachel J. Presa (pro hac vice admission pending) One Bryant Park New York, New York 10036 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 idizengoff@akingump.com lbeckerman@akingump.com bkahn@akingump.com sodonnell@akingump.com rpresa@akingump.com - and Scott Alberino (pro hac vice admission pending) Kate Doorley (pro hac vice admission pending) 1333 New Hampshire Avenue, N.W. Washington, D.C. 20036 Telephone: (202) 887-4000 Facsimile: (202) 887-4288 salberino@akingump.com kdoorley@akingump.com Proposed Counsel for Debtors and Debtors in Possession 18-50757-amk Doc 64-2 FILED 04/01/18 ENTERED 04/01/18 18:27:27 Page 5 of 5