mew Doc 857 Filed 07/11/17 Entered 07/11/17 13:54:07 Main Document Pg 1 of 5

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1 Pg 1 of 5 BALLARD SPAHR LLP 919 N. Market Street, 11 th Floor Wilmington, DE Tel: (302) Fax: (302) Tobey M. Daluz, Esquire Laurel D. Roglen, Esquire Counsel to Exelon Power Labs UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re ) Chapter 11 ) WESTINGHOUSE ELECTRIC COMPANY ) Case No (MEW) LLC, et al., 1 ) ) (Jointly Administered) Debtors. ) ) LIMITED OBJECTION OF EXELON POWER LABS TO MOTION OF DEBTORS PURSUANT TO 11 U.S.C. 363(b), 365(a),, AND 105(a) FOR ENTRY OF ORDER AUTHORIZING DEBTORS TO (I) ENTER INTO SERVICES AGREEMENT WITH VOGTLE OWNERS, (II) ASSUME AND ASSIGN CERTAIN CONTRACTS TO VOGTLE OWNERS, (III) ASSUME AND AMEND CERTAIN EXECUTORY CONTRACTS, AND (IV) REJECT THE VOGTLE EPC CONTRACT Exelon Power Labs ( Exelon ), by its undersigned counsel, submits this limited objection (this Objection ) to the Motion of Debtors Pursuant to 11 U.S.C. 363(b), 365(a), and 105(a) for Entry of Order Authorizing Debtors to (I) Enter into Service Agreement with Vogtle Owners, (II) Assume and Assign Certain Executory Contracts to Vogtle Owners, (III) Assume and Amend 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, if any, are Westinghouse Electric Company LLC (0933), CE Nuclear Power International, Inc. (8833), Fauske and Associates LLC (8538), Field Services, LLC (2550), Nuclear Technology Solutions LLC (1921), PaR Nuclear Holding Co., Inc. (7944), PaR Nuclear, Inc. (6586), PCI Energy Services LLC (9100), Shaw Global Services, LLC (0436), Shaw Nuclear Services, Inc. (6250), Stone & Webster Asia Inc. (1348), Stone & Webster Construction Inc. (1673), Stone & Webster International Inc. (1586), Stone & Webster Services LLC (5448), Toshiba Nuclear Energy Holdings (UK) Limited (N/A), TSB Nuclear Energy Services Inc. (2348), WEC Carolina Energy Solutions, Inc. (8735), WEC Carolina Energy Solutions, LLC (2002), WEC Engineering Services Inc. (6759), WEC Equipment & Machining Solutions, LLC (3135), WEC Specialty LLC (N/A), WEC Welding and Machining, LLC (8771), WECTEC Contractors Inc. (4168), WECTEC Global Project Services Inc. (8572), WECTEC LLC (6222), WECTEC Staffing Services LLC (4135), Westinghouse Energy Systems LLC (0328), Westinghouse Industry Products International Company LLC (3909), Westinghouse International Technology LLC (N/A), and Westinghouse Technology Licensing Company LLC (5961). The Debtors principal offices are located at 1000 Westinghouse Drive, Cranberry Township, Pennsylvania

2 Pg 2 of 5 Certain Executory Contracts, and (IV) Reject the Vogtle EPC Contract [D.I. 769] (the Motion ). 2 In support of this Objection, Exelon respectfully states: BACKGROUND 1. Westinghouse Electric Company, LLC ( WEC ) and its related debtors (collectively, the Debtors ), filed voluntary petitions for relief under chapter 11 of Title 11 of the United States Code on March 31, 2017 (the Petition Date ). The Debtors continue to operate their business and manage their properties as a debtor-in-possession pursuant to 11 U.S.C. 1107(a) and Prior to the Petition Date, Exelon provided various calibration, repair, measurement, inspection, and equipment testing services to WEC and its affiliates pursuant to a Master Services Agreement dated January 3, Under the Master Services Agreement, Westinghouse issued and Exelon performed a number of purchase orders. 3. As of the Petition Date, Exelon s books and records reflect no less than 38 outstanding purchase orders under the Master Services Agreement relating to the Vogtle project, for a total of approximately $47, On June 23, 2017, the Debtors filed the Motion, which identifies certain executory contracts that the Debtors are seeking authority to assume and amend to add GPC and the Vogtle Owners as additional obligors (the Assumed Contracts ). Pursuant to the Motion, in order to assume and amend the Assumed Contracts, the Debtors provided counterparties to each Assumed Contract with a proposed amendment agreement and the proposed payment required to cure all monetary defaults in connection with such Assumed Contract. 2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion. 2

3 Pg 3 of 5 5. Among these Assumed Contracts is one of the purchase orders issued under Exelon s Master Services Agreement (the Purchase Order ). The Debtors have proposed a cure amount of zero dollars in connection with the Purchase Order (the Proposed Cure Amount ). OBJECTION 6. While Exelon does not object in principle to the Debtors proposed assumption and amendment of Exelon s executory contracts, it does object to the partial assumption of the Master Services Agreement, as well as the Proposed Cure Amount, which does not reflect the amounts currently due and owing to Exelon. 7. If a debtor assumes a contract, it must assume all the burdens as well as the benefits of the contract. See Cinicola v. Scharffenberger, 248 F.3d 110, (3d Cir. 2001); Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 78 (3d Cir. 1999); see also In re CellNet Data Sys., 327 F.3d 242, 249 (3d Cir. 2003) ( Under the Bankruptcy Code, a trustee may elect to reject or assume its obligations under an executory contract. This election is an all-or-nothing proposition-either the whole contract is assumed or the entire contract is rejected. ). [I]f the trustee elects to assume the contract,... he takes it cum onere and must render that performance which the bankrupt had contracted to perform as a condition to receiving the benefits of the contract. Cohen v. Drexel Burnham Lambert Grp., 138 B.R. 687, 705 (Bankr. S.D.N.Y. 1992) (internal citations omitted). A debtor cannot simply retain the favorable and excise the burdensome provisions of an agreement. In re Kopel, 232 B.R. 57, (Bankr. E.D.N.Y. 1999). 8. Here, the Debtors cannot cherry-pick one purchase order issued under the Master Services Agreement to assume. A purchase order alone is unlikely to even constitute an executory contract subject to assumption. Instead, the Debtors must assume the Master Services Agreement and with it, all purchase orders performed thereunder. 3

4 Pg 4 of 5 9. Exelon understands the Debtors desire to potentially amend the Master Services Agreement, including to add GPC and the other Vogtle Owners as primary obligors. 3 Exelon has reached out to the Debtors in order to negotiate a possible amendment and is hopeful that mutually acceptable terms may be reached. However, to the extent the Debtors seek approval to assume a single purchase order under the Master Services Agreement, Exelon objects to such an assumption. 10. Moreover, the Motion asserts a Proposed Cure Amount of zero dollars in connection with the Purchase Order. Exelon s books and records reflect that the correct cure amount owed to Exelon in connection with the Purchase Order is $2, But in fact, because the Debtors must assume the entirety of the Master Services Agreement, the correct cure amount is the full $47, due and owing to Exelon under the Master Services Agreement (the Cure Amount ). 11. Any assumption of the Master Services Agreement must be conditioned on the Debtors first paying all amounts due and owing under the Master Services Agreement through the effective date of the assumption of the Master Services Agreement, in accordance with section 365 of the Bankruptcy Code. RESERVATION OF RIGHTS 12. Nothing in this Objection is intended to be, or should be construed as, a waiver by Exelon of any of its rights under any of the Master Services Agreement, the Bankruptcy Code, or applicable law. Exelon expressly reserves all such rights, including, without limitation, the right to: (a) supplement and/or amend this Objection and to assert any additional objections with 3 Exelon reserves all rights to object to the terms of the proposed form of the amendment which, inter alia, purports to limit GPC and the Vogtle Owners liability for indemnification obligations arising out of ordinary negligence. 4

5 Pg 5 of 5 respect to the Proposed Cure Amount; (b) amend the Cure Amount; and (c) assert any further objections as it deems necessary or appropriate. Dated: July 11, 2017 Wilmington, Delaware Respectfully submitted, /s/ Laurel D. Roglen Tobey M. Daluz, Esquire Laurel D. Roglen, Esquire BALLARD SPAHR LLP 919 N. Market Street, 11 th Floor Wilmington, DE Telephone: (302) Facsimile: (302) daluzt@ballardspahr.com roglenl@ballardspahr.com Counsel for Exelon Power Labs 5