mew Doc 2783 Filed 03/09/18 Entered 03/09/18 15:07:40 Main Document Pg 1 of 4. Chapter 11

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1 mew Doc 2783 Filed 03/09/18 Entered 03/09/18 15:07:40 Main Document Pg 1 of 4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK HEARING DATE: MARCH 20, 2018 HEARING TIME: 11:00 A.M. (ET) In re: WESTINGHOUSE ELECTRIC COMPANY, LLC. et al., 1 Debtors. Chapter 11 Case No (MEW) (Jointly Administered) OBJECTION TO NOTICE REGARDING (I) EXECUTORY CONTRACTS AND UNEXPIRED LEASES, (II) PROPOSED CURE OBLIGATIONS, AND (III) RELATED PROCEDURES Westchester Fire Insurance Company ("Westchester"), by and through counsel, hereby object to the Debtors Notice Regarding (I) Executory Contracts and Unexpired Leases, (II) Proposed Cure Obligations, and (III) Related Procedures (the Notice ) and, in support of this objection, states as follows: 1. Westchester issued approximately 24 surety bonds (the Bonds ) on behalf of and at the request of the Westinghouse Electric Company, LLC ( Westinghouse ) and certain of its subsidiaries (with Westinghouse, collectively, the Debtors ) in favor of various state agencies in order to allow the Debtors to secure licenses to conduct construction activities in such states. 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 mew Doc 2783 Filed 03/09/18 Entered 03/09/18 15:07:40 Main Document Pg 2 of 4 The total penal sum of the Bonds that were in place on the Petition Date was approximately $3,048,500. Since the Petition Date, all of the Bonds have been released and discharged. 2. The Bonds were issued in consideration of the execution by the Debtor of that certain Agreement of Indemnity dated December 30, 2015 (the Indemnity Agreement ), pursuant to which the Debtor agreed, among other things, to indemnify, exonerate, and save Westchester harmless from and against every claim, loss, damage, demand, liability, cost, charge, bond premium, suit, judgment, attorneys fees, and reasonable expenses that Westchester incurs in consequence of having issued the Bonds, as more specifically set forth in the Indemnity Agreement. A redacted, true and accurate copy of the Indemnity Agreement is attached as Exhibit A. 3. Pursuant to the Notice, the Debtors have identified the Transfer of Certain Bonds; Release and Agreement of Indemnity as executory contracts that may be assumed or rejected pursuant to 11 U.S.C In addition to Westchester, the contract counter parties to these listed agreements include ACE USA Surety, ACE American Insurance Company, ACE European Group Limited, ACE INA insurance Company, ACE Property, Insurance Company of North America, Pacific Employers Insurance Company, and Indemnity Insurance Company of North America, all of which are subsidiaries of Chubb Limited and affiliates of Westchester. These entities are also parties to the Indemnity Agreement. 4. The Indemnity Agreement is not executory and, therefore, may not be assumed or rejected. See In re THC Financial Corp., 686 F.2d 799, 804 (9 th Cir. 1982)(holding that indemnity agreement is not executory). The Bonds, which are obligations of the Surety to thirdparty obligees and which have already been released, are not property of the bankruptcy estate so they also may not be assumed. See In re Hallmark Builders, Inc., 205 B.R. 974, 976 (Bankr.

3 mew Doc 2783 Filed 03/09/18 Entered 03/09/18 15:07:40 Main Document Pg 3 of 4 M.D. Fla. 1996). In order for a surety bond to constitute an executory contract, subject to assumption and assignment, it must be property of the debtor s estate. See Cohen v. Drexel Burnham Lambert Grp., Inc. (In re Drexel Burnham Lambert Grp., Inc.), 138 B.R. 687, 700 (Bankr. S.D.N.Y. 1992). Even if the Bonds and the Indemnity Agreement were contracts that would otherwise be assumable, they are both financial accommodations that expressly may not be assumed pursuant to 11 U.S.C. 365(c)(2). 5. The Notice further indicates a cure amount of $0 relating to the Indemnity Agreement. However, Westchester has incurred attorney s fees relating to the Bonds to date in the amount of approximately $59, and unpaid premiums in the amount of $ that are proper claims against the Debtors under the Indemnity Agreement. WHEREFORE, Westchester respectfully requests that the Court enter an Order that the Indemnity Agreement and the Bonds may not be assumed or assigned, that the amount owing under the Indemnity Agreement is $59, plus additional attorneys fees incurred in connection with this matter, and that the Court grant such other relief as is appropriate. Dated: March 9, 2018 Respectfully submitted, MCELROY, DEUTSCH, MULVANEY & CARPENTER, LLP /s/ Louis A. Modugno Louis A. Modugno, Esq. Michael Morano, Esq Mount Kemble Ave. Morristown, NJ (T) ; (F) lmodugno@mdmc-law.com -and -

4 mew Doc 2783 Filed 03/09/18 Entered 03/09/18 15:07:40 Main Document Pg 4 of 4 MANIER & HEROD, P.C. Michael E. Collins Esq Demonbreun Street, Suite 900 Nashville, Tennessee Phone: (615) Fax: (615) mcollins@manierherod.com Counsel for Westchester Fire Insurance Company

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