shl Doc 1973 Filed 01/31/17 Entered 01/31/17 16:16:55 Main Document Pg 1 of 9. Chapter 11

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1 Pg 1 of 9 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: METRO AFFILIATES, INC., et al., * Debtors. Chapter 11 Case No.: (SHL) Jointly Administered SETTLEMENT AGREEMENT BETWEEN THE DEBTORS AND THE UNITED STATES ON BEHALF OF THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY AND INTERNAL REVENUE SERVICE WHEREAS, on November 4, 2013, debtors 180 Jamaica Corp.; Amboy Bus Co., Inc.; Atlantic Escorts, Inc.; Atlantic Express Coachways, Inc.; Atlantic Express New England, Inc.; Atlantic Express of California, Inc.; Atlantic Express of Illinois, Inc.; Atlantic Express of LA, Inc.; Atlantic Express of Missouri, Inc.; Atlantic Express of New Jersey, Inc.; Atlantic Express of Pennsylvania, Inc.; Atlantic Express Transportation Corp.; Atlantic Queens Bus Corp.; Atlantic Paratrans of NYC, Inc.; Atlantic Paratrans, Inc.; Atlantic Transit, Corp.; Atlantic-Hudson, Inc.; * This case is Jointly Administered. The main case is Metro Affiliates, Inc., (SHL). The debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal taxpayer identification number, are: 180 Jamaica Corp. (7630); Amboy Bus Co., Inc. (2369); Atlantic Escorts, Inc. (8870); Atlantic Express Coachways, Inc. (2867); Atlantic Express New England, Inc. (4060); Atlantic Express of California, Inc. (5595); Atlantic Express of Illinois, Inc. (5759); Atlantic Express of LA, Inc. (1639); Atlantic Express of Missouri, Inc. (3116); Atlantic Express of New Jersey, Inc. (8504); Atlantic Express of Pennsylvania, Inc. (0330); Atlantic Express Transportation Corp. (4567); Atlantic Queens Bus Corp. (0276); Atlantic Paratrans of NYC, Inc. (1114); Atlantic Paratrans, Inc. (3789); Atlantic Transit, Corp. (7142); Atlantic-Hudson, Inc. (5121); Block 7932, Inc. (3439); Brookfield Transit, Inc. (8247); Courtesy Bus Co., Inc. (5239); Fiore Bus Service, Inc. (1233); Groom Transportation, Inc. (7208); G.V.D. Leasing, Inc. (0595); James McCarty Limo Services, Inc. (8592); Jersey Business Land Co. Inc. (3850); K. Corr, Inc. (4233); Merit Transportation Corp. (8248); Metro Affiliates, Inc. (0142); Metropolitan Escort Service, Inc. (9197); Midway Leasing, Inc. (7793); R. Fiore Bus Service, Inc. (3609); Raybern Bus Service, Inc. (9412); Raybern Capital Corp. (6990); Raybern Equity Corp. (3830); Robert L. McCarthy & Son, Inc. (4617); Staten Island Bus, Inc. (6818); Temporary Transit Service, Inc. (0973); Atlantic Express of Upstate New York Inc. (1570); Transcomm, Inc. (4493); and Winsale, Inc. (2710). The location of the Debtors corporate headquarters and the Debtors service address is: 7 North Street, Staten Island, NY

2 Pg 2 of 9 Block 7932, Inc.; Brookfield Transit, Inc.; Courtesy Bus Co., Inc.; Fiore Bus Service, Inc.; Groom Transportation, Inc.; G.V.D. Leasing, Inc.; James McCarty Limo Services, Inc.; Jersey Business Land Co. Inc.; K. Corr, Inc.; Merit Transportation Corp.; Metro Affiliates, Inc.; Metropolitan Escort Service, Inc.; Midway Leasing, Inc.; R. Fiore Bus Service, Inc.; Raybern Bus Service, Inc.; Raybern Capital Corp.; Raybern Equity Corp.; Robert L. McCarthy & Son, Inc.; Staten Island Bus, Inc.; Temporary Transit Service, Inc.; Atlantic Express of Upstate New York Inc.; Transcomm, Inc.; and Winsale, Inc. (collectively, the Debtors ) filed voluntary petitions for relief under Title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court ), which have been consolidated for procedural purposes and are being jointly administered as In re Metro Affiliates, Inc., et al., Case No (SHL); WHEREAS, on June 11, 2014, the Bankruptcy Court entered the Findings of Fact, Conclusions of Law, and Order Confirming First Amended Joint Chapter 11 Plan of Liquidation ( Plan of Liquidation ) for Metro Affiliates, Inc. and its Affiliated Debtors Proposed by the Debtors and the Official Committee of Unsecured Creditors (the Confirmation Order ) [ECF No. 1372]; WHEREAS, pursuant to the Confirmation Order, the estates of the Debtors have been substantively consolidated for purposes of confirming the Plan of Liquidation, including for the payment of claims and expenses [ECF No. 1372, 9]; WHEREAS, the United States Internal Revenue Service ( IRS ) filed proofs of claim against Debtors Amboy Bus Co., Inc., Atlantic Express Coachways, Inc., Atlantic Express of California, Atlantic Express of Los Angeles, Courtesy Bus Co., Inc., K Corr, Inc., and Staten 2

3 Pg 3 of 9 Island Bus, Inc. asserting general unsecured claims against each Debtor (the IRS Claims ) [Claim Nos. 1225, 1234, 1211, 1235, 1213, 1212, 1230]; WHEREAS, the United States on behalf of the U.S. Environmental Protection Agency ( EPA ) filed proofs of claim against Debtors Amboy Bus Co., Inc., Atlantic Express of New Jersey, Courtesy Bus Co., Inc., Raybern Bus Service, Inc., and Staten Island Bus, Inc. asserting general unsecured claims against these debtors (the EPA Claims ) as well as protectively asserting potential administrative expenses and certain rights that are not claims [Claim Nos. 1168, 1172, 1169, 1170, 1171]; WHEREAS, on August 11, 2014, Debtors Amboy Bus Co., Inc., Atlantic Express of New Jersey, Courtesy Bus Co., Inc., Raybern Bus Service, Inc., and Staten Island Bus, Inc., and the United States on behalf of U.S. Environmental Protection Agency ( EPA ) entered into a settlement agreement ( EPA Settlement Agreement ) pursuant to which, among other things, the EPA received an allowed general unsecured claim against Amboy Bus Company, Inc., Atlantic Express of New Jersey, Inc., Courtesy Bus Company, Inc., Raybern Bus Service, Inc., and Staten Island Bus Company, Inc., in the single aggregated amount of $400,000 (the EPA Allowed Claims ) [ECF No. 1522]; WHEREAS, in the EPA Settlement Agreement, the United States reserved its right to exercise a valid right of setoff pursuant to Section 553 of the Bankruptcy Code with respect to the EPA Allowed Claims; WHEREAS, on October 3, 2014, the Court entered an order approving the EPA Settlement Agreement [ECF No. 1621]; WHEREAS, but for any valid rights of setoff, the IRS would issue a total of $444, to the Debtors Amboy Bus Co., Inc., Atlantic Express Coachways, Inc., Atlantic Express of 3

4 Pg 4 of 9 California, Atlantic Express of Los Angeles, Courtesy Bus Co., Inc., K Corr, Inc., Raybern Bus Service, Inc., Staten Island Bus, Inc. (collectively the Owed Debtors ) for overpayments relating to fuel excise taxes incurred in the third and fourth quarters of 2013 (the Overpayments ). WHEREAS, the United States contends, and Debtors agree, that portions of the Overpayments are subject to valid rights of setoff; NOW, THEREFORE, upon the consent and agreement of the parties by their attorneys and authorized officials, it is hereby agreed and the Court hereby orders as follows: 1. The IRS Proofs of Claim Nos. 1225, 1234, 1211, 1235, 1212, 1230 and 1213 shall be allowed as general unsecured claims (Class 5) against Debtors Amboy Bus Co., Inc., Atlantic Express Coachways, Inc., Atlantic Express of California, Atlantic Express of Los Angeles, Courtesy Bus Co., Inc., K Corr, Inc., and Staten Island Bus, Inc. in the respective amounts of $13,785.98; $884.40; $1,157.85; $2,590.76; $3,416.36; $1,374.45; and $ (the IRS Allowed Claims ). Debtors and the Liquidating Trustee agree not to challenge the validity of the IRS Allowed Claims. 2. IRS will apply a portion of the Overpayments (the Setoff Amount ) as a setoff to fully satisfy the IRS Allowed Claims and a portion of the EPA Allowed Claims. The Setoff Amount consists of the amounts indicated below: 4

5 Pg 5 of 9 Debtor Setoff Amount Amboy Bus Co., Inc. $ 128, Atlantic Express Coachways, Inc. $ Atlantic Express of California $ 1, Atlantic Express of Los Angeles $ 2, Courtesy Bus Co., Inc. $ 41, K Corr, Inc. $ 1, Raybern Bus Service, Inc. $ 6, Staten Island Bus, Inc. $ 47, Total $ 231, The United States shall apply $24, of the Setoff Amount as a setoff to satisfy the IRS Allowed Claims. Promptly after application of these funds as a setoff against the IRS Allowed Claims, the United States shall notify the Liquidation Trust in writing that $24, has been applied to the IRS Allowed Claims. Upon such notification, the IRS Allowed Claims shall be deemed fully and finally satisfied. 4. The United States shall apply $206, of the Setoff Amount as a setoff to satisfy a portion of the EPA Allowed Claims. Promptly after application of these funds as a setoff against the EPA Allowed Claims, the United States shall notify the Liquidation Trust in writing that $206, has been applied to the EPA Allowed Claims. Upon such notification, $206, of the EPA Allowed Claims shall be deemed fully and finally satisfied, and the amount of the EPA Allowed Claims will be reduced accordingly. The balance of the EPA Allowed Claims remains a valid, outstanding and unpaid debt owed to the EPA. Specifically, after applying the Setoff Amount set forth in this paragraph, the remaining amount of the EPA Allowed Claims that have not yet been paid is $193, (the Remaining EPA Allowed Claims ). The Remaining EPA Allowed Claims shall receive the same treatment under the Plan, without discrimination, as all other allowed Class 5 General Unsecured Claims, with all attendant rights provided by the Bankruptcy Code and other applicable law. 5

6 Pg 6 of 9 5. IRS shall pay the remainder of the Overpayments to Debtors, subject to statutory offsets and statutory interest. 6. The automatic stay is hereby lifted to permit the offsets described in this document. 6

7 Pg 7 of 9 THE UNDERSIGNED PARTIES ENTER INTO THIS SETTLEMENT AGREEMENT FOR THE UNITED STATES OF AMERICA: Date: 1/12/17 PREET BHARARA United States Attorney for the Southern District of New York By: /s/ Jessica Jean Hu JESSICA JEAN HU Assistant United States Attorney 86 Chambers Street, Third Floor New York, NY Date: 1/6/17 By: /s/ Ellen M. Mahan ELLEN M. MAHAN Deputy Section Chief Environmental Enforcement Section Environment and Natural Resources Division U.S. Department of Justice Date: 1/6/17 By: /s/ Alan S. Tenenbaum DONALD G. FRANKEL Senior Counsel ALAN S. TENENBAUM National Bankruptcy Coordinator Environmental Enforcement Section Environment and Natural Resources Division U.S. Department of Justice P.O. Box 7611 Ben Franklin Station Washington, DC

8 Pg 8 of 9 FOR THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY: Date: 12/8/16 By: Kate Schorr for Dore LaPosta DORE LAPOSTA Director Division of Enforcement and Compliance Assistance U.S. Environmental Protection Agency-Region Broadway, 21rst Floor New York, NY

9 Pg 9 of 9 FOR DEBTORS: Date: 11/25/16 By: /s/ Lisa G. Beckerman AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York Tel: (212) Fax: (212) Lisa G. Beckerman AKIN GUMP STRAUSS HAUER & FELD LLP 1333 New Hampshire Avenue, N.W. Washington, DC Tel: (202) Fax: (202) Scott L. Alberino FOR THE LIQUIDATING TRUSTEE: Date: 11/21/16 By: /s/ Patrick Collins FARRELL FRITZ, P.C RXR Plaza Uniondale, New York Tel: (516) Fax: Patrick Collins Ted A. Berkowitz Veronique A. Urban SO ORDERED: January 31, 2017 /s/ Sean H. Lane HON. SEAN H. LANE United States Bankruptcy Judge 9