Mg Order Re Motion to Authorize[1]

8/9/2019 Mg Order Re Motion to Authorize[1]

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UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

In re:

MESA AIR GROUP, INC., et al.,

Debtors.1

Chapter 11

Case No. 10-10018 (MG)

(Jointly Administered)

STIPULATION, AGREEMENT, AND ORDER (I) SEVERING CERTAIN ISSUES

FOR TRIAL RELATIVE TO DEBTORS MOTION TO ASSUME THE DELTA

CODE-SHARE AGREEMENT; AND (II) RESOLVING RELATED MATTERS

On this 13th day of May, 2010, this Stipulation, Agreement, and Order (I) Severing

Certain Issues for Trial Relative to Debtors Motion to Assume the Delta Code-Share

Agreement; and (II) Resolving Related Matters (the Stipulation) is entered into by and between

Mesa Air Group, Inc. (Mesa) and certain of its direct and indirect subsidiaries in the above-

captioned chapter 11 cases, as debtors and debtors in possession (collectively, the Debtors),

and Delta Air Lines, Inc. (Delta and together with the Debtors, the Parties). The Parties

respectfully state as follows:

RECITALS

A. On January 5, 2010 (the Petition Date), the Debtors commenced theirreorganization cases by filing voluntary petitions for relief under chapter 11 of title 11 of the

United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code), in the United States

Bankruptcy Court for the Southern District of New York (the Court).

1 The Debtors are: Mesa Air Group, Inc. (2351); Mesa Air New York, Inc. (3457); Mesa In-Flight, Inc. (9110);

Freedom Airlines, Inc. (9364); Mesa Airlines, Inc. (4800); MPD, Inc. (7849); Ritz Hotel Management Corp. (7688);

Regional Aircraft Services, Inc. (1911); Air Midwest, Inc. (6610); Mesa Air Group Airline Inventory Management,

LLC (2015); Nilchi, Inc. (5531); and Patar, Inc. (1653).


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B. The Debtors continue to operate their businesses and manage their assets asdebtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.

C. On January 19, 2010, the Debtors filed theDebtors Motion for AuthorizationPursuant to Section 365 of the Bankruptcy Code to Assume Code-Share Agreement, as Amended,

with Delta Air Lines, Inc. (the Assumption Motion). The Assumption Motion concerns that

certain Delta Connection Agreement, as amended, between Delta and debtor Freedom Airlines,

Inc. (Freedom) and Mesa (the Agreement).

D. On February 23, 2010, the Court signed a Case Management and SchedulingOrder (the CMO) with respect to the Assumption Motion. Among other things, the CMO:

a. Noted the parties agreement to transfer the MFN Litigation (asthat term is defined in the CMO) from the United States District Court for the Northern District

of Georgia (the Georgia Court) to this Court;

b. Noted the parties agreement to litigate the ERJ Litigation (as thatterm is defined in the CMO) in the Georgia Court;

c. Established a discovery schedule; andd. Set July 12, 2010 as the commencement date for trial on all issues

relevant to the Assumption Motion other than those addressed in the ERJ Litigation.

E. In accordance with the CMO, the MFN Litigation has been transferred to thisCourt (Adversary Proceeding No. 10-03064 (MG)) and the ERJ Litigation has been completed

(and the parties are awaiting decision).

F. In addition, the parties have engaged in written discovery and exchangeddocuments. Various disputes have arisen with respect to discovery concerning the Bankruptcy

Issues (as that term is defined below). The parties believe that this Stipulation, in addition to

promoting other efficiencies discussed herein, will avoid the need for the Courts intervention

regarding the parties discovery disputes at this time, as discussed below in paragraph 4.


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G. The Parties agree that the principal issues to be tried with respect to theAssumption Motion are: (a) whether there is a valid agreement to be assumed (which is the

subject of the ERJ Litigation pending in the Georgia Court); (b) whether Mesa breached the

Agreement, and if so, the amount of damages suffered by Delta, as well as the merit and impact

on damages of Mesas counterclaims; (c) such other relief as the Parties have requested in the

Complaint and counterclaims, respectively, that were filed in the MFN Litigation including

Mesas allowed future rates, and to the extent not already included in the foregoing, any and all

limitations on those rates resulting from application of the MFN provisions of the Agreement; (d)

whether Mesa can cure any of the alleged breaches of the Agreement and provide adequate

assurances of future performance; and (e) whether the decision to assume the Agreement is a

proper exercise of Mesas business judgment. Issues (b) and (c) are referred to collectively as

the Contract Issues, and issues (d) and (e) are referred to collectively as the Bankruptcy

Issues. As to (d), the Parties disagree as to whether Mesa may be required to provide adequate

assurances of future performance even if no past breach is demonstrated, and they reserve their

rights on that issue.

H. The Parties agree that it would be more efficient, and would serve the interests ofjudicial economy, if the Bankruptcy Issues were severed from the Contract Issues at the July 12,

2010 trial, and litigated, to the extent then necessary, in connection with the confirmation hearing

on the Debtors proposed plan of reorganization (the Confirmation Hearing) in accordance

with the terms set forth below.

NOW, THEREFORE, upon the mutual promises, covenants, and agreements set forth

herein, and for other good and variable consideration, the receipt and sufficiency of which are

hereby acknowledged, the Parties, intending to be legally bound hereby, agree as follows:


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Dated: May 12, 2010

PACHULSKI STANG ZIEHL & JONES LLP

780 Third Avenue, 36

th

FloorNew York, New York 10017

Attorneys for Debtors and Debtors in Possession

By: /s/ John A. Morris

Dated: May 12, 2010

DAVIS POLK & WARDWELL LLP

450 Lexington AvenueNew York, New York 10017

Attorneys for Delta Air Lines, Inc.

By: /s/ Benjamin S. Kaminetzky

ORDER

SO ORDERED this 13th day of May, 2010.

/s/Martin Glenn________________________THE HONORABLE MARTIN GLENN

UNITED STATES BANKRUPTCY JUDGE

Mg Order Re Motion to Authorize[1]

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