611 B.R. 496 (Bkrtcy.S.D.N.Y. 2020), 16-11078 (MG), In re Lupatech S.A.

Docket Nº:16-11078 (MG)
Citation:611 B.R. 496, 68 Bankr.Ct.Dec. 54
Opinion Judge:MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGE
Party Name:IN RE: LUPATECH S.A., et al., Debtors in a Foreign Proceeding.
Attorney:ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C., Attorneys for the Foreign Representative, By: Steven B. Eichel, Esq.
Case Date:January 10, 2020
Court:United States Bankruptcy Courts, Second Circuit

Page 496

611 B.R. 496 (Bkrtcy.S.D.N.Y. 2020)

68 Bankr.Ct.Dec. 54

IN RE: LUPATECH S.A., et al., Debtors in a Foreign Proceeding.

No. 16-11078 (MG)

United States Bankruptcy Court, S.D. New York

January 10, 2020

Page 497

ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C., Attorneys for the Foreign Representative, By: Steven B. Eichel, Esq.

MEMORANDUM OPINION GRANTING FINAL RELIEF AND ORDERING THAT THE CASES BE CLOSED ON THE TERMS PROVIDED IN THE ACCOMPANYING ORDER

MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGE

As the history of these chapter 15 cases shows, sometimes the interplay between a foreign proceeding that is subject to appellate challenge in the foreign country, and the relief needed to effect the consummation of a plan approved by the foreign court and to close the chapter 15 cases, can seemingly lead to a ping-pong match requiring new rulings from both courts on largely non-controversial issues, before an approved reorganization plan can be successfully consummated. Pending before the Court in these jointly administered chapter 15 cases is a Motion (the "Motion," ECF Doc. # 46) for entry of an order recognizing and enforcing the December 2018, September 2019, and November 2019 Orders (as defined below) within the territorial jurisdiction of the United States; authorizing and directing certain U.S. Intermediaries to carry out any ministerial actions that are required of them under the New Lupatech Plan and granting them protection for the performance of such actions; finding these cases to be fully administered and closing these cases without prejudice; and granting such other relief as the Court deems just and proper.

The Motion was filed by Rafael Gorenstein, in his capacity as the authorized Foreign Representative (the "Foreign Representative") of Lupatech S.A. and its affiliated debtors (collectively, "Lupatech," or the "Debtors"). The Motion is supported by a declaration by Rafael Gorenstein. ("Gorenstein Declaration," ECF Doc. # 47.) The Motion is unopposed.

For the following reasons, the Motion is GRANTED and the cases are ordered to be closed on the terms provided in the separate accompanying order granting relief.

I. BACKGROUND

Lupatech S.A. is the direct or indirect parent company of each of the other Debtors.

Page 498

The Debtors form the "Lupatech Group," a provider of technical components and specialized services to the oil and gas industries. (Motion ¶ 5.)

A. Relevant Case Background

1. The Original Lupatech Plan in the Foreign Court

On August 24, 2015, the Debtors filed a judicial reorganization plan (the "Original Lupatech Plan") with the First Chamber of Bankruptcy, Judicial Recovery and Arbitration Disputes of the Comerca Forum of São Paolo (the "Foreign Court") to restructure their claims, including certain notes (the "Notes"), and provided four payment plans for unsecured creditors. (Id. ¶ 6.) The Original Lupatech Plan was approved by the requisite number of creditors, and on December 16, 2015, the Foreign Court entered its Order homologating (or approving) the plan (the "Original Homologation Order"). (Id. ¶¶ 7-8.) Two creditors subsequently filed appeals (the "Appeals"), alleging that the payment options contained in the Original Lupatech Plan violated Brazilian law. (Id. ¶ 9.)

2. The Chapter 15 Cases

On April 27, 2016 (the "Petition Date"), the Foreign Representative filed these chapter 15 cases by filing verified chapter 15 petitions in this Court. (Id. ¶ 10.) On the same day, the Foreign Representative filed a motion seeking entry of an order granting the chapter 15 petitions and recognizing the foreign proceeding in Brazil as a foreign main proceeding, recognizing and enforcing the Original Lupatech Plan and the Original Homologation Order, and granting additional relief (including authorizing certain U.S. Intermediaries to carry out ministerial actions required or necessary under the Original Lupatech Plan). (Id. ¶ 11.) On May 26, 2016, the Court granted the Foreign Representative’s petition and motion, and entered its Order Granting Recognition of Foreign Main Proceeding and Certain Related Relief, including recognizing the Original Lupatech Plan. ("Recognition Order," ECF Doc. # 15, ¶ 12.)

3. The New Lupatech Plan

In June 2016, the 2nd Reserved Chamber of Business Law of the Court of Appeals of São Paulo granted the Appeals, annulled the Original Lupatech Plan, and ordered that several criteria should be complied with in a new judicial reorganization plan (the "Reversal"). (Id. ¶ 13.) On July 20, 2016, after the Foreign Representative informed the Court of the Reversal, the Court entered an Order Modifying the Recognition Order, suspending its previous recognition of the Original Lupatech Plan and Original Homologation Order. (ECF Doc. # 22; Motion ¶ 14.)

On September 5, 2016, the Debtors filed a modified restructuring plan (the "New Lupatech Plan," or the "Plan") with the Foreign Court, which, inter alia, provides only one payment option for unsecured creditors, consistent with Brazilian law and the Reversal. (Motion ¶ 15.)

With respect to Noteholders’ Unsecured Claims (as defined in the New Lupatech Plan), consummation of the Plan requires (i) 50% of the amount of such claims to be paid in cash and (ii) 50% of the amount of such claims to be paid with Subscription Warrants (as defined in the New Lupatech Plan). (Id. ¶ 16.) The cash payment is to be effectuated by delivery of notes to such claimants. The Plan provides that after the Foreign Representative obtains approval of the New Lupatech Plan and approval from this Court "acknowledging the efficacy of the [New Lupatech] Plan," the current notes will be "cancelled by operation of law and replaced by New Notes to be issued by Lupatech subsidiary Lupatech Finance Limited" (the "Exchange"). (Id. ) (internal quotation marks and citations

Page 499

omitted). Paragraph 6.4.5 of the New Lupatech Plan also provides that Subscription Warrants due to the Noteholders shall be delivered by means of American Depositary Warrants representing such...

To continue reading

FREE SIGN UP