In re Empresa de Transportes Aero del Peru, SA, 01-610-CIV-JORDAN.
| Decision Date | 26 June 2001 |
| Docket Number | No. 01-610-CIV-JORDAN.,01-610-CIV-JORDAN. |
| Parties | In re EMPRESA de TRANSPORTES AERO del PERU, S.A., Debtor. Aerovias de Mexico, S.A. de C.V., et al., Appellants, v. James Feltman, Trustee, Appellee. |
| Court | U.S. District Court — Southern District of Florida |
Thomas Lauria, Marcos Jimenez, Jodi E. Samuels, White & Case LLP, Miami, FL, for Appellants.
David Cimv, Nicole Testa Ligotti, Genovese Lichtman Joblove & Battista, P.A., Miami, FL, for Appellees.
AMENDED ORDER REMANDING CASE
The Bankruptcy Code permits a foreign representative to request the opening of a matter ancillary to a foreign insolvency proceeding. See 11 U.S.C. § 304. A petition under § 304 does not commence a "full" bankruptcy proceeding, but rather "an ancillary case in which a United States bankruptcy court is authorized to apply its processes to give effect to orders entered in a foreign insolvency proceeding." In re Goerg, 844 F.2d 1562, 1567 (11th Cir.1988).
In this § 304 appeal, Aerovias de Mexico, S.A. de C.V. and White & Case LLP challenge the bankruptcy court's denial of their motion under Federal Rule of Civil Procedure 60(b), which sought to vacate the appointment of a trustee. The case raises difficult questions about the extent of a bankruptcy court's powers to fashion "appropriate relief" under § 304(b)(3), including whether the "`maximum flexibility'" that Congress wanted such a court to have amounts to a so-called "blank check." In re Culmer, 25 B.R. 621, 624 (Bankr. S.D.N.Y.1982).
I do not reach these questions now. As explained below, it is at best unclear whether a duly authorized foreign representative is still prosecuting this § 304 proceeding, and I therefore have serious doubts about whether the bankruptcy court had subject-matter jurisdiction to enter the orders now challenged on appeal and whether such jurisdiction, if it existed before, exists now. Given the lack of a developed record on the status of the foreign representative, this matter is remanded to the bankruptcy court for findings of fact and conclusions of law, following an evidentiary hearing, on whether a foreign representative with standing has been maintaining this proceeding since its inception two years ago.
This case began on April 21, 1999, when Aero Peru, a foreign debtor, filed a § 304 petition in the bankruptcy court App. 797.1 The petition was signed by Aero Peru's chief executive officer, Jaan Albrecht, who declared under penalty of perjury that he had been appointed as the representative of Aero Peru's estate in proceedings pending in the Peruvian Indecopi Comision de Salida del Mercado, and that he was Aero Peru's foreign representative as that term was defined by 11 U.S.C. § 101(24). According to Mr. Albrecht's declaration, Aero Peru wanted to "protect its assets located in the United States for distribution in accordance with the laws of the Republic of Peru" App. 798-99. Attached to the declaration were various documents in Spanish App. 800-11. Two weeks later, Aero Peru filed a motion for a temporary injunction, seeking to prevent or stay any actions against it App. 813. The motion for injunctive relief was signed by Aero Peru's counsel, Stuart Mermelstein, Esq.
The bankruptcy court issued a preliminary injunction on May 19, 1999, and scheduled a subsequent hearing on Aero Peru's request for permanent injunctive relief App. 113. At a hearing on June 2, 1999, Jeffrey Herman, Esq., appeared for Aero Peru. He informed the bankruptcy court that a restructuring plan involving Continental Airlines' infusion of capital was being considered in Peru, and provided some information as to how the new company was going to operate App. 321-47. The bankruptcy court held another hearing on June 17, 1999, at which Aero Peru's counsel indicated that the plan of reorganization was subject to a vote by Aero Peru's general creditors. Everyone at the hearing agreed that nothing should be done until the creditors had voted on the plan of reorganization App. 348-55.
The next hearing took place on June 30, 1999. Aero Peru appeared through Mr. Herman and Raul del Solar, Esq., who was Aero Peru's general counsel in Lima. Mr. del Solar reported that talks in Peru were still underway and that the next shareholder meeting was scheduled for July 12, 1999. He also provided details about some of the reorganization proposals being considered. At the conclusion of the hearing, the bankruptcy court continued the request for permanent injunctive relief to a later date App. 358-68.
By the time of the next hearing, on July 27, 1999, not much had changed. Mr. del Solar told the bankruptcy court that while Continental Airlines was no longer in the picture, several other reorganization plans were still under consideration. Mr. Mermelstein, on behalf of Aero Peru, requested additional funds for the preservation of United States assets. The Assistant U.S. Trustee, Robert Angueira, Esq., opposed the request, and argued that the motion for additional funds should have been filed in Peru. He noted that the § 304 proceeding was merely the "tail" of the proceeding that was pending in Peru, and objected to the request on the ground that United States assets should not be used in the absence of a definite plan of reorganization. In response, Mr. del Solar said that what Aero Peru really needed was someone in the United States to negotiate air traffic rights, because without such rights it might be forced into liquidation. The bankruptcy court deferred ruling on Aero Peru's request for funds, and instructed Mr. Mermelstein to discuss matters further with David Haber, Esq., who represented World Fuel, one of Aero Peru's creditors. Once again, the hearing on Aero Peru's request for permanent injunctive relief was postponed App. 371-411.
On August 25, 1999, the bankruptcy court held another hearing. Mr. Herman advised that it was unlikely that Aero Peru would be flying again, and that the creditors were meeting in Lima to convert the Peruvian proceeding from reorganization to liquidation. He also said that Aero Peru's general counsel — Mr. del Solar — had been unable to attend the hearing because of the developments in Peru. Mr. Herman indicated that Aero Peru proposed to send a letter to all United States creditors advising them of the process for filing claims in Peru. The bankruptcy court replied that it wanted to give those creditors an "opportunity to file claims in the United States," and based upon its "present judicial knowledge of the situation in Latin America in general, and Peru in particular," it was inclined to deal with the claims of United States creditors and then transmit the surplus funds to Peru App. 865-69. The bankruptcy court did not explain the underlying bases for its knowledge of the situation in Peru or Latin America.
After some discussion, the bankruptcy court suggested appointing an examiner or trustee to liquidate United States assets, pay the claims of United States creditors, and turn over any surplus funds to Peru.2 The Assistant U.S. Trustee, Mr. Angueira, then explained that the normal protocol for such actions was accomplished through a Chapter 7 proceeding with a Chapter 7 trustee. The bankruptcy court invited the parties present at the hearing — Aero Peru, the Assistant U.S. Trustee, World Fuel, and the Internal Revenue Service — to see if they could agree on an order establishing a procedure. If they could not, the bankruptcy court would issue an order "establishing an independent fiduciary" to handle the liquidation. Mr. Herman responded that Aero Peru was not objecting to the establishment of a claims process in the United States, but wanted United States creditors to be aware of the procedure for filing claims in Peru App. 870-75.3
Following this exchange, Mr. Haber, on behalf of World Fuel, moved for the appointment of a "liquidating Chapter 7 trustee," and the bankruptcy court adjourned the hearing so that the parties could discuss matters. When the hearing resumed later the same day, Mr. Herman announced (and Mr. Haber concurred) that the parties had reached an agreement to request the appointment of a special trustee due to a potential "aviation-type claim." When Mr. Angueira said that he assumed the trustee would be a Chapter 11 trustee, the bankruptcy court corrected him: "Well, it isn't a Chapter 11 trustee, but . . . pursuant to § 105 . . . the trustee will be appointed according to the terms that you all agree upon" App. 875-80.
On September 3, 1999, the bankruptcy court entered an order directing the U.S. Trustee to appoint a trustee for the purpose of liquidating and distributing Aero Peru's "estate" in the United States App. 419.4 The trustee, according to the order, was to have the role, capacity, and duties as set forth in 11 U.S.C. §§ 323 and 1106, including investigating and pursuing claims or actions against shareholders or third parties. The trustee was ordered to distribute Aero Peru's "estate" in the United States and to send any excess funds to Aero Peru's administrator in the Peruvian insolvency proceedings. The U.S. Trustee was given oversight authority.
In an amended order dated September 21, 1999, the bankruptcy court approved the appointment of James Feltman, Esq., as trustee pursuant to 11 U.S.C. § 1104 App. 422. The order explained that the trustee had all the powers and duties of a trustee under 11 U.S.C. § 1106. The certificate of service attached to the order indicated that a copy was sent to Aero Mexico App. 423.
Following his appointment, the trustee requested that he be allowed to retain counsel and employ a collection agent App. 425, 548. The bankruptcy court approved those requests App. 429, 548. The trustee also filed various motions to sell property of the Aero Peru estate and settle claims App. 430, 479, 493, 523. These...
To continue reading
Request your trial