Maxus Liquidating Trust v. YPF S.A. (In re Maxus Energy Corp.)

Decision Date10 May 2021
Docket NumberCase No. 16-11501 (CSS) (Jointly Administered),Adv. Pro. No.: 18-50489 (CSS)
Citation627 B.R. 259
Parties IN RE MAXUS ENERGY CORPORATION, et al., Debtors. Maxus Liquidating Trust, Plaintiff, v. YPF S.A., YPF International S.A., YPF Holdings, Inc., CLH Holdings, Inc., Repsol, S.A., Repsol Exploration, S.A, Repsol E&P USA, Inc., Repsol Offshore E&P USA, Inc., Repsol E&P T&T Limited and Repsol Services Company Defendants.
CourtU.S. Bankruptcy Court — District of Delaware

LANDIS RATH & COBB LLP, Adam G. Landis, 919 Market Street, Suite 1800, Wilmington, DE 19801, CLEARY GOTTLIEB STEEN & HAMILTON LLP, Victor L. Hou, Ari D. MacKinnon, One Liberty Plaza, New York, New York 10006, Counsel for the YPF Defendants

FARNAN LLP, Brian E Farnan, 919 North Market Street, 12th Floor, Wilmington, DE 19801, WHITE & CASE LLP, J. Christopher Shore, Matthew L. Nicholson, 1221 Avenue of the Americas, New York, New York 10020, Counsel for the Liquidating Trust

OPINION

Sontchi, C.J.

Before the Court is the Motion of YPF Defendants for Certification of Direct Appeal to the United States Court of Appeals for the Third Circuit Pursuant to 28 U.S.C. § 158(d)(2), D.I. 399 ("Motion for Direct Appeal"). The appeal that is the subject of the Motion for Direct Appeal is from this Court's April 6, 2021 Opinion ("Opinion") and Order, D.I. 389 and 390, respectively, denying YPF Defendants' Motion to Disqualify White & Case LLP as Counsel for the Maxus Liquidating Trust, D.I. 306 ("Motion to Disqualify"). For the reasons set forth below, the Court will grant, in part, and deny, in part, the Motion for Direct Appeal.

1. Plaintiff's Opposition

In Plaintiff's Opposition to YPF Defendants' Motion for Certification of Direct Appeal to the United States Court of Appeals for the Third Circuit Pursuant to 28 U.S.C. § 158(d)(2), D.I. 409, the Trust cites to the Court's opinion in Simon & Schuster, Inc. v. Advanced Marketing Services Inc. in arguing that the Court should "defer to the District Court and ... refrain from deciding the Request for Direct Appeal, pending a decision from the District Court on the Motion for Leave to Appeal."1 However, the rules in place at the time of the Court's decision in Simon & Schuster have changed. Interim Rule 8001(f), which was in place at the time Simon & Schuster was decided, has been replaced by current Rule 8006.

Rule 8006(b) provides:

(b) Filing the Certification. The certification must be filed with the clerk of the court where the matter is pending. For purposes of this rule, a matter remains pending in the bankruptcy court for 30 days after the effective date under Rule 8002 of the first notice of appeal from the judgment, order, or decree for which direct review is sought. A matter is pending in the district court or BAP thereafter.2

Although the rule change does not directly address the incongruity identified in Simon & Schuster that "[t]he legal analysis under the Motion for Leave to Appeal and the Request for a Direct Appeal to be applied by the District Court and this Court, respectively, is virtually identical ,"3 Rule 8006 clearly contemplates that the Bankruptcy Court is to decide whether to issue a certification for direct appeal, even if the District Court has before it a motion for leave to appeal an interlocutory order. Further, it provides a practical method for doing so by providing this Court with a 30-day window of jurisdiction to issue its decision. Finally, given the Court's familiarity with the record in this case (and with the benefit of 14 more years of experience on the bench), it seems appropriate that the Court should take the laboring oar in deciding the Motion for Direct Appeal, which will at least provide a foundation for the District Court in the event it ultimately has to decide the Motion for Leave to Appeal.4 Thus, the Court will depart from its course in Simon & Schuster and decide whether to issue a certification for direct appeal.5

2. Statement of Facts6

This adversary proceeding has been pending since 2018 and grew out of the 2016 Chapter 11 case of Maxus Energy Corporation ("Maxus"). The plaintiff is the Maxus Liquidating Trust (the "Trust"), which was formed under Maxus's confirmed plan of reorganization to pursue litigation, including this adversary proceeding. The relevant defendants are YPF S.A., YPF International S.A., YPF Holdings, Inc., and CLH Holdings, Inc. (collectively, "YPF"). At all relevant times, YPF was Maxus's parent. The causes of action in the complaint principally revolve around fraudulent conveyance, and alter ego/veil-piercing claims.

Since the Trust's formation, it has been represented by White & Case LLP ("White & Case") as lead counsel, including in this adversary proceeding. Similarly, since shortly after the inception of this adversary proceeding, YPF has been represented by Sidley Austin LLP ("Sidley") as lead counsel. YPF is also represented in this adversary proceeding by Cleary Gottlieb Steen & Hamilton LLP on issues related to the Motion to Disqualify and the appeal.

The facts and issues relevant to the Motion to Disqualify center on Ms. Jessica Lauria neé Boelter.7 Ms. Boelter was formerly a partner in the restructuring group of Sidley before she joined White & Case on October 1, 2020.8

Along with other lawyers, Ms. Boelter participated in the initial Sidley pitch to YPF in the summer of 2018.9 She was involved in negotiating the engagement letter between Sidley and YPF.10 She also consulted with other members of the Sidley team on certain motions, including the motion to dismiss, and related analysis and was admitted pro hac vice in the adversary proceeding.11 In addition, she participated in or was copied on email correspondence with the client.12 She also attended several in-person meetings with the client.13 Executives at YPF considered Ms. Boelter to be "an integral part of YPF's outside legal team and depended on her advice, counsel and discretion on a wide range of highly sensitive topics."14

James Conlan led the Sidley engagement from the outset until his departure from Sidley in June 2020.15 Although Ms. Boelter was the senior remaining restructuring partner on the engagement, John Kuster assumed lead responsibility for the engagement after Mr. Conlan left the firm.16

Ms. Boelter's participation in this adversary proceeding varied over time.17 In total, she billed 300 hours to the engagement between 2018 and 2020.18 To the best of Ms. Boelter's recollection, approximately 200 of these hours were billed in 2018, approximately 100 hours were billed in 2019 (with the majority billed during the first half of the year), and no hours were billed in 2020.19 Ms. Boelter attended at least part of the 6-hour oral argument on the motion to dismiss and recalls making one appearance on the record during a discovery hearing.20 The Court has no recollection of Ms. Boelter appearing in the case. Nonetheless, according to Mr. Kuster, Ms. Boelter worked on, supervised work on, and/or was privy to internal discussions concerning:

a. drafting the motion to dismiss the complaint and preparing YPF's initial disclosure;
b. document collection, document review, privilege determinations, and other discovery matters;
c. the motion to withdraw the reference and consideration of the merits of seeking another forum;
d. the tactics of White & Case in the litigation;
e. developing YPF's overall litigation strategy;
f. YPF's disclosure pursuant to U.S. securities laws;
g. the engagement of local counsel;
h. corporate law considerations related to the case;
i. the possibility of settlement or other out-of-court resolution of the case;
j. discussions concerning litigation status; and
k. potential expert issues.21

As noted above, Mr. Conlan, then the global head of Sidley's restructuring group, left Sidley to join Faegre Drinker Biddle & Reath LLP in June 2020. As is often the case in these matters, Mr. Conlan's departure led to the departure of other attorneys in his group. Ms. Boelter began exploring other opportunities and avers that her work for YPF played no role in her decision to explore lateral moves or to leave Sidley.22

In connection with her ultimate relocation to White & Case, Ms. Boelter went through a standard conflict screening process.23 During that process, Ms. Boelter did not discuss the YPF case other than to identify it as a matter on which she had worked, for purposes of conflict identification.24 Also, during that process, Ms. Boelter understood that she was not being recruited because of her prior work for YPF.25

From the beginning of her recruitment, Ms. Boelter understood that, because of her prior work for YPF on this case, a screen would be necessary.26 A screen was implemented as of the day Ms. Boelter joined the firm;27 and Ms. Boelter was promptly informed of, and acknowledged that she would comply with, the screen.28 Ms. Boelter avers that she has never seen any of the Trust's documents pertaining to this matter, whether hard copy or electronic, in White & Case's possession.29

Ms. Boelter avers that she has not revealed, either directly or indirectly, any confidential information (or substantive information of any sort) that she learned during her work for YPF, including during the conflicts screening process, to anyone at White & Case and there is no evidence to the contrary.30 Other than the limited necessary disclosures during the conflicts screening process, Ms. Boelter has not discussed this matter with anyone at White & Case and has not set foot in White & Case's New York office since she joined the firm (perhaps not surprising given the existing pandemic).31 Ms. Boelter understands that White & Case policy dictates that any disclosure of a YPF confidence, even inadvertent, will be punished as a disciplinary violation.32 Finally, Ms. Boelter has agreed to certify compliance with the White & Case screen periodically.33

YPF executives first learned that Ms. Boelter was leaving Sidley and joining White & Case on September 12, 2020.34 Ms. Boelter...

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1 cases
  • Maxus Liquidating Tr. v. YPF S.A. (In re Maxus Energy Corp.)
    • United States
    • U.S. Bankruptcy Court — District of Delaware
    • July 27, 2021
    ...Trust v. YPF, S.A. (In re Maxus Energy Corp.), 626 B.R. 249, 260 (Bankr. D. Del.), motion to certify appeal granted, 627 B.R. 259 (Bankr. D. Del. 2021) (applying Enzo Life Sciences, Inc. v. Adipogen Corp., C.A. No. 11-cv-00088 -RGA, 2013 WL 6138791 (D. Del. Nov. 20, 2013)). 23. In re Maxus ......

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