MARY KAY VYSKOCIL, Bankruptcy Judge.
Aleksey Vladimirovich Bazarnov (the "
After the Evidentiary Hearing had concluded and the parties had submitted their proposed findings of fact and conclusions of law, but before final oral arguments on the Verified Petition, PPF filed the motion now before the Court, seeking to reopen the evidentiary record to introduce additional evidence it contends the Court should consider in connection with its ruling on the Verified Petition and PPF's objections thereto (the "
PPF's Motion is brought under Rule 59(a)(2) of the Federal Rules of Civil Procedure, titled New Trial; Altering or Amending a Judgment, which is applicable here pursuant to Rule 9023 of the Federal Rules of Bankruptcy Procedure. Although FRCP 59 does not explicitly authorize a court to reopen the record prior to the issuance of a judgment, there is no doubt that the court has discretion to reopen the record to allow a party to submit additional evidence. See Hyperlaw, Inc. v. West Publishing Co. (In re Matthew Bender & Co., Inc.), 158 F.3d 674 (2d Cir. 1998), Romeo v. Sherry, 308 F.Supp.2d 128, 138-39 (E.D.N.Y. 2004). In deciding such a motion, courts consider the relevance and probative value of the additional evidence sought to be admitted, the reason for the moving party's failure to introduce the evidence earlier, whether the opposing party has had an opportunity for cross-examination, and the extent to which the opposing party may be prejudiced by admission of the proposed evidence. See In re Matthew Bender & Co., Inc., 158 F.3d at 679 (citing Garcia v. Woman's Hosp., 97 F.3d 810, 814 (5
Relevant to the Court's decision regarding whether to reopen the Record is the degree to which the movant exercised diligence in discovering the new information or documents it seeks to introduce and acted promptly in seeking relief. The Court finds that, with the exception of the Assignment Related Evidence (which relates to events that transpired after the Evidentiary Hearing), PPF failed to act in a timely manner and to exercise reasonable diligence to obtain the new evidence.
Approximately one month after the Petitioner served PPF with notice of the Verified Petition, and a mere three business days before the Evidentiary Hearing on the Verified Petition was scheduled to commence, PPF served a notice seeking to depose the Petitioner and the production of 23 categories of documents (together, the "
The Court found that PPF failed to provide adequate notice in accordance with the Federal Rules, incorporated by the Bankruptcy Rules, of its intent to depose the Petitioner. In addition, the Court noted that, at the first day of the Evidentiary Hearing, PPF had cross-examined the Petitioner for approximately three hours. Before excusing the Petitioner from the witness stand, the Court asked PPF if it had any further questions for the Petitioner, and PPF's counsel replied that he did not. Accordingly, the Court found that PPF had been afforded a full opportunity to examine the witness and granted the Motion to Quash with respect to the deposition of the Petitioner. The Court also found that the majority of the Document Requests were overly broad, not tailored to lead to the production of documents relevant to the issues before the Court in connection with the Verified Petition, sought publicly available information, were not proportionate to the needs of this Chapter 15 case, and appeared to be calculated to gather information to support PPF's contentions solely in connection with the SDNY Action. In addition, the Court agreed with the Petitioner's contention that, at the time PPF served its Discovery Requests, PPF had been on notice of the first Evidentiary Hearing date for approximately one month, and that PPF's attempt to seek discovery less than three business days before the first Evidentiary Hearing date would serve to delay a ruling on the Verified Petition, particularly when PPF could have sought discovery at an earlier point in the Chapter 15 case (citing Bankruptcy Rule 1018). The Court ruled that the Petitioner need only provide documents in response to two of the 23 document requests.
The Court now finds that PPF again has failed to act diligently in pursuing the new evidence, in waiting three weeks after the close of the evidentiary record in connection with the Verified Petition, and nearly fifty days after its opposition to the Verified Petition, to seek to put the new documents before the Court.
The Court notes that, with the exception of the Assignment Related Evidence, there are several serious issues as to the admissibility of the new evidence PPF seeks, belatedly, to add to the Record. Specifically, there are problems with respect to authentication of such new evidence and the documents are rank hearsay. PPF has made no attempt to address these evidentiary issues, and opening the Record to allow PPF to bring in witnesses to address these evidentiary issues would add further delay to resolution of the Verified Petition. Such additional delay would not only be prejudicial to the Petitioner, but also would be inconsistent with section 1517(c) of the Bankruptcy Code, which provides that "[a] petition for recognition of a foreign proceeding shall be decided upon at the earliest possible time." 11 U.S.C. § 1517(c).
PPF moves to reopen the evidentiary record to introduce three categories of additional evidence: (1) the Nogotkov Letter; (2) the Gureev Evidence and (3) the Assignment Related Evidence (each defined and analyzed below).
PPF seeks to introduce a letter, dated April 4, 2017, from Kirill Nogotkov ("Nogotkov"), the receiver of Pavlovskgranit-Invest, a company wholly-owned by Poymanov ("
(Zhukov Decl. Exh. E) In addition, in the Nogotkov Letter, Nogotkov asked Bastrykin to personally oversee an audit and examination of the circumstances and facts set forth in the complaint due to "well-grounded fears" that Poymanov "may use corrupt connections and administrative resources available to him in order to obstruct investigation of facts set forth in the statement submitted to the Main Investigative Department for Moscow of Russia's Investigative Committee . . . ." (Zhukov Decl. Exh. E)
PPF commenced the SDNY Action by a complaint, dated November 22, 2016 (the "
PPF argues that the Court should reopen the Record to permit PPF to introduce the Nogotkov Letter as relevant to PPF's argument that recognition of the Russian Insolvency Proceeding should be denied on public policy grounds. Section 1506 of the Bankruptcy Code authorizes a court to refuse to take an action under Chapter 15 if such action would be "manifestly contrary to the public policy of the United States." 11 U.S.C. § 1506. Specifically, PPF contends that the Nogotkov Letter, and its timing, constitute evidence that the Petitioner commenced this Chapter 15 case in bad faith, in order to thwart the SDNY Action, to further the conspiracy to deprive Poymanov of his ownership interests in P-Granit and to retaliate against Poymanov by generating criminal charges.
The request to reopen the Record to allow the Nogotkov Letter to be introduced into evidence is denied. The letter is not relevant to the issues before the Court in connection with the Verified Petition. There is no allegation that Petitioner participated in drafting the Nogotkov Letter, the Petitioner is not copied on the letter, and he is not mentioned in the letter. There is no evidence in the Record that the Petitioner is conspiring, or has conspired, with Nogotkov, and even if the Petitioner were aware of the letter at the time it was sent, the letter does not prove that the Petitioner commenced this Chapter 15 case to facilitate a conspiracy against Poymanov. Accordingly, the Nogotkov Letter would have very low probative value, if any, in connection with the Court's decision on recognition of the Russian Insolvency Proceeding or PPF's opposition to recognition on the basis that such recognition would be manifestly contrary to the public policy of the United States. Nor is the Nogotkov Letter relevant to any other issues concerning the propriety of actions taken by the Petitioner in connection with the Russian Insolvency Proceeding or this Chapter 15 case.
PPF also seeks to introduce information concerning the finances and employment of Petr Gureev ("
The additional evidence that PPF wishes to introduce suggests that, as of 2015, Gureev earned only a meager salary from his employer, Invest-Sintez LLC ("
In support of its contention that the Retainer Account does not constitute Poymanov's property within the meaning of section 109(a), PPF seeks to challenge the source of the Gureev Payments and Gureev's motivation in making the Gureev Payments. PPF argues that the Court should reopen the Record to allow submission of this additional evidence (collectively, the "
(Mtn. ¶ 12(d))
PPF's request to reopen the Record to admit the Gureev Evidence is denied because the Gureev Evidence is not probative of whether the funds held in the retainer account constitute Poymanov's property and thereby satisfy the eligibility requirements of section 109(a). The fact that PPF may have an argument that the Gureev Agreements and the payments made thereunder may be avoidable as a "mock and sham" transaction under Russian law because Gureev (a) lacked the financial capability to make the Gureev Payments from his own funds and/or (b) was incentivized to make the Gureev Payments (or, impliedly, even given the funds to make the Gureev Payments) by Invest-Sintez, Umanda, Dromaca, Kyprianou, Atlas Alpha or Nisoram does not render the Gureev Evidence relevant. The sole issue arising under section 109(a) is whether the money held in the retainer account is property of the foreign debtor. How that property was acquired or why a third party gave the property to the foreign debtor is legally irrelevant for purposes of the section 109(a) issue before the Court. See, e.g., In re Octavier Admin. Pty Ltd., 511 B.R. 361, 373 (Bankr. S.D.N.Y. 2014) ("Section 109(a) says, simply, that the debtor must have property; it says nothing about the amount of such property, nor does it direct that there be any inquiry into the circumstances surrounding the debtor's acquisition of the property . . . .") (footnotes omitted). In addition to the evidentiary infirmities with respect to the Gureev Evidence, PPF's new argument concerning the Gureev Evidence would require the Court to draw one of many speculative inferences and is too tenuous to have any probative value with respect to the Court's determination of the foreign debtor's property interests in the funds held in the retainer account.
PPF also argues that the Court should reopen the Record to admit the Gureev Evidence as probative with respect to PPF's argument that recognition of the Russian Insolvency Proceeding should be denied on public policy grounds. PPF contends that recognition of the Russian Insolvency Proceeding would be manifestly contrary to the public policy of the United States because the Chapter 15 case is part of an illegal conspiracy against Poymanov to strip him of his interests in P-Granit, and ultimately, to eliminate P-Granit and seize its assets. Thus, PPF contends that recognition of the Russian Insolvency Proceeding would be manifestly contrary to U.S. public policy because it would aid in an illegal conspiracy against Poymanov. The Gureev Evidence, taken together with all of the other evidence that now constitutes the Record, does not even come close to supporting this argument. The alleged nexus between Gureev and Nisoram, even assuming that Nisoram in fact conspired to deprive Poymanov and Podgornaya of their interests in P-Granit, is too speculative and remote to support a conclusion that the Gureev Payments and the commencement of this Chapter 15 case were part of any alleged conspiracy against Poymanov, much less that recognition of the Russian Insolvency Proceeding would be manifestly contrary to the public policy of the United States.
The final new evidence that PPF seeks to introduce relates to the Petitioner's motion in the Russian Insolvency Proceeding for a determination that the PPF Assignment is invalid as a matter of Russian Bankruptcy Law (the "
The Court finds that the Assignment Motion is relevant to the Petitioner's request for an order determining that the SDNY Action is subject to the automatic stay because, if the PPF Assignment is valid, then the claims asserted in the SDNY Action would belong to PPF, not Poymanov, and therefore the SDNY Action would not be subject to the automatic stay. If, on the other hand, the Russian Court were to determine that the PPF Assignment is not valid as a matter of Russian Bankruptcy Law and accordingly the PPF Assignment is void, then at least the portion of the claims asserted in the SDNY Action that belong to Poymanov, or otherwise should be administered as part of the Russian Insolvency Proceeding, would be subject to the automatic stay. The Assignment Related Evidence is therefore highly relevant to the issues before the Court. Moreover, the developments of which PPF seeks to update the Record occurred after the conclusion of the Evidentiary Hearing, and thus could not have been introduced earlier. Finally, since the Assignment Motion was filed on the Petitioner's behalf in the Russian Insolvency Proceeding, the Petitioner should be aware of the Assignment Related Evidence and is not prejudiced by the Court's taking these developments into consideration. Accordingly, the Court has reopened the Record to allow consideration of the Assignment Related Evidence.
For the reasons discussed herein, PPF's request to reopen the Record to admit the Nogotkov Letter and the Gureev Evidence is denied, and PPF's request to reopen the Record to introduce the developments concerning the Assignment Motion is granted.
