SEAN H. LANE, UNITED STATES BANKRUPTCY JUDGE.
Before the Court is the motion of Aurelius Capital Management, LP ("Aurelius,"
The Court's Decision was extensive. See In re Oi Brasil Holdings Coöperatief U.A., 578 B.R. 169 (Bankr. S.D.N.Y. 2017). While familiarity with the Decision is assumed, some brief background is helpful before considering the merits of the Motion.
At its core, the Dutch Insolvency Trustee filed this case to overturn the Court's Prior Recognition Order in the summer of 2016 that found the center of main interests (or "COMI") of Coop was in the Brazil. That prior determination was based upon Coop's role as a special purpose financing vehicle for the "Oi Group," a Brazilian group of companies in the telecommunications business. Id. at 176 (describing the Oi Group); id. at 183-84 (explaining that Coop is a Dutch special purpose vehicle with no ability to generate a cash return on proceeds and that any proceeds must be on-lent to an operating Oi Group entity capable of generating a profit). Based on a determination that COMI for Coop and other Oi Group debtors was in Brazil, the Court recognized the restructuring in Brazil as a foreign main proceeding for Coop and those other debtors under Chapter 15 of the Bankruptcy Code. See 11 U.S.C. § 1517 (setting forth requirements for granting recognition of a foreign proceeding).
In this case — filed in 2017 — the Dutch Insolvency Trustee sought to reverse the Brazilian recognition, claiming that Coop's COMI had always been in the Netherlands or, in the alternative, that Coop's COMI had shifted from Brazil to the Netherlands by virtue of the actions of the Insolvency Trustee. The Insolvency Trustee's petition was supported by the so-called International Bondholder Committee (the "IBC" and, together with the Insolvency Trustee, the "Petitioners"), a group of creditors that included Aurelius; the Petitioners were opposed by the debtors who had previously obtained recognition of the Brazilian restructuring proceeding and another group of Oi Group creditors called the Steering Committee (the "Objectors"). See In re Oi Brasil Holdings Coöperatief U.A., 578 B.R. at 175.
In the Decision, the Court rejected the position of the Petitioners. After first discussing the applicable legal standard (id. at 193-216), the Court concluded that Coop's COMI was properly determined in the first instance (id. at 216-21). The Court further concluded that Petitioners had not satisfied the requirements under 11 U.S.C. § 1517(d) for modifying or terminating the prior recognition of the Brazilian restructuring proceeding given the nature of Coop as a special purpose financing vehicle for the Oi Group, creditor expectations regarding Coop, and the limits on the Insolvency Trustee's power to meaningfully reorganize Coop. Id. at 221-35. In addition to these reasons, the Court
Aurelius does not seek reconsideration of the Decision's holding as to Coop's COMI. Rather, Aurelius requests that the discussion in the Decision about its own conduct be removed. Specifically, Aurelius requests the Court modify or vacate Section F(3) of the Decision and certain other related passages. Id. at 235 (Section F(3), entitled "The Plan of Aurelius"). Aurelius offers two reasons for the requested relief. First, it argues that the Court misconstrued the trial record and evidence. Second, it offers new evidence in the form of the declaration of Aurelius' chairman and chief investment officer, Mark Brodsky (the "Brodsky Declaration").
Aurelius seeks relief under Rules 59 and 60 of the Federal Rules of Civil Procedure (Motion ¶¶ 31-38), which are made applicable to this adversary proceeding by Rules 9023 and 9024 of the Federal Rules of Bankruptcy Procedure, respectively. The Movant specifically cites Rules 59(a), 59(e), and 60(b)(6), arguing that the latter two justify re-visiting the trial record and modifying the Decision's factual findings, and that the former allows the Court to accept and consider the Brodsky Declaration. Motion ¶¶ 31-38.
Rule 59(e) of the Federal Rules of Civil Procedure authorizes the filing of a "motion to alter or amend a judgment." Fed. R. Civ. P. 59(e). The standard for granting a motion to alter or amend a judgment under Federal Rule 59(e) is "strict, and reconsideration will generally be denied...." Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (quoting Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)). "A motion to amend the judgment will be granted only if the movant presents matters or controlling decisions which the court overlooked that might have materially influenced its earlier decision." In Design v. Lauren Knitwear Corp., 1992 WL 42911, at *1 (S.D.N.Y. Feb. 24, 1992) (citing Morser v. AT & T Information Systems, 715 F.Supp. 516, 517 (S.D.N.Y. 1989); Travelers Insurance Co. v. Buffalo Reinsurance Co., 739 F.Supp. 209, 211 (S.D.N.Y. 1990)).
Such a request for relief "is not a vehicle for relitigating old issues, presenting the case under new theories, securing a rehearing on the merits, or otherwise taking a `second bite at the apple.'" Tonga Partners, 684 F.3d at 52 (quoting Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d Cir. 1998)). Nor is it "an opportunity for a party to `plug[] the gaps of a lost motion with additional matters.'" Cruz v. Barnhart, 2006 WL 547681, at *1 (S.D.N.Y. Mar. 7, 2006) (quoting Carolco Pictures Inc. v. Sirota, 700 F.Supp. 169, 170 (S.D.N.Y. 1988)). "Arguments raised for the first time on a motion for reconsideration are therefore untimely." Cruz, 2006 WL 547681, at *1 (citing Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Stroh Cos., Inc., 265 F.3d 97, 115-16 (2d Cir. 2001)). "[I]t is improper for the movant to present new material `because[,] by definition[,]
Rule 60(b) of the Federal Rules of Civil Procedure lists six grounds upon which a court may relieve a party from a final judgment. Fed. R. Civ. P. 60(b). Rule 60(b)(6) grants authority to do so for "any other reason that justifies relief" (Fed. R. Civ. P. 60(b)), and only applies "when the asserted grounds for relief are not recognized in clauses (1)-(5) of the Rule" and "there are extraordinary circumstances justifying relief." Tapper v. Hearn, 833 F.3d 166, 172 (2d Cir. 2016) (quoting Nemaizer v. Baker, 793 F.2d 58, 63 (2d Cir. 1986)). "As (b)(6) applies only when no other subsection is available, grounds for relief may not be mistake, inadvertence, surprise or excusable neglect." Nemaizer, 793 F.2d at 63.
The Second Circuit has held that Rule 60(b)(6) "confers broad discretion on the trial court to grant relief when appropriate to accomplish justice [and] it constitutes a grand reservoir of equitable power to do justice in a particular case." Marrero Pichardo v. Ashcroft, 374 F.3d 46, 55 (2d Cir. 2004) (quoting Matarese v. LeFevre, 801 F.2d 98, 106 (2d Cir.1986), cert. denied, 480 U.S. 908, 107 S.Ct. 1353, 94 L.Ed.2d 523 (1987)). But the rule is only "properly invoked where there are extraordinary circumstances, or where the judgment may work an extreme and undue hardship." Id. at 56 (quoting Matarese, 801 F.2d at 106). "[A]n error in legal interpretation does not constitute `extraordinary circumstances.'" In re Enron Corp., 352 B.R. 363, 369 (Bankr. S.D.N.Y. 2006). "`[A] motion for relief from judgment is generally not favored and is properly granted only upon a showing of exceptional circumstances.'" In re Enron, 352 B.R. at 369 (quoting U.S. v. Int'l Bhd. Of Teamsters, 247 F.3d 370, 391 (2d Cir.2001)). "Properly applied Rule 60(b) strikes a balance between serving the ends of justice and preserving the finality of judgments." In re Enron Corp., 2003 WL 1562202, at *12 (Bankr. S.D.N.Y. Mar. 21, 2003) (quoting Nemaizer, 793 F.2d at 61)). Rule 60(b)(6) is not ... a substitute for an appeal from an erroneous judgment." In re Enron, 352 B.R. at 369 (quoting In re Teligent, Inc., 306 B.R. 752, 761 (Bankr. S.D.N.Y. 2004)) (omission in the original).
Rule 59(a)(1)(B) of the Federal Rules of Civil Procedure provides that a new trial may be granted "on all or some of the issues ... after a nonjury trial for any reason for which a rehearing has heretofore been granted in a suit in equity in federal court." Fed. R. Civ. P. 59. Rule 59(a)(2) also provides that "[a]fter a nonjury trial, the court may, on motion for a new trial, open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new ones, and direct the entry of a new judgment." Id. Rule 59(a)(2) motions may only be granted if:
Sorenson v. Wolfson, 2015 WL 4095197, at *3 (S.D.N.Y. July 7, 2015) (quoting In Design, 1992 WL 42911, at *1); see also In re Cross Media Mktg. Corp., 2006 WL 2337177, at *8 (S.D.N.Y. Aug. 11, 2006). "`A new trial may be ordered to prevent a grave miscarriage of justice even though the newly discovered evidence supporting that order would have been available to the moving party at trial had that party exercised proper diligence,'" but "only [in] cases in which the evidence is `practically conclusive.'" In re Cross Media Mktg. Corp., 2006 WL 2337177, at *8 (quoting Ope Shipping, Ltd. v. Underwriters at Lloyds, 100 F.R.D. 428, 432 (S.D.N.Y. 1983)).
Before turning to Aurelius' specific arguments, the Court addresses an underlying theme in the Motion. In arguing for relief, Aurelius maintains that the Decision's discussion about Aurelius' alleged lack of candor was "something of a surprise." Motion ¶ 57. Underpinning that notion appears to be the idea that Aurelius' conduct had not been the subject of much discussion during this proceeding. But that is not the case here as the issue of Aurelius' conduct was squarely placed before the Court both before and during the trial.
First, the Objectors explicitly framed their allegations against Aurelius and the IBC in terms of an overarching investment strategy starting from at least the date of the Brazilian recognition hearing in the prior Chapter 15 case. See, e.g., Steering Committee's Objection to The Trustee's Verified Petition and Motion ("SC Objection") ¶ 1 [ECF No. 55] ("[W]hile Oi, Coop and their affiliates have pressed forward with their group-wide restructuring in Brazil.... [a] group of noteholders led by Aurelius has forced Coop into liquidation proceedings in the Netherlands and caused the appointment of a trustee...."; id. ¶ 2 ("The Trustee's enactment of Aurelius' investment strategy has already caused harm to creditors and the restructuring process.... [F]ragmenting this Court's Recognition Order for Coop .... can serve only to lay the groundwork for the Trustee and Aurelius to create hold-up value...."); id. ¶ 4 ("Since the entry of the Recognition Order, Aurelius has alternately pressured and wheedled the Trustee into taking steps to push Coop into bankruptcy in the Netherlands, all with the goal of gaining a bargaining chip in Coop's ongoing Brazilian restructuring."); Discovery Hr'g Tr. 79:18-80:2 [ECF No. 138] (seeking discovery of Aurelius' communications starting on July 20, 2016 (the day before the Prior Recognition Hearing, and two days before entry of the Prior Recognition Order) to track communications with recipients of an investment memo that Aurelius distributed to other potential Coop creditors on July 22, 2016). In its objection to the Chapter 15 petition filed by the Insolvency Trustee, the Steering Committee contended that Aurelius' purchase of 99% of its Coop note holdings after the Prior Recognition Hearing could
SC Objection ¶ 57 (emphasis added). The parties also raised Aurelius' "maneuvering"
Second, the parties repeatedly pointed the Court to Aurelius' participation in the prior recognition hearing, its request for specific language carving out its actions abroad from the automatic stay, and its decision to refrain from objecting to recognition of the Brazilian proceeding. See, e.g., id. ¶ 24 (summarizing details regarding Aurelius' request for a stipulation that the automatic stay would only apply to actions within the United States, Aurelius' appearance through counsel at the prior recognition hearing, and Aurelius' holdings of only $800,000 of Coop notes at the time); id. ¶ 25 (observing that Aurelius did not object to the Brazilian COMI finding or any other part of the prior recognition order, but subsequently "dramatically increased its position in Coop Notes, with full knowledge of the implication of the Recognition Order's finding that Coop's COMI was in Brazil"); Trial Tr. 118:22-119:2, Sept. 18, 2017 (Cunningham) Notice of Filing of Evidentiary Hearing Transcripts [ECF No. 124] (presenting Oi's opening argument at trial and stating that "after laying in the weeds for a year, also along comes Aurelius and other IBC noteholders who deliberately sat out and offered no evidence or objection at the prior recognition hearing.").
Third, as Aurelius acknowledges (Motion ¶ 57), parties raised allegations in the days leading up to the trial of COMI manipulation and bad faith based on Aurelius' conduct. See, e.g., SC Objection ¶ 4 ("[A]mple evidence demonstrates that ... an Aurelius-led group of bondholders ... repeatedly acted to manipulate Coop's COMI as part of a broader strategy to maximize [their] recoveries, to the detriment of the Oi Group's other creditors."); Letter Filed by Luke Barefoot at 2 [ECF No. 39] (requesting discovery of "creditor recoveries, recovery scenarios and alternative plans" as "relevant to whether Coop's [COMI] ha[d] been manipulated" and "the question of motivation, bad faith and whether the movant and/or the International Bondholder Committee sought to shift COMI simply for the purpose of disruption and nuisance value"); Status Conference Tr. 29:24-30:12 [ECF No. 51] (presenting Oi's view that if Coop's COMI had shifted it was the result of "manipulation done by creditors, including Aurelius,... specifically for the purpose to derail the potential for a restructuring in Brazil."); Discovery Hr'g Tr. 60:15-61:25 (Oi arguing for discovery of communication between Aurelius and the Insolvency Trustee regarding the purpose of the debtor-in-possession financing and any possible agreements to use the funds to litigate and "derail th[e] global restructuring... and use that leverage to increase the value of [Aurelius'] bonds"). Indeed, counsel for the IBC expressly acknowledged that Aurelius' conduct had been a focus. See Discovery Hr'g Tr. 91:23-92:8 ("[T]here's been a lot of discussion in the objector's papers regarding COMI manipulation.... And as part and parcel of that argument, there's been an attack, a very unfair attack and certainly misguided attack, against one of the members of the IBC Aurelius.").
Given all the discussion of Aurelius' conduct, it was not surprising to the Court that the topic became a significant issue at trial, so much so that a witness from Aurelius testified at trial. See Trial Tr. 573:7-663:2, Sept. 25, 2017 (Gropper). Based on a robust evidentiary record on the issue, the Court ultimately concluded that Aurelius had a strategy to collaterally attack the
Given all this evidence of Aurelius' strategy, the only question was how to view it for purposes of Chapter 15. See In re Oi Brasil Holdings Coöperatief U.A., 578 B.R. at 239 ("Having found that Aurelius engaged in such a strategy, the question then becomes the legal significance of its actions."). While the Court was reluctant to delve into Aurelius' conduct absent good reason, the Court ultimately determined it was necessary and appropriate to address the conduct as relevant to the Chapter 15 issues presented to the Court. Id. at 240-42 (citing In re Fairfield Sentry, 714 F.3d 127, 138 (2d Cir. 2013) (noting that "[t]he absence of a statutory definition for a term [like COMI] that is not self-defining signifies that the text is open-ended, and invites development by courts, depending on facts presented, without prescription or limitation."); see also id. at 242-44 (explaining that actions of Aurelius were inconsistent with trend in international insolvency law).
Notwithstanding this extensive record concerning Aurelius' conduct, the Motion itself focuses only on a few specific pieces of evidence in the trial record. First and foremost, it contends that the Court misinterpreted Mr. Gropper's affirmative statement that "[i]t was always [Aurelius'] understanding and expectation that Coop would be reorganized in the Netherlands pursuant to the laws of the Netherlands." Trial Tr. 636:19-637:25, Sept. 25, 2017 (Gropper). Second, Movant states that neither the investment memo issued to other
But in focusing on these specific bits of evidence, the Motion obscures the big picture. As is clear from the discussion above and the Court's Decision, the Court reached its conclusion about Aurelius' conduct based on a totality of the evidence. See In re Oi Brasil Holdings Coöperatief U.A., 578 B.R. at 235 ("The evidence establishes....); id. 237-38 (compiling evidence regarding Aurelius' actions "consistent" with the identified investment strategy). Accordingly, the Court declines Movant's attempt to rewrite or alter its finding as to Aurelius — findings made on an exhaustive review of a fulsome and heavily contested record — based on Aurelius' cherry picked evidence. "A motion to amend the judgment will be granted only if the movant presents matters or controlling decisions which the court overlooked that might have materially influenced its earlier decision." In Design, 1992 WL 42911, at *1 (citing Morser, 715 F.Supp. at 517) (explaining standard for application of Rule 59(e)); Travelers Insurance Co., 739 F.Supp. at 211 (same)). The Movant here does not present new law, or point to matters the Court overlooked. Rather, Aurelius simply argues that in considering certain of the evidence before it, the Court got it wrong.
Moreover, Aurelius' reliance on specific pieces of evidence conveniently overlooks other evidence on the same topics. For example, it is true that Mr. Gropper's testimony did not specifically express an opinion on COMI or an intention to file a Chapter 15. But he did express the opinion that Coop's restructuring would take place in the Netherlands, a view he held even at the time of the prior recognition hearing that recognized Coop's Brazilian restructuring proceeding. Trial Tr. 636:19-637:25, Sept. 25, 2017 (Gropper). The Court understood that testimony against the backdrop of Coop's assets being located, for all practical purposes, in Brazil and thus beyond the reach of the Insolvency Trustee. See In re Oi Brasil Holdings Coöperatief U.A., 578 B.R. at 233, 234, and 235 n. 51. It is hard to imagine how Aurelius would think that the restructuring of Coop — including payment of its bondholders like Aurelius — could be effectively accomplished in the Netherlands under these circumstances, absent an action to block the Brazilian restructuring proceeding. The meaning of this testimony was also gleaned from Mr. Gropper's testimony that, early in his conversations with the Insolvency Trustee, they had actually "discussed [that] he would commence some proceeding" in the U.S., either a Chapter 15 or a Chapter 11. Trial Tr. 617:5-9, Sept. 25, 2017 (Gropper).
Similarly, Movant's letters to Mr. Berkenbosch in the fall of 2016 did not mention Chapter 15, but it was the immediacy, frequency, and aggressiveness of Aurelius' contact that support the conclusion that the letters were part of a blocking strategy being pursued from the very start. It is
Given the totality of the record, therefore, the Court concludes that Movant has not satisfied its burden for relief. Simply attempting to pick at and re-characterize individual pieces of evidence is not enough to meet the strict standard set by Rule 59(e) or justify exercising an "extraordinary remedy" which is to "be employed sparingly in the interests of finality and conservation of scarce judicial resources." In re Health Management Sys. Inc. Sec. Litig., 113 F.Supp.2d at 614 (quoting Wendy's Int'l, 169 F.R.D. at 685). Accordingly, the Court rejects Aurelius' argument that Section F(3) of the Decision should be struck under Rule 59 for lack of evidence. Motion ¶ 39.
For similar reasons, the Court declines Movant's request to vacate any portion of its decision under Rule 60(b)(6). "Rule 60(b)(6) is not ... a substitute for an appeal from an erroneous judgment." In re Enron, 352 B.R. at 369 (quoting In re Teligent, Inc., 306 B.R. at 761) (omission in the original). If Aurelius believes the Court misinterpreted the evidence, the appropriate procedure is to appeal the Decision. Further, contrary to Movant's claim, the facts here do not otherwise constitute the requisite "extraordinary circumstances" which would justify a Rule 60(b) order. Tapper, 833 F.3d at 172 (quoting Nemaizer, 793 F.2d at 63). To support its position, Aurelius offers to "forego its right to appeal the Chapter 15 Decision if the Court grants the requested relief." Motion ¶ 65 (explaining the preservation of judicial resources to be gained, its concerns over reputational harm, and its good faith participation in the Brazilian proceedings). But the prospect of an appeal is irrelevant in determining whether to grant the requested relief and, in any event, parties have already filed appeals of the Decision, thus belying the likelihood of any
The Court next considers Movant's request to accept new evidence in the form of the Brodsky Declaration. Aurelius relies on Federal Rule of Civil Procedure 59(a)(2) to justify consideration of the declaration, arguing that sufficient evidence to support the Court's findings regarding Aurelius' behavior was previously lacking, and that ignoring the Brodsky Declaration would be manifestly unjust. Movant also cites case law for the proposition that granting a new trial is appropriate given its view that the finding of Aurelius' lack of candor was "a surprise." Motion ¶ 57 (citing Sequa Corp., 156 F.3d at 144).
But the Brodsky Declaration does not meet the standard under Rule 59(a)(2). Rule 59(a)(2) motions may only be granted if:
Sorenson, 2015 WL 4095197, at *3 (quoting In Design, 1992 WL 42911, at *1 (internal citation omitted)); see also In re Cross Media, 2006 WL 2337177, at *8.
As discussed extensively above, however, the Court concludes that the issue of Aurelius' conduct was squarely raised before the Court and that there was sufficient evidence to support its findings regarding that conduct. Moreover, the Brodsky Declaration does not qualify as newly discovered evidence, as its primary topic is what Aurelius and its representatives knew and believed at various points in time during the earlier proceedings.
For the reasons stated above, the Court denies the Motion.
IT IS SO ORDERED.
