Edward O. Sassower, P.C. James H.M. Sprayregen, P.C.

Joshua A. Sussberg, P.C. (admitted pro hac vice) Anup Sathy, P.C.

KIRKLAND & ELLIS LLP Chad J. Husnick, P.C. (admitted pro hac vice)

KIRKLAND & ELLIS INTERNATIONAL LLP Emily E. Geier (admitted pro hac vice)

601 Lexington Avenue KIRKLAND & ELLIS LLP

New York, New York 10022 KIRKLAND & ELLIS INTERNATIONAL LLP

Telephone: (212) 446-4800 300 North LaSalle

Facsimile: (212) 446-4900 Chicago, Illinois 60654

Telephone: (312) 862-2000

-and- Facsimile: (312) 862-2200

Michael A. Condyles (VA 27807)

Peter J. Barrett (VA 46179)

Jeremy S. Williams (VA 77469)

KUTAK ROCK LLP

901 East Byrd Street, Suite 1000

Richmond, Virginia 23219-4071

Telephone: (804) 644-1700

Facsimile: (804) 783-6192

Co-Counsel to the Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

)

In re: ) Chapter 11

)

TOYS “R” US, INC., et al.,

1

) Case No. 17-34665 (KLP)

)

Debtors. ) (Jointly Administered)

)

)

TOYS “R” US, INC. et al., )

)

Plaintiffs, )

)

v. ) Adv. Pro. No. ___________

)

FUNG RETAILING LIMITED, )

)

Defendant. )

)

 

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, are set forth in the Order (I) Directing Joint Administration of Chapter 11 Cases and (II) Granting Related 

Relief [Docket No. 78]. The location of the Debtors’ service address is One Geoffrey Way, Wayne, New Jersey 

07470.

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2

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

Toys “R” Us, Inc. (“Toys Inc.”) and Toys “R” Us Europe, LLC and certain of the abovecaptioned debtors and debtors in possession (the “Taj Debtors” or “Plaintiffs”)2

, by counsel, file 

this Complaint pursuant to 11 U.S.C. §§ 105 and 362 and Rules 7001 and 7065 of the Federal 

Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) to extend the automatic stay and grant 

a temporary restraining order and preliminary injunction relief halting Fung Retailing Limited 

(“Fung” or “Defendant”) from further prosecution of the arbitration proceeding it initiated 

against respondents TRU (UK) Asia Limited and Toys (Labuan) Holdings Limited (the “NonDebtor Respondents”). In support thereof, the Taj Debtors state as follows:

NATURE OF THE ACTION

1. This is an adversary proceeding seeking declaratory and injunctive relief to stay 

and enjoin Fung’s continued prosecution of arbitration it initiated in the International Chamber 

of Commerce against the Non-Debtor Respondents. Fung’s Request for Arbitration is attached 

hereto as Exhibit A.

2. Fung’s actions threaten to upend the Taj Debtors’ reorganization. Fung seeks to 

create through competing adjudication uncertainty about the status of the Asia JV. This 

uncertainty will drive down bids—benefitting Fung (which can then either exercise its right of 

first refusal (“ROFR”) or bid for the asset at a depressed price), but harming the Debtors and 

their creditors (whose primary basis for recoveries will be the value achieved from the Asia JV 

sale). 

3. Fung’s actions also threaten core components of the restructuring process. 

Contrary to the “just, speedy, and inexpensive determination of every case and proceeding,” Fed. 

 

2 The Taj Debtors are Toys “R” Us Europe, Tru Taj LLC, Tru Taj Finance, Inc., TRU Taj Holdings 1, LLC, 

TRU Taj Holdings 2, Ltd., TRU Taj Holdings 3, LLC, TRU Asia, LLC, and TRU Taj (Europe) Holdings, LLC. 

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3

R. Bankr. P. 1001, and the related goal of “centralized decision-making,” see In re White 

Mountain Mining Co., 403 F.3d 164, 169–70 (4th Cir. 2005). Fung seeks to have multiple 

tribunals consider issues rightly presented and centralized before this Court. This poses the risk 

of inconsistent adjudication and protracted litigation about forum and enforceability.

4. Fung only is able to create this chaos because of particularities relating to the 

Debtors’ corporate structure. If Debtor Tru Taj LLC owned the Debtors’ interest in the Asia JV 

directly, then Fung plainly would be prevented from initiating arbitration by the automatic stay. 

However, because Debtor Tru Taj LLC owns the Debtors’ interest in the Asia JV indirectly, 

Fung initiated arbitration (the “Fung Arbitration”) against the Non-Debtor Respondents. 

5. The Debtors thus seek to extend the automatic stay to non-Debtors with identical 

interests, and to enjoin Fung from further pursuing the arbitration. As further described below, 

the Fung Arbitration should be stayed and Fung enjoined from continued prosecution for at least 

four reasons. First, the Fung Arbitration will diminish the property that the Debtors could 

otherwise make available to creditors by driving down the bid price for the Asia JV. Second, the 

identity of the Non-Debtor Respondents is inexorably interwoven with the identity of the 

Debtors. Third, continued prosecution of the Fung Arbitration would distract key personnel 

integral to these bankruptcy proceedings from their bankruptcy-related responsibilities. Fourth, 

continued proceedings against the Non-Debtor Respondents in another forum would prejudice 

the Debtors’ opportunity and ability to defend themselves in the Fung Arbitration. Accordingly, 

further prosecution of the Fung Arbitration against the Non-Debtor Respondents should be 

stayed and enjoined.

6. The Debtor Plaintiffs thus file this Complaint and respectfully move the Court to 

enter a declaratory judgment extending the automatic stay to cover the Fung Arbitration against 

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4

the Non-Debtor Respondents. Additionally, the Debtor Plaintiffs move this Court to enter an 

injunction barring Fung from further pursuing the Fung Arbitration.

RELIEF REQUESTED

7. The Debtor Plaintiffs seek a declaration that the prosecution of the Fung 

Arbitration and all claims therein against the Non-Debtor Respondents is stayed until completion 

of the Debtors’ sale and restructuring process pursuant to sections 362(a)(1) and (a)(3) of the 

United States Bankruptcy Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”), and rule 

7001(9) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”). 

8. Additionally, the Debtor Plaintiffs seek to enjoin Fung from further prosecution of 

the Fung Arbitration and all claims therein against the Non-Debtor Respondents until completion 

of the Debtors’ sale and restructuring process pursuant to section 105 of the Bankruptcy Code 

and Bankruptcy Rule 7001(7). 

PARTIES

9. On September 18, 2018 (the “Petition Date”), Toys Inc. and its debtor affiliates, 

including the Plaintiffs, each filed a voluntary petition for relief under chapter 11 of the United 

States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”)

10. The Defendant is a privately held company incorporated in Hong Kong. The 

Defendant has submitted itself to the jurisdiction of the United States Bankruptcy Court for the 

Eastern District of Virginia (the “Court”), and this Court specifically held that it has personal 

jurisdiction over Defendant with respect to the bidding process. 

JURISDICTION AND VENUE

11. The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 

and the Standing Order of Reference from the United States District Court for the Eastern 

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5

District of Virginia, dated July 10, 1984. The Debtors confirm their consent, pursuant to Rule 

7008 of the Bankruptcy Rules, to the entry of a final order by the Court in connection with this 

Motion to the extent that it is later determined that the Court, absent consent of the parties, 

cannot enter final orders or judgments in connection herewith consistent with Article III of the 

United States Constitution.

12. Venue is proper in the Court pursuant to 28 U.S.C. §§ 1408 and 1409.

13. The bases for the relief requested herein are sections 105 and 362 of the 

Bankruptcy Code and Bankruptcy Rule 7001.

14. This Court has personal jurisdiction over all necessary parties pursuant to Rule 

7004(f) of the Bankruptcy Rules. This Court held that it has personal jurisdiction over Fung with 

respect to the bidding process; therefore, to the extent Fung’s actions threaten the sale and plan 

process, they should be halted. See 9/6/18 Hr’g Tr. at 191:1-8 (“I do think that having a 

collateral proceeding in Hong Kong that may interfere with the debtors’ ability to maximize the 

process, interfere with the bidding process is inappropriate and I think that Fung has by 

immersing itself in the bidding process in this -- that is being overseen by this Court, has 

subjected itself to personal jurisdiction for those purposes ....”); id. at 192:12-16 (“I see this 

offer of $760 million dollars as the minimum. I won’t take kindly to it being reduced pursuant to 

arbitration proceedings in Hong Kong and so to the extent that I have the ability to prevent that 

from happening, I intend to exercise that.”).

FACTS

15. The Court recently approved the Debtors’ plan to sell their most valuable 

remaining asset, a majority interest in Toys (Labuan) Holding Limited, often referred to as the 

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6

“Asia JV.”3 It is based in Hong Kong and comprises the Debtors’ business across Japan, China 

and Southeast Asia. The Debtors own 84.87% of the Asia JV. The remaining 15.13% is owned 

by Fung, a China-based retailing arm of the overall Fung Group, whose core businesses are 

comprised of companies in trading, logistics, distribution, and retailing. The Taj Debtors, 

through non-debtor affiliate TRU UK Asia Ltd., and Fung are parties to a Shareholders’ 

Agreement dated March 24, 2017 (“Shareholders’ Agreement”). 

16. Debtor Tru Taj LLC holds (through non-debtor subsidiaries) the entirety of the 

Debtors’ interest in the Asia JV. In addition, Toys Inc.—the main Debtor in these cases and the 

indirect holder of all interests in Tru Taj LLC—is party to the Shareholders’ Agreement with 

Fung and has guarantee obligations thereunder. Shareholders’ Agreement Section 10. 

17. Also, Debtor Toys Inc. indirectly owns Debtor Geoffrey LLC (“Geoffrey”), 

which owns the Debtors’ worldwide intellectual property rights, such as the names “Toys ‘R’ 

Us” and “Babies ‘R’ Us,” which it licenses to the Asia JV to support all of the Debtors’ affiliated 

stores throughout Asia. 

18. On June 11, 2018, the Debtors filed their Motion for Entry of an Order (I) 

Authorizing the Debtors to Take any Corporate Action Necessary to Enter Into a Sale and 

Purchase Agreement Related to the Asia Business, (II) Authorizing the Debtors to Provide Bid 

Protections in Connection with the Asia Sale and Purchase Agreement, and (III) Granting 

Related Relief [Docket No. 3379].

19. On August 4, 2018, the Taj Debtors filed their Motion for Entry of an Order (I) 

Establishing Bidding Procedures for the Sale of Certain Assets, (II) Scheduling an Auction and 

 

3

“An Order (I) Authorizing the Debtors to Take Any Corporate Action Necessary to Enter Into a Sale and 

Purchase Agreement Related to the Asia Business, (II) Authorizing the Debtors to Provide Bid Protections in 

Connection with the Asia Sale and Purchase Agreement, and (III) Granting Related Relief,” (the “Asia Sale Order.”) 

[Docket No. 3597].

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7

Hearing to Consider the Sale, (III) Approving the Form and Manner of Notice, (IV) Clarifying 

the Applicability of a Right of First Refusal and a “Drag” Right, and (V) Granting Related 

Relief (the “Bid Procedure Motion”) [Docket No. 4016]. 

20. On August 29, 2018, the Debtors filed their Reply in Support of their Motion for 

Entry of an Order (I) Establishing Bidding Procedures for the Sale of Certain Assets, (II) 

Scheduling an Auction and Hearing to Consider the Sale, (III) Approving the Form and Manner 

of Notice, (IV) Clarifying the Applicability of a Right of First Refusal and a “Drag” Right, and 

(V) Granting Related Relief (the “Bid Procedures Reply”) [Docket No. 4417]. 

21. On September 6, 2018, the Court held it had jurisdiction over Fung with respect to 

matters relating to the bidding process. Specifically, the Court held: “I do think that having a 

collateral proceeding in Hong Kong that may interfere with the debtors’ ability to maximize the 

process, interfere with the bidding process is inappropriate and I think that Fung has by 

immersing itself in the bidding process in this -- that is being overseen by this Court, has 

subjected itself to personal jurisdiction for those purposes ....” (9/6/18 Hr’g Tr. at 191:1-8.)

22. The Fung Objection and the Fung Arbitration aims to prevent this Court from 

adjudicating disputes that should be resolved by this Court, and instead having a private 

arbitration panel in Hong Kong decide whether and to what extent this Court is permitted to 

oversee the Debtors’ sale of their asset and their restructuring. 

23. Fung seeks to adjudicate in Hong Kong, among other things, whether the 

Bankruptcy Court is the wrong forum (“[t]he Hong Kong Tribunal is the sole forum in which all 

issues raised by the [Debtors’] Motion ... may be raised, argued, and adjudicated,” Fung 

Objection at p. 3 (emphasis added); whether the arbitration clause in the Shareholders’ 

Agreement should be enforced regardless of Fourth Circuit law to the contrary, id. at 2; whether 

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8

the Shareholders’ Agreement and its ROFR provision are “valid, binding and enforceable,” id. at 

3; whether the Taj Lenders’ credit bid constitutes “a bona fide ‘offer’ within the meaning of the 

Shareholders’ Agreement and, therefore, it does not trigger the right of first refusal, drag along, 

and tag along obligations,” id. at 3; and whether “[t]he drag along right is not enforceable unless 

Fung Retailing’s right of first refusal is enforceable and performed in accordance with its terms,” 

id. at 3. 

24. Fung’s actions threaten to upend the Taj Debtors’ reorganization. Fung seeks, 

through competing adjudication, to create uncertainty about the status of the Asia JV and to 

impose in derogation of this Court’s authority value-destructive delay on the Debtors’ 

restructuring. This uncertainty will drive down bids—benefitting Fung (which can then either 

exercise its ROFR or bid for the asset at a depressed price), but harming the Debtors and their 

creditors (whose primary basis for recoveries will be the value achieved from the Asia JV sale). 

Fung’s actions also threaten core components of the restructuring process. Contrary to the “just, 

speedy, and inexpensive determination of every case and proceeding,” Fed. R. Bankr. P. 1001, 

and the related goal of “centralized decision-making,” see In re White Mountain Mining Co., 403 

F.3d 164, 169–70 (4th Cir. 2005), Fung seeks to have multiple tribunals consider issues rightly 

presented and centralized before this Court. This poses the risk of inconsistent adjudication and 

protracted litigation about forum and enforceability.

25. Fung only is able to create this chaos by relying on particularities relating to the 

Debtors’ corporate structure. If Debtor Tru Taj LLC owned the Debtors’ interest in the Asia JV 

directly, then Fung no doubt would be prevented from initiating arbitration by the automatic stay. 

However, because Debtor Tru Taj LLC owns the Debtors’ valuable interest in the Asia JV 

indirectly, Fung initiated arbitration against non-Debtors the Non-Debtor Respondents. 

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9

26. The Debtors thus seek to extend the automatic stay to the Non-Debtor 

Respondents, and to enjoin Fung from further pursuing the arbitration against them. As further 

described below, the Fung Arbitration against the Non-Debtor Respondents should be stayed or 

enjoined.

A. The Fung Arbitration Will Diminish the Value of Estate Assets and Thereby 

Affect the Property of the Debtors to the Detriment of Their Creditors. 

27. The Fung Arbitration will adversely impact property of the Debtors’ estate by 

depleting or diluting assets potentially available for creditor recoveries. It will create uncertainty 

that will prevent the highest and best bids on the Asia JV, and will significantly prolong these 

cases.

28. As set out further in the Bid Procedures Motion and the Bid Procedures Reply, the 

Debtors are seeking to sell their interest in the Asia JV. While in the initial rounds of bidding, 

the Debtors received multiple bids of over $1 billion, subsequent rounds of bidding yielded much 

lower bids. As set out in the Tempke Declaration [Docket No. 4418], a key reason why the 

number of bidders has declined and why the price of bids has declined is the uncertainty that 

Fung has sowed around its minority interest in the Asia JV. 

29. The Fung Arbitration is yet another mechanism to create chaos that ultimately 

will depress interest in the Asia JV and bid prices. Fung seeks findings in the Fung Arbitration 

that will depress bids. It seeks to have the arbitral panel determine that “[t]he proposed Taj 

Transaction does not trigger the ROFR, Drag Along, and Tag Along obligations under the 

Shareholders’ Agreement.” Fung Arbitration § E(c). With this argument, Fung seeks to prevent 

any buyer from using the “drag-along” provision to purchase 100% of the equity in the Asia 

JV—meaning that a buyer will have no choice but to have Fung as a minority partner. Fung also 

argues that “[t]he Tribunal must conduct an evidentiary hearing to determine the appropriate 

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10

value of the “Offered Price.” Id. § E(d). Here, Fung argues that even if the ROFR rights are 

implicated, the Stalking Horse Bid should not be credited at the full $760 million amount—but 

rather that “the Tribunal must determine what (if any) value to ascribe to the so-called Credit Bid 

Amount.” Id. ¶ 39. Should Fung prevail, it will argue that it can exercise its ROFR rights at less 

than the $760 million bid, diminishing the estate by the amount of the reduction. See 9/6/18 

Hr’g Tr. at 192:12-16 (“I see this offer of $760 million dollars as the minimum. I won’t take 

kindly to it being reduced pursuant to arbitration proceedings in Hong Kong and so to the extent 

that I have the ability to prevent that from happening, I intend to exercise that.”).

30. In addition, the arbitration process will be egregiously prolonged, which will 

further deplete value. Under the ICC procedures, the Respondent is not even due to propose an 

arbitrator until about the time Debtors propose to conduct the auction to sell the asset. 

Understandably, not one potential bidder has expressed any interest in acquiring the asset only to 

have to wait for completion of a foreign litigation to know whether its purchase cost or the nature 

of its ownership may change. Second, if not stopped, the lingering Fung Arbitration risks the 

possibility that a separate tribunal may disagree with this Court’s interpretation of bankruptcy 

law and this Court’s orders—meaning that even if a sale closes, the winning bidder for the Asia 

JV may face the prospect of its ownership interest being challenged or upended. Bidders factor 

this uncertainty into their bids, if they continue to bid at all, further depressing value available to 

creditors. Even for the Stalking Horse Bid, the Taj Noteholders’ consent is required to close. 

Lingering uncertainty could jeopardize the ability to go effective. 

31. Thus, the Fung Arbitration, if not enjoined, would reduce or diminish the value of 

estate assets and thereby affect the property of the debtor to the detriment of the debtor’s 

creditors as a whole. Tempke’s Declaration explains how Fung has created uncertainty, 

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11

negatively affected bidders, and contributed to a decline in bid prices. See Docket No. 4418. 

The initiation of arbitration before a foreign tribunal further compounds the risk to estate value.

B. The Identity of the Non-Debtor Respondents Is Inexorably Interwoven with the 

Identity of the Debtors. 

32. Debtor Tru Taj LLC holds (albeit through non-debtor subsidiaries) the entirety of 

the Debtors’ interest in the Asia JV. In addition, Toys Inc.—the main Debtor in these cases and 

the indirect holder of all interests in Tru Taj LLC—is party to the Shareholders’ Agreement with 

Fung and has guarantee obligations thereunder. Shareholders’ Agreement Section 10. 

33. No party, including Fung, has argued that it is improper or outside the bounds of 

this Court’s authority to oversee the Debtors’ sale of its Asia JV interest. In fact, as noted in the 

Bid Procedures Reply and at the September 6, 2018 hearing, Fung fully presumed that this Court 

is required to supervise and approve the sale, because it conditioned its bid on the Court 

“approving bid procedures with bid protections for the proposed buyer” and receiving “an 

effective and unstayed order of the Bankruptcy Court ..., pursuant to section 363,” including “a 

finding of ‘good faith.’” 5/14/18 Fung Ltr. to Lazard at 3-5.

34. Indeed, this Court is better positioned to adjudicate disputes with Fung in a 

centralized way and consistent with bankruptcy goals of “secur[ing] the just, speedy, and 

inexpensive determination of every case and proceeding.” Fed. R. Bankr. P. 1001; see also In re 

White Mountain Mining Co., 403 F.3d 164, 169–70 (4th Cir. 2005) (“Arbitration is inconsistent 

with centralized decision-making because permitting an arbitrator to decide a core issue would 

make debtor-creditor rights contingent upon an arbitrator’s ruling rather than the ruling of the 

bankruptcy judge assigned to hear the debtor’s case.”) (quotation omitted).

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C. Continued Prosecution of the Fung Arbitration Would Distract Key Personnel 

Integral to these Bankruptcy Proceedings. 

35. If the Fung Arbitration continues against the Non-Debtor Respondents, key 

Debtor employees, whose full attention to these chapter 11 proceedings is critical, would be 

distracted by discovery and by other proceedings in the Fung Arbitration. The same employees 

of the Debtors would need to be involved even if the case proceeded only as to the Non-Debtor 

Respondents. For example, Robert Zarra serves not only as the Executive Vice President –

International Finance for Debtor Tru Taj LLC, but he also is the sole director of TRU (UK) Asia 

Limited and a director of Toys (Labuan) Holding Limited. 

36. The Taj Debtors have only limited capacity to run their businesses and effectuate 

a value-maximizing sale of the Asia JV. At this point, the Debtors employ only five people 

primarily for the benefit of Taj, and the Debtors’ legal department has shrunk to only two 

attorneys. The Debtors rely on their vanishingly small leadership team to manage the Debtors’ 

on-going restructuring challenges, not protracted foreign arbitration proceedings designed to 

impede the restructuring. 

D. Continued Proceedings Against the Non-Debtor Respondents in the Fung 

Arbitration Would Prejudice the Debtors’ Opportunity and Ability to Defend 

Themselves. 

37. Allowing the Fung Arbitration to proceed against the Non-Debtor Respondents 

while claims against the Debtors are stayed risks prejudicing the Debtors. Notably, although 

Debtor Toys Inc. is a signatory to the Shareholders’ Agreement and has rights and 

responsibilities thereunder, Fung did not initiate arbitration against Toys Inc.—no doubt because 

the automatic stay bars it from doing so. But this means that a critical party will be absent from 

the Fung Arbitration, and risks competing determinations in dueling forums. The Fung 

Arbitration seeks to have adjudicated in a Hong Kong arbitration rights and obligations 

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13

guaranteed and indemnified by Debtor Toys Inc., even though the Debtor will not participate or 

be heard there.

FIRST CLAIM FOR RELIEF

(Section 362 – Declaratory Judgment)

38. The Debtor Plaintiffs repeat and re-allege Paragraphs 1–37 of this Complaint as if 

fully set forth herein. 

39. The Debtor Plaintiffs seek an order staying the prosecution of Fung’s claims in 

the Fung Arbitration as to all Respondents therein until completion of the Debtors’ restructuring 

process, pursuant to sections 362(a)(1) and 362(a)(3) of the Bankruptcy Code. 

40. The extension of the stay is warranted and necessary because the Fung Arbitration 

will diminish the property that the Debtors could otherwise make available to creditors by 

driving down the bid price for the Asia JV; the identity of the Non-Debtor Respondents is 

inexorably interwoven with the identity of the Debtors; continued prosecution of the Fung 

Arbitration would distract key personnel integral to these bankruptcy proceedings from their 

bankruptcy-related responsibilities; and continued proceedings against the Non-Debtor 

Respondents in another forum would prejudice the Debtors’ opportunity and ability to defend 

themselves in the Fung Arbitration. Accordingly, the prosecution of the Fung Arbitration against 

the Non-Debtor Respondents should be stayed or enjoined.

41. Based on the foregoing, the Debtor Plaintiffs seek a declaratory judgment 

extending the automatic stay to the Non-Debtor Respondents pursuant to sections 362(a)(1) and 

362(a)(3) of the Bankruptcy Code. 

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14

SECOND CLAIM FOR RELIEF

(Section 105 – Injunctive Relief)

42. The Debtor Plaintiffs repeat and re-allege paragraphs 1–37 of this Complaint as if 

fully set forth herein. 

43. Additionally, the Debtor Plaintiffs seek an injunction pursuant to section 105 of 

the Bankruptcy Code barring Fung from continued prosecution of the Fung Arbitration until 

completion of the Debtors’ sale and restructuring process. 

44. Section 105(a) of the Bankruptcy Code authorizes the Court to issue “any order, 

process or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 

U.S.C. § 105(a). 

45. Here, as discussed above, the continuation of the Fung Arbitration would 

diminish and interfere with the property of the Debtors’ estates and threaten their ability to 

successfully and efficiently reorganize. Thus, this Court should apply section 105(a) to enjoin 

Fung’s continued prosecution of the Fung Arbitration. 

46. If Fung’s claims in the Fung Arbitration are not enjoined, the Debtors will suffer 

irreparable harm by being unable to achieve the highest and best offer for their most valuable 

asset, the Asia JV, and through prolonged and competing arbitration proceedings that will delay 

and impede their reorganization. The Debtors also are likely to succeed on the merits with 

respect to extending the automatic stay or enjoining the Fung Arbitration in order to centralize 

proceedings and avoid competing adjudications. The balance of equities tips in Debtors’ favor, 

since Fung can still pursue any argument it chooses; it simply will need to do so in the Richmond 

bankruptcy court. The injunctive relief sought will serve the public interest by promoting the 

Debtors’ speedy and successful conclusion of these bankruptcy proceedings—a benefit to all 

constituencies—and advancing the objectives of the automatic stay.

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15

47. Based on the foregoing, the Debtor Plaintiffs respectfully request an injunction 

under section 105 of the Bankruptcy Code to enjoin Fung’s continued prosecution of the Fung 

Arbitration until completion of these chapter 11 cases.

PRAYER FOR RELIEF

WHEREFORE, the Debtor Plaintiffs respectfully demand judgment against the 

Defendants in this adversary proceeding, and request relief as follows: 

(a) entry of a declaratory judgment pursuant to section 362 of the Bankruptcy 

Code and Bankruptcy Rule 7001(9) that the automatic stay is extended to the Non-Debtor 

Respondents until completion of the Debtors’ sale and restructuring process; and 

(b) entry of an injunction pursuant to section 105 of the Bankruptcy Code and 

Bankruptcy Rule 7001(7) enjoining and prohibiting Fung from further prosecuting the 

Fung Arbitration until completion of the Debtors’ sale and restructuring process; and 

(c) all such other relief as the Court may find just and proper.

[Remainder of page intentionally left blank]

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Richmond, Virginia

Dated: September 10, 2018

/s/ Jeremy S. Williams

KUTAK ROCK LLP KIRKLAND & ELLIS LLP

Michael A. Condyles (VA 27807) KIRKLAND & ELLIS INTERNATIONAL LLP

Peter J. Barrett (VA 46179) Edward O. Sassower, P.C.

Jeremy S. Williams (VA 77469) Joshua A. Sussberg, P.C. (admitted pro hac vice)

901 East Byrd Street, Suite 1000 601 Lexington Avenue

Richmond, Virginia 23219-4071 New York, New York 10022

Telephone: (804) 644-1700 Telephone: (212) 446-4800

Facsimile: (804) 783-6192 Facsimile: (212) 446-4900

Email: Michael.Condyles@KutakRock.com Email: edward.sassower@kirkland.com

Peter.Barrett@KutakRock.com joshua.sussberg@kirkland.com

Jeremy.Williams@KutakRock.com

-andCo-Counsel to the Debtors

and Debtors in Possession James H.M. Sprayregen, P.C.

Anup Sathy, P.C. 

Chad J. Husnick, P.C. (admitted pro hac vice)

Emily E. Geier (admitted pro hac vice)

300 North LaSalle

Chicago, Illinois 60654

Telephone: (312) 862-2000

Facsimile: (312) 862-2200

Email: james.sprayregen@kirkland.com

 anup.sathy@kirkland.com

chad.husnick@kirkland.com

emily.geier@kirkland.com

Co-Counsel to the Debtors

and Debtors in Possession

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EXHIBIT A

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CO NFI D ENT I AL

MARTIN ROGERS

martin.rogers@davispolk.com

JONATHAN CHANG

jonathan.chang@davispolk.com

DAVIS POLK & WARDWELL

18/F, The Hong Kong Club Building 

3A Chater Road

Hong Kong 

Phone: + 852 2533 3300

Fax: + 852 2533 3388

Attorneys for Claimant FUNG RETAILING LIMITED 馮氏零售集團有限公司

ICC ARBITRATION

FUNG RETAILING LIMITED

馮氏零售集團有限公司,

 Claimant,

v.

TRU (UK) ASIA LIMITED and

TOYS (LABUAN) HOLDINGS LIMITED,

 Respondents.

Case No.

REQUEST FOR ARBITRATION

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1. This is a Request for Arbitration (“Request”) under Article 4 of the Rules of 

Arbitration of the International Chamber of Commerce (“ICC” and the “ICC Rules”).

2. By way of this Request, and in accordance with Article 4 of the ICC Rules, Fung 

Retailing Limited 馮氏零售集團有限公司 (the “Claimant”) demands that its dispute 

with TRU (UK) Asia Limited (“TRU Asia”) and Toys (Labuan) Holdings Limited (the 

“Asia JV” and, together with TRU Asia, the “Respondents”) under the Amended and 

Restated Shareholders’ Agreement dated 24 March 2017 (the “Shareholders’ 

Agreement”) be referred to arbitration under the ICC Rules. The Claimant and the 

Respondents are parties to the Shareholders’ Agreement. 

3. Further, in accordance with Article 4 of the ICC Rules, the Claimant provides the 

following information:-

A. The Claimant

Name: Fung Retailing Limited 馮氏零售集團有限公司 (a Hong Kong incorporated 

company)

Registered Address: 11th Floor, LiFung Tower 

888 Cheung Sha Wan Road

Kowloon

Hong Kong

Attn: Company Secretary

Fax: +852 2686 1001

Legal Representatives: Mr. Martin Rogers

Mr. Jonathan Chang

Davis Polk & Wardwell

18/F, The Hong Kong Club Building 

3A Chater Road

Hong Kong 

Phone: + 852 2533 3300

Email: martin.rogers@davispolk.com

jonathan.chang@davispolk.com

Fax: + 852 2533 3388

The Claimant requests that all correspondence, notices, and other documents to be 

served upon it be directed and addressed to its solicitors, Davis Polk & Wardwell, using 

the contact details specified above.

B. The Respondents

Name: TRU (UK) Asia Limited (a company incorporated under the laws of England and 

Wales)

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Registered Address: c/o Toys “R” Us

One Geoffrey Way

Wayne, NJ 07470

Attn: General Counsel

Contact Person: General Counsel

Fax: +1 973 614 4043

Legal Representative: Edward O. Sassower, P.C.

Joshua Sussberg, P.C.

Kirkland & Ellis LLP

Kirkland & Ellis International LLP

601 Lexington Avenue

New York, New York 10022

Phone: + 1 212 446 4800

Email: edward.sassower@kirkland.com

joshua.sussberg@kirkland.com

Fax: + 1 212 446 4900 

-andJames H.M. Sprayregen, P.C.

Anup Sathy, P.C.

Chad J. Husnick, P.C.

Emily E. Geier

300 North LaSalle

Chicago, Illinois 60654

Phone: + 1 312 862 2000

Email: james.sprayregen@kirkland.com

anup.sathy@kirkland.com

chad.husnick@kirkland.com

emily.geier@kirkland.com

Fax: + 1 312 862 2200

Name: Toys (Labuan) Holdings Limited (a company incorporated under the laws of 

British Virgin Islands) 

Registered Address: c/o Toys “R” Us

One Geoffrey Way

Wayne, NJ 07470

Attn: General Counsel

Contact Person: General Counsel

Fax: +1 973 614 4043

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Legal Representative: James C. Tecce, Esq.

Quinn Emanuel Urquhart & Sullivan LLP

51 Madison Avenue, 22nd Floor

New York, New York 10010

Phone: + 1 212 849 7199

Email: jamestecce@quinnemanuel.com

Fax: + 1 212 849 7100 

C. Arbitration Agreement

4. The agreement to arbitrate disputes is set out in Clause 11.12 of the Shareholders’ 

Agreement (the “Arbitration Agreement”). The signatories to the Shareholders’

Agreement and the Arbitration Agreement include, among others, the Claimant and 

the Respondents.

5. Clause 11.12 of the Shareholders’ Agreement provides that:-

“(a) All disputes arising out of or in connection with this Agreement shall

be finally settled under the Rules of Arbitration of the International Chamber of 

Commerce (the “Rules of Arbitration”) by a tribunal of three arbitrators appointed as 

follows: claimant(s), on the one hand, and respondent(s), on the other hand, shall 

each appoint one arbitrator for confirmation to the tribunal; the third arbitrator, who is 

to act as the Chairman of the tribunal, shall be appointed by agreement of the two 

arbitrators appointed by the claimant(s) and respondent(s). Unless specified 

otherwise in this provision, the Rules of Arbitration shall govern any arbitration under 

this provision.

(b) Any arbitration shall take place in Hong Kong, and it shall be conducted 

exclusively in and entirely in the English Language.”

6. The Claimant understands that:-

(a) The arbitration shall be administered in accordance with the ICC Rules.

(b) The seat of the arbitration shall be Hong Kong.

(c) The language of the arbitration shall be English.

(d) There shall be three arbitrators (together, the “Tribunal”).

D. Governing Law

7. Clause 11.11 of the Shareholders’ Agreement provides that:-

“This Agreement and the documents to be entered into pursuant to it, shall be 

governed by and construed in accordance with Hong Kong law.” 

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E. Description of the Dispute and the Claims Made

8. The Claimant (and its predecessors) have been involved in the operation of the Toys 

“R” Us business in Asia, initially as the licensee of the Toys “R” Us name, since 1984. 

The Claimant presently owns 15.13% of the shares in the Asia JV, which owns and 

operates more than 500 Toys “R” Us retail locations in Asia. 

9. Due in large part to the Claimant’s operating expertise, the performance of the Toys 

“R” Us stores owned and operated by the Asia JV and its subsidiaries has differed

significantly – operationally and financially – from all of the other Toys “R” Us stores

outside of Asia. These differences have allowed the Asia JV to grow, expand, and 

operate while Toys “R” Us, Inc. (“TRU Inc.”) and certain of its direct and indirect 

subsidiaries suffered operational and financial difficulties and commenced bankruptcy

or insolvency proceedings in other parts of the world. Neither the Asia JV nor TRU 

Asia (the 84.87% shareholder of the Asia JV) are Debtors in the Chapter 11 Cases 

(each as defined below) pending in the United States.

10. In 2011, the Claimant contributed 100% of its Toys “R” Us toy business to the Asia 

JV, a then newly formed subsidiary incorporated in the British Virgin Islands and 

headquartered in Hong Kong. Thereafter, the Claimant sold 70% of its interests in 

the Asia JV to TRU Asia, a company incorporated under the laws of England and 

Wales, and entered into a shareholders’ agreement, dated 31 October 2011 (the 

“2011 Shareholders’ Agreement”), by and among the Claimant, TRU Inc., and the 

Respondents to govern the relationship among the Claimant and the Respondents. 

11. In March 2017, TRU Asia contributed 100% of its Japanese toy business to the Asia 

JV in exchange for an increased equity ownership stake in the Asia JV from 70% to 

approximately 85%. In conjunction with this transaction, the Claimant, TRU Inc., and 

the Respondents amended and restated the 2011 Shareholders’ Agreement (the 

“Shareholders’ Agreement”). A copy of the Shareholders’ Agreement is attached 

hereto as Exhibit C1.

12. Under the Amended and Restated Memorandum of Association of the Asia JV, a 

copy of which is attached hereto as Exhibit C2, transfers of shares of the Asia JV are 

subject to the terms of the Shareholders’ Agreement. Specifically, Article 18 of the 

Amended and Restated Memorandum of Association for the Asia JV provides that 

“[s]ubject to the provisions of this Memorandum, the Articles and any shareholders 

agreement, Shares in the Company may be transferred” (emphasis added). 

13. On 18 September 2017, TRU Inc. and certain of its direct and indirect subsidiaries 

(collectively, the “Debtors”) commenced voluntary chapter 11 cases in the United 

States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”). 

These chapter 11 cases are jointly administered under the lead case In re Toys “R” 

Us Inc., Case No. 17-34665 (the “Chapter 11 Cases”). Significantly, neither the Asia 

JV (which is incorporated in the British Virgin Islands), TRU Asia (which is 

incorporated under the laws of England and Wales), nor either entity owning the 

equity interests of TRU Asia (which are incorporated in the British Virgin Islands) is a 

Debtor in the Chapter 11 Cases.

14. On 4 August 2018, certain of the Debtors – Toys “R” Us Europe, LLC, Tru Taj LLC, 

Tru Taj Finance, Inc., TRU Taj Holdings 1, LLC, TRU Taj Holdings 2, Ltd., TRU Taj

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Holdings 3, LLC, TRU Asia, LLC, and TRU Taj (Europe) Holdings, LLC (collectively, 

the “Taj Debtors”) – filed with the Bankruptcy Court Taj Debtors' Motion for Entry of 

an Order (I) Establishing Bidding Procedures for the Sale of Certain Assets, 

(II) Scheduling an Auction and Hearing to Consider the Sale, (III) Approving the Form 

and Manner of Notice, (IV) Clarifying the Applicability of a Right of First Refusal and a 

"Drag" Right, and (V) Granting Related Relief [Docket No. 4016] (the “Motion”). A 

copy of the Motion is attached hereto as Exhibit C3. Whilst there is some ambiguity 

as to the precise nature of the relief sought in the Motion (as to which see further 

paragraph 27 below), the substance of what the Taj Debtors seek from the 

Bankruptcy Court is an order directed to ensuring that the Claimant should not be 

able to exercise its right of first refusal under the Shareholders’ Agreement (the 

“ROFR”), while selectively seeking to allow TRU Asia to enforce the related dragalong rights under the Shareholders’ Agreement (the “Drag Along”) (such issues, 

and related issues regarding the application of the ROFR and the Drag Along, the 

“Share Transfer Issues”). In effect, the Taj Debtors are seeking permission to force 

the Claimant out of the Asia JV, in violation of the terms of the Shareholders’ 

Agreement. 

15. Prior to the Debtors’ commencement of the sale process for TRU Asia’s equity 

interests in the Asia JV, the Claimant, as the owner of the remaining 15.13% of the 

equity interests in the Asia JV, feared that Toys “R” Us’s economic distress in North 

America would spread throughout the global company. The Claimant expressed 

such concerns only to the Debtors and implored the Debtors to take appropriate steps 

to protect Asia JV’s businesses. Specifically, the Claimant advised the Debtors that, 

in light of the filing of the Chapter 11 Cases, the Debtors had underestimated the 

degree of credit and liquidity risks to the Asia JV’s businesses, together with the

decline in sales performance, across the various Asian markets in which the Asia JV 

operates.

16. The Claimant also informed the Debtors and their advisors on multiple occasions that 

the sale of the Asia businesses should be expedited. In the Claimant’s view, delay 

increased the risk of deterioration in value of the Asia businesses. To expedite the 

process, the Claimant expressed the view that bidders should have access to the 

relevant Asia JV documents and to the Claimant as a shareholder of the Asia JV.

17. There have been numerous predictable impediments to the sale process unrelated to 

the Claimant, including:-

(a) the contagion effects on the Asia JV’s business stemming from the liquidation 

of Toys “R” Us’s other businesses around the world; 

(b) the unresolved dispute with Geoffrey, LLC and its secured lenders (i.e., the B4 lenders), on one hand, and the Taj Debtors and their creditors (i.e., the Taj 

Noteholders (as defined below)), on the other hand, over the rights to and the 

value of the intellectual property utilized by the Asia JV and its subsidiaries; 

(c) the uncertainty surrounding other potential intercompany claims asserted 

against the Asia JV; and

(d) the unduly lengthy sale process (i.e., the Debtors commenced the formal 

process approximately six months ago – 9 March 2018).

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18. The Debtors and their advisors have also persistently refused to provide other 

bidders with access to the Claimant, as a current and potential future business 

partner in the Asia JV, reflecting the Debtors’ and their advisors’ underestimation of 

the value contribution to the Asia JV attributed by bidders to the Claimant’s ongoing 

involvement in the Asia JV’s business.

19. This Request is not filed lightly and was necessitated by the foregoing developments 

in the Bankruptcy Court and the Chapter 11 Cases; particularly, the Taj Debtors’ filing 

of the Motion raising, among other things, the Share Transfer Issues. These events 

have required that the Claimant seek to enforce its rights under the Shareholders’ 

Agreement in Hong Kong through the specific mechanism set forth in the 

Shareholders’ Agreement.

(a) The Tribunal in Hong Kong is the sole forum in which the rights of the 

parties to the Shareholders’ Agreement may be determined

20. As set out above, the Shareholders’ Agreement expressly provides that “[a]ll disputes 

arising out of or in connection with [the Shareholders’ Agreement] shall be finally 

settled under the Rules of Arbitration of the International Chambers of Commerce 

(the “Rules of Arbitration”) by a tribunal of three arbitrators” and that any such 

arbitration must “take place in Hong Kong.” Shareholders’ Agreement §§ 11.12(a), 

(b). The wording of the Arbitration Agreement is both mandatory and expressed in 

the widest possible terms (it covers “all disputes arising out of or in connection with”).

21. The Share Transfer Issues clearly arise out of and/or are connected with the 

Shareholders’ Agreement, as they involve determining the validity, enforceability, and 

interpretation of, and/or entitlement to enforce, certain clauses in the Shareholders’ 

Agreement. As a matter of the governing law of the Shareholders’ Agreement (Hong 

Kong law), they fall four square within the scope of the Arbitration Agreement. The 

sole, proper forum to resolve the Share Transfer Issues is by way of an arbitration 

under the ICC Rules before the Tribunal.

22. The Taj Debtors’ Motion in the Bankruptcy Court is a transparent attempt to 

circumvent the clear terms of the Shareholders’ Agreement, particularly given the fact 

that the Respondents (the counterparties to the Shareholder Agreement) are not 

even Debtors in the Chapter 11 Cases. Indeed, the Taj Debtors have failed to even 

attempt service of the Motion on the Claimant.

23. In any event, the Bankruptcy Court lacks jurisdiction to adjudicate on the dispute for a 

number of reasons. In summary:-

(a) the Taj Debtors did not serve the Motion on the Claimant in accordance with 

the Convention on the Service Abroad of Judicial and Extrajudicial 

Documents in Civil or Commercial Matters, as is required by Rules 9017 and 

7004 of Federal Rules of Bankruptcy Procedure. Because the Taj Debtors 

failed to serve the Claimant, the Bankruptcy Court lacks the authority to order 

the relief they seek; and

(b) the Bankruptcy Court has neither general nor specific in personam jurisdiction 

over the Claimant. The Claimant is a Hong Kong company—incorporated in 

Hong Kong and with its principal place of business there—and Hong Kong is 

where any matter concerning the Shareholders’ Agreement should be 

decided. The Claimant has no meaningful contacts with the United States, let 

alone contacts that are so systematic and continuous as to render it at home 

there. It has no offices or employees in the United States, nor does it solicit 

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any business there. Moreover, the Claimant has never sought to enforce or 

assert any claim in the Chapter 11 Cases. 

Shortly, the Claimant will be filing in the Bankruptcy Court an objection to the 

assertion by the Debtors that the Bankruptcy Court has in personam jurisdiction over 

the Claimant, which will articulate these matters in significantly greater detail.

24. The Claimant’s partner in the Asia JV, which owes it a contractual duty of 

performance under the Shareholders’ Agreement, is TRU Asia, an English company 

that is not a Debtor in the Chapter 11 Cases. The contractual relationship between 

the Claimant and the Respondents was negotiated and executed in Hong Kong and 

concerns a company, the Asia JV, which is incorporated in the British Virgin Islands 

and whose business is centered in and limited to the Asian market.

25. Indeed, the Claimant and the Respondents, each of which is a non-U.S. party, went 

out of their way to ensure that any disputes would be resolved in Hong Kong alone. 

The parties expressly chose Hong Kong law to govern the Shareholders’ Agreement 

and agreed on the broad mandatory Arbitration Agreement requiring arbitration in 

Hong Kong, as set out in Clause 11.12 of the Shareholders’ Agreement.

(b) The Bankruptcy Court lacks the authority to grant the relief requested by the 

Taj Debtors in their Motion

26. Even if the Claimant were subject to the personal jurisdiction of the Bankruptcy Court 

(which it is not), the Motion as it relates to the ROFR and the Drag Along would still 

fail because the Bankruptcy Court lacks the authority to grant the requested relief 

under title 11 of the United States Code (the “Bankruptcy Code”).

27. By the Motion, the Taj Debtors have asked the Bankruptcy Court to either declare 

unenforceable or to invalidate the ROFR under Section 365(f) of the Bankruptcy 

Code, while also allowing TRU Asia to enforce the Drag Along. There is a lack of 

clarity and some inconsistency in the Motion as to which of these remedies is being 

sought. Whichever it is, the objective of the Motion is clearly to seek a determination 

from the Bankruptcy Court as to whether (a) the Claimant has a surviving entitlement, 

as against TRU Asia, to exercise the ROFR conferred by the Shareholders’ 

Agreement, (b) TRU Asia would maintain the right to exercise the Drag Along 

notwithstanding the elimination of the ROFR, and/or (c) the parties should (in the 

circumstances that exist) be permitted to exercise such rights. However, these are 

issues which the parties to the Shareholders’ Agreement – the only parties who have 

a direct interest in, and would be directly bound by a judicial or arbitral determination 

of, them – have expressly agreed should be resolved by ICC Arbitration, to the 

exclusion of any other forum.

28. In any event, as a statutory matter, the relief sought by the Taj Debtors does not fall 

within the ambit of Section 365(f) of the Bankruptcy Code. Section 365(f) of the 

Bankruptcy Code permits a debtor in proceedings under the Bankruptcy Code to 

assign certain executory contracts “of the debtor” notwithstanding a provision in such 

contract or applicable law “that prohibits, restricts, or conditions the assignment of 

such contract.” 11 U.S.C. § 365(f). By its plain meaning, the statute only applies 

when a debtor seeks to assign an executory contract to which it is a party 

notwithstanding an anti-assignment provision – it does not confer broader authority to 

rewrite the terms of executory contracts generally. 

29. In these circumstances, Section 365(f) of the Bankruptcy Code clearly does not apply 

for two primary reasons:-

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(a) the Shareholders’ Agreement is not an executory contract “of the debtor”; 

rather, it is an agreement between the Respondents, which are not Debtors in 

the Chapter 11 Cases, and the Claimant; and

(b) the Respondents are not seeking to assign the Shareholders’ Agreement to 

anyone. The transaction affected by the ROFR (and the related Drag Along) 

is simply the transfer of stock of the Asia JV subject, as required by the Asia 

JV’s Articles, to the Shareholders’ Agreement. 

Although the Taj Debtors elide these distinctions, they are crucial because the 

specific statute that the Taj Debtors look to – Section 365(f) of the Bankruptcy Code –

does not purport to give the Bankruptcy Court the jurisdiction or authority to grant the 

requested relief.

30. The fact that TRU Asia’s obligations are guaranteed by TRU Inc. is neither relevant 

nor persuasive. At most, the only relevance of the guarantee is the impact of the 

Chapter 11 Cases on those guarantee obligations, but not with the underlying 

obligations that are covered by the guarantee. In this regard, it is to be noted that the 

Claimant has never sought to enforce the guarantee and has not filed a proof of claim 

in the Chapter 11 Cases asserting a claim on account of the guarantee or otherwise

(c) The proposed Taj Transaction does not trigger the ROFR, Drag Along, and 

Tag Along obligations under the Shareholders’ Agreement

31. The Shareholders’ Agreement sets out the Claimant’s and the Respondents’ rights 

and obligations in connection with the transfer of shares in the Asia JV. Clause 3.2 of 

the Shareholders’ Agreement affords the parties with the following ROFR:-

“(a)If at any time during the period commencing on the Completion Date and ending 

on the date that is three (3) years from the Completion Date (the “ROFR Period”) 

[(i.e., 24 March 2020)] a Party (a “ROFR Transferring Party”) receives a written, 

bona fide and arms length firm offer whereby it may Transfer all (and not some only) 

of its Shares and the Thai Shares (in the case of a Transfer by TRU) held by the 

ROFR Transferring Party or its Affiliates (the “ROFR Transfer Shares”) to any 

person other than an Affiliate of such Party (a “Potential Transferee”) and such firm 

offer is acceptable to the ROFR Transferring Party, the ROFR Transferring Party

shall give written notice of this fact (the “Offer Notice”) to the other Shareholder (the 

“ROFR Non-Transferring Party”) (including the name of the Potential Transferee, 

the number of ROFR Transfer Shares and a copy of any written offer or similar 

document which sets out the price and terms offered by the Potential Transferee) 

and offer to Transfer the ROFR Transfer Shares to the ROFR Non-Transferring 

Party at the proposed sale price (the “Offered Price”) and on substantially the 

same terms and conditions as those offered by the Potential Transferee as set 

out in the Offer Notice including the terms of the applicable license from Geoffrey or 

its successors or assigns for the TRU Asia Business . . . . The ROFR Transferring 

Party shall also provide to the ROFR Non-Transferring Party any material information 

provided to the Potential Transferee.

(b) The ROFR Non-Transferring Party shall have thirty (30) Business Days after 

receipt of such Offer Notice (the “Offer Period”) to: (i) accept the offer contained in 

the Offer Notice by providing written notice of acceptance to the ROFR Transferring 

Party before the expiry of the Offer Period; or (ii) consent to the proposed Transfer of 

the ROFR Transfer Shares to the Potential Transferee at the price and on the terms 

set out in the Offer Notice.”

32. Simply put, the ROFR requires a party that receives a bona fide offer to purchase its 

shares in the Asia JV to extend the same sale offer to the other party at the same 

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sale price and on the same sale terms and conditions. The underlying intent is to 

grant a party the right to purchase its partner’s shares in the Asia JV for the same 

cash purchase price being offered – anything other than a cash offer could result in 

the inability of one party to match such offer on an apples-to-apples basis. 

33. Here, the Taj Debtors have proposed a convoluted set of transactions that purports to 

be an offer that fits within the scope of the ROFR. However, in truth, the Taj 

Transaction amounts to no more than a distribution of control of the TRU Asia’s 

interest in the Asia JV to the holders (the “Taj Noteholders”) of the 12.00% senior 

secured notes due 16 August 2021 (the “Taj Prepetition Notes”).

34. Pursuant to the proposed transaction (the “Taj Transaction”) among the Taj Debtors 

and certain of the Taj Noteholders, TRU Asia’s shares in the Asia JV and its related 

controlling entities would be transferred to an entity (“Reorganized Taj”) created by 

or on behalf of the Taj Noteholders. On the effective date of the proposed plan of 

reorganization, each Taj Noteholder would receive its pro rata share of the equity of 

Reorganized Taj, subject to dilution by a rights offering. Eligible Taj Noteholders 

would also receive on account of their claims the right to subscribe for additional 

shares of Reorganized Taj in a backstopped rights offering, which would seek to raise 

up to $520 million. Reorganized Taj would use the proceeds of the rights offering to 

pay off the outstanding debtor-in-possession financing of the Taj Debtors.

35. In short, the Taj Noteholders have agreed to a recovery on account of their claims 

against the Taj Debtors, pursuant to a chapter 11 reorganization, consisting solely of 

(a) ownership of Reorganized Taj, which would control TRU Asia’s equity interest in 

the Asia JV and (b) any cash recovered from other sources of value – i.e., the 

liquidation of the Taj Debtors’ remaining assets. Consequently, the Taj Transaction is 

not a bona fide “offer” for the shares in the Asia JV for purposes of the ROFR. 

36. Illustrative of this fact, the purported “sale price” for TRU Asia’s shares in the Asia JV 

includes an undisclosed amount of Taj Prepetition Notes held by the Taj Noteholders. 

Among other things:-

(a) Representing, as it does, mere claims in the Chapter 11 Cases of the Taj 

Debtors, this non-cash component is of unknown value and cannot be 

replicated by the Claimant for purposes of exercising the ROFR. The 

Claimant does not own any Taj Prepetition Notes and the bulk of such notes 

are solely in the possession and control of the group of cooperating Taj 

Noteholders proposing the Taj Transaction. As a result, the proposed offer is 

not in a form that could trigger the ROFR or would afford the Claimant the 

ability to exercise its bargained for, contractual rights under the ROFR. The 

proposed Taj Transaction simply does not fit within the scope of the ROFR.

(b) In addition, “credit bidding” is a right that secured creditors have in certain 

auctions to offset their secured claims against the purchase price of their 

collateral – effectively exchanging all or a portion of their debt for the assets 

securing it. The “credit bid” proposed by the Taj Noteholders is not a credit 

bid as the concept is commonly understood. The Taj Noteholders do not 

have a security interest in the asset being sold – TRU Asia’s shares in the 

Asia JV; rather, the Taj Noteholders are secured by the equity of certain of 

TRU Asia’s direct or indirect parent entities. As such, the “credit bid” 

component of the Taj Transaction is illusory. The Taj Transaction involves 

merely a distribution of control of the Asia JV to the Taj Noteholders.

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(d) The Tribunal must conduct an evidentiary hearing to determine the 

appropriate value of the “Offered Price”

37. Even assuming, arguendo, that the Tribunal determines that the Taj Transaction 

constitutes a bona fide sale “offer” within the purview of Clause 3 of the Shareholders’ 

Agreement and, therefore, triggers the ROFR, the purported “offer” amount of $760 

million under the Taj Transaction should not be deemed the “Offered Price” for the 

ROFR.

38. The Motion and the Stalking Horse Purchase Agreement attached thereto state that 

the “Total Consideration Amount” to be paid under the Taj Transaction is $760 

million, which consists of (i) a “credit bid” of Taj Prepetition Notes in a face amount to 

be determined (the “Credit Bid Amount”), plus (ii) cash in an amount of $760 million 

minus the Credit Bid Amount. 

39. The Claimant understands that the Taj Debtors seek to determine the Credit Bid 

Amount based on the face amount of Taj Prepetition Notes included in the “credit 

bid.” However, as noted above, the Taj Prepetition Notes are of undetermined value 

and the “credit bid” is not a credit bid at all, so any rule that would otherwise

determine the value of a credit bid by reference to the face amount of debt included in 

the offer is inapplicable under the ROFR. Rather, if the ROFR is triggered at all by 

the Taj Noteholders’ so-called offer, the Tribunal must determine what (if any) value 

to ascribe to the so-called Credit Bid Amount, including the purported non-cash 

consideration, in order to determine the appropriate value of the “Offered Price” for 

which the Claimant has, under the ROFR, the option to accept the offer or otherwise 

consent to the proposed “Transfer”. 

40. Additionally, since the Taj Prepetition Notes are solely in the control of the bidders 

making the offer, in the event that the ROFR is triggered by the Taj Transaction, the 

Tribunal should determine that the Claimant can exercise such ROFR for cash in an 

amount equal to the arbitration-determined value of the Offered Price. 

(e) The Drag Along and the ROFR are inextricably intertwined and the Drag 

Along cannot be enforced unless the ROFR is enforced

41. By the Motion, the Taj Debtors seek to challenge the enforceability of and/or 

invalidate the ROFR, while selectively exercising the Drag Along. Under the 

Shareholders’ Agreement, the exercise of the Drag Along is conditioned upon the 

ROFR, i.e., the Drag Along cannot be enforced unless the ROFR is enforced.

Indeed, the provisions are two sides of the same coin and neither party would have 

agreed to the inclusion of one right in the Shareholders’ Agreement without including 

the other.

42. Clause 3.6 of the Shareholders’ Agreement provides the following:-

“(a)If TRU wishes to Transfer any ROFR Transfer Shares . . . to a Potential 

Transferee in accordance with clauses 3.2 . . . TRU may, in its sole and absolute 

discretion, issue a notice within ten (10) days after the expiry of the Offer Period . . . 

(“Drag Along Notice”) to Fung Retailing and all other Shareholders that are Parties 

to this Agreement from time to time.”

43. As described in paragraph 31 above, the “Offer Period” refers to the 30-business day 

period pursuant to which the Claimant would have the opportunity to exercise the 

ROFR. The Drag Along in Clause 3.6 of the Shareholders’ Agreement does not 

make sense without the ROFR—the concepts are inextricably intertwined. The Drag 

Along can only be exercised after the non-selling shareholder declines to exercise its 

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ROFR rights or consents to the sale of the shares. Excising the ROFR from the Drag 

Along would allow TRU Asia to exercise the Drag Along without limitation. That is not 

what the Claimant and TRU Asia bargained for.

44. The Taj Debtors attempt to strip out the ROFR and keep the Drag Along using 

Section 365 of the Bankruptcy Code, but the Bankruptcy Code does not allow the Taj 

Debtors to pick and choose the provisions in the Shareholders’ Agreement they wish 

to enforce. To the extent that Section 365 even applies, it is well established that 

Section 365 is a shield, not a sword, and the Taj Debtors cannot cut this key, 

bargained-for provision in half. See In re Crumbs Bake Shop, Inc., 522 B.R. 766, 772 

(Bankr. D.N.J. 2014) (finding that section 365 could be used as a “shield” to “free a 

bankrupt trademark licensor from burdensome duties that hinder its reorganization” 

but section 365 could not be used as a “sword” to “take back trademark rights [the 

debtor] bargained away”); In re Hirschhorn, 156 B.R. 379, 381 (Bankr. E.D.N.Y. 1993) 

(“It is a well-known axiom that the bankruptcy laws are intended to be used as a 

shield and not as a sword”). It would both be inconsistent with the terms of the 

Shareholders’ Agreement and manifestly unjust to strip the Claimant of the 

bargained-for ROFR and hold the Claimant to the companion Drag Along.

F. Relief Sought

45. On the basis of the foregoing, the Claimant seeks the following relief from the 

Tribunal:-

(a) A declaration that, as between the parties to these arbitration proceedings, the 

Tribunal is the sole forum in which any and all issues raised by the Motion that 

concern the rights of the parties to the Shareholders’ Agreement may be raised, 

argued, and adjudicated. 

(b) A declaration that any decision or order made by the US Bankruptcy Court that 

purports to adjudicate upon the issues mentioned in (a) above or seeks to give 

effect to such adjudication, and which purports and/or is intended to bind or 

confer rights upon the parties to these proceedings (the “US Bankruptcy Court 

Ruling”), would necessarily entail the Respondents being in breach of the 

Arbitration Agreement and is not binding on the Claimant.

(c) An injunction restraining the Respondents to these proceedings from seeking to 

rely for any purpose or act upon an US Bankruptcy Court Ruling and/or upon any 

order of the Bankruptcy Court made for the purpose of giving effect to an US 

Bankruptcy Court Ruling.

(d) An injunction restraining the Respondents to these proceedings from seeking to 

rely for any purpose or act upon an order of any other court or tribunal 

recognizing, giving effect to, or otherwise enforcing an US Bankruptcy Court 

Ruling.

(e) A declaration that the Shareholders’ Agreement, including in particular but not 

limited to the ROFR, Drag Along, and Tag Along, are valid and binding on all the 

parties to these proceedings and enforceable by the Claimant against the 

Respondents in accordance with their terms.

(f) To the extent that the Motion is granted by the Bankruptcy Court:-

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i. A declaration that the proposed Taj Transaction does not constitute a 

bona fide “offer” within the purview of Clause 3 of the Shareholders’ 

Agreement and, therefore, it does not trigger the ROFR, Drag Along, and 

Tag Along obligations set forth therein.

ii. In the alternative, a declaration that, if the Tribunal determines that the Taj 

Transaction constitutes a bona fide “offer” within the purview of Clause 3 

of the Shareholders’ Agreement and, therefore, triggers the ROFR, the 

purported “offer” amount of $760 million under the Taj Transaction shall 

not be deemed the “Offered Price” for the ROFR; rather, the Tribunal

must conduct an evidentiary hearing to determine the appropriate value of 

the “Offered Price” for which the Claimant has the option to accept the 

offer or otherwise consent to the proposed Transfer.

(g) A declaration that, on the true construction of the Shareholders’ Agreement, the 

Drag Along is not enforceable unless the ROFR is enforceable and is performed 

by the Respondents in accordance with its terms.

(h) An order that the Respondents shall reimburse the Claimant for all fees and 

expenses incurred by the Claimant in the Chapter 11 Cases to the extent that 

issues pleaded therein should have been resolved by way of arbitration pursuant 

to the Arbitration Agreement.

(i) Such additional or alternative relief as appropriate.

G. Payment of Advance on Costs and Submission of Request for Arbitration and 

Copies

46. Pursuant to Article 3(1) of the ICC Arbitration Rules, the Claimant will submit by 

courier to the Secretariat of the ICC Court six copies of this Request for Arbitration, 

together with all accompanying documents.

47. In accordance with Article 4(4)(b) of the ICC Arbitration Rules, the Claimant will also 

submit to the Secretariat of the ICC Court, along with its Request for Arbitration and 

accompanying documents, the US $5,000 filing fee, as prescribed in Appendix III, 

Article 1(1) of the ICC Arbitration Rules. 

H. Arbitrator Nomination

48. Clause 11.12 of the Shareholders’ Agreement provides that arbitration will be 

conducted by three arbitrators appointed as follows: Claimant, on the one hand, and 

Respondents, on the other hand, shall each appoint one arbitrator for confirmation to 

the tribunal; the third arbitrator, who is to act as the Chairman of the tribunal, shall be 

appointed by agreement of the two party-appointed arbitrators.

49. Pursuant to Clause 11.12 of the Shareholders’ Agreement and Article 12(4) of the 

ICC Arbitration Rules, the Claimant nominates Anthony Rogers, FCIS, FCS, GBS, 

QC, JP as its arbitrator for confirmation by the ICC Court. His contact information is 

as follows:

9C Jonsim Place, 228 Queen’s Road East

Hong Kong

Tel: +852 9288 2910

Email: agr@anthonyrogers.com

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H. Confidentiality

50. Clause 9.1 of the Shareholders’ Agreement provides that “the existence, terms and 

provisions of [the Shareholders’ Agreement], and all information concerning the [Asia 

JV], any Group Company, the TRU-Asia Business, and all other information obtained 

or prepared by any Party in preparation for or in connection with the execution of this 

Agreement and performance of the obligations hereunder (“Confidential 

Information”), is confidential and no Party shall disclose any of such Confidential 

Information to any other person without the express written consent of the other 

Parties.”

51. In accordance with Clause 9.1 of the Shareholders’ Agreement, the Claimant 

requests that this arbitration be conducted on a confidential basis.

Dated this 23rd day of August 2018.

DAVIS POLK & WARDWELL

SOLICITORS FOR THE CLAIMANT

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