Exhibit 15.5  UNITED STATES
  BANKRUPTCY COURT
  SOUTHERN DISTRICT OF NEW YORKxIn re:In a Proceeding Under §
  304BOARD OF
  DIRECTORS OF
  MULTICANAL S.A.,
  
  of the Bankruptcy CodeCase No. 04-10280 (ALG)Debtor
  in Foreign ProceedingxIn re:Involuntary Chapter 11MULTICANAL
  S.A.,Case No. 04-10280 (ALG)Alleged
  Debtor.x  MEMORANDUM OF
DECISION  A P P E A R A N C E S:  CLEARY, GOTTLIEB, STEEN
& HAMILTON Attorneys for § 304
Petitioner Board of Directors of Multicanal S.A. and
Alleged Debtor Multicanal S.A. By:Lindsee
P. Granfield, Esq. Kurt A. Mayr, Esq. Timothy S. Mehok, Esq. Maria McFarland, Esq. Sara Lester, Esq. One Liberty Plaza New York, New York  10006  1


PROSKAUER ROSE LLP Attorneys for Respondent
and Involuntary Petitioner
Argentinean Recovery Company LLC 1585 Broadway New York, New York 10036 By:Louis
M. Solomon, Esq, 
Jeffrey Levitan, Esq,
Caroline S. Press, Esq. 
Jennifer R. Scullion, Esq. 
Justin Killian, Esq. Adam T. Berkowitz, Esq.  ALLAN L. GROPPER
UNITED STATES BANKRUPTCY JUDGE  Multicanal S.A. (Multicanal),
a cable company located in Argentina, has filed a petition under § 304 of the
Bankruptcy Code seeking recognition in the United States of anacuerdo preventivo extrajudicial (APE) proceeding
in the Republic of Argentina.  At the
commencement of the proceeding, Multicanal also moved to enjoin a large United
States holder of its Notes, Argentinian Recovery Company LLC (ARC), from
continuing to pursue two lawsuits in New York State Court in which ARC sought a
judgment for overdue amounts on the Notes. 
ARC is an entity formed to hold Multicanal Notes owned by certain
clients of WRH Partners Global Securities, L.P. (Huff), an investment manager
whose clients include pension funds, charitable foundations, research
institutions and universities (for convenience, ARC and Huff will hereafter
collectively be called Huff).  Huff has
opposed the § 304 petition and in addition, together with two affiliated
Noteholders, filed an involuntary Chapter 11 petition against Multicanal under
§ 303 of the Bankruptcy Code.  Multicanal
has moved to dismiss the involuntary proceeding in favor of § 304 recognition
and further argues that even if the § 304 petition is rejected, it would not be
appropriate or feasible to attempt the involuntary reorganization of an
Argentine company in a U.S. Chapter 11 case. 
The dual proceedings raise  2


issues as to the
recognition in the United States of foreign reorganization proceedings and the
remedies available to U.S. creditors.  The facts relevant
to the appropriate disposition of both petitions were the subject of a hearing
that encompassed three days of testimony and the introduction of thousands of
pages of documents and deposition testimony. 
Certain of the background facts have already been set forth in the Courts
opinion dated March 12, 2004 denying Huffs motion to dismiss the § 304
petition.  In re Bd. of
Dirs. of Multicanal, S.A., 307
B.R. 384 (Bankr. S.D.N.Y. 2004) (appeal pending).  Huff argued that the protections under U.S.
law given to holders of notes issued under an indenture qualified under the
Trust Indenture Act of 1939 prohibit the non-consensual restructuring of notes
in a foreign insolvency proceeding.  This
Court held that the Trust Indenture Act does not override § 304 of the
Bankruptcy Code or preclude the enforcement in the United States of a foreign
insolvency proceeding otherwise entitled to recognition here.  The question now for decision is whether
Multicanal has met its burden of establishing that the APE proceeding in
Argentina is entitled to recognition.  A
related question is whether, on the other hand, the involuntary petition
commenced by Huff and two other holders should be permitted to go forward.  On the basis of
the entire record, the Court enters the following findings of fact and
conclusions of law.  3


FACTS  Background  Multicanal S.A. is
a sociedad anonimaorganized under
Argentine law, with principal offices in Buenos Aires.  It is a wholly-owned subsidiary of Grupo
Clarin (Clarin), an Argentine media conglomerate that owns, among other properties,
the largest circulation newspaper in Argentina. 
About 90% of Multicanals operations are in Argentina, with virtually
all of the remainder in Paraguay and Uruguay. 
Its revenues are derived primarily from monthly subscription fees for
cable service, connection fees and advertising. 
Although it purchases goods and materials from this country, it has no
ongoing business in the United States. 
As of January 28, 2004, the date that the involuntary petition was
filed, its sole U.S.-based assets were three bank accounts with an aggregate
balance of approximately $9,500.  Multicanals
restructuring can be traced to Argentinas recent economic collapse.   In late 2001, following four years of
economic recession, Argentina experienced the worst economic crisis in its
history. See Applestein v. Republic of Argentina, No. 02 Civ. 4124, 2003 WL 22743762,
at *2 (S.D.N.Y. 2003); Lightwater Corp. v.
Republic of Argentina, No.
02 Civ. 3804, 2003 WL 1878420, at *2 (S.D.N.Y. 2003).  In November 2001, in response to a run on the
Argentine banks, the government restricted access to bank deposits and
instituted controls on foreign exchange. 
In February 2002, in further response, the Argentine government allowed
the peso, which had been tied to the U.S. dollar on a one-to-one parity basis
for the previous ten years, to float. 
Over the next four months the pesos value decreased approximately 75%
relative to the U.S. dollar. 
Restrictions on access to U.S. dollars and the sharp devaluation of the  4


peso made Multicanals
acquisition of programming from the United States much more expensive and
hindered its ability to make interest payments on its substantial
dollar-denominated debt obligations. 
This debt, representing substantially all of Multicanals debt for money
borrowed, includes Bank debt and five series of U.S. dollar-denominated notes
(the Notes) in an aggregate principal amount of U.S. $509 million.  It also represents about 97% of Multicanals
total debt; as of December 31, 2003, trade debt represented only about 3% of
Multicanals outstanding debt. 
Multicanal has paid all of its undisputed trade debt in the ordinary
course of its business since February 2002. 
The situation is very different with respect to its debt for money
borrowed.  The Notes are
unsecured and were issued in five series between 1997 and 2001: (1) $97 million
in principal amount of 91⁄4% notes due 2002; (2) $99 million in principal amount
of 10 1⁄2% notes due 2007; (3) $131 million in principal amount of Series E
13.125% notes due 2009; (4) $38 million in principal amount of Series C 10 1⁄2%
notes due 2018; and (5) $144 million in outstanding principal Series J Floating
Rate Notes due 2003 (collectively, the Notes).  The Notes are governed by New York law and
provide for payment in New York in U.S. dollars.  They were issued under indentures qualified
under the U.S.  Trust Indenture Act; the
Bank of New York serves as indenture trustee. 
Multicanal employed U.S. financial advisors and institutions to market,
sell and underwrite the Note issues.  The
Notes were not initially registered with the U.S. Securities and Exchange
Commission but were issued with a commitment by Multicanal to do so, and they
were later registered.  Since 1997
Multicanal has been subject to the reporting obligations set forth in Section
15(d) of the Securities Exchange Act of 1934. 15 U.S.C. § 78o(d).  5


On February 1,
2002, Multicanal defaulted on payments of principal and interest on certain of
the Notes, and by April 2002 Multicanal had defaulted on payments due on all
five series of Notes.  It also defaulted
on its Bank debt, which is also unsecured. 
Multicanal considered its options and determined that it would explore
the possibility of restructuring its outstanding financial debt.  In June 2002, Multicanal announced that it
had retained J.P. Morgan Securities Inc. (Morgan) as its financial advisor to
assist in the formulation of a restructuring proposal to submit to creditors.  There are two
principal means of restructuring under the Argentine insolvency laws.  The first is by a concurso
preventivo, which
seeks to reorganize a debtors business and avoid liquidation of the
estate.  In a concurso the debtor continues to manage its
business under the supervision of a court-appointed supervisor and a creditors
committee.  Creditor consents for the
restructuring are obtained after the debtor has filed for relief with the
court.  An automatic stay is triggered by
the filing of a concurso, and transactions outside of the ordinary course of business
require prior court authorization.1  The second means
of restructuring is by an acuerdo preventivo
extrajudicial, or
APE, which is generally much less expensive and time-consuming than a concurso.  An APE is a privately negotiated debt
restructuring, supported by a qualified majority of a debtors creditors, that
is submitted to an Argentine court for judicial approval.  An APE proceeding gives rise to judicial
oversight after creditor approval has been solicited, from the time of the
filing for confirmation.  An APE may only
affect claims of unsecured creditors; those claims that are not affected by the
APE remain unimpaired.  
 (1)A
thorough discussion of concursos preventivosmay be found in In re Bd. of Dirs. of
Compania General de Combustibles S.A., 269 B.R. 104 (Bankr. S.D.N.Y. 2001).  6


The laws governing
APE proceedings were amended in May 2002, largely in response to the Argentine
economic crisis, to increase their scope and effect.  The 2002 amendments, which incorporated
certain existing provisions applicable in a concurso, provide (i) for the imposition of a
stay on all claims affected by an APE and (ii) that the terms of the APE will
be binding upon all holders of claims affected by the APE.  Court confirmation of an APE requires the
support of holders of a majority in number and two-thirds in total outstanding
amount of the affected unsecured indebtedness. 
Affected creditors may object to confirmation of an APE before an
Argentine court based on the inaccuracy of a companys statements of assets and
liabilities, the failure to obtain the requisite vote needed for approval, or
on the ground that an APE is abusive or fraudulent.  Such creditors also have appellate rights
once the Argentine lower court has ruled on their objection.  A third type of insolvency proceeding under
Argentine insolvency law, a quiebra or
a concurso
liquidatorio, results
in the liquidation of a debtors estate.  In the third
quarter of 2002, Multicanal approached known institutional holders of its debt,
including Fleet National Bank, Citibank, Deutsche Bank, Credit Suisse First
Boston, Credit Lyonnais, Toronto Dominion, TIAA-CREF, Fintech Advisory Ltd.,
Orix Capital Markets LLC, Dolphin Fund Management and Huff, to commence
discussions on the possibility of a restructuring.  Certain of these holders, who collectively
held in excess of 25% of Multicanals Notes, formed an informal Negotiating
Group.  The Group retained Argentine
counsel, whose fees and expenses were paid by Multicanal.  A characteristic
of most public debt issued by non-U.S. entities, including the Notes, is that
it is held either in nominee name or in unregistered form, and the issuer does
not know the identity of many of the holders. 
Multicanal hired Bondholders Communications Group to determine the
demographics of the Noteholders.  There
never was certainty as to the identities of  7


the holders.  As best appears from the record, over 80% of
the Noteholders were U.S. individuals and institutions, but the holders also
included a significant number of Argentine individuals who had purchased and
held this dollar-denominated debt.  As further
discussed below, perhaps 5% of the outstanding aggregate principal amount of
the Notes, or $25 million in total, was held by U.S. retail investors,i.e., individuals
and entities who were not qualified institutional buyers (QIBs) within the
meaning of the U.S. securities laws.2 Substantially all the
remaining debt was held by Noteholders who were offshore holders within the
meaning of Regulation S under the United States Securities Act of 1933, 17
C.F.R. § 230.901 et seq. (Regulation
S), or were QIBs and would be able to purchase unregistered securities in the
U.S. under SEC Rule 144A.3  Beginning in
September 2002, a series of petitions for involuntary liquidation, orquiebrapetitions,
were filed in Argentine courts by Argentine retail Noteholders; by the end of
2002, over 20 such petitions had been filed. 
Multicanal stayed these petitions by depositing in escrow with the
relevant court an amount sufficient to cover the alleged claims filed by the
petitioners, thereby evidencing a degree of solvency.  The escrowed amounts totaled approximately 4
million pesos, and the Company would have been obligated to escrow additional
funds in the event further quiebra petitions were filed.  
 (2)The
record is not clear, however. For example, an email from Bondholder
Communications Group to Multicanal, dated July 23, 2002, indicates that small
retail customers of J.B. Hanauer held approximately $20 million of Notes as of
that date. (Huff Ex. 152.) A later Morgan email, dated February 24, 2003,
states that J.B. Hanauer held Notes for approximately 400 U.S. retail holders
(Huff Ex. 120.). Huff conceded at trial, however, that J.B. Hanauer customers
held $5 million in U.S. retail Notes as of December 2003.  (3)SEC
Rule 144A governs private resales of securities issued outside the United
States that can be resold to certain holders in the U.S. without registration.
Such resales may be made to qualified institutional buyers as defined in 17
C.F.R. § 230.144A(7)(a). QIBs are thought to have the net worth and expertise
to protect their interests without the need for securities registration under
the U.S. securities laws.  8


Restructuring Proposal  On January 31,
2003, in an effort to move forward with its restructuring and stem further quiebrafillings, Multicanal announced a restructuring
proposal.  The initial proposal
contemplated two steps.  Multicanal would
make a cash tender offer to purchase $100 million of its outstanding debt at a
price of $300 per $1,000 of principal amount tendered (the Cash Option).  Multicanal would then solicit acceptances for
an APE providing for the restructuring of Multicanals outstanding debt not
retired in the cash tender offer.  Under
this latter proposal, each holder of outstanding debt would receive under the
APE either: (i) $1,000 principal amount of Multicanals 10-year notes bearing
interest at rates that would increase over time from 2.0% to 4.0% (the Par
Option);4 or (ii) a combination of $315 principal amount of Multicanals
7-year notes bearing interest at a fixed 7% annual rate or an economically
equivalent floating rate, as elected by the holder, and 598 of Multicanals
Class C shares of common stock (the Combined Option).  The 22-page offer to purchase, describing the
terms of the cash offer, was dated January 31, 2003.  The principal terms of the initial proposal
for the APE were described in a solicitation statement of 188 pages sent only
to QIBs and Regulation S Noteholders and dated February 7, 2003.  Prior to
distributing the APE solicitation materials, Multicanal had sent an eligibility
letter to Noteholders requiring certification that the beneficial holder of the
Notes was either a QIB or fell within the terms of Regulation S. U.S. holders
who were not QIBs were given the opportunity to participate only in the cash
tender because of the U.S. securities law restrictions  
 (4)These
notes, which were issued in the original principal amount and were called par
notes, were nevertheless not expected to trade at par because of their low
interest rate and long tenure. They were especially designed for Argentine
retail holders who, it was thought, would be attracted by an instrument that
would maintain the principal amount of the debt and be redeemed at par, even
though the instrument would carry a below-market interest rate during the long
intermediate period.  9


discussed further
below.  As noted above, Multicanals
trade creditors would not be affected by the restructuring and would continue
to be paid in the ordinary course of the Companys business.  Amended Restructuring
Proposal  On July 25, 2003,
Multicanal amended the terms of its initial restructuring proposal so that: (i)
those creditors who elected the Combined Option would receive $440 of
Multicanal 7-year notes bearing interest at a fixed 7% annual rate or an
economically equivalent floating rate, as elected by the holder, and 641 Class
C shares for each $1,000 of existing debt tendered; (ii) those creditors who
elected the Par Option would receive $1,050 of Multicanals 10-year notes for
each $1,000 of existing debt tendered bearing interest at rates that would
increase over time from 2.5% to 4.5%; and (iii) those creditors who elected the
Cash Option would receive the same 30% of the principal of the Notes in cash
plus a minimal amount of interest at a rate of 2% per annum from the date on
which the APE was approved to the date on which Noteholders received
payment.  The stock to be distributed to
the Noteholders who elected the combined debt and equity option would be capped
at 35% of Multicanals equity in the aggregate; Clarin would retain 65% of
Multicanals equity after the APE.  All
Noteholders that had tendered their Notes in connection with the cash proposal
or had elected one of the other options were required to resubmit letters of
transmittal evidencing a tender and any election among the options, and thus
had an opportunity to reconsider their position on Multicanals restructuring.  The amendment also
formally incorporated the option to receive cash for outstanding Notes into the
APE, so that creditors who selected the Cash Option would be counted in
determining whether the support of the required majorities needed to approve
the APE had been obtained.  In connection
with the cash offer, Clarin agreed to contribute $15 million to fund at  10


least 40% of the payments
required thereunder.  In consideration of
the improvements to the restructuring proposal described above, certain
creditors, all of whom had been part of the Negotiating Group, executed Support
Agreements agreeing to vote in favor of the APE on certain terms and
conditions.  On August 12, 2003
Multicanal filed proceedings in the Commercial Trial Court of Buenos Aires to
initiate the process of obtaining judicial confirmation for the APE.  In connection therewith it requested that the
Court convene a Noteholders meeting at which Noteholders would have the right
to appear and vote for or against the APE, and also set a deadline for making a
tender.  Multicanal requested, and the
Argentine Court agreed, that the meeting be convened pursuant to Article 45bis of the
Argentine Insolvency Law, which means that the Court would consider confirming
the APE using a method to calculate votes similar to that used in a concurso preventivo.  By this method, Noteholders that were
absent from the meeting or abstained from voting on the APE would not be
counted when determining whether the APE had obtained the requisite
approvals.  The Court directed that the
Indenture Trustee convene the meeting, but the Trustee declined to do so.  Therefore, on September 22, 2003, the
Argentine Court issued an order calling a meeting of all Noteholders.  Notice was published in various Argentine
publications, the Wall Street Journals eastern edition and the Luxemburger Wort, informing
Noteholders that a meeting would be held on December 10, 2003 in Buenos Aires
to consider and vote upon the APE.  A
voting notice was circulated in English and Spanish.  On October 21,
2003, the Bank of New York, acting as Indenture Trustee, sent a notice to
Noteholders describing the proposed voting procedures and indicating that it
would request Multicanal to expand and simplify the documentation that could be
used by holders to participate  11


in the December 10th
meeting.  Representatives of Multicanal
flew to the United States to meet with the Trustee on October 23rd to explain
the voting procedures.  On November 21,
2003, the Trustee distributed a second notice to all Noteholders omitting its
prior concerns regarding the documentation. 
The Trustee never filed an objection to the voting procedures with the
Argentine Court.  Noteholders had
the option of appearing at the meeting in person or by proxy.  Noteholders who intended to participate in
the December 10th meeting were required to indicate their status as a
beneficial owner of Notes and, in the case of a person represented by proxy, to
provide evidence of a power of attorney appointing the representative to act in
such capacity.  Holders who accepted
either the cash offer or one of the two securities offers and elected to tender
their Notes were able to have their Notes represented at the meeting by the
exchange agent, Morgan.  The requirements
for voting and for tendering shares are further discussed below.  The record date for voting on the APE was
November 21, 2003.  As previously noted,
those Noteholders who did not attend the December 10th meeting, or who attended
but abstained from voting, were not counted in determining whether the APE has
the support of the requisite majority of Noteholders.  The tender deadline for the solicitation was
5:00 p.m. New York time on December 12, 2003, two days after the meeting date.  Huff  Huff is an
investment management company that has investment discretion over pension,
charitable and other funds and invests money for individuals of high net
worth.  Its clients are both qualified
and non-qualified institutional buyers. 
WRH Partners Global Securities, L.P., a Huff entity, is ARCs investment
manager.  Huff had made a substantial
investment in Multicanals Notes before the Argentine financial crisis and has
made investments in many other  12


foreign cable
companies.  Huff increased its holdings
in the Multicanal Notes on the open market subsequent to the crisis.  Huff did not join
the Negotiating Group but did have several meetings with representatives of
Multicanal with respect to the restructuring. 
The record is hotly contested with respect to the course of these
negotiations.  There is no dispute that
Huff and Multicanal representatives met and that Multicanal tried to obtain
Huffs support.  Huff recognized that
Multicanal needed to restructure its debt and that an in-court proceeding is
usually not a desirable outcome. 
(Thorton Dep. Test. 67:5-14, 90:15-24.) But Huff appears to have
rejected Multicanals proposals out-of-hand, and there is little evidence that
the parties engaged in meaningful negotiations. 
Beyond that, Huff alleges that at a meeting in April 2003, Multicanal
offered Huff additional consideration, in addition to that offered to other
creditors, if Huff would agree to support the APE.  William Connors, a Huff senior portfolio
manager, testified that on two subsequent occasions, Alejandro Urricelqui, a
Multicanal director and the Chief Financial Officer of Clarin, offered Huff up
to 2% of Multicanals equity if Huff would vote in favor of the APE.  Urricelqui denied that Multicanal had ever
offered Huff a special deal, however, and he affirmatively testified that it
was Huff that conveyed to him demands for special treatment.  Adrian Meszaros, Multicanals Chief Financial
Officer, also testified that during the April 2003 meeting between Multicanal
and Huff, Huff representatives demanded that Multicanal provide Huff alone with
additional value, on the ground that Huff was the only creditor that could deliver
a restructuring.  In any event, no
deal of any type was reached, and Huff remained a staunch opponent of the APE
up to the date of the December meeting. 
There is no question that the vote was expected to be very close, that
Multicanal continued to attempt to garner support, and that it also  13


sought to keep Notes out
of Huffs hands.  One critical block of
Notes was held by TIAA-CREF, which was interested in selling (apparently at a
premium above the current market, based on the blocks critical importance in
the voting).  Huff contends that
Multicanal assisted Kingdon Capital Management Corp. (Kingdon), which already
owned a substantial amount of Notes and was supportive of the restructuring, in
the acquisition of these Notes.  The
record shows that Meszaros of Multicanal discussed with a trader the
possibility that Multicanal might fund part of Kingdons purchase price.  But Meszaros testified that he dropped any
such notion on advice of counsel, and Christopher Melton, the Kingdon portfolio
manager, denied that any part of the purchase price had been funded by
Multicanal or that Kingdon had received any special consideration from
Multicanal.  There is no direct evidence
in the record that Multicanal financed any part of the Kingdon purchase from
TIAA-CREF, although it is established that Multicanals counsel assisted
Kingdon in completion of the paperwork necessary to vote the Notes in favor of
the APE.  During the period
leading up to the vote, Huff also took steps to garner support.  Huff purchased Notes from Van Eck Global
Opportunity Fund Ltd.; however, since the purchase took place after the record
date of November 21, 2003 for voting, it was ultimately unable to vote these
Notes.  At Huffs request the Indenture
Trustee for the Noteholders also sent a notice to all holders calling a
Noteholders meeting, at which Huff could presumably organize the holders.  But such a meeting was never held, apparently
in view of the lack of response from other holders.  Huff also took measures to protect its right
to vote no. It transferred most of its holdings into ARC, a separate limited
liability company comprised of clients of one or more Huff entities, so that it
would have a more secure voting position. 
Concerned about possible reprisals in Argentina, it hired a firm of
international security specialists for protection, and  14


Huffs seven
representatives traveled to Argentina in separate groups by circuitous routes
that did not require entrance into the country through the capital.  In November 2003
Urricelqui, a director of Multicanal, also commenced criminal proceedings in
Argentina against Huff and several of its representatives.  Urricelqui reported Huffs alleged requests
for a special deal to the Argentine criminal authorities in November 2003,
and an Argentine prosecutor commenced an investigation.  The prosecutor brought the investigation to
the attention of an Argentine judge in December 2003, and the first public
action regarding the criminal investigation took place in January 2004.  Huff did not become aware of the
investigation until after the December 10th meeting and when it did, promptly
sought to commence criminal proceedings against Multicanal representatives in the
United States.  It may be that, in
the days leading up to the December 10th meeting, Huff believed it already had
sufficient votes to block the APE; its representatives had earlier claimed in
negotiations with Multicanal that they had a blocking position.  (Samii Dep. Test. 165:7-167:21.) On the eve
of the meeting, however, Huff apparently concluded it might not be able to
carry the vote.  On December 9, 2003 and
again on December 10, 2003, Huff announced a tender offer for the purchase of
up to an additional $50 million worth of Notes at a price of 50 percent of
par.  On the morning of the meeting on
December 10th, it filed petitions with the Argentine court seeking to vote
Notes held by Huff acquired after the November 21, 2003 record date established
for voting.  The petitions were denied on
the ground that Huff had not complied with the applicable record date
procedures.  Just before the start of the
meeting, Huff also attempted to purchase the Notes held by Deutsche Bank, which
requested that the start of the meeting be delayed so that it  15


could consider its
alternatives.5 Multicanal apparently threatened to sue Deutsche Bank
to enforce the Support Agreement the Bank had earlier signed, and Deutsche Bank
ultimately decided not to sell to Huff and to vote in favor of the APE.  Huff attended the December 10, 2003 meeting,
voted against the APE, and was given an opportunity to inform all parties in
attendance of Huffs proposed purchase of Notes.  The Meeting of Creditors and Judicial Confirmation of the APE in
Argentina  Holders of 94% of
the principal amount of Notes participated in the December 10th meeting in
Argentina either in person or by proxy, including twenty-five Noteholders who
voted against the APE.  At the meeting,
holders of $318,599,001 aggregate principal amount of Notes and $18,542,827
principal amount of Bank debt voted in favor of the APE.  Holders of $159,083,024 principal amount of
Notes voted against the APE, including $157,355,024 voted by Huff.  Multicanal has calculated that 68% of the
aggregate principal amount of the outstanding debt voted in favor of the APE,
and the Argentine court determined in its APE confirmation order that
sufficient votes were cast in favor of the APE to satisfy the requirements of
the Argentine insolvency law.  The QIB
and non-QIB Noteholders voted together as a single class; Huff alleges that
Multicanal would not have obtained the requisite two-thirds majority necessary
to approve the APE had they voted separately.  The APE requires
that a majority of the holders of debt also vote in favor of an APE.  The methodology used to calculate numerosity
under Argentine law is the following. 
Each issue of Notes, issued under one indenture, is considered to represent
one potential vote for and one  
 (5)Huff
further alleges that at the start of the meeting  as on other occasions 
Urricelqui threatened Huff representatives with physical harm. Responding to
Huffs allegations, Urricelqui testified in his deposition that he never made
such threats before the December 10th meeting, but he conceded that,
immediately prior to the December 10th meeting, he and Mr. Connors engaged in a
heated altercation.  16


potential vote
against.  Pursuant to this methodology,
since individual beneficial holders in each of the five issues voted for and
against the APE, the Notes were found to represent five votes for and five
votes against.  The other entities
entitled to vote were the holders of Multicanals Bank debt, who supported the
overall restructuring.  The final vote
was therefore ten votes in favor (five Noteholders and five Banks) and five
against, sufficient to satisfy the numerosity requirement.  Shortly after the
meeting on December 10th, Multicanal filed a pleading with the Court in
Argentina seeking confirmation of the APE. 
On December 17, 2003, the Argentine Court issued an order certifying
that Multicanal had shown prima facie compliance with all legal
formalities required for the valid filing of its APE and ordered the
publication of notices as required by Article 74 of the Argentine Insolvency
Law.  On December 23, 2003, a stay of the
collection actions commenced in Argentina against Multicanal by creditors was
confirmed by the Argentine Court. 
Following a summer court recess, the period for filing objections to the
APE ran from February 2, 2004 through February 13, 2004.  During that period six creditors filed
objections with the Argentine Court, including an objection filed by State
Street Bank & Trust Co., as the registered holder of the Notes held by
Huff, a conditional objection filed by Credit Suisse First Boston and an
objection filed by Deutsche Bank.  In its
objection Huff argued, among other things, that Multicanals APE discriminated
against the Noteholders that voted against it, alleging that those Noteholders
were not permitted to choose from the three options on the same terms as those
who voted in favor of the APE.  On April 14, 2004,
Judge Ottolenghi of the Argentine court issued a decision confirming the APE as
having satisfied the requirements of Argentine law.  In a 36-page opinion, the Court overruled
each of the objections save one.  It
accepted the argument that creditors who had voted  17


against the APE or
abstained could not be discriminated against and required that Multicanal
provide Noteholders who voted against or abstained in the APE with a thirty-day
period to elect a form of consideration under the restructuring, thus granting
them the same rights given to those who had voted in favor of the APE at the
December 10th meeting.  The thirty-day
election period would commence upon the affirmation of the APE confirmation
order by the Argentine appellate court. 
Under Judge Ottolenghis order, those Noteholders who voted in favor of
the APE, and who already made an election, are not explicitly given a new right
to elect among the three options.  State
Street Bank, as the registered holder of Huffs Notes, and one other creditor
have filed appeals of the APE confirmation order with an Argentine appellate
court.  The appeals are currently
pending.  U.S. Proceedings  On December 19,
2003, before filing its objections in Argentina and nine days after the meeting
date, Huff commenced two lawsuits in the Supreme Court of the State of New York
seeking a judgment for amounts outstanding under its Notes, as well as
declaratory and injunctive relief that Multicanal could not, by virtue of the
U.S. Trust Indenture Act, restructure Huffs Notes in the APE.  In response to those lawsuits, on January 16,
2004, Multicanals board of directors, acting as its foreign representative
within the meaning of 11 U.S.C. § 101(24), filed a petition under § 304 of the
Bankruptcy Code commencing a case ancillary to the Argentine APE. Multicanal
also filed a motion in the § 304 case seeking a temporary restraining order and
preliminary injunction enjoining Huff from proceeding with the State court
lawsuits.  On January 16, 2004, this
Court granted a temporary restraining order providing that, pending a hearing
on a preliminary injunction, Huff and all other entities were enjoined from
prosecuting or taking action in furtherance of the State court lawsuits, taking
action in the U.S. interfering  18


with the administration
of the Argentine restructuring proceedings, or commencing or continuing any
other action against Multicanal or its property outside the Bankruptcy Court
relating to any bond, note or bank debt owed by Multicanal.  The temporary restraining order has remained
in place by consent of the parties pending a decision herein.  As a preliminary
matter in the § 304 proceeding, Huff argued that its rights as the holder of
Notes issued under an indenture qualified under the U.S. Trust Indenture Act (TIA)
could not, as a matter of law, be impaired or affected by a foreign insolvency
case and that, in effect, a § 304 proceeding could not be used to limit its
rights.  It was agreed that this Court
would initially decide whether, as a matter of law, Huffs rights, as the
holder of Notes issued under an indenture qualified under the TIA, can be
impaired by reason of recognition of a foreign insolvency proceeding in the
United States.  As noted above, on March
12, 2004, the Court held that Huffs rights under the Trust Indenture Act do
not preclude the granting of relief to Multicanal under § 304 of the Bankruptcy
Code.  Huff has taken an appeal.  The Court did not rule on the issue whether
the Argentine APE proceeding satisfies the requirements of § 304, acknowledging
that, pursuant to the statute, the issue should be determined, if contraverted,
after trial. 11 U.S.C. § 304(b).  On January 28,
2004, ARC, WRH Global Securities Pooled Trust and Willard Alexander also filed
an involuntary Chapter 11 petition against Multicanal, rendering it a putative
debtor in bankruptcy in the United States. 
Huff asserted with regard to the involuntary that Multicanals debt
should be restructured in a full U.S. Chapter 11 proceeding, and that such a
proceeding would be feasible under the circumstances.  Multicanal immediately moved to dismiss the
involuntary petition on the ground that it violated the temporary restraining
order entered in the §  19


304 case.  In an oral opinion issued on March 26, 2004,
the Court denied this motion to dismiss. 
In due course, it was decided that the § 304 and the involuntary would
be tried together.  In connection with
the trial of the § 304 case, Multicanal renewed its motion to dismiss the
involuntary proceeding on multiple grounds, including that this Court lacks
jurisdiction,forum
non conveniens, and that the petition was filed in bad faith.  Huff maintains that a U.S. restructuring
under Chapter 11 is not only feasible, but appropriate under the
circumstances.  It has also maintained
its opposition to the APE but suggested at the time of trial and in its
post-trial pleadings that instead of a blanket refusal to recognize the APE,
the Court might direct Multicanal to take a new vote in accordance with what it
describes as fair procedures as a condition to the APEs recognition in the
United States.  DISCUSSION  I.Standards and
Prerequisites for Granting Relief Under § 304.  The Supreme Court
made clear over a century ago that in contracting with a foreign entity, a
person subjects himself to those laws of the foreign government affecting the
powers and obligations of the corporation with which he voluntarily contracts.  Canada S. Ry. Co. v.
Gebhard, 109 U.S.
527, 537 (1883).  U.S. courts have
recognized that foreign courts have an interest in presiding over the
insolvency proceedings of their own domestic business entities to promote the
systematic distribution of a debtors assets. 
Cunard S.S. Co. v. Salen Reefer Servs. AB (In re
Cunard), 773 F.2d
452, 458 (2d Cir. 1985).  Section 304
provides a statutory mechanism for United States courts to recognize and
facilitate foreign insolvency proceedings. 
The overriding purpose of § 304 is to best assure an economical and
expeditious  20


administration of a
foreign estate, § 304(c), and to prevent the piecemeal distribution of the
estate.  Bank of New
York v. Treco (In re Treco), 240 F.3d 148, 153-54 (2d Cir. 2001); Koreag, Controle et
Revision S.A. v. Refco F/X Assocs.  (In
re Koreag, Controle et Revision S.A.), 961 F.2d 341, 358 (2d Cir. 1992).  Section 304(a)
provides that [a] case ancillary to a foreign proceeding is commenced by the
filing with the bankruptcy court of a petition under this section by a foreign
representative. There are thus two statutory prerequisites to a § 304 case, a foreign
proceeding and a foreign representative. 
In re Artimm, s.r.l., 278 B.R. 832, 838 (Bankr. C.D. Cal.
2002).  Foreign proceeding is defined
very broadly under the Bankruptcy Code.6 Multicanals APE is clearly
a judicial proceeding  for the purpose of  adjusting debts  or effecting a
reorganization. See In re Netia Holdings S.A., 277 B.R. 571, 580-581 (Bankr.
S.D.N.Y. 2002).  Only a foreign
representative has standing to seek relief under § 304.  Aerovias de Mexico, SA. de
C.V. v. Feltman (In re Empresa de Transportes Aero del Peru, S.A.), 263 B.R. 367, 375-76 (Bankr. S.D.
Fla. 2001).  Huff contends that
Multicanals board of directors fails to satisfy the definition of foreign
representative, as it is not a trustee or other independent fiduciary.  A board of directors may be an appropriate
representative in a § 304 case, however, if it plays a role similar to that of
a debtor in possession under the U.S. Bankruptcy Code, where management remains
in control of the reorganizing debtor and an independent trustee is not
ordinarily appointed.  See In re Petition of Bd. of Dirs. of Hopewell Intl Ins. Ltd., 238 B.R. 25, 53-54 (Bankr. S.D.N.Y.
1999), affd, 275 B.R. 699 (S.D.N.Y. 2002); In re Artimm, 278 B.R. at  
 (6)Foreign
proceeding is defined in § 101(23) of the Bankruptcy Code as a proceeding,
whether judicial or administrative and whether or not under bankruptcy law, in
a foreign country in which the debtors domicile, residence, principal place of
business, or principal assets were located at the commencement of such
proceeding, for the purpose of liquidating an estate, adjusting debts by
composition, extension, or discharge, or effecting a reorganization.  21


839.  The Multicanal board, like the board in Hopewell, 238 B.R. 53-54, is charged
 with the obligation of carrying out the provisions of the APE.  In principle, it is an appropriate foreign
representative.  Once the
prerequisites are established, § 304(c) provides guidelines for the exercise
of the Courts discretion in determining whether to grant relief.  Section 304(c) provides:  In determining whether to
grant relief under subsection (b) of this section, the court shall be guided by
what will best assure an economical and expeditious administration of such
estate, consistent with   (1)just
treatment of all holders of claims against or interests in such estate; (2)protection
of claim holders in the United States against prejudice and inconvenience in
the processing of claims in such foreign proceeding; (3)prevention
of preferential or fraudulent dispositions of property of such estate; (4)distribution
of proceeds of such estate substantially in accordance with the order
prescribed by this title; (5)comity;
and (6)if
appropriate, the provision of an opportunity for a fresh start for the individual
that such foreign proceeding concerns.7  11 U.S.C. §
304(c).  Notwithstanding the delineation
of those factors, under the statute, the touchstone is an economical and
expeditious administration of the foreign estate, and the factors in
subsection (c) are guidelines, not requirements.  In re Ionica PLC, 241 B.R. 829, 835 (Bankr. S.D.N.Y. 1999).  Moreover, the Second Circuit has emphasized
the need for a case-specific approach towards the granting of § 304 relief,
acknowledging that such an approach will in many or most cases support the
granting of the requested relief.  In re Treco, 240
F.3d at 161.  The legislative history of
§ 304 also directs that in applying the § 304 factors, a court is to examine
the specific circumstances of each case. 
H.R. Rep. No. 95-595, 95th Cong. 1st Sess. 324-325 (1977), S. Rep. No.
95-989, 95th Cong. 2nd Sess. 35 (1978); see also In re Culmer, 25  
 (7)This
factor applies only to insolvency proceedings relating to individuals and is
not applicable here.  22


B.R. 621, 628
(Bankr. S.D.N.Y. 1982).  Although one
factor might support the denial of § 304 relief, another factor, or a
combination of several factors, may direct the opposite result.  The Court must ultimately weigh all of the
relevant factors in reaching a decision. 
In re Ionica, 241 B.R. at 835.  Many
decisions have also held that the fifth factor, comity, is preeminent in
determining whether relief should be granted. 
In re Treco, 240 F.3d at 156-57 (We do not quarrel with the view  that
comity is the ultimate consideration in determining whether to provide relief
under § 304.); see also In re Hwang, 309 B.R. 842, 846 (Bankr. S.D.N.Y.
2004); In re Culmer, 25 B.R. at 629.  Comity
does not automatically override the other § 304 factors  rather, the granting
of comity is to be determined in light of the other factors.  In re Treco, 240 F.3d at 156, citing In re Koreag, Controle et Revision S.A., 130 B.R.
at 712, vacated on other grounds, 961 F.2d 341 (2d Cir. 1992).  The Supreme Court provided the classic
definition of comity over a century ago:  Comity, in the legal
sense, is neither a matter of absolute obligation, on the one hand, nor of mere
courtesy and good will, upon the other. 
But it is the recognition which one nation allows within its territory
to the legislative, executive, or judicial acts of another nation, having due
regard both to international duty and convenience, and to the rights of its own
citizens, or of other persons who are under the protection of its laws.  Hilton
v. Guyot, 159
U.S. 113, 163-64 (1895).  Outside the § 304
context, U.S. courts have granted comity to foreign insolvency proceedings when
it has been demonstrated that the foreign court is a court of competent
jurisdiction, and that the laws and public policy of the forum state and the
rights of its residents will not be violated. 
In re Cunard, 773 F.2d at 457.  The
issue in cases where comity is raised as an affirmative defense is
substantially the same as the issues under § 304: whether  23


fundamental standards of
procedural fairness are observed and state and federal law and public policy
are not violated.  Ecoban Fin.
Ltd. v. Grupo Acerero del Norte, SA de CV, 108 F.Supp. 2d 349, 352-53 (S.D.N.Y. 2000), affd, 242
F.3d 364 (2d Cir. 2001).  There is no
requirement that the foreign proceedings be identical to United States
bankruptcy proceedings.  Allstate Life Ins. v. Linter Group Ltd., 994 F.2d 996, 999 (2d Cir. 1993),
citing In re Brierley, 145 B.R. 151, 166 (Bankr. S.D.N.Y. 1992) (a § 304 case).  The key issue is one of due process and the
public policy of the forum.  See Finanz AG Zurich v Banco Economico S.A., 192 F.3d 240, 246 (2d Cir. 1999)
(United States courts will ordinarily defer to foreign proceedings so long as the
foreign court had proper jurisdiction and enforcement does not prejudice the
rights of United States citizens or violate domestic public policy.) (quoting Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d 709, 713 (2d Cir. 1987);
see also International Transactions Ltd. v. Embotelladora
Agral Regiomontana, 347
F.3d 589, 594 (5th Cir. 2003) (to obtain recognition, foreign procedures must
provide a system compatible with the requirements of due process of law.); In re Hourani, 180
B.R. 58, 70 (Bankr. S.D.N.Y. 1995) (foreign proceeding must comport with
American notions of fairness and due process.); In re
Hackett, 184 B.R.
656, 658 (Bankr. S.D.N.Y. 1995); In re Gee, 53 B.R. 891, 901 (Bankr. S.D.N.Y.
1985).  II.Huffs Opposition
to the APE.  Huff has opposed
recognition of Multicanals APE as prejudicial and unfair to U.S. creditors on
three principal grounds. First, Huff argues that the APE is a form of private
insolvency regime not subject to adequate judicial control and not entitled to
recognition under the general standards of § 304(c).  Second, Huff contends that the vote taken in
favor of the APE was coerced and unfair, and that a lack of judicial oversight
(among other things) led Multicanal  24


to engage in abusive
practices that created an atmosphere of coercion and intimidation.  Third, Huff alleges that Multicanal
discriminated against U.S. retail investors in its restructuring.  We treat each of
Huffs points hereafter.  A.IS
THE APE A FORM OF INSOLVENCY PROCEEDING ENTITLED TO RECOGNITION UNDER § 304?  Argentina has
detailed and comprehensive laws relating to both liquidations (quiebra) and reorganizations (concurso).  Prior
to 2002 APE procedures, which provide for an out-of-court workout, played a
limited role, because there was no way to make a workout binding on a
dissenting minority of creditors.  In
2002, in response to the nations financial crisis, the Argentine Congress amended
the APE to provide for the application of APE procedures in a reorganization
that was not wholly consensual.  As
amended, the statute provided that a debtor could file with the Court evidence
of consents to a reorganization from holders of a majority in number and
two-thirds in amount of the affected debt, together with a statement of assets
and liabilities valued on or about the date of filing; a certified schedule of
creditors; and a schedule of pending lawsuits against the debtor.  The filing, if prima facie valid, would give
rise to a stay of all actions against the debtor by creditors affected by the
APE. Creditors would be given a period of time to object to the APE, which the
Court would then confirm or reject.  All
parties would have a right to appeal.  Huff attacks the
APE in principle as providing uncontrolled discretion to a debtor and as having
too truncated a statutory underpinning. 
Huffs basic contention is that judicial oversight is inadequate in that
the Court is brought into the process only after the solicitation of votes is
over and is expressly authorized only to consider limited aspects of the
proceedings  whether  25


the statement of assets and liabilities is adequate and whether the
statutory majorities have been obtained.  The absence of a
detailed statutory framework for the APE is not fatal.  For example, the Canadian Companies
Creditors Arrangement Act (CCAA) has only three parts, yet they provide the
underpinning for a reorganization law that is recognized under § 304 and
routinely granted comity.  See Tradewell, Inc. v. American Sensors Elecs., Inc., No. 96 Civ. 2474, 1997 U.S. Dist.
LEXIS 10890 (S.D.N.Y. 1997); Badalament, Inc. v.
Mel-O-Ripe Banana Brands, Ltd.,
265 B.R. 732, (E.D. Mich. 2001). 
All of the legal experts who testified in this case agreed that certain
of the early decisions of the Argentine courts construing the APE, as amended
in 2002, have applied provisions of concurso law to supplement the provisions of the
APE law.  Huff charges that those
Argentine decisions that have gone beyond the strict terms of the APE statute
are an anomaly, and that creditors can have no certainty that these precedents
will prevail in another case.  Yet, as
discussed above, precedent under § 304 teaches that the application of a
statute in the particular case under consideration is at issue in a § 304
proceeding, not the foreign statute in the abstract.  See In re Treco, 240 at 158-59.  The application by the Court in Argentina of
the principle of uniformity of treatment of similarly situated creditors
provided for in the law governing concursos is evidenced by that Courts
requirement that all creditors who rejected the APE or abstained have a further
opportunity to elect among the forms of consideration made available in the
APE.  As for the alleged
lack of judicial oversight during the period of solicitation and voting, the
APE bears a strong resemblance to U.S. prepackaged plans of reorganization (Prepacks),
which in one form or another have been an established means of restructuring in
the United  26


States for many years.(8)
See Campbell v. Alleghany Corp., 75 F.2d 947 (4th Cir. 1935).  Under the current version of a U.S. Prepack,
the proponent of a plan of reorganization may file a plan and place before the
court previously obtained acceptances and rejections, provided that  (1)the
solicitation of such acceptance or rejection was in compliance with any
applicable nonbankruptcy law, rule or regulation governing the adequacy of
disclosure in connection with such solicitation; or (2)if
there is not any such law, rule or regulation, such acceptance or rejection was
solicited after disclosure to such holder of adequate information...  11 U.S.C. §
1126(b).  In a U.S. Prepack, the debtor
negotiates a restructuring agreement and solicits acceptances prior to the
Chapter 11 filing.  See N. Saggese and A.
Ranney Marinelli, A Practical Guide to Out-of-Court
Restructurings and Prepackaged Plans of Reorganization, 4.01[A] (2d ed. 2000).  There is thus no oversight by a court during
the period when the debtor formulates a plan, prepares and disseminates
disclosure materials and solicits votes. 
Hopewell, 238 B.R. at 52. 
Similarly, the APE provides for the negotiation of a restructuring and
the solicitation of votes prior to filing a restructuring plan with the
Argentine courts for confirmation.  The
voting requirements for a class of creditors to accept an APE and a U.S.
Prepack are also similar.  Both the APE
and the U.S. Prepack require the approval of holders of two-thirds of  
 (8)They
are also used in other countries in different forms.  See, e.g., Jacques Henrot & Emmanuel
Fatome, Pre-Bankruptcy and Bankruptcy Processes in France, 1998-1999 Ann. Surv. Bankr. L. 619,
630-36 (1999) (discussing the reglement amiableprocedure
under the French Law of 1984); John A. Barrett, Jr., Mexican
Insolvency Law, 7
Pace Intl L. Rev. 431 (1995) (discussing Mexicos suspension of payments
law).  Huffs expert witness on Argentine
law, Prof. Juan Anich, in his testimony before the Argentine Congress in
support of a draft of the amendments to the APE, recognized that the APE is
part of a trend toward streamlined and less expensive reorganization procedures.  He stated:  [T]he legislation of virtually all the countries in
the world have in recent years concurred in promoting this kind of proceeding,
in order to avoid the huge costs derived from the institutional structure [a
proceeding bearing a structure more like a concurso or a plenary Chapter 11
case].  These costs must be borne not
only by private parties, but also by the institution itself, which all of a
sudden is flooded by a huge number of processes and disputes of this kind.  We believe that this proposed amendment will
make it easier for many disputes currently resolved by the courts to be the
subject matter of arrangements made by the parties in a different framework.  (MC Ex. 141, p. 6.)  27


the unsecured
indebtedness and more than half in number of the claims affected by the
proceedings.  Creditors who do not vote
on an APE are not counted in determining whether the requisite vote was
obtained, as is the case in the United States. 
See 11 U.S.C. § 1126(c).  In seeking
confirmation of the APE, the debtor must file certain documents with the
Argentine court, each certified by a public accountant, including: (i) a
statement of assets and liabilities valued on or about the date of the APE;
(ii) a certified schedule of creditors; (iii) a schedule of pending lawsuits
and administrative procedures against the debtor; (iv) a schedule listing its
accounting books; and (v) evidence that the requisite vote has been
obtained.  In U.S. Prepacks, all of this
information is not necessarily filed with the court; the bankruptcy court may
allow a debtor to dispense with the filing of schedules and statements of
financial affairs if the debtor is not seeking to bar and discharge certain
categories of debt.  See Procedural Guidelines for Prepackaged Chapter 11 Cases in the U.S.
Bankruptcy Court, Southern
District of New York at VI.C.4. (Procedural Guidelines).  Creditors committees are not always formed in
APE proceedings, and they are likewise not always formed in a U.S.
Prepack.  See Gary B. Wilcox and David M.
Rievman, Restructuring Troubled Debt Under the New Debt
Exchange Rules, 10
Va. Tax Rev. 665, 675 n.52 (1991).  A stay is
effectuated upon the filing of both an APE and a U.S. Prepack.  In a U.S. Prepack, the automatic stay
operates as a stay of virtually all actions or proceedings against the debtor
arising before the commencement of the bankruptcy case.  The APEs stay is less broad  unlike in a
U.S. Prepack, the stay of the APE only affects those actions against the debtor
and its assets that relate to claims of an economic nature that are affected by
the APE.  However, as previously
discussed, 97% of Multicanals outstanding debt is financial debt that is
affected by the APE.  28


In both an APE and a U.S. Prepack the debtor continues in possession of
its property and operates its business, and Argentine and U.S. courts,
respectively, may enjoin or restrict the disposition of a debtors assets.  Once a case is filed, U.S. courts exercise
supervisory and oversight powers in a U.S. Prepack; Argentine courts do the
same in an APE.  Moreover, in many U.S.
Prepacks, as in Multicanals APE, there is no need for a claims administration
or reconciliation process because affected claims are admitted and all other
creditors are generally paid on confirmation of a plan or in the ordinary
course of the debtors business. 
Procedural Guidelines VI.C.16.  In an APE, after the initial finding of the Argentine court that the
formal requirements of the APE have been met, the debtor is required to publish
notice of the filing for five business days in Argentine newspapers.  Creditors then have ten court days to file
objections to confirmation.  The
Argentine court may review the solicitation and other pre-filing restructuring
processes used by the debtor during this objection period, and hear evidence on
any objections that are raised.  A party
whose objection is overruled by the Argentine court may appeal, and creditors
can move to unwind an APE if they prove certain types of fraud within six
months after confirmation.  Debtors in
U.S. Prepacks must also make a motion to the U.S. court upon notice to
creditors to approve confirmation of a Chapter 11 plan, and § 1144 of the
U.S. Bankruptcy Code provides for revocation of a confirmation order within 180
days of its date of entry if such order was procured by fraud.  Huff condemns the APE on the ground that it need not satisfy the
conditions to confirmation of aconcurso proceeding or of a U.S. Chapter 11 plan, whereas a U.S. Prepack
must satisfy all of the conditions for confirmation of any other Chapter 11
case.  Importantly, these Chapter 11
conditions include good faith in the formulation and execution of the plan of  29


reorganization (§ 1129(a)(3)); the best
interests test, requiring that every creditor receive at least as much in the
reorganization as it would receive in a liquidation under Chapter 7 (§ 1129(a)(7));
and satisfaction of the absolute priority rule (§ 1129(b)).  Huff contends that the failure of Argentine
law to require satisfaction of these basic provisions should preclude an APE
from recognition under § 304.  Huff misconstrues the standards for § 304 recognition.  As discussed above, the touchstone of § 304
is the economical and expeditious administration of the foreign estate,
consistent with the factors set forth in § 304(c).  There is no requirement that a foreign
proceeding incorporate the conditions to confirmation set forth in § 1129
of the U.S. Bankruptcy Code. 
Distribution of proceeds substantially in accordance with the order
prescribed by the Bankruptcy Code, as provided in § 304(c)(4), is the one
guideline that refers directly to title 11 of the U.S. Code.  But the cases do not require that a
distribution in a foreign proceeding match the distribution that would be
available in a hypothetical U.S. case, or that U.S. creditors receive the
precise recovery or treatment to which they would be entitled under Chapter 11.In re Treco, 240 F.3d at 158-59; In re Garcia Avila, 296 B.R.
95, 112 (Bankr. S.D.N.Y. 2003).  For example, inGarcia
Avila, the Court granted § 304 recognition to a Mexican
reorganization even though Mexican law does not explicitly require the
proponent of a plan to satisfy either the best interests test or the absolute
priority rule.  With regard to the
absolute priority rule, the Court noted that, in a consensual Chapter 11 case,
creditors may agree to accept less than full payment while allowing equity to
retain some or all of its interests.  It
went on to observe that the Mexican Act  requires a majority vote to overcome
the absolute priority rule, and this is substantially in accordance with the
Bankruptcy Code.  Id. at 111-12.  In the  30


Multicanal APE the principle that shareholders should
not receive any recovery absent payment in full to creditors was also overcome
by the vote in favor of the APE.9  As for the best interests test, Argentine law does not require that a
debtor in an APE prepare an explicit liquidation analysis showing that each
creditor affected by the APE would be worse off in a liquidation.  There is no question on the extensive record
of this case, however, that this cable company with few hard assets would have
little to distribute in a liquidation. 
Even Huff does not complain about Multicanals posting of collateral to
stave off thequiebra petitions
filed by small Noteholders in Argentina. 
As hard as it has fought to oppose the APE and presumably to control
Multicanals future, Huff has never filed a quiebra itself,
and it filed an involuntary Chapter 11, not a Chapter 7, in the United States.  The foregoing is not to ignore the requirement of good faith, mandated
for Chapter 11 confirmation by § 1129(a)(3).  It is incorporated into § 304 through
the concept of comity and the requirement of § 304(c)(1) of just
treatment of all holders of claims or interests.  It is assumed that an APE should not be
recognized in the United States if not pursued in good faith. But in the heat
of a debtor/creditor dispute, where the parties can hold very different views
of thebona
fides of a reorganization plan, the issue of good faith should be
probed elastically and on a case by case basis. 
To do otherwise invites unnecessary rigidity in bankruptcy
administration emasculating bright prospects of reorganization by slavish
review of  
 (9)Huff
complains that Multicanals shareholder, Clarin, lobbied successfully for a
statute adopted in Argentina in 2003 limiting the percentage of voting stock of
a communications company that could be owned by persons who are not citizens of
Argentina.  It charges that this statute
limited the amount of stock that could be distributed in Multicanals
restructuring and gave Multicanal/Clarin an unfair advantage in the
negotiations.  It is not unusual,
however, for a nation to limit control of sensitive industries to citizens and
restrict foreign stock holdings in certain industries.  See, e.g., Communications Act of 1934, 47
U.S.C. § 310(b)(3) and (4). 
Multicanals inability to provide creditors with more stock, moreover,
does not mean the APE was fundamentally unfair. 
A swap of equity for debt is not the only way to compensate creditors or
fund a plan.  See 11 U.S.C. § 1123(a)(5),
which provides illustrations of several means for a Chapter 11 plans
implementation, including retention by the debtor of all or any part of the
property of the estate.  31


prepetition dealings by debtors with their creditors.
In re Eden Assocs., 13 B.R. 578, 584 (Bankr. S.D.N.Y.
1981).  Another influential early Chapter
11 case found that for purposes of determining good faith under section 1129(a)(3) 
the important point of inquiry is the plan itself and whether such plan will
fairly achieve a result consistent with the objectives and purposes of the
Bankruptcy Code. In re Madison Hotel Assocs., 749 F.2d 410, 425 (7th Cir. 1984);
see 7 L. King, Collier on Bankruptcy, ¶ 1129.03[3][a][iii][A] (15th ed.
rev. 2003).  There is nothing in the terms of Multicanals APE that is fundamentally
inconsistent with the provisions of a confirmable Chapter 11 plan.  It provides for an orderly and expeditious
distribution to creditors of cash, debt and equity.  Huff has never suggested that it is not
feasible, another important requirement for confirmation of a U.S. plan. § 1129(a)(11).  On the contrary, Huff complains that
Multicanal could pay more.  In connection with Huffs charges that Multicanals plan provides too
small a recovery to unsecured creditors, it should be emphasized that the
Bankruptcy Code does not require rejection of a consensual plan that has
received the requisite vote because the debtor could pay more. Chapter 11,
like the APE, is based on the principle that a plan should, if possible, be
negotiated and then ratified by a creditor vote.  The members of the Negotiating Group that
agreed to support the APE were large, sophisticated, well represented
institutions.  Huffs assertions that the
APE amounted to a give-away for Clarins benefit insults these creditors.10 
Moreover, Huffs  
 (10)Huff
asserted that some of the members of the Negotiating Group supported the APE
only because they were more interested in the future of Multicanals
shareholder, Clarin, with which they also had a debtor creditor
relationship.  There is no proof in the
record that all members of the Group had such a relationship, however, or that
the Group as a whole did not exercise reasonable business judgment.  There is also nothing indicating that any
member failed to vote in good faith.  In
a U.S. Chapter 11 case, absent bad faith or illegality, the Bankruptcy Code
does not preclude a claim holder from voting in accordance with its overall
economic interests.  John Hancock Mut. Life Ins. Co. v. Route 37 Bus. Park Assocs.,
987 F.2d 154, 161 (3d Cir. 1993). A Chapter 11 creditor need not vote with selfless
disinterest. See In re Gilbert,
104 B.R. 206, 216 (Bankr. W.D. Mo. 1989), citing In re Federal Support Co., 859 F.2d 17, 19 (4th Cir. 1988).  32


allegation that the APE was filed in bad faith because
too much value was retained by Clarin was also undermined by the testimony of
its portfolio managers, who insisted that they only performed a back-of
the-envelope analysis of Multicanals financial statements and ability to repay
debt over time and never committed any such analysis to writing.  They asserted in effect that they fought
Multicanals APE, tendered for $50 million of Multicanals debt, and filed an
involuntary Chapter 11 petition against Multicanal without ever having put on
paper their analysis of what a fair plan would comprise, raising at least an
inference regarding their own good faith.  Huffs charges with respect to Multicanals economic relationship with
its parent company implicates § 304(c)(3), which directs the Court to
consider, as one of the guidelines in a § 304 proceeding, prevention of
preferential or fraudulent dispositions of property of the foreign estate.11  Courts have examined a debtors ability to
recapture or avoid preferences and fraudulent conveyances when determining
whether to recognize a foreign proceeding. 
SeeIn
re Rubin, 160 B.R.
269, 282-83 (Bankr. S.D.N.Y. 1993); In
re Laitasalo, 193 B.R. 187, 195 (Bankr. S.D.N.Y. 1996).  Multicanal has described three methods by
which APE creditors are protected from preferences and fraudulent
conveyances.  First, if a preference or
fraudulent conveyance occurred before consents for an APE were obtained and was
not adequately disclosed, creditors would be able to object to the extent
knowledge of such information would have altered their decision.  Second, if a preference or conveyance were
not disclosed in a Statement of Assets and Liabilities and became known prior
to the APEs confirmation, any creditor could object to the APEs
confirmation.  Third, if a preference or
conveyance became known within six months  
 (11)Huff
asserted that Clarin overcharged its subsidiary for programming material and
that Multicanal improperly dissolved a subsidiary.  On the record herein, for purposes of this § 304
proceeding, Multicanal sufficiently countered that its transactions were
supportable and disclosed in its SEC filings.  33


after the Argentine Court confirmed the APE, creditors
would be able to object, and the debtor would be placed in liquidation if the
objection was sustained.  Although the procedures in Argentina are not identical to the treatment
of preferences and fraudulent conveyances under U.S. insolvency law, they need
not be.  In re Garcia
Avila, 296 B.R. at
112.  Moreover, in many U.S. Prepacks,
the debtor does not bring any preference or fraudulent conveyance actions.  See Saggese and Ranney-Marinelli, A Practical Guide to Out-of-Court Restructurings and Prepackaged Pans
of Reorganization at
¶ 4.03[C].  Huff has not complained that
any holders of 97% of Multicanals debt  its financial debt  actually
received preferences or fraudulent payments in respect of this debt.  Rather, it is undisputed that all Noteholders
and Bank creditors have been waiting to receive distributions of assets through
the APE, if the proceeding is finally confirmed in Argentina.  However, to the extent that preferences and
fraudulent conveyances might have been an issue here, the safeguards available
in the APE are sufficient to meet the requirements of § 304(c)(3) under
the circumstances of this case.  In sum, Multicanals APE, which bears many similarities to a
prepackaged Chapter 11 proceeding, is the type of reorganization proceeding
that, in principle, is subject to recognition under § 304.  The further questions raised by Huff are
whether the APEs voting procedures and alleged discrimination against non-QIB
holders in the United States precludes the grant of § 304 relief or
requires this Court to order a new vote on the APE.  B.THE VOTING AND
SOLICITATION PROCEDURES USED BY MULTICANAL IN THE APE  Huff has identified certain practices and procedures in connection with
the voting on the APE that it alleges were coercive and unlawful and should
cause the Court either to withhold  34


recognition of the APE or require a new vote.  Huff charges that these practices were
inconsistent with those that would prevail in a United States insolvency case
and resulted in a denial of due process to U.S. creditors.  In examining Huffs charges, the real issue is whether due process was
denied.  This was not a Chapter 11 proceeding
under the U.S. Bankruptcy Code, whether prepackaged or not.  This was an Argentine APE, and the issue
before the Court is not whether Multicanal followed all of the procedures for
solicitation and voting that would apply in a Chapter 11 case, but whether the
APE should be granted recognition under § 304 of the Bankruptcy Code.  See discussion at pp. 23-25, supra.  In deciding this issue, it is relevant
that Huffs charges with respect to voting and solicitation practices directly
implicate only the more general provisions of § 304(c) that Congress
directed the court to consider [i]n determining whether to grant relief . Section 304(c)(2) directs
the court to consider protection of claim holders in the United States against
prejudice and inconvenience in the processing of claims in such foreign
proceeding . This subsection relates specifically to the processing of
claims, however, and there is no issue in the Multicanal APE with respect to
the recognition of the claims of the U.S. Noteholders.  All claims in respect of the Notes are
automatically recognized in the APE without any requirement for filing a proof
of claim or taking any potentially burdensome action.  The requirement in § 304(c)(4) that
distribution of proceeds of the foreign estate be substantially in
accordance with the order prescribed by the Bankruptcy Code has most
frequently been invoked in connection with denial of a § 304
petition.  See In re Treco, 240 F.3d 148 (2d Cir. 2001).  It is implicated most directly in connection with
the issue of discrimination against U.S. non-QIBs, a matter that is dealt with
below, but not in connection with the voting and solicitation procedures.  35


The more general provisions of § 304(c) that are most closely
at issue in connection with Huffs challenges to the voting and solicitation
procedures of the Multicanal APE are § 304(c)(1), which requires just
treatment of all holders of claims against or interests in the foreign estate,
and § 304(c)(5), which identifies comity as a factor to be considered in
determining whether to grant a § 304 petition.  See In re Treco, 240 F.3d at 156-57.  The courts have held that the requirement of just
treatment implicates general due process standards; as noted above, § 304(c)(1) will
be satisfied if a foreign proceeding provides for a comprehensive procedure
for the orderly and equitable distribution of [a debtors] assets among all of
its creditors. In re Treco, 240 F.3d at 158.  Comity similarly may be granted where fundamental
standards of procedural fairness are observed and state and federal law and
public policy are not violated. Ecoban, 108 F.Supp.2d at 353.  Again, the real issue is not whether the same
procedures were followed as in a Chapter 11 case but whether there was
fundamental due process afforded to Multicanals creditors.  Notice is, of course, a key element of due process.  See Mullane v. Central Hanover
Bank & Trust Co., 339
U.S. 306 (1950); Bender v. City of Rochester, 765 F.2d 7 (2d Cir. 1985).  Lack of adequate notice has been a key factor
in many cases which have denied recognition to a foreign insolvency
proceeding.  For example, in International Transactions v. Embotelladora Agral, 347 F.3d at 591, the Circuit Court
refused to grant comity to a Mexican proceeding, not because of any unfairness
in the Mexican procedures generally but because the record did not sufficiently
demonstrate that the defendant had received notice of a hearing at which the
Mexican court entered the order on which plaintiff relied for preclusion
purposes.  Insufficient notice to
creditors has also been a factor in the few cases that have denied recognition
of a foreign proceeding based in part on § 304(c)(2).  See In re Hourani, 180 B.R. at 67-69; In re  36


Papeleras Reunidas, S.A., 92 B.R. 584, 591-92 (Bankr.
E.D.N.Y. 1988).  It is therefore relevant
that in the Multicanal APE proceedings, notice was extensive and highly
sophisticated.  As a reporting company under
the U.S. securities laws, Multicanal was required to continue to provide
filings on Form 6-K, and financial information on Multicanal was
available to creditors and others through SEC filings.  The solicitation materials for the APE were
extensive, voluminous and detailed, and in a form modeled on materials that
would be used in large U.S. tender or exchange offers.  The July 2003 supplemental APE
solicitation and Cash Option offering materials themselves totaled more than 60
pages each.  (MC Exs. 14 and 15.)
Multicanal also had its own web site. 
Adequacy of notice is one of the few matters that Huff does not
challenge.  We now turn to those procedural aspects of the vote on the APE of which
Huff does complain.  1.Classification
of QIBs and non-QIBs together for voting purposes  Huff argues that it was improper for Multicanal to place all of its
Noteholders in one group  in U.S. bankruptcy terminology, in one class  for
purposes of voting on the APE.  Since
U.S. retail holders were not entitled to make an election and were allowed only
the Cash Option, Huff contends, they should have been placed in a separate
class from the non-QIBs and should have voted separately.  Multicanals argument fails for at least
three reasons.  First, class voting is not a basic requirement of due process or of § 304
recognition.  In one case under § 304,
the Court found that although the Mexican insolvency law does not envision
voting by class, the requirements of § 304 were nevertheless satisfied
because a majority vote was required to approve the plan.  See In re Garcia Avila, 296 B.R. at 111-12.
Multicanals APE required the support of holders of two-thirds of the total
outstanding amount of unsecured indebtedness and a majority in number for
judicial confirmation.  37


Second, it is worthy of note that Huffs challenge to the
classification scheme would likely fail even in a Chapter 11 case.  Under § 1122(a) of the Bankruptcy
Code, a plan may place a claim or an interest in a particular class only if
such claim or interest is substantially similar to the other claims or
interests of such class. Substantially similar claims are those which share
common priority and rights against the debtors estate. In re
Greystone III Joint Venture,
995 F.2d 1274, 1278 (5th Cir. 1991). 
Unsecured claims will, generally speaking, comprise one class 
because they are claimants of equal legal rank entitled to share pro rata in
values remaining after payment of secured and priority claims.  FGH Realty Corp. v. Newark
Airport/Hotel Ltd. Pship, 155
B.R. 93, 99 (D. N.J. 1993) quoting In re 266 Washington
Assoc., 141 Bankr.
275, 282 (Bankr. E.D.N.Y. 1992); see also In re One Times Square
Assoc. Ltd. Pship, 165
B.R. 773, 776 (Bankr. S.D.N.Y. 1994). All of the Noteholders and the Banks held
general unsecured claims of equal rank.  Finally, we deal elsewhere with Huffs contention that there was
improper discrimination against U.S. retail Noteholders and hold that there was
and that it must be remedied.  The
discrimination against U.S. retail holders was impermissible chiefly because
they held the same Notes as all other Noteholders, leading to the conclusion
that they were properly classified in the same class as all others.  With the discrimination remedied, Huffs
charges of improper classification lose much of whatever force they had.  2.Allegations
that the Voting Procedures Coerced Noteholders to Accept the APE  Huffs next contention is that the voting procedures coerced holders to
vote yes in that only an affirmative vote would permit the holder to elect
among the options available.  If the
holder abstained or voted no, it could not easily make an election.  Huff points to the testimony of the Head of
Loan Products at Deutsche Bank that the Banks ability to choose among options  38


was an important factor in causing it to support the
APE (and to execute what proved to be a critical support agreement) and that
this factor might have materially impacted the Banks decision.  (Paasche Dep. Test. 15:10-16:16, 34:12-19.)  Multicanal responds with three points. 
First, it argues that the Deutsche Bank testimony is inconclusive and
there is no evidence in the record that any holder was actually coerced by the
voting provisions.  See Kane v. Johns-Manville Corp., 843 F.2d 636, 647 (2d Cir. 1988) (procedural irregularities,
including in voting procedures, deemed harmless because they would not have
affected the outcome of the case).  There
were certainly many other reasons for Deutsche Banks decision to sign a
Support Agreement and ultimately to vote in favor of the APE.12   Second, Multicanal argues that even if a
Noteholder voted no or abstained, it still had two days after the date of the
meeting on December 10th to tender and choose one of the options.  Finally, Multicanal contends that Huff and
other creditors objected to judicial confirmation of the APE in Argentina on
this ground and received appropriate relief. 
The decision of Judge Ottolenghi on Multicanals request for
confirmation of the APE requires that all creditors who abstained or voted in
the negative on the APE have a 30-day period to choose one of the options
and thus receive the same ultimate treatment as Noteholders who voted in the
affirmative.  The Argentine court did
not, however, order a new vote, which is what Huff asks this Court in effect to
require.  In considering Huffs claims that there was coercion at a level that
would deny Noteholders due process, it is important to take into account what
Multicanals solicitation materials actually said as to the effect of a no
vote or an abstention.  For example, the July 25,  
 (12)Huff
submitted affidavits of several small creditors in support of the involuntary
Chapter 11 case and in opposition to the APE. 
Two of these also spoke of coercion, but none of the affiants was
subjected to cross examination, and the affidavits were admitted into evidence
for limited purposes.  39


2003 solicitation materials for the Cash Option stated
that it was Multicanals position that Noteholders who supported the APE would
be first in line in terms of electing among the three forms of
consideration.  But the solicitation
materials made it clear that an election might be made available to others and
that, under the law of Argentina, courts have ruled that creditors opposing a
reorganization plan in aconcurso cannot be
put at a disadvantage in relation to those creditors who agreed to such plan on
a voluntary basis. (MC Ex. 15, p. 40.)  This is indeed the construction that Huff has successfully advocated in
the Argentine Court.  Huff argues that
Judge Ottolenghis ruling, which required Multicanal to give creditors an
election, finds discrimination [but] does not remedy it because a new vote
was not required.  (Huff Proposed Finding
of Fact 140.) Under the circumstances of this matter, however, it would not be
appropriate for this Court to dictate such a remedy and require a new vote in Argentina.  As discussed above, the question here is not
whether the APE should be confirmed as a U.S. Chapter 11 plan, but whether it
is entitled to recognition under § 304 and fundamental principles of due
process.  See Ecoban, 108
F.Supp.2d at 353, where the Court said that the proper inquiry on a comity
motion  is not the motives of a debtor in the foreign proceeding, but into the
foreign courts ability to address, and redress, improper conduct and the
foreign court is the appropriate venue for plaintiff to do so.  In any event, fundamental principles of due process are not
implicated.  The issue of constrained
choice in tender offers is not a simple one. 
See, e.g., John C. Coffee, Jr. and William A. Klein, Bondholder Coercion: The Problem of Constrained Choice in Debt Tender
Offers and Recapitalizations,
58 U.Chi. L. Rev. 1207 (1991);13  Andrew L. Bab, Debt Tender
Offer  
 (13)The
authors state: neither public policy nor private contracting should seek to
preclude, in the abstract, all use of coercive cash or exchange offers for
debt securities.  Nor should such
techniques be wholly legitimized. 
Rather, public policy should seek to shift control over the coercive
potential from the corporate issuer to a majority of the bondholders.  The majority would then be able to discipline
an opportunistic minority that is  40


Techniques and the Problem of Coercion, 91 Colum. L. Rev. 846 (1991);14
see also Mark J. Roe, The Voting Prohibition in
Bond Workouts, 97
Yale L.J. 232 (1987).  Under the
circumstances, even if the rule might be different in a Chapter 11 case,
see In re Mcorp Fin., Inc., 137 B.R. 219, 236 (Bankr. S.D. Tex.
1992), it cannot be said that the Multicanal solicitation requires the Court to
deny § 304 relief or direct a new vote.  
 seeking to hold out and
receive a disproportionate share of the distressed debtors assets. 58 U. Chi.
L. Rev. at
1216-17.  (14)The
author concludes: The exit consent solicitation and other techniques used by
financially troubled issuers and assailed as coercive have not been invalidated
in any court. evidence strongly suggests that these techniques have only a
marginal impact and cannot pressure bondholders into tendering at an unfair
price. 91 Colum. L. Rev. at 889-90.  41


3.The
Procedural Requirements for Voting No Were Burdensome and Unfair  Huff further contends that the vote was coercive in that Multicanal
made it significantly harder for a creditor to vote no rather than to vote in
the affirmative.  To vote in the
affirmative and tender, a participant in the U.S. Depository Trust System (DTC),
such as a broker or dealer holding Notes for a beneficial holder, had to
provide the exchange agent, Morgan, the following documents: a power of
attorney to vote; a duly executed, notarized, and apostilled or consularized
letter of transmittal; and a duly executed instruction letter from each of the
beneficial holders of the Notes.15 
To attend the meeting and vote in the negative, a DTC participant had to
supply similar documentation.  All
non-Spanish language documents had to be notarized, apostilled or consularized
and translated into Spanish by a registered Argentine translator, with the
translators signature certified by the Translators Association of the
Republic of Argentina.  All persons
attending the meeting also had to complete an attendance form, available on a
web site.  There was disparity in the procedures required for a no as opposed to
a yes vote.  Morgan was available to
act as a proxy for a creditor casting a vote in favor of the APE, and it was
able to obtain the appropriate Spanish language documentation.  For a negative vote a creditor had to attend
in person or obtain a proxy and also obtain a 
certified translation of English-language documents.  In principle, however, nothing prevented Huff
from locating a suitable proxy in Argentina to serve as a proxy for other dissenting
creditors.  Indeed, as the December meeting
approached, Huff caused the Indenture Trustee for the Notes to call a meeting  
 (15)Most
Notes in the United States, including Huffs, were registered in the name of a
broker/dealer participant in the DTC system. 
Slightly different documentation was required from the Argentine Common
Deposit System and from the European clearing agencies, Euroclear and
Clearstream, who collectively held most of the remaining Notes.  42


of Noteholders to take place in New York, presumably
to organize Noteholders, but there was little response from other holders, and
the meeting was never held.  The cases and commentators have recognized that foreign procedures are
inevitably more cumbersome to U.S. creditors than domestic procedures, and
numerous cases have rejected claims that the burden of satisfying foreign
procedural requirements justifies denial of § 304 relief.  SeeVesta
Fire Ins. Corp. v. New Cap Reins. Corp. Ltd., 244 B.R. 209, 218 (S.D.N.Y. 2000) (inconvenience to creditors
of proceeding in foreign forum does not defeat § 304 relief); In re Brierly, 145
B.R. at 163 (burdens do not justify denial of relief, especially as U.S. law
requires foreign creditors to assume certain burdens in U.S. cases); In re Hwang, 309
B.R. at 846-47 (foreign proceeding recognized even when U.S. creditor
faced substantial additional expense, including a $133,000 stamp duty in the
foreign proceeding); see also In re Gercke, 122 B.R. 621, 626 (Bankr. D.D.C.
1991). Those rare cases that have held that the procedures in a foreign
proceeding have been so burdensome as to violate § 304(c)(2) have
involved a critical lack of notice to the U.S. creditors affected by the
foreign case.  In re
Papeleras Reunidas, S.A., 92
B.R. 584, 591 (Bankr. E.D.N.Y. 1988) (creditor given no notice of the foreign
case); In re Hourani, 180 B.R. at 67-68; 2 L. King, Collier on
Bankruptcy, ¶ 304.08
(15th ed. rev. 2003).  Notice is not an
issue here.  As Huff argues, Multicanal could have simplified the voting
procedures.  For example, it appears that
in at least one APE in Argentina, involving CTI Holdings, a bondholders meeting
was held simultaneously in Argentina and the United States in Spanish and in
English.  But it cannot be said that due
process was violated by holding the meeting in Buenos Aires.  Holders of 94% of the principal amount of
Notes voted at the December 10th meeting either in person or by
proxy.  The voting requirements were
known for a substantial period before the meeting, and  43


while the Indenture Trustee for the Noteholders
initially expressed a desire to simplify the procedures, it amended its
position in a subsequent letter.  There
is no evidence that Huff objected to the procedures at the time; its efforts in
the fall of 2003 appear aimed at voting a blocking interest.  Nothing in the record establishes that the
voting procedures were so discriminatory and burdensome as to deny due process
to U.S. Noteholders and require this Court either to deny § 304 relief or
order a new vote.  4.Role
of the Indenture Trustee; Calculation of Majorities  Huff next contends that Multicanal procured the absence of the
Indenture Trustee for the Noteholders and, in anex parte order,
obtained a judicial ruling that absentee creditors would not be considered in
calculating whether the necessary majorities were obtained for approval of the
APE.  Further, Huff argues, the vote
ignored the requirement of numerosity and improperly gave the Bank creditors a
tie-breaking vote.  With respect to the position of the Indenture Trustee, Huff overstates
the record when it asserts that Multicanal procured its absence.  There is no evidence that Huff or any other
holder asked the Trustee to take any action that it did not take.  It appears at most that Multicanal was
delinquent in paying the Trustees fees and expenses, and that Multicanal
refused to pay the cost of the Trustees attendance at a meeting called by
Multicanal.  When the Argentine Court
directed that the Trustee hold the meeting to consider approval of the APE, the
Trustee declined, citing potential conflicts between its duties under the
Indentures and its duties in connection with a meeting held pursuant to the
provisions of the Argentine insolvency laws.  Huffs complaints about the methodology for counting votes are
factually correct, but it has not provided a basis for invalidating the vote as
a consequence of the challenged procedures. 
Multicanal did obtain a ruling from the Argentine court ex parte, in
accordance with usual  44


procedures in that country  that the majorities
needed for approving the APE should be calculated on the basis of those
Noteholders who attended the meeting and voted rather than on the basis of the
entire class.  But the ruling was hardly
arbitrary, as votes are calculated in this manner in an Argentineconcurso.  Moreover, the calculation of
majorities on the basis of those who vote is exactly the same in a U.S. Chapter
11 case, where those who do not vote are not included in the numerator or
denominator.  See 11 U.S.C. § 1126(c).  Huff also complains about the methodology for calculating
numerosity.  As indicated above, the
Notes were issued in a series and are considered to be one instrument under
Argentine law.  Since some beneficial
holders of each of the series of the Notes voted for and some voted against the
APE, it was considered that for each series there was one vote in the
affirmative, and one vote in the negative. 
That resulted in five votes in favor and five against the APE, with the
five Banks having the deciding vote for numerosity purposes.  While this methodology is certainly different from that which would be
used in a Chapter 11 case, there is no evidence in the record that it is not
the standard method for computing numerosity under Argentine law.  The record does not show that Multicanal
would have failed to satisfy the numerosity test even after counting individual
beneficial holders, especially as Huff, one voter through ARC, represented 98.9
% of the vote in opposition to the APE. 
Fundamental issues of due process are not implicated, and there is no
basis for rejecting the entire APE because the courts in Argentina applied
Argentine law in accordance with determinable standards.  5.Improper
Pressure and Threats by Multicanal  Finally, Huff contends, Multicanal pressured creditors, offered
improper consideration for votes and facilitated vote distortion by assisting yes
voters but not negative voters.  45


In its opposition to the APE, Huff took very extensive discovery in
accordance with the procedures that prevail in the United States, including the
depositions and the production of tens of thousands, if not hundreds of
thousands of pages of documents. 
Huff established on this record that Multicanal vigorously pursued the
APE, attempting to garner support and to keep Notes out of the hands of Huff,
which was also increasing its holdings and had announced itself as a firm
opponent of the APE.  Huff uncovered no indication that Multicanal offered improper
inducements to any entity to support the APE. 
The evidence in the record with respect to Kingdons purchase of the
TIAA-CREF position does not lead to the conclusion that there was a side deal.  Kingdons portfolio manager denied it, and
the price at which Kingdon purchased the Notes was not materially out of line
with the value of the consideration offered in the APE.  Not long after the TIAA-CREF sale to Kingdon,
Huff tendered for $50 million of Notes at a higher price.16  There were undoubtedly harsh words exchanged between representatives of
Multicanal and Huff.  There were threats
on both sides.  (Urricelqui Dep. 186:21-189:8l;
6/3/04 Trial Tr. 291:8-16, 294:9-295:7.) Although the record is not
entirely clear as to what Urricelqui said, it is clear that his words had no
effect on Huffs unwavering opposition to the APE.  Huff took elaborate steps to protect itself
from possible harassment or violence in connection with its attendance at the December 10th
meeting to vote at the APE.  But the fact
that Huff took precautionary measures does not prove that Multicanal would have
used improper methods in its dealings with Huff.  Tensions were high between the parties, but
there was no impediment to  
 (16)Huff
also alleges that Kingdon received assistance from Multicanal in voting its
Notes.  The record indicates that this
assistance consisted of Multicanals outside counsel providing a junior
attorney for half an hour to help Kingdon fill out documentation necessary to
vote by proxy.  46


Huffs effective opposition to the APE, which it has
continued to fight in the courts of Argentina and the United States.  One act involving Huff, however, requires further examination.  In November 2003, Urricelqui, a director
of Multicanal, filed criminal charges against several representatives of Huff
for allegedly demanding that Multicanal provide Huff treatment under the APE
which would be better than that available to all other creditors.  In December 2003 the charges were
referred to an Argentine judge for further examination; the record does not
show their present status.  The charges
were allegedly based on tapes that Urricelqui had made of conversations with Huff
representatives.  At his deposition,
Urricelqui initially refused to testify about the criminal proceedings and his
later testimony was limited.  He did not
produce the tapes, which he claimed were in the possession of the Argentine
authorities.  (Urricelqui Dep. Test. 146:2-14,
153:17-154:9, 161:7-25.)  There is no indication that the criminal prosecution intimidated Huff
or affected its opposition to the APE. 
It did not learn of the matter until after the December 10th
meeting.  When it did, its first response
was to attempt to file criminal charges against Multicanal in the United
States.  Huffs opposition to the APE
both in the United States and in Argentina has been steadfast.  If Multicanals intent was to intimidate Huff
 and there is limited evidence as to its intent  it probably had the opposite
effect.17  This Court has no authority or desire to review the actions of a
criminal court in Argentina. 
Nevertheless, Multicanal is seeking affirmative relief in our courts for
its restructuring, a matter in which the interest of the United States is not
incidental.  Notes in  
 (17)The
Court gives no weight to Urricelquis assertion that he contacted the Argentine
prosecutor in his personal capacity as a director and not on behalf of
Multicanal, out of his concern over threats that were made by Huff against him.  47


principal amount of over $500 million were issued in
New York, governed by New York law, and about 80% of the Notes are held by U.S.
entities, most visibly by Huff and its clients. 
This Court held in an earlier decision in this case that the U.S.
interest does not override the interest of Argentina or require the application
of a provision of the Trust Indenture Act to the derogation of Multicanals
right to seek relief under § 304. 307 B.R. at 384.  However, if a U.S. creditor had to fear that
it would face criminal prosecution in the issuers courts as a consequence of
its opposition to a foreign proceeding, and if the prosecution was in fact
groundless, the foreign proceeding would not necessarily be entitled to receive
recognition in the courts of the United States. Cf. Laker Airways Ltd. v. Sabena,
Belgian World Airlines, 731 F.2d 909, 931 (D.C. Cir. 1984)
(state not required to give effect to foreign judicial proceedings grounded on
policies which do violence to its own fundamental interests.).  Accordingly, prior to entry of a final order under § 304,
Multicanal will have to establish in this proceeding justification for its
commencement of a criminal prosecution in Argentina against Huff and its
representatives.  C.DISCRIMINATION
AGAINST U.S. RETAIL NOTEHOLDERS  Huffs final contention is that Multicanal discriminated against U.S.
retail Noteholders  Noteholders who were not QIBs  in its APE.18  For the reasons discussed below, the Court
finds that the APE discriminated against the U.S. non-QIB Noteholders, and that
such discrimination must be remedied if the APE is to receive recognition under
§ 304.  
 (18)Multicanal
appears to have abandoned its argument that Huff does not have standing to seek
relief on behalf of non-QIB U.S. Noteholders on the ground that ARC is
comprised only of QIBs.  In determining
whether to permit § 304 relief the Court must conduct a case-by-case
balancing of the § 304(c) factors. 
In re Treco, 240 F.3d at
155.  Allegations of discrimination
against U.S. Noteholders are highly relevant to the Courts analysis and need
be addressed to determine whether recognition is appropriate.  48


1.The
Discriminatory Treatment  There is not much dispute about the fact that U.S. retail holders
received different treatment from other Noteholders.  They were excluded from the Par Option and
the Combined Option and offered only cash. 
There is also not much doubt on the record that by being compelled to
take the Cash Option, the U.S. retail holders received worse treatment than the
other Noteholders, at least after the proposals were amended in July 2003.  Whereas the securities options were
significantly improved through the amendment to the initial APE proposal, which
appears to have been negotiated with the large Noteholders who signed Support
Agreements, the Cash Option remained at 30 percent and was only marginally improved
by the addition of 2% interest from the date of approval of the APE through the
date of distribution to Noteholders. 
Meszaros acknowledged the discrepancy in value between the cash and
securities options during his trial testimony, stating that the combined
debt/equity option was worth $0.44 on the dollar, exclusive of the equity.  (6/2/04 Trial Tr. 181:18.) The testimony of
two creditors, Deutsche Bank and Kingdon, corroborated Multicanals
analysis.  Deutsche Banks Head of Loan
Products testified that the Bank valued the Cash Option at substantially less
than the combined option.  A Kingdon
portfolio manager testified that Kingdon had marked its position in
Multicanal to a market value of around 34 cents on the dollar in November 2003,
when Kingdon purchased Notes from TIAA-CREF, and 42 cents as of May 2004.  The difference in value is further supported by the disproportionate
number of Noteholders who elected the Par Option and the combined debt/equity
option over the Cash Option.  The Cash
Option was oversubscribed in the initial tender.  However, following the amendment and change
in the terms of the APE, there was a large flow from the Cash Option to the
securities alternatives.  The figures
that Multicanal provided to the Argentine Court in April  49


2004 indicate that $44.1 million was tendered for the
Cash Option ($37.7 million of which was tendered through Morgan), while $116.9
million and $181.6 million were tendered for the Par and Combined Options,
respectively.  A significant amount of
the Notes tendered for the Cash Option was ostensibly held by U.S. retail
holders.  These figures lead to the
conclusion that, although the U.S. retail holders held the same Notes as the
QIBs and were placed in the same class by Multicanal for APE voting purposes,
they were provided with a distribution of significantly lesser value.  2.Asserted
Justification for the Discrimination  Multicanal did not dispute the disparate treatment given to U.S. retail
holders.  It argued principally that the
difference in treatment resulted from the effect of the U.S. securities laws
and that the treatment was justified.  The U.S. securities laws potentially have a major disruptive impact on
the restructuring of foreign debt, particularly in an exchange offer.  In any restructuring, even if the securities
were issued abroad under an exemption from U.S. registration, some of the debt
may come into the possession of U.S. holders who are not QIBs and not able to
be offered new securities without registration or an exemption from
registration.19  As noted
above, Multicanal registered the Notes under the U.S. securities laws and
facilitated the sale of the Notes to non-QIBs in the United States.  This was not a case where U.S. holders were
few or where U.S. retail holders were virtually incidental; the best evidence
is that 80% of all of the Noteholders were located in the U.S. and 5% or more
were non-QIBs.  Multicanal was thus faced
with a situation where it could not issue new securities (as opposed to cash)
to its non-QIB U.S. Noteholders without  
 (19)Over
time debt may change hands, and under Rule 144, restricted securities may
be resold freely after a two-year holding period, even to holders in the United
States who are not QIBs. 17 C.F.R. § 230.144.  50


addressing the U.S. regulatory scheme anew in
connection with its APE.  In order to
deal with the U.S. securities laws, Multicanal had to find an exemption from
registration or provide the non-QIBs with cash. 
An exemption from registration was not readily available under the
restructuring that Multicanal was attempting to pursue.20  Multicanal determined to issue the U.S.
retail holders only cash and to restrict them from any securities.  While Multicanal had a good reason for offering the U.S. retail holders
only cash, the question is whether the admitted discrimination is inconsistent
with recognition of the APE under § 304. 
Multicanal argues correctly that there are circumstances in which
different treatment of creditors in the same class can be justified under the
U.S. bankruptcy laws.  See, e.g., Aetna Casualty and Surety Co. v. Chateaugay Corp.  (In re Chateaugay Corp.), 89 F.3d 942, 949-50 (2d Cir.
1996).  It is also correct, as discussed
above, that a creditor need not receive the same distribution in a foreign case
as in a hypothetical U.S. Chapter 11 proceeding, and that comity does not
require that claims receive treatment in a foreign proceeding identical to the
treatment that would be provided under U.S. law.  In re Garcia Avila, 296 B.R. at 112.  However, although § 304 does not mandate
that a foreign insolvency law replicate U.S. law, § 304(c)(1) requires
the just treatment of all holders of claims against or interests in such
estate, § 304(c)(2) provides for the protection of claim holders in
the United States against  
 (20)Under
the initial offering in connection with the APE, securities could not be issued
to U.S. retail holders in exchange for the Notes under the exemptions for
offshore transactions or private placements. 
The exemption in § 3(a)(9) of the Securities Act of 1933, 15
U.S.C. § 77c(9), for securities issued in exchange for other securities of
the issuer was not available because § (3)(a)(9) does not permit the
exchange agent to receive certain incentive compensation, and Morgans
compensation as exchange agent was thought to have such a success fee. The
exemption in § 3(a)(10) of the Securities Act of 1933, 15 U.S.C. § 77c(10),
for securities issued in connection with a judicial proceeding after a hearing
upon the fairness of such terms and conditions at which all persons to whom it
is proposed to issue securities in such exchange shall have the right to
appear was not available because of uncertainty regarding standards for the
fairness inquiry; the Securities and Exchange Commission has construed the
exemption narrowly.  See Richard E.
Mendales, We Can Work It Out: The
Interaction of Bankruptcy and Securities Regulation in the Workout Context,
46 Rutgers L. Rev. 1213, 1270 (1994).  51


prejudice and inconvenience in the processing of
claims in such foreign proceeding, and § 304(c)(4) requires distribution
of proceeds of such estate substantially in accordance with the order
prescribed by title 11.  The principle of equality between identically situated creditors is
fundamental under U.S. insolvency law. 
See Mason v. Paradise Irrigation Dist., 326 U.S. 536, 541 (1946); also Sampsell v. Imperial Paper & Color Corp., 313 U.S. 215, 219 (1941) ([t]he
theme of the Bankruptcy Act is equality of distribution.).  The Second Circuit has repeatedly held that,
in determining whether to grant comity to a foreign insolvency proceeding, a
court must look to certain indicia of fairness, including whether creditors of
the same class are treated equally in the distribution of assets. Allstate Life Ins. v. Linter Group Ltd., 994 F.2d 996, 999 (2d Cir. 1993); Finanz AG Zurich v. Banco Economico S.A., 192 F.3d 240, 249 (2d Cir. 1999).21  The Argentine Court similarly demonstrated
its intent to treat all Noteholders equally, providing in its decision that all
creditors who voted no or abstained be allowed to elect an option following
the APEs confirmation.  A foreign
proceeding cannot discriminate against U.S. creditors and expect recognition
under § 304.  Multicanal has not
adequately explained why it did not take appropriate steps to eliminate the
disadvantageous aspects of the discrimination.  This is especially true in that there were at least four alternatives
available to Multicanal that would have allowed it to offer substantially the
same distribution to non QIBs in the United States as it did to other
Noteholders.  The first would have been
to restrict the compensation of its exchange agent, Morgan, for soliciting
votes.  The second was to register the
new securities in the United States.  A
third alternative was to file for reorganization under Chapter 11 and make  
 (21)In
a Chapter 11 case, § 1123(a)(4) also requires that a plan of
reorganization provide the same treatment for each claim or interest of a
particular class, unless the holder of a particular claim or interest agrees to
a less favorable treatment of such particular claim or interest.  52


available the exemption to the securities laws found
in 11 U.S.C. § 1145  an alternative that Huff obviously still
propounds.  A fourth and somewhat
different solution would have been to restrict non-QIBs in the U.S. to cash but
to ensure that the cash consideration had a value that was equivalent to the
securities alternatives.  There would
accordingly be different treatment afforded to the U.S. non QIBs, but different
treatment that was arguably justified under all of the circumstances.  See In re Chateaugay Corp., 89 F.3d at 949-50.  Multicanal argues that it is common to provide agents with incentive
compensation, that it did not want to take the time or incur the expense and
uncertainty of registering the securities, and that a U.S. Chapter 11 case has
the disadvantages further discussed below in connection with the § 303
petition.  Assuming that Multicanal had
valid business reasons for not registering its securities, for avoiding a U.S.
Chapter 11 case and for not restructuring Morgans compensation package, it
could have made a cash offer that was equivalent to the value of the securities
being offered.  It did not do so.  3.Remedy  The remaining question is how to fashion an appropriate remedy for the
discrimination.  Courts are permitted
broad latitude in fashioning an appropriate remedy in a § 304
proceeding.  In re Koreag, 961 F.2d at 348; In re Culmer, 25
B.R. 621, 627-28 (Bankr. S.D.N.Y. 1982). 
Huff would deny recognition to the APE altogether.  This is not called for under the
circumstances, especially as there are less drastic alternatives that
Multicanal apparently could still adopt as an amendment to the APE.  One remedy would supplement the relief already ordered by the Court in
Argentina.  As noted above, Judge
Ottolenghi has ordered that Multicanal allow those who voted no or abstained
in the APE to make an election among the three alternative forms of
consideration  53


once all appeals are determined in Argentina.  In order to obtain recognition of the APE in
the United States under § 304, Multicanal could make the same election
available to U.S. retail Noteholders.22  Alternatively, Multicanal could increase the
value of the Cash Option.  There may be
other alternatives.  This Court will not
in the first instance direct a remedy without hearing from the parties, but the
discrimination must be eliminated before final relief is entered herein.  III.The
Involuntary Chapter 11 Proceeding.  As discussed above, Huff and two affiliated holders of Multicanal
Notes, WR Global Securities Pooled Trust and Willard Alexander, have filed a
petition under § 303 of the Bankruptcy Code seeking to place Multicanal in
an involuntary Chapter 11 case.23 
Huff argues that an involuntary proceeding is the only forum in which
Multicanals U.S. creditors can obtain appropriate relief, that such a
proceeding would be feasible, and that it would not have an adverse effect on
Multicanal in Argentina.  Multicanal
objects to the involuntary proceeding and seeks its dismissal on multiple
grounds, including lack of jurisdiction, Huffs alleged bad faith filing, forum non conveniens,
improper service of the petition, laches and Multicanals history of
debt repayment.  
 (22)Even
though securities could not initially be offered to U.S. retail holders in
connection with the APE, Multicanal has stated that it could, under § 3(a)(9) of
the Securities Act, issue securities to holders pursuant to court order.  Section 3(a)(9) provides an
exemption from registration for securities that are exchanged by an issuer with
existing security holders where no commission or other remuneration is paid for
soliciting such exchange.  Since Morgan
would no longer be involved in the offer, Multicanal has taken the position
that the § 3(a)(9) exemption is available and that non-QIBs would be
eligible to receive the same securities options as the QIBs.  (23)Section 303(b) provides
in relevant part: An involuntary case against a person is commenced by the
filing with the bankruptcy court of a petition under chapter 7 or 11 of this
title  (1) by three or more entities, each of which is either a holder of
a claim against such person that is not contingent as to liability or the
subject of a bona fide dispute, or an indenture trustee representing such a
holder  54


Multicanal also invokes the provisions of § 305 of the Bankruptcy
Code, entitled Abstention. Section 305 provides:  (a)The
court, after notice and a hearing, may dismiss a case under this title, or may
suspend all proceedings in a case under this title, at any time if   (1)the
interest of creditors and the debtor would be better served by such dismissal
or suspension; or  (2)(A)there
is pending a foreign proceeding; and  (B)the
factors specified in section 304(c) of this title warrant suchdismissal or suspension.  Multicanal argues that
the involuntary petition is subject to dismissal under both § 305(a)(1) and
(2).  Section 305 grants the Court
significant discretion to decline to exercise jurisdiction over a bankruptcy
case.  See 2 L. King, Collier on Bankruptcy,
¶ 305.01.  For the reasons set
forth below, the Court holds that the involuntary petition should be dismissed
pursuant to § 305(a) and that it need not reach Multicanals other
grounds for dismissal.  A.Section 305(a)(2)  Section 305(a)(2) provides that a Court may dismiss a case if
there is a foreign proceeding pending and the factors set forth in § 304(c) warrant
dismissal.  As discussed above,
Multicanals APE is a foreign proceeding and, with certain caveats, the § 304(c) factors
have been satisfied.  Thus the Court may,
in its discretion, dismiss the involuntary petition pursuant to this
section.  In re Ionica PLC, 241 B.R. 829, 834 (Bankr.
S.D.N.Y. 1999).  There are several cases in which a full U.S. proceeding has been
dismissed in favor of a §304 case brought by a foreign representative.  See In re Gee, 53 B.R. 891 (Bankr. S.D.N.Y. 1985);
In re Cenargo Intl, PLC,
294 B.R. 571 (Bankr. S.D.N.Y. 2003). 
In In re Axona Intl Credit & Commerce Ltd., 88 B.R. 597 (Bankr. S.D.N.Y. 1988),
affd, 115 B.R. 442 (S.D.N.Y. 1990), appeal
dismissed, 924 F.2d
31 (2d Cir. 1991), the foreign representative brought a plenary  55


proceeding and, when it had served its purposes,
successfully dismissed it in favor of a less expensive and burdensome § 304
proceeding over the strong objection of a U.S. creditor.  In these cases the most obvious governing
principle has been a thorough pragmatism as to what relief would best meet the
needs of the foreign debtor.  See In re Avianca Nacionales de Columbia S.A. Avianca and Avianca, Inc., 303 B.R. 1, 15 (Bankr. S.D.N.Y.
2003).  This, of course, is what § 304
seeks to advance  the economical and expeditious administration of the
foreign estate.  In the instant case, the economical and expeditious administration of
the foreign estate is best served by proceeding with its § 304 petition
and dismissing the involuntary Chapter 11 petition.  As previously noted, U.S. courts have
acknowledged that foreign courts have an interest in presiding over the
insolvency proceedings of their own domestic business entities to promote the
systematic distribution of a debtors assets. 
In re Cunard, 773 F.2d 452 at 458. Section 304 was adopted to further
the goal of preventing the piecemeal distribution of a debtors estate by
centralizing administration in one court insofar as possible.  In re Koreag, Controle et Revision S.A., 961 F.2d at 358.  Section 304 implicitly acknowledges that
centralizing an insolvency proceeding will frequently provide the optimal
result for a debtor and its creditors alike by preventing certain creditors
from gaining an advantage over others by virtue of differing judicial
systems.  A single primary proceeding
also minimizes the time, expense and administrative burdens of managing full
cases in multiple jurisdictions.  In re Treco, 240
F.3d at 154.  A U.S. Chapter 11 proceeding to run concurrently with the existing APE,
one alternative proposed by the involuntary petitioners, would hinder rather
than advance an equitable distribution in this case.  Multicanals expert witness on Argentine law
explained that a  56


concurrent U.S. case would be deemed to conflict with,
rather than complement the APE, and that it would receive no recognition in
Multicanals home country under Argentine insolvency law to the extent it
purported to administer assets in Argentina. 
The APE is far along and, with the caveats previously discussed,
provides for the just treatment of Multicanals creditors.  Given that the § 304 factors have been
substantially met with regard to Multicanals APE, it is neither necessary nor
practical for a U.S. Chapter 11 proceeding to go forward.  B.Section 305(a)(1)  Section 305(a)(1) also provides the Court with discretion to
dismiss or suspend a proceeding under the Bankruptcy Code if the interests of
creditors and the debtor would be better served by such dismissal or
suspension. The legislative history indicates that the provision was designed
to be utilized where, for example, a few recalcitrant creditors attempted to
interfere with an out-of-court restructuring that had the support of a
significant percentage of the debtors creditors.  H.R. Rep. No. 95-595, 95th Cong.,
1st Sess. 325 (1977); S.Rep. No. 95-989, 95th Cong., 2d Sess. 35
(1979); In re Wine & Spirits Specialties of Kansas
City, Inc., 142
B.R. 345, 347 (Bankr. W.D. Mo. 1992).  Factors the courts have considered in determining whether the interests
of creditors and the debtor would be better served by dismissal or suspension
of a proceeding include whether another forum is available and whether another
proceeding has proceeded to the point that it would be costly and
time-consuming to start afresh under the Bankruptcy Code.  See, e.g., In re
Grigoli, 151 B.R.
314, 320 (Bankr. E.D.N.Y. 1993); In re RCM Global Long Term
Capital Appreciation Fund, Ltd., 200 B.R. 514, 525 (Bankr. S.D.N.Y. 1996); In re Paper
I Partners, LP, 283
B.R. 661, 679 (Bankr. S.D.N.Y. 2002). Although the provisions of § 305(a)(2) are
directly on point, it is worth noting that these factors also provide support
for dismissal or suspension of  57


the involuntary proceeding.  In addition, a further factor is the
objective futility of the maintenance of a Multicanal reorganization in the
United States, over the opposition of the putative debtor.  Bankruptcy jurisdiction has traditionally been premised on the
existence of a res and the in rem jurisdiction of the court in
administering the estate.  See Tennessee Student Assistance Corp. v. Hood, 124 S. Ct. 1905, 1910 (2004).  Where an enterprise held property in more
than one jurisdiction, the traditional territorial rule provided that each
nation would take control of the property within its jurisdiction and
administer it without much regard for the enterprise as a whole.  A central purpose of the system of modified
universality represented by § 304 is to avoid the waste and inefficiency
of multiple proceedings by positing a main proceeding in one jurisdiction and
an ancillary proceeding in aid of the principal case in other
jurisdictions.  See, e.g., Jay Westbrook,
A Global Solution to Multinational Default, 98 Mich. L. Rev. 2276, 2300-01
(2000); also In re Treco, 240 F.3d at 154.  In any event, the main cause for multiple
proceedings has been the existence of property or property interests in various
jurisdictions.  The presence of some
property in the United States remains a prerequisite to the maintenance of a
title 11 case involving a person that does not have a residence, domicile or
place of business here.  11 U.S.C. § 109(a).  Multicanal has virtually no property in the United States, as well as
no residence, domicile or place of business. 
Huff has not suggested any way to assert effective jurisdiction over
Multicanal.  Huff argued that a Chapter
11 trustee in the United States might be able to force Multicanal into a concurso in
Argentina.24  Multicanal
responded that Argentina would not recognize the authority of a U.S. trustee to
affect property outside of the United States, and that any such tactic would be
inappropriate in any event.  It would be
inconsistent with the goal of  
 (24)It
appears that Argentine law does not provide for a reorganization case or concurso initiated by creditors.  58


§§ 304 and 305 of cooperation in international
insolvencies to place a foreign company in Chapter 11 for the sole purpose of
appointing a trustee to take action that would not otherwise be appropriate in
the home jurisdiction of the enterprise. 
Cf. In re HBA East, Inc., 87 B.R. 248, 260 (E.D.N.Y. 1988) (Chapter
11 relief should not be available to entities filing to obtain a perceived
advantage in litigation with others or to provide an alternate judicial forum.).  Case law permits the dismissal of a Chapter 11 petition on a motion to
dismiss where on the filing date there was no reasonable likelihood that the
debtor intended to reorganize and no reasonable probability that it would
eventually emerge from bankruptcy proceedings. 
In re C-TC 9th Ave. Pship, 113 F.3d 1304, 1309 (2d Cir. 1997),
quoting In re Cohoes Indus. Terminal, Inc., 931 F.2d 222, 227 (2d
Cir. 1991).  In Carolin
Corp. v. Miller, 886
F.2d 693, 694 (4th Cir. 1989), the Court said that a Chapter 11 case should be
dismissed with great caution and upon supportable findings both of the
objective futility of any possible reorganization and the subjective bad faith
of the petitioner in invoking this form of bankruptcy protection.  A principal issue in these cases was the good
faith of the debtor in filing a voluntary Chapter 11 petition and asserting that
it had a reasonable prospect for a judicial rehabilitation.  In the instant involuntary case, the motives
of the involuntary petitioners are less important than the objective futility
of any possibility of administering a reorganization in this jurisdiction.  In a situation where the debtor is
steadfastly opposed to a U.S. Chapter 11 case, where there are assets worth
only $9,500 over which the Court could assume jurisdiction, and where the
principals of the debtor have no nexus to the United States, that objective
futility is sufficiently shown.  On a
motion to dismiss a court must take into account its ability to enforce its
orders.  Cf. Gulf Oil
Corp. v. Gilbert, 330
U.S. 501, 508 (1947) (enforceability of judgment is factor in determining forum non conveniens);
In re International Admin. Servs., Inc., 211 B.R. 88, 93-96  59


(Bankr. M.D. Fla. 1997).  The inability of this Court to force the
rehabilitation of this debtor over its objection provides a further reason for
dismissal of the involuntary proceeding. 
See In re Globo Communicacoes e Participacoes S.A., No. 03-B-17814
(PCB), oral opinion dated Feb. 19, 2004, at 29-36 (dismissing
involuntary Chapter 11 case brought against Brazilian telecommunications
company by Huff affiliates).  60


CONCLUSION  Multicanals APE may be recognized and enforced in the United States
pursuant to 11 U.S.C. § 304 and the involuntary Chapter 11 dismissed,
subject to the following.  Multicanal
shall within 30 days file and serve (i) a proposed cure for the
discrimination against U.S. retail Noteholders and (ii) sufficient
information about the criminal proceedings in Argentina so that a determination
may be made that those proceedings are substantially justified.  Huff may have 15 days to respond and a
hearing will then be scheduled.  Once
these issues are determined, the Court will enter an appropriate order.  In the meantime, the temporary restraining
order entered herein, originally dated January 16, 2004, shall remain in
full force and effect as a preliminary injunction.   Dated: New York, New York 
August 27, 2004  /s/
  Allan L. GropperUNITED STATES
  BANKRUPTCY JUDGE  61