Source: https://www.scribd.com/document/394817545/Appellees-Debtors-Brief-In-Re-Ocean-Rig-UDW-Inc-Second-Circuit-Court-of-Appeals-Case-No-18-1374
Timestamp: 2019-07-23 16:00:41
Document Index: 709195714

Matched Legal Cases: ['§ 101', '§ 101', '§ 304', '§ 1101', '§ 1129', '§ 1501', '§ 1504', '§ 1507', '§ 1508', '§ 1509', '§ 1509', '§ 1515', '§ 1517', '§ 1517', '§ 1517', '§ 1520', '§ 1520', '§ 1521', '§ 1521', '§ 1525', '§ 140', '§ 1501', '§ 1504', '§ 1520', '§ 1507', '§ 1520', '§ 1517', '§ 1521', '§ 1517', '§ 9', '§ 4', '§ 140', '§ 101', '§ 1520', '§ 1520', '§ 1520', '§ 101', '§ 1520', '§ 1101', '§ 1129', '§ 304', '§ 304', '§ 1508', '§ 4', '§ 1507']

Appellees/Debtors' Brief (In Re: Ocean Rig UDW Inc., Second Circuit Court of Appeals Case No. 18-1374) | Bankruptcy | Standard Of Review
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Case 18-1374, Document 69, 11/13/2018, 2432558, Page1 of 69
SIMON APPELL, FOREIGN REPRESENTATIVE, ELEANOR FISHER,
FOREIGN REPRESENTATIVE,
BRIEF FOR DEBTORS-APPELLEES
KELSI B. CORKRAN EVAN C. HOLLANDER
ORRICK, HERRINGTON DANIEL A. RUBENS
& SUTCLIFFE LLP EMMANUEL FUA
1152 15th Street NW ORRICK, HERRINGTON
Washington, DC 20005 & SUTCLIFFE LLP
(202) 339-8400 51 West 52nd Street
Attorneys for Debtors-Appellees
Case 18-1374, Document 69, 11/13/2018, 2432558, Page2 of 69
The following individuals and entities directly or indirectly own
the following percentages of equity interests in Debtor-Appellee Ocean
Rig UDW Inc. (UDW): affiliates of Elliott International Capital Advisors
Inc., BlueMountain Capital Management, LLC, Canyon Capital
Advisors LLC, Avenue Capital Group, Pacific Investment Management
Company LLC, and Oz Management LP own approximately 20.24%,
10.78%, 7.74%, 7.61%, 5.47%, and 5.16%, respectively, and Prime Cap
Shipping Inc., a company affiliated with Mr. George Economou,
beneficially owns approximately 9.31%. UDW directly or indirectly
owns 100% of Debtors-Appellees Drill Rigs Holdings Inc., Drillships
Financing Holding Inc., and Drillships Ocean Ventures Inc. No other
publicly held corporation owns 10% or more of any of the Debtors-
Appellees’ stock.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page3 of 69
CORPORATE DISCLOSURE STATEMENT............................................ i
COUNTERSTATEMENT OF THE ISSUES ............................................ 4
COUNTERSTATEMENT OF THE CASE................................................ 4
Statutory Background ...................................................................... 4
The Parties ....................................................................................... 6
A Market Downturn Renders The Debtors Insolvent And
Prompts Their Restructuring ................................................. 7
The Debtors Seek Chapter 15 Recognition ................................... 10
The JPLs Determine To Promote The Schemes ........................... 11
The Bankruptcy Court Grants Recognition .................................. 13
The Cayman Court Sanctions The Schemes, And The
Bankruptcy Court Issues An Order Enforcing Them.......... 16
The Restructuring Becomes Final ................................................. 18
The District Court Dismisses Ms. Weiner’s Appeal ..................... 19
SUMMARY OF ARGUMENT ................................................................. 21
STANDARD OF REVIEW....................................................................... 25
ARGUMENT ............................................................................................ 26
I. Ms. Wiener Lacks Standing To Pursue This Appeal........... 26
A. Only those persons aggrieved by a bankruptcy
court’s order have standing to challenge the order
on appeal. ..................................................................... 26
B. As a purported shareholder of an insolvent
company, Ms. Wiener lacked a pecuniary interest
in the Debtors’ restructuring. ...................................... 29
Case 18-1374, Document 69, 11/13/2018, 2432558, Page4 of 69
C. Regardless of the Debtors’ financial condition, the
recognition order did not affect Ms. Wiener’s
pecuniary interests. ..................................................... 36
Dismissing The Appeal As Equitably Moot. ........................ 44
A. The district court correctly applied the equitable
mootness doctrine to this chapter 15 appeal. ............. 45
concluding that all relevant factors support the
doctrine’s application. .................................................. 52
Case 18-1374, Document 69, 11/13/2018, 2432558, Page5 of 69
In re 60 E. 80th St. Equities, Inc.,
218 F.3d 109 (2d Cir. 2010) ........................................................... 25, 29
In re Agrokor d.d.,
No. 18-12104, __ B.R. __, 2018 WL 5298403 (Bankr.
S.D.N.Y. Oct. 24, 2018) ........................................................................ 50
Allstate Ins. Co. v. Hughes,
174 B.R. 884 (S.D.N.Y. 1994) ............................................ 49, 51, 54, 58
In re Arcapita Bank B.S.C.(c),
Nos. 13 Civ. 5755-56 (SAS), 2014 WL 46552 (S.D.N.Y.
Jan. 6, 2014) ......................................................................................... 48
604 F.3d 727 (2d Cir. 2010) ................................................................. 25
737 F.3d 238 (2d Cir. 2013) ..................................... 1, 26, 27, 28, 40, 41
In re Bear Stearns High Grade Structured Credit Strategies
389 B.R. 325 (S.D.N.Y. 2008) .............................................................. 50
Bennett v. Jefferson Cty.,
899 F.3d 1240 (11th Cir. 2018) ...................................................... 47, 51
In re BGI, Inc.,
772 F.3d 102 (2d Cir. 2014) ........................... 2, 3, 26, 44, 45, 46, 48, 53
No. 12cv7714 (ALC), 2013 WL 10822966 (S.D.N.Y. May
22, 2013) ............................................................................................... 58
Case 18-1374, Document 69, 11/13/2018, 2432558, Page6 of 69
In re Charter Commc’ns, Inc.,
691 F.3d 476 (2d Cir. 2012) ......................................... 44, 45, 46, 56, 58
10 F.3d 944 (2d Cir. 1993) ....................................................... 52, 55, 57
988 F.2d 322 (2d Cir. 1993) ................................................................. 58
In re City of Detroit,
838 F.3d 792 (6th Cir. 2016) .......................................................... 47, 48
In re DBSD N. Am., Inc.,
634 F.3d 79 (2d Cir. 2011) ....................................................... 26, 27, 40
In re E.C. Ernst, Inc.,
2 B.R. 757 (S.D.N.Y. 1980) .................................................................. 26
714 F.3d 127 (2d Cir. 2013) ....................................................... 5, 42, 43
In re Fiorano Tile Imports, Inc.,
619 F. App’x 33 (2d Cir. 2015) (summary order) ................................ 58
452 B.R. 367 (S.D.N.Y. 2010) .............................................................. 29
In re GT Automation Grp., Inc.,
828 F.3d 602 (7th Cir. 2016) ................................................................ 29
In re Gucci,
126 F.3d 380 (2d Cir. 1997) ................................................................. 27
Huebner v. Midland Credit Mgmt., Inc.,
897 F.3d 42 (2d Cir. 2018) ................................................................... 53
In re Johns-Manville Corp.,
843 F.2d 636 (2d Cir. 1988) ............................................... 26, 27, 36, 38
Millea v. Metro-North R.R. Co.,
658 F.3d 154 (2d Cir. 2011) ................................................................. 32
Case 18-1374, Document 69, 11/13/2018, 2432558, Page7 of 69
In re Morgan Stanley Info. Fund Sec. Litig.,
592 F.3d 347 (2d Cir. 2010) ................................................................... 9
In re MPM Silicones, LLC,
874 F.3d 787 (2d Cir. 2017) ..................................................... 52, 55, 56
In re Point Center Fin., Inc.,
890 F.3d 1188 (9th Cir. 2018) ........................................................ 27, 28
In re Quigley Co.,
391 B.R. 695 (Bankr. S.D.N.Y. 2008) .................................................. 35
Rajamin v. Deutsche Bank Nat’l Trust Co.,
757 F.3d 79 (2d Cir. 2014) ................................................................... 25
Royal & Sun Alliance Ins. Co. v. Century Int’l Arms, Inc.,
466 F.3d 88 (2d Cir. 2006) ................................................................... 51
In re Technicool Sys, Inc.,
896 F.3d 382 (5th Cir. 2018) ................................................................ 26
In re Transwest Resort Props., Inc.,
801 F.3d 1161 (9th Cir. 2015) .............................................................. 58
266 U.S. 507 (1925) .............................................................................. 43
In re Zarnel,
619 F.3d 156 (2d Cir. 2010) ........................................................... 25, 27
In re Zenith Elecs. Corp.,
329 F.3d 338 (3d Cir. 2003) ................................................................. 57
426 F.3d 540 (2d Cir. 2005) ................................................................. 37
11 U.S.C. § 101(15) ....................................................................... 37, 38, 42
11 U.S.C. § 101(41) ................................................................................... 38
Case 18-1374, Document 69, 11/13/2018, 2432558, Page8 of 69
11 U.S.C. § 304.................................................................................... 49, 50
11 U.S.C. § 1101(2) ................................................................................... 46
11 U.S.C. § 1129........................................................................................ 48
11 U.S.C. § 1501(a)(1) ................................................................................. 5
11 U.S.C. § 1504.......................................................................................... 5
11 U.S.C. § 1507.................................................................................... 5, 55
11 U.S.C. § 1508.................................................................................... 5, 51
11 U.S.C. § 1509(b)(2) ........................................................................... 5, 55
11 U.S.C. § 1509(b)(3) ........................................................................... 5, 55
11 U.S.C. § 1515.......................................................................................... 5
11 U.S.C. § 1517........................................................................................ 11
11 U.S.C. § 1517(b)(1) ................................................................................. 5
11 U.S.C. § 1517(d) ................................................................................... 55
11 U.S.C. § 1520.............................................................................. 5, 41, 43
11 U.S.C. § 1520(a) ......................................................................... 5, 39, 42
11 U.S.C. § 1521.......................................................................................... 5
11 U.S.C. § 1521(a) ............................................................................... 6, 55
11 U.S.C. § 1525(a) ..................................................................................... 5
Bankruptcy Rule 8006 .............................................................................. 15
Cayman Islands Companies Law (2016 Revision) § 140(1) .............. 34, 35
Fed. R. Evid. 201......................................................................................... 9
Order 102, Rule 20(4)(e) of the Grand Court Rules 1995 ....................... 12
Case 18-1374, Document 69, 11/13/2018, 2432558, Page9 of 69
Order 102, Rule 20(7) of the Grand Court Rules 1995 ........................... 12
7 Collier on Bankruptcy (16th ed. 2009) .................................................. 53
Case 18-1374, Document 69, 11/13/2018, 2432558, Page10 of 69
Appellant Tally M. Wiener seeks to overturn a bankruptcy court
order granting recognition in the United States of the Cayman Islands-
based insolvency proceedings of Ocean Rig UDW Inc. (UDW) and three
of its subsidiaries (referred to collectively as Ocean Rig or the Debtors).
Exercising its authority under chapter 15 of the Bankruptcy Code, the
bankruptcy court granted various forms of relief to facilitate the
Cayman proceedings, including recognizing those proceedings as
“foreign main proceedings.” Ms. Wiener, an attorney acting pro se who
purports to be a UDW shareholder, was the sole objector to the Debtors’
motion for recognition of the Cayman proceedings. The bankruptcy
court overruled her objections, and in the absence of any request for a
stay, the restructuring proceeded to its conclusion.
In the district court, Appellees moved for dismissal of Ms.
Wiener’s appeal under two well-settled prudential doctrines. First,
standing to appeal from bankruptcy court orders is limited to persons
“directly and adversely affected pecuniarily” by such an order. In re
Barnet, 737 F.3d 238, 242 (2d Cir. 2013). Second, because “effective
relief on appeal becomes impractical, imprudent, and … inequitable”
Case 18-1374, Document 69, 11/13/2018, 2432558, Page11 of 69
once a restructuring is complete, the doctrine of equitable mootness
requires certain bankruptcy appeals to be dismissed at the outset. In re
BGI, Inc., 772 F.3d 102, 107 (2d Cir. 2014). The district court granted
the motion to dismiss on both independent grounds.
This Court should affirm. First, as for standing, Ms. Wiener’s
status as a putative shareholder in an insolvent company meant that
she lacked a stake in the restructuring, as there was not sufficient
value in the enterprise to make creditors whole. None of Ocean Rig’s
creditors objected to the Debtors’ request for the bankruptcy court to
recognize the Cayman proceedings; indeed, they overwhelmingly
supported that relief. Although Ms. Wiener now purports to contest the
Debtors’ solvency, she fails to identify any clear error in the lower
courts’ factual findings. Moreover, separate and apart from the
Debtors’ financial condition, Ms. Wiener cannot articulate any
connection between the order she challenges and her pecuniary
Nor has Ms. Wiener identified any error or abuse of discretion in
the district court’s finding that this appeal is equitably moot. Although
the equitable mootness doctrine originated in appeals from orders
Case 18-1374, Document 69, 11/13/2018, 2432558, Page12 of 69
confirming chapter 11 plans, it has since been applied to other contexts,
“without apparent ill effect.” BGI, 772 F.3d at 109. There is every
reason to apply this doctrine to chapter 15 appeals, like this one, that
threaten to upset a completed restructuring that has the imprimatur of
a foreign court. Here, Ms. Wiener never sought to stay the bankruptcy
court’s recognition order, which was a condition precedent to the
consummation of the Cayman restructuring and was relied upon by
creditors, the Debtors, and other stakeholders. Nullifying the chapter
15 proceedings would thus impinge on the rights of third parties who
overwhelmingly supported the restructuring, and risk undoing
compromises essential to the Debtors’ post-restructuring viability. It is
accordingly inequitable for this appeal to proceed.
In sum, because Ms. Wiener cannot show she has any pecuniary
stake in this appeal’s outcome, or that it would be feasible—let alone
equitable—to overturn a condition precedent to a restructuring that has
already been consummated, this Court should affirm the district court’s
Case 18-1374, Document 69, 11/13/2018, 2432558, Page13 of 69
1. Whether the district court correctly found that Ms. Wiener
lacks standing to appeal the bankruptcy court’s order granting
recognition of foreign insolvency proceedings, where she had no
pecuniary interest in the outcome of the foreign restructuring and
cannot articulate any connection between her asserted pecuniary
interests and the injunctions that she challenges on appeal.
2. Whether the district court acted within its discretion in
finding Ms. Wiener’s appeal to be equitably moot where she failed to
seek a stay, the foreign restructuring proceeded to completion, and the
order challenged on appeal has been relied upon by creditors,
shareholders, and other third parties.
COUNTERSTATEMENT OF THE CASE1
This appeal arises from proceedings under chapter 15 of the
Bankruptcy Code. Chapter 15 aims to “provide effective mechanisms
for dealing with cases of cross-border insolvency, while promoting
1 Citations to “Br.” refer to Ms. Wiener’s opening brief in this appeal,
citations to “A” refer to Ms. Wiener’s Appendix, and citations to “SA”
refer to the Appellees’ Supplemental Appendix.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page14 of 69
international cooperation, legal certainty, fair and efficient
administration of cross-border insolvencies, protection and
maximization of debtors’ assets, and the rescue of financially troubled
businesses.” In re Fairfield Sentry Ltd., 714 F.3d 127, 132 (2d Cir.
2013) (quotation marks omitted); see also 11 U.S.C. §§ 1501(a)(1), 1508,
1525(a). To that end, chapter 15 permits representatives of foreign
debtors to commence an ancillary case in the United States by
petitioning a U.S. bankruptcy court for recognition of insolvency
proceedings taking place abroad. 11 U.S.C. §§ 1504, 1515.
A U.S. bankruptcy court’s decision to grant recognition, in turn,
authorizes various forms of automatic and discretionary relief. Id.
§§ 1520, 1521; see also id. §§ 1507, 1509(b)(2)-(3). As relevant here, an
order granting recognition of a “foreign main proceeding” gives rise to
an automatic stay of all proceedings against the debtor in the United
States, as well as all actions that interfere with the debtor’s property
located within the United States. See Fairfield Sentry, 714 F.3d at 133
(citing 11 U.S.C. § 1520(a)); see also 11 U.S.C. § 1517(b)(1) (defining a
foreign proceeding as a “foreign main proceeding” if it takes place “in
the country where the debtor has the center of its main interests”).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page15 of 69
Moreover, once a recognition order is entered, the court may grant “any
appropriate relief” where necessary to further chapter 15’s purposes
and protect the debtor’s assets. 11 U.S.C. § 1521(a).
Ocean Rig Group is an international offshore oil drilling
contractor and owner and operator of drilling rigs. SA236 ¶ 7
(Kandylidis Declaration). Debtor-Appellee Ocean Rig UDW Inc. (UDW)
is the holding company of the Ocean Rig Group and the parent of the
three subsidiary Debtors-Appellees (together with UDW, the Debtors).
SA233 ¶ 3. Iraklis Sbarounis is the Cayman Islands court-appointed
foreign representative of the Debtors for these proceedings, as well as
the successor to the Debtors’ former foreign representatives and joint
provisional liquidators (JPLs), Eleanor Fisher and Simon Appell. SA30
¶ 4 (Sbarounis Declaration).2
2The restructuring was approved by the Cayman court in September
2017, and on October 4, 2017, that court issued orders discharging Ms.
Fisher and Mr. Appell as foreign representatives of the Debtors and
appointing Mr. Sbarounis, the Chief Financial Officer of UDW, as the
Debtors’ successor foreign representative. See SA896-98 (Cayman
Court Discharge and Appointment Order); C.A. Dkt. No. 16 (amended
Case 18-1374, Document 69, 11/13/2018, 2432558, Page16 of 69
Appellant Tally M. Wiener is an attorney and purported
shareholder of UDW who has represented herself in these proceedings.
SA294 (Amended Objection); SA623 (Recognition Opinion). She claims
to have purchased an undisclosed quantity of shares of UDW at some
point before she filed her objection to the Debtors’ motion for
recognition.3
A Market Downturn Renders The Debtors Insolvent And Prompts
By 2017, an unprecedented drop in crude oil prices severely
depressed the off-shore drilling market. SA239-40 ¶ 13. Due to these
market forces and substantial payments coming due under the Debtors’
various debt instruments, the Debtors were unable to remain solvent.
SA240-41 ¶¶ 14-16; SA627-28; SA850 ¶¶ 3-4 (Cayman Court
Judgment). In response to these financial challenges, the Debtors
3Ms. Wiener takes issue with the notion that she is a “purported”
shareholder, claiming that Appellees “admitted she is a shareholder” by
describing her as such in a filing with the Securities and Exchange
Commission. Br. 13 n.6. The district court and bankruptcy court
properly referred to Ms. Wiener as a “purported” or “asserted”
shareholder because she has never “backed up with any evidence” her
assertion that she owns UDW shares. SA622-23; A31. In any event,
there is no need for this Court to resolve that semantic dispute; this
appeal should be dismissed even assuming (as the district court did)
that Ms. Wiener in fact holds UDW shares.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page17 of 69
retained legal and financial advisors in early 2016 to consider
restructuring alternatives. SA241 ¶ 17.
Those efforts culminated in a March 23, 2017 agreement with
creditors to restructure the Debtors’ financial indebtedness through
four Schemes of Arrangement (Schemes) under Cayman Islands law.4
The restructuring agreement was supported by an overwhelming
majority of affected creditors and contemplated a substantial
deleveraging of Ocean Rig through the exchange of more than $3.7
billion of existing financial indebtedness for 100% of the equity in the
reorganized UDW (projected to be worth about $1.831 billion), cash
payments of about $288 million, and new secured debt of $450 million.
Id.; see also SA31-33 ¶¶ 6, 9. The agreement described the anticipated
distributions to be made to affected creditors and made clear that
UDW’s existing shareholders would be effectively wiped out.
To begin the process of obtaining the requisite court approval for
the restructuring, the Debtors filed winding up petitions on March 24,
2017 in the Cayman Islands, where UDW is domiciled. SA850 ¶ 3,
4 A scheme of arrangement is a court-approved compromise between a
company and its creditors or shareholders. See SA266-70 ¶¶ 41-49
(summarizing relevant provisions of Cayman Islands Companies Law).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page18 of 69
SA233-34 ¶ 4. On March 27, 2017, the Cayman court appointed the
JPLs (Ms. Fisher and Mr. Appell) and authorized them to commence
chapter 15 proceedings on behalf of the Debtors, as well as to consider
and (if deemed appropriate by the JPLs) promote the restructuring
agreement as set forth in the Schemes. SA171-231. The next day, the
Debtors publicly disclosed the terms of the restructuring agreement via
a filing with the Securities and Exchange Commission. See Ocean Rig
UDW Inc., SEC Form 6-K, Ex. 99.1 (Mar. 28, 2017), https://www.sec.gov
/Archives/edgar/data/1447382/000091957417003022/d7448127_ex99-
1.htm (contemplating, inter alia, the provision of 100% of the equity of
the reorganized UDW to various groups of creditors, subject to dilution
by shares to be distributed under a management equity plan); see also
SA241-44 ¶¶ 17-22 (describing restructuring agreement).5
5 Appellees respectfully request that the Court take judicial notice of
the SEC filings referenced in this brief for the limited purpose of
establishing that the contents of those filings were publicly disclosed.
See In re Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 354 n.5
(2d Cir. 2010); Fed. R. Evid. 201; see also Br. 13 n.6 (requesting judicial
notice of UDW’s representations in an SEC filing).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page19 of 69
The Debtors Seek Chapter 15 Recognition
In order to stave off disruptive actions threatened by certain hold-
out creditors, see SA250-51 ¶¶ 35-38, the JPLs (in their capacity as the
Debtors’ authorized foreign representatives) promptly commenced
chapter 15 cases for each of the Debtors in the U.S. Bankruptcy Court
in the Southern District of New York on the same day the JPLs were
appointed: March 27, 2017. In the chapter 15 cases, the JPLs sought
recognition of the Cayman proceedings as “foreign main proceedings”
and related relief under the Bankruptcy Code. SA111-52. One of
UDW’s major creditors, Texas-based Highland Capital Management LP
(acting for several managed funds that were significant creditors of
UDW), conducted substantial discovery regarding the recognition
motion and initially indicated that it intended to object to that relief.
Highland ultimately decided not to file an objection, as detailed in a
June 2017 letter to the bankruptcy court. SA289-90.
Although Ms. Wiener was aware of the chapter 15 proceedings
since at least April 2017, SA477 (April 15, 2017 email from Ms. Wiener
to undersigned counsel), she did not participate in any aspect of the
cases, including discovery, until she filed her objection to the
Case 18-1374, Document 69, 11/13/2018, 2432558, Page20 of 69
recognition motion on July 10, 2017, the last possible date to do so. See
SA285-88; SA291-96. In that objection, Ms. Wiener contended, inter
alia, that the Debtors could not meet their burden of proving either that
their “center of main interests” (COMI) was in the Cayman Islands or
that the Debtors maintained an “establishment” in the Cayman Islands
such that the Cayman proceedings could qualify for recognition as
foreign “main” or “nonmain” proceedings under 11 U.S.C. § 1517.
SA294-95.6 Besides Ms. Wiener, no party filed an objection to the
recognition motion.
The JPLs Determine To Promote The Schemes
In May 2017, after thoroughly investigating the Debtors’ financial
condition and the terms of the restructuring agreement as embodied by
the Schemes, the JPLs decided to promote the Schemes. SA552 § 9.3
(Practice Statement Letter). The JPLs then promptly filed the Schemes
with the Cayman court, together with a proposed Explanatory
6On the eve of the recognition hearing, Ms. Wiener filed a letter motion
challenging the venue of the chapter 15 proceedings. SA469-71.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page21 of 69
Statement7 and summonses seeking authority to commence meetings of
creditors for each of the Debtors. SA282-83 ¶¶ 13-14.
In July 2017, the Cayman court authorized the JPLs to convene
creditors’ meetings the following month for the purpose of voting on the
Schemes. Creditors were then provided with the approved Explanatory
Statement, which set forth detailed descriptions of how the Schemes
would operate, including explanations of anticipated distributions,
financial analyses, and valuations, as well as the details of all
management agreements with third parties. SA538 ¶ 24. The
Explanatory Statement made clear what all affected creditors and
significant equity holders recognized and what the Cayman court
ultimately found: that the Debtors were profoundly insolvent prior to
the restructuring. See SA851-52 ¶¶ 9-15; SA32-33 ¶ 9; SA48-65
(Explanatory Statement – Valuation Analysis).8 After the affected
7 An explanatory statement provides creditors or shareholders with
information necessary for them to make an informed decision about the
merits of a scheme. See SA527-29 (Order 102, Rule 20(4)(e), (7) of the
Grand Court Rules 1995).
8The parties filed excerpts of the Explanatory Statement with the
bankruptcy court and district court. As Mr. Sbarounis explained in his
district court declaration (SA32), the entire document is publicly
available on the website of the information agent for the restructuring:
Case 18-1374, Document 69, 11/13/2018, 2432558, Page22 of 69
creditors voted in favor of the Schemes by overwhelming margins,
SA598 ¶ 48, the Cayman court scheduled hearings for September 2017
to consider whether to “sanction” (i.e., approve) the Schemes, SA523-24
¶¶ 23-24.
The Bankruptcy Court Grants Recognition
On August 16, 2017, the bankruptcy court held a hearing on
recognition, during which the parties, including Ms. Wiener, presented
evidence and examined witnesses. Later that month, the court issued
an opinion and order (the Recognition Opinion, SA618-52, and the
Recognition Order, SA653-589) overruling Ms. Wiener’s objections and
granting recognition of the Cayman proceedings, including the Scheme-
https://cases.primeclerk.com/oceanrig/Home-DocketInfo?DocAttribute
=3208&DocAttrName=SCHEMEDOCUMENTS.
9For purposes of clarity, this brief departs from the defined terms the
district court used in its dismissal opinion to refer to the opinion and
order granting the petition for recognition. See A23 (referring to the
bankruptcy court’s August 24, 2017 memorandum opinion on
recognition as the “Recognition Order” and to the accompanying order of
the same date as the “Enforcement Order”). This brief uses the term
“Enforcement Order” to refer to the bankruptcy court’s September 20,
2017 order giving full force and effect to the Cayman Schemes in the
United States (SA875-81), discussed infra at 17, which resolved a
Case 18-1374, Document 69, 11/13/2018, 2432558, Page23 of 69
related proceedings, as “foreign main proceedings.” See SA653-54. 10
The bankruptcy court found, among other things, that venue of the
chapter 15 proceedings was proper in the Southern District of New
York; that Cayman insolvency proceedings “apply the property of the
debtor in satisfaction of its liabilities pari passu and distribute such
property to creditors according to their rights and interests”; that the
Debtors’ COMI was in the Cayman Islands; that the Debtors did not
manipulate their COMI in bad faith by establishing their COMI in the
Cayman Islands prior to the petition date; and that granting
recognition of the Cayman proceedings advanced the public policy
objectives of chapter 15. SA639; SA642-51.11
10As the court’s accompanying opinion explained, the Recognition Order
did not itself give full force and effect to the terms of the Schemes,
which at that point had not yet been presented to the Cayman court for
consideration. See SA652; see also SA613:8-11, 615:18-22.
11Because Ms. Wiener did not provide any documentary evidence of her
alleged shareholder status, the bankruptcy court concluded that she
“failed to establish that she is a party-in-interest with standing to
contest recognition.” SA623. The court nonetheless considered her
objections on the merits “as if she had established her standing to object
to recognition” because of the court’s independent obligation to
determine whether recognition was proper. Id.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page24 of 69
By its terms, the Recognition Order became “immediately effective
and enforceable upon its entry.” SA658. Ms. Wiener did not seek a stay
of the Recognition Order in the bankruptcy court, district court, or this
Court. On September 7, 2017, Ms. Wiener filed a notice of appeal from
the Recognition Order and the accompanying Opinion. SA659-63. Her
Bankruptcy Rule 8006 statement identified as issues on appeal the
bankruptcy court’s conclusions regarding venue, her status as a
shareholder, the location of the Debtors’ COMI (including the propriety
of efforts to establish the Debtors’ COMI in the Cayman Islands as part
of the restructuring strategy), the recognition of Cayman Scheme-
related proceedings in addition to the provisional liquidation
proceedings, and whether the Debtors acted in bad faith or violated
public policy. SA882-87 (Statement of Issues).12
12As Ms. Wiener acknowledges, the district court dismissed her appeal
on the basis that she lacked standing and that the appeal was equitably
moot, “without reaching the merits of the appeal.” Br. 12. Accordingly,
the merits of the bankruptcy court’s ruling on recognition are not before
this Court. Ms. Wiener’s brief nonetheless includes several asides
questioning various aspects of the recognition proceedings as well as
certain terms of the Cayman Schemes. See Br. 6-11 & nn.2-4, 6.
Appellees disagree with Ms. Wiener’s characterizations and reserve all
rights to address them in due course if this case is remanded to the
district court for further proceedings on the merits of the bankruptcy
Case 18-1374, Document 69, 11/13/2018, 2432558, Page25 of 69
The Cayman Court Sanctions The Schemes, And The Bankruptcy
Court Issues An Order Enforcing Them
In September 2017, following a three-day hearing, the Cayman
court issued orders sanctioning the Schemes. SA666-844; see also
SA847-74 (Cayman Court Judgment). The Cayman court determined,
inter alia, that “[t]he restructuring of all four Schemes put together is
the best way of maximising value for the creditors of the Group,” who
“overwhelming[ly] support[ed]” the transaction. SA851 ¶¶ 7-8; SA874
¶¶ 130-31. The Cayman court further found that the alternative to the
Schemes would be liquidation and enforcement of security by creditors,
which “would result in value destruction generally for all creditors.”
SA852 ¶ 11. Neither the Cayman court nor any party to those
proceedings—including Highland, which vigorously contested the
Schemes and whose principal and founder was UDW’s largest
shareholder, see SA275—ever suggested there was sufficient value in
the Debtors to pay creditor claims in full or to support any legal
entitlement to a recovery by UDW shareholders. Ms. Wiener never
participated in the Cayman proceedings.
Once the Schemes were sanctioned by the Cayman court, the
Debtors’ foreign representatives moved in the chapter 15 cases for an
Case 18-1374, Document 69, 11/13/2018, 2432558, Page26 of 69
order granting comity and giving full force and effect to the Schemes in
the United States (the Enforcement Motion). SA478-510. Ms. Wiener
had notice of this motion, its objection deadline, and hearing date,
SA602-08, but did not file any objection or appear at the hearing.
Indeed, no party opposed the motion.
At the hearing on the Enforcement Motion, the bankruptcy court
observed that the Cayman court had provided “a very careful,
thoughtful, reasoned decision” in support of its orders sanctioning the
Schemes. SA891:6-10. The bankruptcy court then issued an order
recognizing, granting comity to, and giving full force and effect in the
United States to the Cayman court’s orders and to the Schemes
themselves. SA875-81 (Enforcement Order). The bankruptcy court
found, inter alia, that the enforcement relief requested was “necessary
to effectuate the purpose of chapter 15 and to protect the Debtors, their
assets and the interests of their creditors and other parties in interest.”
SA877 ¶ 6. No party appealed from or sought a stay of the Enforcement
Order, which by its terms became effective immediately.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page27 of 69
The Restructuring Becomes Final
Following the bankruptcy court’s entry of the Recognition and
Enforcement Orders, the Schemes became effective on September 22,
2017, while Ms. Wiener’s appeal was still pending in the district court.
A29, 38; SA31 ¶ 8; SA34-46.13 As provided under the Schemes, the
restructuring was consummated through several steps that irrevocably
changed the Debtors’ capital structures and operations. A38; SA32-33
¶ 9. UDW issued shares to creditors representing virtually all of the
equity value of the reorganized Debtors (estimated to have a value of
about $1.831 billion). SA32 ¶ 9(a); SA63.14 Creditors also received
13Recognition of the Cayman proceedings and issuance of the
Enforcement Order were both conditions precedent to the
restructuring’s consummation. See SA675-76 § 4.1(f); SA903-04.
14In connection with the issuance of equity to creditors, and as
authorized by a shareholder vote on April 24, 2017, UDW effectuated a
reverse stock split on September 21, 2017. The reverse stock split
effected an exchange of every 9,200 of existing shares into one share of
the reorganized company (with no fractional shares being issued),
which, when combined with the shares issued to creditors under the
restructuring, resulted in pre-restructuring shareholders’ retaining in
the aggregate a 0.02% equity stake in the reorganized company. SA36
(Restructuring Press Release); SA63; see Ocean Rig UDW Inc., SEC
Form 6-K, Ex. 99.1 (April 24, 2017), https://www.sec.gov/Archives
/edgar/data/1447382/000091957417003579/d7465303_6-k.htm
(announcing shareholder vote authorizing Board to effect reverse stock
split); Ocean Rig UDW Inc., SEC Form 6-K, Ex. 99.1 (Sept. 19, 2017),
Case 18-1374, Document 69, 11/13/2018, 2432558, Page28 of 69
approximately $288 million in cash (SA32 ¶ 9(b)) and $450 million of
new secured notes (SA32 ¶ 9(c)). In addition, the reorganized Debtors
also entered into a long-term management services agreement with
TMS Offshore Services Ltd. (SA32 ¶ 9(d)) and a new shareholders’
agreement for UDW (SA33 ¶ 9(e)).15
The District Court Dismisses Ms. Weiner’s Appeal
Although Ms. Wiener noticed an appeal from the bankruptcy
court’s Recognition Order, she did not seek to stay that order, did not
participate in the Cayman proceedings, and did not object to or appeal
from the bankruptcy court’s Enforcement Order. The restructuring
thus proceeded to completion while her appeal remained pending in the
https://www.sec.gov/Archives/edgar/data/1447382/0000919574170
06817/d7655314_ex99-1.htm (announcing reverse stock split).
15On September 4, 2018, third party Transocean Ltd., a publicly traded
company, announced that it had entered into a definitive merger
agreement with UDW through which it will acquire UDW in a cash and
stock transaction valued at approximately $2.7 billion. Subject to the
satisfaction or waiver of certain conditions, the merger is expected to
close in the fourth quarter of 2018. See Transocean Ltd., SEC Form 8-
K, Ex. 99.1 (Sept. 4, 2018), https://www.sec.gov/Archives/edgar/
data/1451505/000145150518000091/c505-20180904ex9912cc652.htm;
Transocean Ltd. & Ocean Rig UDW Inc., Joint Proxy Statement/
Prospectus 7 (Oct. 16, 2018), https://www.sec.gov/Archives/edgar/
data/1451505/000155837018007708/rig-20181016x424b3.htm.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page29 of 69
district court. Accordingly, Appellees moved to dismiss Ms. Wiener’s
appeal on two independent grounds: first, because Ms. Weiner lacked
appellate standing as a person aggrieved by the order that she
challenged, and second, because the restructuring’s consummation
rendered the appeal equitably moot. The district court stayed merits
briefing while the motion to dismiss was pending. SA1. Following a
pre-motion conference and full briefing on the motion to dismiss, the
district court dismissed the appeal in a memorandum opinion and order
dated April 5, 2018. A23-41.
As set forth in its dismissal order, the district court granted the
motion to dismiss on both grounds. First, the district court considered
whether Ms. Wiener was an “aggrieved person” whose pecuniary
interests are directly affected by the order on appeal, as is required for
appellate standing. A30. The district court held that Ms. Wiener
lacked standing because, “as a purported shareholder” of an insolvent
company, she “did not stand to lose anything from, and thus had no
pecuniary interest in, UDW’s restructuring.” A32. The district court
also rejected Ms. Wiener’s contention that the decision to permit the
pre-restructuring shareholders to retain a de minimis percentage of
Case 18-1374, Document 69, 11/13/2018, 2432558, Page30 of 69
equity for the purpose of enabling UDW to maintain its Nasdaq listing
and avoid the delay and expense of a re-registration process somehow
conveyed “aggrieved person” status upon her. A32-33.
The district court then held that dismissal was independently
warranted on equitable mootness grounds because the Debtors had
already substantially completed their Cayman restructuring and Ms.
Wiener never sought a stay of the Recognition Order. A34. As the court
explained, the equitable mootness doctrine, which originated in
bankruptcy cases filed under chapter 11, has since been applied in cases
under chapters 7, 9, and 13, as well as in a case involving chapter 15’s
predecessor statute. A34-35. The court found that the Debtors’
positions had “comprehensively changed” and their restructuring was
“substantially completed,” thus giving rise to a presumption of
mootness that Ms. Wiener failed to rebut. A38.
The district court’s judgment should be affirmed because Ms.
Wiener lacks standing and because her appeal is equitably moot.
I.A. Standing to appeal a bankruptcy court order is limited to
persons who are “aggrieved” by that order, meaning that the order
Case 18-1374, Document 69, 11/13/2018, 2432558, Page31 of 69
directly and adversely affects that person’s financial interests. This
standard is more stringent than the test for Article III standing. That
is because bankruptcy proceedings affect a multitude of parties, so some
further limitation on standing is needed to ensure that courts are not
deluged with appeals from parties only marginally affected by
bankruptcy court orders.
B. As a purported shareholder in an insolvent company, Ms.
Wiener was not aggrieved by the bankruptcy court’s order granting
recognition. The bankruptcy court, district court, and Cayman court all
determined that the Debtors were profoundly insolvent at the time the
chapter 15 petitions were filed. Ms. Wiener fails to identify any error,
let alone a clear error, in that factual finding. All relevant stakeholders
recognized that the Debtors lacked sufficient value to make creditors
whole, and all provisions of the Scheme were consistent with that
reality. Under Cayman law, like U.S. law, equity holders of an
insolvent enterprise are not entitled to any recovery until creditors have
been paid in full. Because Ms. Wiener stood to gain nothing in these
proceedings, she cannot maintain an appeal that seeks to undermine an
Case 18-1374, Document 69, 11/13/2018, 2432558, Page32 of 69
order overwhelmingly supported by the creditors who had an actual
financial stake in the restructuring.
C. Even if her contentions about the Debtors’ financial condition
had merit, Ms. Wiener would still lack standing because she cannot
articulate any connection between the order she challenges and her
pecuniary interests. The Recognition Order did not target Ms. Wiener
or otherwise have anything to do with her; it simply operated to stay
proceedings and other actions adverse to the Debtors and their property
in the United States. The bankruptcy court entered that order after
finding that such relief was necessary to facilitate the Cayman
restructuring, as well as in the interest of the Debtors, their
stakeholders, and the public. Ms. Wiener has not contested any of those
findings, and she cannot explain why the Recognition Order directly
and adversely affects her financial interests. Thus, she is not a person
aggrieved by that order.
II. The doctrine of equitable mootness provides for dismissal of
appeals when appellate relief would unduly disrupt a finalized
restructuring. The district court did not abuse its discretion in
dismissing this appeal as equitably moot.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page33 of 69
A. The district court correctly held that equitable mootness
applies to appeals in chapter 15 bankruptcy cases. Although the
doctrine originated in appeals from orders confirming chapter 11 plans,
it has been extended to other contexts. The policies that give rise to the
doctrine—finality, reliance, and equity—apply just as much to
recognition orders under chapter 15 as they do to bankruptcy court
orders entered in other types of proceedings. Moreover, when a
bankruptcy court order is entered in aid of a foreign restructuring that
has become final while an appeal is pending, comity principles heighten
the importance of assessing whether appellate relief would be equitable.
B. The district court acted well within its discretion in
determining this appeal is equitably moot under this Court’s
precedents, which call for a strong presumption of mootness when a
restructuring has been substantially consummated. Here, it is
undisputed that the Cayman restructuring has now been completed for
over a year. The presumption therefore applies, and Ms. Wiener has
not made any meaningful attempt to establish the circumstances
necessary to rebut it. First and foremost, she has never sought a stay
that would preserve the status quo. Moreover, because the Schemes
Case 18-1374, Document 69, 11/13/2018, 2432558, Page34 of 69
were expressly conditional on the entry of a Recognition Order, a
successful appeal would call into question numerous transactions on
which third parties have relied, including the Debtors’ issuance of
equity, distributions of cash and notes, and entry into new agreements
with third parties. For these reasons, granting appellate relief here
would be imprudent and inequitable.
“On appeal from the district court’s review of a bankruptcy court
decision,” this Court “review[s] the bankruptcy court decision
independently, accepting its factual findings unless clearly erroneous
but reviewing its conclusions of law de novo.” In re Baker, 604 F.3d 727,
729 (2d Cir. 2010) (quotation marks omitted). Standing is ultimately a
“legal issue” subject to de novo review, In re Zarnel, 619 F.3d 156, 161
(2d Cir. 2010), but underlying factual findings are reviewable for clear
error.16 This Court “review[s] a district court’s dismissal on grounds of
16 See, e.g., In re 60 E. 80th St. Equities, Inc., 218 F.3d 109, 116 (2d Cir.
2010) (holding that district court and bankruptcy court findings that
bankruptcy estate had insufficient value to pay creditors in full were
“findings of fact” subject to clear error review, and concluding that the
debtor thus lacked standing to challenge the sale of assets); Rajamin v.
Deutsche Bank Nat’l Trust Co., 757 F.3d 79, 85 (2d Cir. 2014) (“If the
court … resolved disputed facts in ruling on standing, we will accept the
Case 18-1374, Document 69, 11/13/2018, 2432558, Page35 of 69
equitable mootness for abuse of discretion, under which [this Court]
examine[s] conclusions of law de novo and findings of fact for clear
error.” BGI, 772 F.3d at 107.
I. Ms. Wiener Lacks Standing To Pursue This Appeal.
A. Only those persons aggrieved by a bankruptcy court’s
order have standing to challenge the order on appeal.
As the district court correctly held, “[t]o have standing to appeal a
bankruptcy court order, an appellant must be an ‘aggrieved person,’”
such that the specific order in question “‘directly affects [the appellant’s]
pecuniary interests.’” A30 (quoting In re Johns-Manville Corp., 843
F.2d 636, 642 (2d Cir. 1988)). This “aggrieved person” test is “stricter”
than the injury-in-fact test for Article III standing, Barnet, 737 F.3d at
242, in that it requires the appellant’s injury to be both “‘direct[]’ and
‘financial,’” In re DBSD N. Am., Inc., 634 F.3d 79, 89 (2d Cir. 2011). Put
differently, the challenged order “must burden [an appellant’s] pocket
before he burdens a docket.” In re Technicool Sys, Inc., 896 F.3d 382,
court’s findings unless they are clearly erroneous.” (brackets and
quotation marks omitted)); In re E.C. Ernst, Inc., 2 B.R. 757, 760
(S.D.N.Y. 1980) (“Whether an appellant is a ‘person aggrieved’ is a
question of fact ….”).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page36 of 69
386 (5th Cir. 2018). The “stringency” of the “aggrieved person” test is
by design: if not followed, “marginal parties,” Johns-Manville Corp., 843
F.2d at 642 n.3, could mire proceedings in “endless appeals,” Barnet,
737 F.3d at 243, “sound[ing] the death knell of the orderly disposition of
bankruptcy matters,” In re Gucci, 126 F.3d 380, 388 (2d Cir. 1997).17
Thus, although the current Bankruptcy Code does not by its
express terms limit standing to appeal, “for practical reasons this Court
and others have adopted the general rule, loosely modeled on the former
Bankruptcy Act, that in order to have standing to appeal from a
bankruptcy court ruling, an appellant must be ‘a person aggrieved.’”
DBSD, 634 F.3d at 89 (quotation marks omitted). And although this
Court has described that test as “the general rule,” id. (emphasis
added), there is no exception that aids Ms. Wiener. As DBSD
explained, some parties lacking a direct pecuniary interest may have
standing to appeal based on a “public interest,” such as the U.S. Trustee
or SEC. Id. at 89 n.3 (citing Zarnel, 619 F.3d at 162); accord Barnet,
17The Second Circuit is hardly unique in imposing prudential limits on
standing for bankruptcy appeals. “All circuits … limit standing to
appeal a bankruptcy court order to ‘person[s] aggrieved’ by the order.”
In re Point Center Fin., Inc., 890 F.3d 1188, 1191 (9th Cir. 2018).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page37 of 69
737 F.3d at 242 n.1. Ms. Wiener does not contend that the “public
interest” test permits her to maintain this appeal, and she cannot point
to any other test this Court has used to assess bankruptcy appellate
Ms. Wiener’s invocation of a recent Ninth Circuit decision, In re
Point Center Financial, Inc., 890 F.3d 1188 (9th Cir. 2018), only
reinforces the primacy of the “aggrieved person” standard. The Ninth
Circuit allowed the appeal there to proceed where it was undisputed
that the appellants’ “pecuniary interests [were] directly and adversely
affected by the bankruptcy court order in question.” Id. at 1194. The
district court had dismissed the appeal despite that pecuniary interest
because the appellants failed to attend the bankruptcy court hearing on
the motion at issue. The Ninth Circuit reversed, holding that “one need
not have attended and made objections at the hearing to be directly and
adversely affected by a bankruptcy court’s decision.” Id. at 1193. Thus,
Point Center is perfectly consistent with what this Court and the
district court here have held: that a person must be aggrieved by a
bankruptcy court order to have standing to appeal it.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page38 of 69
B. As a purported shareholder of an insolvent company,
Ms. Wiener lacked a pecuniary interest in the Debtors’
The district court found that Ms. Wiener, as a “purported
shareholder” of company that was “insolvent,” “did not stand to lose
anything from, and thus had no pecuniary interest in, UDW’s
restructuring.” A31-32. That sound conclusion was itself sufficient to
defeat Ms. Wiener’s appellate standing.18 Ms. Wiener’s arguments to
the contrary misunderstand the applicable law and fall well short of
identifying clear error in the factual findings below.
There is no question that the Debtors were massively insolvent at
the time of the restructuring. Relying on an uncontested declaration of
the Debtors’ foreign representative, the district court found that the
approximately $3.7 billion of debt outstanding at the time of the
18See, e.g., Freeman v. Journal Register Co., 452 B.R. 367, 370-71
(S.D.N.Y. 2010) (where debtors are not “sufficiently solvent to provide
equity holders with a recovery” under a bankruptcy plan, equity holders
lack a “pecuniary interest” in the plan’s confirmation); see also 60 E.
80th St. Equities, 218 F.3d at 115 (chapter 7 debtors have standing to
challenge a sale of their assets “only if there could be a surplus after all
creditors’ claims are paid”); In re GT Automation Grp., Inc., 828 F.3d
602, 605 (7th Cir. 2016) (unsecured creditor lacked standing to appeal
bankruptcy court order when creditor could not demonstrate how it
“would get ‘even a dollar’ from a favorable decision,” where estate’s
assets were insufficient to satisfy other claims that had priority).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page39 of 69
restructuring significantly exceeded the Debtors’ total value (estimated
to be approximately $2.6 billion), such that there was “no value left for
[UDW’s] pre-restructuring shareholders.” A31-32; see also SA31 ¶ 6;
SA240-42 ¶¶ 15-16, 19. And the Cayman court, after carefully
considering objections to the Schemes, likewise concluded that the
Debtors were “insolvent,” that the Schemes represented a “fair
allocation” to creditors, and that the “alternative” would “involve
inevitably the liquidation of the [Debtors] and … value destruction
generally for all creditors.” SA850-52 ¶¶ 4, 10-11; SA874 ¶ 130.
Indeed, Ms. Wiener has never disputed that the Debtors’ distributable
value fell well short of satisfying creditors’ claims.
Ms. Wiener maintains, however, that she contested the Debtors’
“cash flow” solvency, positing that the Debtors could have used
available cash or borrowed funds to make two sizeable interest
payments that were due in April 2017, and thereby avoided triggering
cross-default provisions that accelerated the $3.7 billion in debt. See
Br. 20-21. That contention mischaracterizes the declaration of the
Debtors’ then-President and Chief Financial Officer, who explained that
it was not possible for UDW to make an upcoming payment “without
Case 18-1374, Document 69, 11/13/2018, 2432558, Page40 of 69
borrowing funds that it [would] be unable to repay.” SA240 ¶ 15. The
bankruptcy court thus concluded that the Debtors “did not expect to
have sufficient cash available to make these payments without further
borrowing,” and that the Debtors thereafter “acted prudently” by
exploring their restructuring options and commencing proceedings in
the Cayman Islands. SA628-29. The district court likewise found that
as of the date the Cayman proceedings were initiated, “UDW was
insolvent and had an upcoming interest payment that it did not have
the money to pay without borrowing funds, which UDW would not have
been able to repay.” A27. Ms. Wiener has come nowhere close to
identifying any clear error in those findings, and her revisionist history
of the Debtors’ solvency should be rejected.
Ms. Wiener then seizes on two Scheme provisions addressing pre-
restructuring shareholders as indicating that the Debtors were solvent.
First, she points to the fact that such shareholders retained a 0.02%
interest in the post-reorganization equity of UDW. Br. 20. But as Ms.
Wiener seems to recognize, that fact had nothing to do with the
intrinsic value of the equity held by UDW’s pre-restructuring
shareholders. The retention of this nominal amount of equity instead
Case 18-1374, Document 69, 11/13/2018, 2432558, Page41 of 69
served a specific purpose wholly unrelated to the Debtors’ solvency: The
Debtors and their creditors decided to provide the pre-restructuring
shareholders of UDW with a 0.02% interest in the reorganized company
in order to enable the company to preserve its Nasdaq listing and avoid
the expense and delay of reapplying for listing on Nasdaq after the
restructuring had been consummated.19 The district court thus
correctly rejected the notion that this de minimis retention of equity by
pre-restructuring shareholders somehow endowed them with a
pecuniary interest in UDW’s restructuring notwithstanding the fact
that creditors were not paid in full. A32.
Similarly misplaced is Ms. Wiener’s argument that the 9.31%
equity stake provided to “management” establishes that shareholders
had a pecuniary interest in the Debtors’ restructuring. Br. 18-20. Ms.
Wiener did not present that argument to the district court: Her
opposition to the motion to dismiss said nothing about the provision of
equity to management. See SA66-90. Thus, she should not be
permitted to advance the argument now. See, e.g., Millea v. Metro-
19See Br. 19 (“Shareholders were diluted to 0.02% as part of trying to
secure continued trading under the ticker symbol ORIG, Ocean Rig
having resisted Nasdaq’s delisting notice.”).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page42 of 69
North R.R. Co., 658 F.3d 154, 163 (2d Cir. 2011) (“Arguments raised for
the first time on appeal are deemed waived.”).
In any event, Ms. Wiener’s references to the management equity
plan do nothing to establish that the Debtors were solvent such that
existing shareholders would be entitled to distributions. The
“management” to which Ms. Wiener refers is TMS Offshore Services
Ltd. (TMS), a company in which certain pre-restructuring shareholders
have interests, as the Debtors fully disclosed. See SA92. TMS was
granted a 9.31% equity stake in UDW in accordance with a master
services agreement, which was to be entered into by TMS and the
reorganized UDW upon the consummation of the restructuring.
Explanatory Statement, Part G (Restructuring Documents), at 145.20
The management equity plan reflected a consensual measure to ensure
that the interests of post-restructuring Ocean Rig’s management would
be aligned with the interest of the post-restructuring shareholders in
maximizing the value of the reorganized company. The management
20 Although Ms. Wiener’s brief fails to provide any citations in support
of her contentions about the management equity plan, the terms of the
plan are described in detail in the publicly filed Explanatory Statement
(available at https://cases.primeclerk.com/oceanrig/Home-DownloadPDF
?id1=Njk1Njk2&id2=0). See supra at 11-13.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page43 of 69
equity plan in no way undermined the reality that the Debtors were
deeply insolvent before that restructuring was completed.21
Ms. Wiener further argues that the district court’s analysis is
“inapposite” because it relies on the premise that creditors’ claims must
be satisfied before distributions can be made to equity holders, which
she suggests does not hold true under Cayman law. Br. 18-19. But Ms.
Wiener cites no Cayman law giving shareholders priority over creditors
to the distribution of limited assets. Unsurprisingly, Cayman law does
not diverge from U.S. law in that regard. Instead, Cayman law
provides that each Debtor’s property “shall be applied in satisfaction of
its liabilities pari passu and subject thereto shall be distributed
amongst the members [i.e., shareholders] according to their rights and
interests in the company.” Cayman Islands Companies Law (2016
21 The Debtors’ Boards of Directors deemed this agreement to be
necessary to facilitate Ocean Rig’s continued operations. Explanatory
Statement, supra, Part G (Restructuring Documents), at 146. The
terms of the agreement were “the product of extensive arms-length
negotiations,” were consented to by each creditor that agreed to support
the restructuring, and were approved by the Debtors’ independent
board members. Id. Moreover, the Schemes were ultimately sanctioned
by the Cayman court as the “best way of maximising value for the
creditors of the Group,” SA874 ¶ 130, without any creditor or any other
party having objected to the Scheme provisions regarding the provision
of equity to TMS.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page44 of 69
Revision) § 140(1) (emphasis added) (cited in SA641).22 Thus, as set
forth in the declaration of an experienced Cayman insolvency attorney,
the interests of an insolvent Cayman company “are equated to the
interests of the creditors,” and shareholders are not involved in an
insolvent company’s scheme of arrangement. SA265-66 ¶¶ 32, 41
(Reynolds Declaration).
For these reasons, there is no basis to disturb the district court’s
finding that as the shareholder of an insolvent enterprise, Ms. Wiener
failed to satisfy the “person aggrieved” test for appellate standing. And
given Ms. Wiener’s lack of a financial stake in the restructuring, her
challenges also run afoul of the related prudential principle that
appellants may only assert their “own legal rights and interests and not
those of third parties.” A30 (citing In re Quigley Co., 391 B.R. 695, 705
(Bankr. S.D.N.Y. 2008)). The creditors with a stake in this massive
restructuring overwhelmingly supported it, see SA851 ¶ 7; SA865 ¶ 89;
SA874 ¶ 131, and not a single creditor maintained an objection to the
Recognition Order from which Ms. Wiener appeals. When “one
22Ms. Wiener introduced Cayman Islands Companies Law (2016) as an
exhibit during the recognition hearing. See SA385 (Trial Ex. SX-C).
Case 18-1374, Document 69, 11/13/2018, 2432558, Page45 of 69
constituency before the court seeks to disturb a plan of reorganization
based on the rights of third parties who apparently favor the plan,”
courts “have been understandably skeptical of the litigant’s motives and
have often denied standing as to any claim that asserts only third-party
rights.” Johns-Manville, 843 F.2d at 644. That caution is fully
As discussed above, Ms. Wiener’s status as a purported
shareholder of an insolvent company meant that she lacked the
financial stake in the restructuring necessary to support appellate
standing. In addition to contesting the district court’s finding of
solvency, Ms. Wiener now maintains that the “financial condition of
[the] chapter 15 debtors” is completely irrelevant to appellate standing.
Br. 21. Ms. Wiener’s arguments are misguided, and in fact confirm
deficiencies in her standing that go beyond the fact that she “did not
stand to lose anything from, and thus had no pecuniary interest in,
UDW’s restructuring.” A32.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page46 of 69
Ms. Wiener’s brief devotes two sentences to a new theory of
standing: that “[s]he is a shareholder aggrieved by injunctions to which
she is subject.” Br. 16; see also Br. 14. That contention is flawed for
several reasons. First of all, the argument is unpreserved. Ms.
Wiener’s district court opposition to Appellees’ motion to dismiss
mentioned the Recognition Order injunctions only in passing, see SA71;
SA74, and did not contend that the operation of these injunctions
qualified her as a “person aggrieved” by the Recognition Order.
Because she did not present that argument, the district court did not
address it in its dismissal order. And even in this Court, she does not
develop the point beyond her ipse dixit assertion that she is “aggrieved
by [the] injunctions.” Br. 16; see, e.g., Zhang v. Gonzales, 426 F.3d 540,
545 n.7 (2d Cir. 2005) (deeming argument waived when appellate brief
addressed it in “only a single conclusory sentence”).
In any event, Ms. Wiener’s claim proves entirely too much. The
injunctions in the Recognition Order cover “all entities (as that term is
defined in section 101(15) of the Bankruptcy Code), other than the JPLs
and their expressly authorized representatives and agents.” SA657.
The Bankruptcy Code defines the term “entity” to include “person,”
Case 18-1374, Document 69, 11/13/2018, 2432558, Page47 of 69
which in turn includes “individual[s], partnership[s], and
corporation[s].” 11 U.S.C. § 101(15), (41). Thus, if Ms. Wiener is
“aggrieved” by the fact that she is a “person” subject to an injunction,
every other natural or corporate person currently in existence would
likewise be aggrieved in that same way. The whole point of the “person
aggrieved” standard, however, is to limit the parties who can appeal a
bankruptcy court order to those who are “directly and adversely affected
pecuniarily” by that order. Johns-Manville, 843 F.2d at 641 (quotation
marks omitted). Ms. Wiener has not attempted to—and cannot—make
Regardless of the Debtors’ financial condition at the time of the
restructuring, there is simply no connection between the relief granted
by the Recognition Order challenged on appeal and Ms. Wiener’s
pecuniary interests. The Recognition Order did not give effect to the
Schemes, which resulted in the substantial deleveraging of the Debtors,
the distribution of substantial equity to creditors, and the massive
dilution of the Debtors’ pre-reorganization shareholders. The actions
undertaken in connection with the Schemes were given effect in the
Case 18-1374, Document 69, 11/13/2018, 2432558, Page48 of 69
United States via the Enforcement Order, which Ms. Weiner did not
seek to stay or object to.
What the Recognition Order did do was trigger the automatic stay
imposed under 11 U.S.C. § 1520(a), as well as enjoin specified forms of
interference with the Debtors and their property in the United States.23
That relief was premised on factual findings that recognition would be
“in the best interest of the Debtors, their estates, their creditors and
other parties in interest,” as well as “the interest of the public”; that
absent such relief, “the Debtors, their creditors and such other parties
in interest would suffer irreparable injury for which there is no
adequate remedy at law”; and that absent recognition, the Cayman
23In relevant part, the Recognition Order contains injunctions against:
“a) execution against any of the Debtors’ assets; b) the commencement
or continuation … of a judicial, administrative, arbitral, or other action
or proceeding, or to recover a claim, … against the Debtors in the
United States; c) taking or continuing any act to create, perfect, or
enforce a lien or other security interest, set-off, or other claim against
the Debtors or any of their property; d) transferring, relinquishing, or
disposing of any property of the Debtors to any entity … other than the
JPLs; e) commencing or continuing an individual action or proceeding
concerning the Debtors’ assets, rights, obligations, or liabilities to the
extent they have not been stayed pursuant to section 1520(a) of the
Bankruptcy Code; and f) terminating contracts or otherwise
accelerating obligations thereunder; provided, in each case, that such
injunction shall be effective solely within the territorial jurisdiction of
the United States.” SA657.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page49 of 69
restructuring “may be thwarted by the actions of certain creditors.”
SA654; SA656.
As noted, Ms. Wiener’s appeal from the Recognition Order
challenges the bankruptcy court’s conclusions regarding the location of
the Debtors’ COMI, venue, whether the Cayman provisional liquidation
and scheme proceedings otherwise qualify as “foreign main
proceedings,” and whether those proceedings are consistent with public
policy. See Br. 6-7; SA294-96; supra at 15. She has never disputed the
bankruptcy court’s findings that recognition was in the best interest of
the Debtors, creditors, other parties in interest, and the public. She has
not contested that recognition was an essential step in the Debtors’
Cayman restructuring. And she has not explained how she would
“stand[] a reasonable chance of improving [her] position,” DBSD, 634
F.3d at 93, if the Cayman proceedings were not recognized. That
inability to articulate a “direct[]” connection between the order she
challenges and her financial interests, Barnet, 737 F.3d at 243, defeats
her appellate standing, regardless of the Debtors’ financial condition.
This Court’s decision in Barnet, a chapter 15 appeal, illustrates
the fatal disconnect between Ms. Wiener’s objections to the Recognition
Case 18-1374, Document 69, 11/13/2018, 2432558, Page50 of 69
Order and her pecuniary interests. The appellant in Barnet
(Drawbridge) appealed directly to this Court from a bankruptcy court
order granting recognition of an Australian liquidation proceeding. Id.
at 241. After the recognition order was entered, the debtor’s foreign
representatives filed a motion seeking discovery from Drawbridge in
connection with an investigation and pending lawsuit against certain of
Drawbridge’s Australian affiliates. The bankruptcy court granted the
discovery motion while the recognition appeal was pending. Id. This
Court held that Drawbridge lacked standing to appeal from the
recognition order itself because that order “neither name[d] Drawbridge
nor direct[ed] any relief against Drawbridge,” “[n]or [did] Drawbridge
argue that it is affected by the automatic relief provided for in 11 U.S.C.
§ 1520.” Id. at 242. The Court went on to hold that Drawbridge had
standing to appeal from the bankruptcy court’s subsequent discovery
order, which plainly “aggrieved” Drawbridge in that the order was
specifically directed to Drawbridge and authorized discovery from
Drawbridge over Drawbridge’s objection. Id. at 243.
Here, Ms. Wiener stands in the same position as Drawbridge with
respect to the Recognition Order. That order neither names her nor
Case 18-1374, Document 69, 11/13/2018, 2432558, Page51 of 69
directs relief against her. To be sure, Ms. Wiener (like every other
person in the world) counts as an “entity” subject to the injunctive
components of the Recognition Order. But that was also true in Barnet,
where Drawbridge was an “entity” subject to the automatic stay that
took effect upon recognition, but still lacked standing to appeal from
recognition. See 11 U.S.C. § 1520(a) (recognition order operates as a
stay “applicable to all entities”); 11 U.S.C. § 101(15) (the term “entity”
includes “person[s]”). And there is no counterpart here to the later
discovery order in Barnet, which targeted and concededly “aggrieved”
the appellant. Ms. Wiener did not even object to the Enforcement Order
that facilitated the dilution of her alleged holdings of stock pursuant to
the Schemes, nor has she identified any other order that causes her
direct financial injury.
Similarly, although Ms. Wiener portrays In re Fairfield Sentry
Ltd., 714 F.3d 127, as a case supporting her standing to appeal, that
decision only underscores that she is not aggrieved by the Recognition
Order. Standing was not addressed or disputed in Fairfield Sentry, so
that decision certainly does not represent a blanket endorsement of
“shareholder appellate standing to contest chapter 15 … rulings.” Br.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page52 of 69
22; see Webster v. Fall, 266 U.S. 507, 511 (1925) (“Questions which
merely lurk in the record, neither brought to the attention of the court
nor ruled upon, are not to be considered as having been so decided as to
constitute precedents.”); A33. And it is evident why all assumed that
the appellants there (shareholders in Sentry, a Madoff feeder fund) had
standing to challenge the recognition of Sentry’s liquidation proceedings
in the British Virgin Islands: they, unlike Ms. Wiener, could identify a
pecuniary interest that the recognition order directly and adversely
As this Court’s Fairfield Sentry decision explained, before Sentry
entered liquidation, two shareholders filed a derivative action in New
York state court asserting claims against Sentry’s directors,
management, and service providers. 714 F.3d at 130-31. “Pursuant to
11 U.S.C. § 1520, recognition of the BVI liquidation as a foreign main
proceeding imposed an automatic stay on any other proceedings against
Sentry in the United States — including the derivative action.” Id. at
131. Thus, the shareholder appellants were plainly aggrieved by the
recognition order: It prevented them from pursuing a derivative action
Case 18-1374, Document 69, 11/13/2018, 2432558, Page53 of 69
that, if successful, would have augmented the bankruptcy estate.24
Here, by contrast, Ms. Wiener cannot identify any way in which the
Recognition Order harms her pecuniary interests as a purported
shareholder, let alone the interests of creditors with an actual stake in
the restructuring. That failure requires her appeal to be dismissed.
Dismissing The Appeal As Equitably Moot.
Equitable mootness is a prudential doctrine under which a court
may dismiss a bankruptcy appeal when, even if “‘effective relief could
conceivably be fashioned, implementation of that relief would be
inequitable.’” BGI, 772 F.3d at 107 (quoting In re Charter Commc’ns,
Inc., 691 F.3d 476, 481 (2d Cir. 2012)). Through this appeal, Ms.
Wiener seeks to upend the Recognition Order, and, in turn, Ocean Rig’s
entire $3.7 billion Cayman Islands-based restructuring. Significantly,
however, Ms. Wiener did not seek a stay of the Recognition Order, and
24 As the district court noted, Fairfield Sentry differs from this case
because Sentry’s shareholders were entitled to the proceeds of the
liquidation—unlike UDW’s shareholders here, who had no prospect of
recovery. A34. Ms. Wiener tries to sow doubt about the extent of
Sentry’s liabilities, but cites no evidence that the liquidation proceeds
were insufficient to make any creditors whole, and cannot explain why
the shareholder appellants would have fought to pursue a derivative
action if they would not have shared in the recoveries.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page54 of 69
during the pendency of her appeal, the Schemes became effective and
fully implemented. Because granting Ms. Wiener the relief she seeks
would “unjustly upset[]” this restructuring, Charter, 691 F.3d at 481,
upon which numerous third parties have relied for over a year and
which a foreign court determined is essential to the Debtors’ continued
vitality, the district court’s dismissal of this appeal on equitable
mootness grounds should be affirmed.
mootness doctrine to this chapter 15 appeal.
In challenging the district court’s dismissal for equitable
mootness, Ms. Wiener principally contends that the doctrine should not
apply to chapter 15 appeals at all. See Br. 26-30, 33-35. She is correct
about the doctrine’s origins: equitable mootness “developed judicially in
response to the particular problems presented by the consummation of
plans of reorganization under Chapter 11.” BGI, 772 F.3d at 107
(quotation marks omitted). But as the district court noted, “[c]ourts
have imported the policy from its origin in Chapter 11 to cases under
Chapters 7, 9, and 13 of Bankruptcy Code.” A35. Moreover, “[t]he
inequity of unwinding a reorganization that has been substantially
completed, and which the appellant failed to seek to stay, applies
Case 18-1374, Document 69, 11/13/2018, 2432558, Page55 of 69
equally in the context of foreign reorganizations as it does to domestic
ones.” A38.
Ms. Wiener first contends that equitable mootness should not
apply outside of chapter 11 because this Court has looked to whether a
reorganization has been “substantial[ly] consummat[ed]” before
applying the doctrine, and “substantial consummation” is a term of art
defined in chapter 11. See Br. 27-28 (citing Charter, 691 F.3d at 482,
and 11 U.S.C. § 1101(2)). That argument overlooks the reality that the
“pragmatic” doctrine of equitable mootness “admits of considerable
flexibility” and “has already been accorded broad reach, without
apparent ill effect.” BGI, 772 F.3d at 107-09. Ms. Wiener has offered
no principled reason to exclude chapter 15 from its ambit.
Notably, in two recent decisions involving municipal bankruptcy
proceedings under chapter 9 of the Bankruptcy Code, the Eleventh and
Sixth Circuits both rejected the notion that the doctrine is unique to
chapter 11. The Eleventh Circuit applied equitable mootness “[b]ecause
the doctrine is driven by its principles rather than any particular
codification or arbitrary limitation,” and because it saw “no respect in
which these principles are bound to come into play any less in the
Case 18-1374, Document 69, 11/13/2018, 2432558, Page56 of 69
Chapter 9 context than in the contexts of Chapters 11 or 13.” Bennett v.
Jefferson Cty., 899 F.3d 1240, 1250 (11th Cir. 2018). As the district
court here appreciated, chapter 15 is no different; the policy concerns
motivating the doctrine “appl[y] equally in the context of foreign
reorganizations.” A38.
The Sixth Circuit, for its part, specifically rejected the notion that
because equitable mootness caselaw refers to “substantial
consummation,” the doctrine is confined to chapter 11 appeals. In a
decision arising from Detroit’s municipal bankruptcy proceedings, the
Sixth Circuit explained that because “equitable mootness is a doctrine
outside of the Code entirely, … [i]t did not require, at conception, any
codified definitions of terms.” In re City of Detroit, 838 F.3d 792, 804
(6th Cir. 2016). Courts have nonetheless incorporated “substantial
consummation” into their equitable mootness doctrine as “a conceptual
means to determine the extent to which the plan ha[d] progressed.” Id.
(quotation marks omitted). Disagreeing that “the use of a codified
definition as an element necessarily places the entire non-Code doctrine
within the exclusive confines of that definition’s particular Code
chapter,” the Sixth Circuit chose to “allow[] the written definition [of
Case 18-1374, Document 69, 11/13/2018, 2432558, Page57 of 69
‘substantial consummation’] to stand on its own terms.” Id. Again, that
reasoning applies squarely to chapter 15. The fact that “substantial
consummation” happens to be defined in chapter 11 is irrelevant; the
key is that the restructuring here has been “consummated” (or
“completed” or “finalized”) under any conceivable definition of that
concept, as Ms. Wiener does not dispute.
Ms. Wiener’s other arguments for chapter 15 exceptionalism fare
no better. She asserts that “Chapter 15 appeals proceed on the merits
where, as here, recognition is at issue.” Br. 28-29. But equitable
mootness was not at issue in Fairfield Sentry, the sole case she cites as
support for this proposition. The recognition determination is certainly
subject to statutory requirements and operates as a “threshold
requirement” for additional relief, Br. 29, yet the same is true of orders
confirming chapter 11 reorganization plans, see 11 U.S.C. § 1129, which
are indisputably subject to dismissal for equitable mootness. BGI, 772
F.3d at 107; see also In re Arcapita Bank B.S.C.(c), Nos. 13 Civ. 5755-56
(SAS), 2014 WL 46552, at *5 (S.D.N.Y. Jan. 6, 2014) (noting that the
doctrine “has been applied in a variety of contexts, including to appeals
from orders addressing settlements injunctive relief, leave to file
Case 18-1374, Document 69, 11/13/2018, 2432558, Page58 of 69
untimely proofs of claim, class certification, property rights, asset sales,
and payment of prepetition wages” (footnotes omitted)).
Ms. Wiener also undertakes a lengthy effort to distinguish then-
District Judge Sotomayor’s application of equitable mootness in Allstate
Insurance Co. v. Hughes, 174 B.R. 884 (S.D.N.Y. 1994), a case decided
under the predecessor to chapter 15 (former 11 U.S.C. § 304), where a
creditor appealed a permanent injunction enforcing provisions of a
foreign Scheme of Arrangement. Ms. Wiener seizes on Judge Koeltl’s
errant description of that decision as a case from this Court, see Br. 25
(citing A35), but the ensuing analysis in his dismissal order in no way
turned on whether Allstate constitutes binding or persuasive authority.
Although Ms. Wiener contends otherwise, Allstate indisputably applied
equitable mootness to an appeal from injunctive relief supporting a
foreign restructuring, as the court held “it would be inequitable … to
hear th[e] appeal; it is moot.” Allstate, 174 B.R. at 891. But cf. Br. 25
(incorrectly asserting that Allstate “did not … dismiss the appeal before
it on mootness grounds”).
Ms. Wiener then points to differences between former § 304 and
the standard for recognition under chapter 15, but those differences
Case 18-1374, Document 69, 11/13/2018, 2432558, Page59 of 69
have nothing to do with the question here: whether equitable mootness
applies to appeals from U.S. bankruptcy court injunctions ancillary to
foreign restructuring proceedings. When it comes to the recognition of
foreign proceedings, chapter 15 certainly reflects a “more rigid …
standard” than that under former section 304, under which “all relief …
was discretionary and based on subjective, comity-influenced factors.”
In re Bear Stearns High Grade Structured Credit Strategies Master
Fund, Ltd., 389 B.R. 325, 332-34 (S.D.N.Y. 2008). The issue here,
however, is not the place of comity in the recognition analysis, but
whether comity should counsel hesitation in permitting appeals that
could unsettle foreign restructurings.
That latter comity consideration applies to chapter 15 just as it
did to former section 304. See In re Agrokor d.d., No. 18-12104, __ B.R.
__, 2018 WL 5298403, at *15 (Bankr. S.D.N.Y. Oct. 24, 2018) (“Many of
the principles—particularly comity—that were applied in ancillary
proceedings under section 304 were carried forward and apply today in
Chapter 15 cases.”). Allstate and the district court here properly
recognized that “concerns of comity” mean that U.S. courts should be
especially reluctant to entertain appeals that could unsettle a
Case 18-1374, Document 69, 11/13/2018, 2432558, Page60 of 69
completed foreign restructuring. Allstate, 174 B.R. at 890; A39. Indeed,
principles of comity are “central to Chapter 15” and Congress’s
instructions for how to interpret that enactment. A39 (internal
quotation marks omitted); see also 11 U.S.C. § 1508; Royal & Sun
Alliance Ins. Co. v. Century Int’l Arms, Inc., 466 F.3d 88, 92-93 (2d Cir.
2006) (finding that “[a] foreign nation’s interest in the ‘equitable and
orderly distribution of a debtor’s property’ is an interest deserving of
particular respect and deference”). Comity thus provides yet another
reason that equitable mootness has at least as much of a place in
chapter 15 appeals as it does in appeals under other chapters of the
Bankruptcy Code. Cf. Bennett, 899 F.3d at 1250 (because “concerns
about finality, reliance and equity will be at play” in both chapter 11
and chapter 9, there is no reason why a creditor “should be able to avoid
equitable mootness merely because the bankruptcy proceedings happen
to be under chapter 9”).25
25Moreover, principles of comity were considered by the bankruptcy
court in determining the scope of relief to be granted in connection with
recognition and in its consideration of issuing the Enforcement Order,
to which Ms. Wiener failed to object. See SA655-56 ¶ J; SA877 ¶ 9.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page61 of 69
doctrine’s application.
In dismissing Ms. Wiener’s appeal as equitably moot, the district
court heeded this Court’s prior applications of the doctrine. First, the
district court considered whether the reorganization had been
“substantially consummated,” such that there would be a “strong
presumption” that the appeal is moot. A36; accord, e.g., In re MPM
Silicones, LLC, 874 F.3d 787, 804 (2d Cir. 2017). The district court
recognized that this presumption could be rebutted upon a sufficient
showing of several factors, including whether “the appellant pursued
with diligence all available remedies to obtain a stay of execution of the
objectionable order.” A36 (quoting In re Chateaugay Corp., 10 F.3d 944,
953 (2d Cir. 1993) (Chateaugay II)). The district court found that Ms.
Wiener did not seek a stay of the recognition order and that “the
debtors’ positions have comprehensively changed” as a result of the
restructuring’s finalization “because the debtors have issued new equity
and made cash distributions to creditors and entered into a new secured
debt facility, as well as a long-term management … agreement.” A38.
The district court did not abuse its discretion in applying the
Case 18-1374, Document 69, 11/13/2018, 2432558, Page62 of 69
Chateaugay II framework to the facts of this case and concluding that
the appeal is equitably moot.
On this appeal, Ms. Wiener focuses the bulk of her attention on
the threshold question of whether equitable mootness applies in chapter
15, and only barely addresses the district court’s exercise of discretion
in determining her appeal was moot. Notably, apart from her meritless
argument that “substantial consummation” is a concept unique to
chapter 11, see supra at 45-48, she does not challenge the district court’s
factual finding that the restructuring here “has been substantially
completed” as of September 22, 2017, such that “the debtors’ positions
have comprehensively changed.” A38; see also BGI, 772 F.3d at 110
(“‘Determining whether a plan has been substantially consummated is a
question of fact ….’” (quoting 7 Collier on Bankruptcy ¶ 1101.02[2] (16th
ed. 2009)). Her remaining arguments fail to demonstrate that the
district court’s finding of equitable mootness rested on legal error or fell
outside “the range of permissible decisions.” Huebner v. Midland Credit
Mgmt., Inc., 897 F.3d 42, 53 (2d Cir. 2018).
Ms. Wiener starts by mischaracterizing the district court’s opinion
as “treat[ing] [her] appeal as per se equitably moot without examining
Case 18-1374, Document 69, 11/13/2018, 2432558, Page63 of 69
the actual effects of the requested relief.” Br. 30; see also Br. 35
(faulting district court for “not considering the actual effects of
assessing the appeal on the merits”). The district court did no such
thing. Its holding was grounded in the particulars of this case—
specifically, the facts that the restructuring was consummated in
September 2017, that Ms. Wiener failed to request a stay, and that her
appeal seeks to “unwind[]” that reorganization. A38.
In that regard, the district court was not required to defer to Ms.
Wiener’s unsupported assurances that the relief she requests “does not
disturb the Cayman schemes of arrangement.” SA83. As Appellees
have explained, the entry of a Recognition Order was an express
contractual condition precedent to the Schemes. See SA675-76; SA736-
37; SA773-74, SA813-14 § 4.1; see also Allstate, 174 B.R. at 890 (finding
bankruptcy appeal to be equitably moot after noting that “creditors
approved the Scheme only on the condition that the U.S. Bankruptcy
Court issue [a] permanent injunction,” such that relief modifying the
injunction could “call into question the validity of a Scheme”). Further,
the bankruptcy court’s Enforcement Order premised the relief it
granted upon several statutory provisions, each of which requires a
Case 18-1374, Document 69, 11/13/2018, 2432558, Page64 of 69
grant of recognition in order to be triggered. SA875-81 (citing 11 U.S.C.
§§ 1507, 1509(b)(2)-(3), 1517(d), 1521(a)). In other words, without the
Recognition Order, the bankruptcy court would not have been able to
issue the Enforcement Order, which gave the Schemes full force and
effect in the United States. And without the Enforcement Order, the
Debtors would be at risk of hostile creditor actions in the United States.
Those case-specific realities informed the district court’s sound exercise
of discretion in finding the appeal to be equitably moot.
Ms. Wiener then attempts to downplay the significance of her
failure to seek a stay, which distinguishes this case from the precedents
she accuses the district court of disregarding. See Br. 30 (citing
Chateaugay II and Charter). Chateaugay II makes clear that where (as
here) a restructuring has been substantially consummated, an appeal
should be dismissed as moot unless five specified circumstances “all …
exist,” one of which is the appellant’s having acted diligently to stay the
order on appeal. 10 F.3d at 953.26 And Charter reiterated that “all five
26The remaining four factors are whether: “(i) effective relief can be
ordered; (ii) relief will not affect the debtor’s re-emergence; (iii) relief
‘will not unravel intricate transactions’; [and] (iv) affected third-parties
are notified and able to participate in the appeal.” MPM Silicones, 874
F.3d at 804. Here, Appellees’ motion to dismiss addressed these factors,
Case 18-1374, Document 69, 11/13/2018, 2432558, Page65 of 69
[of the] ‘Chateaugay factors’” must be met to overcome the presumption
of equitable mootness. 691 F.3d at 482. Most recently, in MPM
Silicones, the Court again noted that the five Chateaugay factors must
all be met to rebut the presumption of mootness, and emphasized that
the “chief consideration under Chateaugay II is whether the appellant
sought a stay of confirmation.” 874 F.3d at 804.
Ms. Wiener’s only response is to assert that a stay was
unnecessary because “as a practical matter, the status quo was
preserved pending adjudication [on] appeal,” in that “the injunction[]
challenged on appeal remain[ed] in force during the course of the
appeal.” Br. 31. But the entire point of seeking a stay is to prevent the
injunction challenged on appeal from going into effect. Because Ms.
Wiener took no action to delay the Recognition Order’s effectiveness, the
status quo completely changed: The Cayman court approved the
Schemes, the bankruptcy court issued an Enforcement Order granting
see SA24-26, and the district court ultimately found that it would be
inequitable to “unwind[]” the numerous transactions that took place
when the restructuring became effective, A38. Ms. Wiener alluded to
these factors only obliquely in the district court, maintaining
(incorrectly) that the relief she requests would not disturb the Schemes.
See SA83. Her brief in this Court does not address these factors at all.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page66 of 69
the Schemes full force and effect, the restructuring became effective,
and pursuant to the Schemes, the Debtors canceled existing debt, made
distributions of cash and equity, issued new notes, and entered into
important new agreements. See A39; see also supra at 18-19. Those
developments precluded Ms. Wiener from rebutting the presumption of
mootness not just because she failed to seek a stay, but also because
changed circumstances made it impossible for the court to afford
effective relief without the risk of “unraveling intricate transactions.”
A37 (quoting Chateaugay II, 10 F.3d at 952-53); cf. In re Zenith Elecs.
Corp., 329 F.3d 338, 346 (3d Cir. 2003) (finding no equitable mootness
where the appellant sought to disgorge “$76,500 in professional fees, a
tiny sum in the context of the reorganization of a company valued at
$300 million,” relief that would not cause the reorganization “to
unravel”).
Finally, Ms. Wiener argues that the district court erred by
dismissing the appeal without also ruling on its merits, emphasizing
that the court stayed merits briefing while the motion to dismiss was
pending. See Br. 32-33. She fails to mention, however, that the district
court stayed the merits briefing as an accommodation to her, so that she
Case 18-1374, Document 69, 11/13/2018, 2432558, Page67 of 69
would not have to “worry about filing the initial brief on the appeal”
while she was preparing her opposition to Appellees’ motion to dismiss.
A17. In any event, “[a]s [this Court’s] precedent makes clear, the
doctrine of equitable mootness permits a court to decide whether an
action should be dismissed before reaching the underlying merits of the
appeal.” In re Fiorano Tile Imports, Inc., 619 F. App’x 33, 34 (2d Cir.
2015) (summary order) (citing Charter, 691 F.3d at 484, and In re
Chateaugay Corp., 988 F.2d 322, 325 (2d Cir. 1993)); accord, e.g., In re
Transwest Resort Props., Inc., 801 F.3d 1161, 1167 (9th Cir. 2015); In re
BGI, Inc., No. 12cv7714 (ALC), 2013 WL 10822966, at *10 (S.D.N.Y.
May 22, 2013), aff’d, 772 F.3d 102 (2d Cir. 2014). The fact that district
courts sometimes choose to include alternative holdings on the merits
after finding an appeal to be equitably moot, e.g., Allstate, 174 B.R. at
891, does not mean that courts are obligated to do so.
Case 18-1374, Document 69, 11/13/2018, 2432558, Page68 of 69
This Court should affirm the district court’s judgment dismissing
/s/ Evan C. Hollander
ORRICK, HERRINGTON & Daniel A. Rubens
SUTCLIFFE LLP Emmanuel Fua
1152 15th Street NW ORRICK, HERRINGTON &
Washington, DC 20005 SUTCLIFFE LLP
Counsel for Debtors-Appellees
Case 18-1374, Document 69, 11/13/2018, 2432558, Page69 of 69
This brief complies with the type-volume limitation of Local Rule
32.1(a)(4) because this brief contains 11,735 words, excluding the parts
of the brief exempted by Fed. R. App. P. 32(f).
using Microsoft Word 2013 in Century Schoolbook 14-point font.
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