Opinion ID: 2616
Heading Depth: 3
Heading Rank: 1

Heading: Just Treatment of Creditors

Text: Argo contends that the APE process does not provide for just treatment of creditors because it allows for only limited objections and limited recourse against a majority-approved APE. The just treatment factor is satisfied upon a showing that the applicable law provides for a comprehensive procedure for the orderly and equitable distribution of [the debtor]'s assets among all of its creditors. Treco, 240 F.3d at 158 (internal quotation marks omitted); see also 2 Collier on Bankruptcy § 304.08 (15th ed. 2007) (Usually, an ancillary petition furthers the goals of just treatment of all creditors by preventing piecemeal dismemberment and by centralizing administration of the debtor's affairs and assets.). Instances in which a court has held that the foreign proceeding does not satisfy this factor include when the proceeding fails to provide creditors access to information and an opportunity to be heard in a meaningful manner, which are [f]undamental requisites of due process, In re Hourani, 180 B.R. 58, 67 (Bankr.S.D.N.Y.1995), or when the proceeding would not recognize a creditor as a claimholder, see In re Papeleras Reunidas, S.A., 92 B.R. 584, 590 (Bankr.E.D.N.Y. 1988) (By reason of its not having been given notice of the Spanish proceeding, Adams was not recognized as a creditor, thus depriving it of the opportunity to participate in the proceeding, prejudicial to its rights.). Here, the APE plan provided for an orderly, centralized administration of Telecom's debt restructuring. Argo had notice of the APE proceedings throughout the process  from Telecom's filing of an initial registration statement with the SEC describing the APE proposal; to distributing of the final solicitation statement; to convening a noteholders' meeting pursuant to an order of the Argentine court; to publishing notices of approval by the Argentine court informing creditors of their right to object to approval of the APE. As further evidence that Argo was put on notice of this process, Argo sent several letters to U.S. Bank  but, notably, without first raising its issues with Telecom or the Argentine court  indicating its disagreement with and its refusal to be bound by the APE. Throughout, Argo had the opportunity to object to the terms of the proposed plan, to vote on the plan, and then to submit objections  subject to the parties' dispute about the scope of permissible objections [10]  to the Argentine court. In addition, Article 52(4) of the Insolvency Law prohibits courts from approving an abusive plan in the context of acuerdo preventivo proceedings. Both parties' experts testified that Argentine courts apply this prohibition in the context of an APE proceeding, although there is some uncertainty about whether courts are required or simply permitted to conduct an abusiveness inquiry. [11] In any event, the Argentine court in this proceeding did consider whether the plan was abusive, fraudulent, or discriminatory. It ruled that the APE was not, and did so only after directing that non-consenting creditors should get an additional opportunity to select among their consideration options after the APE was approved. Based on this evidence, the bankruptcy court did not abuse its discretion by finding that this APE proceeding comported with due process and ensured just treatment of creditors.