Saturday, December 1, 2012

In re Board of Directors of Telecom Argentina case brief (outside judgements being granted in the US)

 In re Board of Directors of Telecom Argentina (2nd Cir. 2008)

A telecom company had re-negotiated its obligations in the wake of an economic crisis. Argo Fund challenged the restructuring. The telecom announced it had intended to restructure under Argentina Involsvency Law. The law allowed the debtor to suspend payments or seek court approval under privately negotiated, majority approved plan and bind all creditors. They had 90% consent in $ and 82% in #. Argentine court approved the plan. They concluded it was not abusive, fraudulent, or discriminatory with legal regs. Under §304 Telecom sought ancillary to a foreign proceeding to declare the approval order and give the APE full force and effect in the US to bind all creditors. Bankruptcy court qualified it as a “foreign proceeding” and granted.

Can the Argentina judgment be granted in the US?

Yes, the Argentina judgment can be granted in the United States.

§304 grants petitions for best economical and expeditious administration of the estate with 6 factors. A) Just treatment of creditors: Argo had notice but never objected. Bankruptcy court did not abuse its discretion that this APE ensured due process and just treatment. 
B) Comity: This is the most important factor. Comity is “the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other person who are under the protection of its law.” 
-Argo argued it violated public policy b/c it was inconsistent with the Bankruptcy Code for 3 reasons. 1) protection of bondholder’s under §316, 2) best interests of creditors under §1129, and 3) good faith requirement under §1129. §304 acts to override these objections.

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