Hosking v. TPG Capital Management, L.P. (In re Hellas Telecommunications (Luxembourg) II SCA
524 B.R. 488
Bankr. S.D.N.Y.2015Background
- Hellas Telecommunications (Luxembourg) II SCA (Hellas II) issued debt in Dec. 2006 and transferred ~€1.57 billion from accounts outside the U.S. to parent entities; subsequent distributions to defendants total ~€973.7 million. Plaintiffs are the Joint Compulsory Liquidators appointed in the U.K. insolvency and are the foreign representatives in a Chapter 15 case in this Court.
- Plaintiffs sued under New York Debtor & Creditor Law (NYDCL) for actual and constructive fraudulent transfer and unjust enrichment against 27 defendants (U.S. and non-U.S. entities and individuals, including TPG, Apax, Deutsche Bank, and TCW), alleging those transfers were avoidable and that certain consulting fees were improper.
- Defendants moved to dismiss primarily for lack of personal jurisdiction, lack of subject-matter jurisdiction/failure to state a claim, choice of law, standing, statute of limitations, and defenses including in pari delicto/Wagoner and §546(e).
- Procedurally: Hellas II’s foreign main proceeding is pending in the U.K.; Chapter 15 recognition was granted in 2012; this adversary complaint was filed in 2014. The Court held extensive briefing and oral argument.
- Core disposition: the Court (1) found personal jurisdiction over many U.S.-connected defendants but not over certain non-U.S. Apax/TPG defendants and TPG London; (2) dismissed Count II (constructive fraudulent conveyance) on choice-of-law grounds (New York law conflicts with U.K./Luxembourg and foreign law controls); (3) dismissed Count I (NYDCL actual fraudulent conveyance) for lack of standing under applicable law; and (4) denied dismissal of Count III (unjust enrichment) as to the U.S. Apax/TPG defendants (plausible insider/control allegations, timely claim).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction (general vs specific) | Nationwide contacts with the U.S. suffice under Fed. R. Bankr. P. 7004; many defendants have U.S. contacts making jurisdiction proper. | Daimler limits general jurisdiction to where a defendant is “at home”; many defendants lack sufficient NY/U.S. contacts for general or specific jurisdiction. | Nationwide (U.S.-wide) contacts govern; general jurisdiction exists for most U.S.-domiciled defendants (TPG, TCW, DB) but not for Apax non-U.S. defendants and TPG London; specific jurisdiction lacking for those non-U.S. defendants — claims against them dismissed. |
| Subject-matter jurisdiction (core/non-core; related-to) | Court has related-to jurisdiction under 28 U.S.C. §1334 because recovery would materially affect the foreign estate; whether core is irrelevant to jurisdiction. | Claims are state-law and arise outside bankruptcy; bankruptcy court may lack authority to finally adjudicate core issues. | Court has related-to subject-matter jurisdiction; whether claims are core affects final-judgment authority but not jurisdiction. Motion to dismiss for lack of subject-matter jurisdiction denied. |
| Choice of law for constructive fraudulent transfer (Count II) | New York law should apply; NYDCL reaches these transfers. | U.K. or Luxembourg law governs avoidance of transactions involving the debtor’s entities and do not recognize NY-style constructive fraudulent conveyance. | An actual conflict exists; interest-analysis favors U.K./Luxembourg law as more connected to the conduct; Count II dismissed (NY law does not apply). |
| Standing to bring NYDCL actual fraudulent conveyance (Count I) | Liquidators (foreign representatives) have authority under U.K. law and chapter 15 discretionary relief (§1521) to pursue creditor-claims under NYDCL; §276-a and CBIR/ Insolvency Act support standing. | Plaintiffs lack standing because NYDCL §276 requires creditor-status (or trustee stepping into creditors’ shoes via §544) and §1521(a)(7) disallows using §544; U.K. law does not vest liquidators with standing to sue on behalf of all creditors for claims that belong to creditors. | Plaintiffs failed to show under U.K. law that liquidators may assert NYDCL §276 claims on behalf of creditors without relying on §544; Count I dismissed for lack of standing. |
| Unjust enrichment (Count III) — standing and in pari delicto/Wagoner | Plaintiffs may pursue unjust enrichment as foreign representatives; allegations plausibly plead that Apax/TPG acted as insiders and controlled Hellas II, so in pari delicto/Wagoner defenses should not bar the claim. | Wagoner/in pari delicto bar trustee claims that derive from management’s misconduct; defendants contend plaintiffs allege debtor complicity, so claim belongs to creditors not debtor. | At pleading stage plaintiffs plausibly alleged domination/control by Apax/TPG such that insiders exception may apply; unjust enrichment survives as to U.S. Apax/TPG defendants, timely under §108 tolling. |
Key Cases Cited
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (limits general jurisdiction to forums where a defendant is essentially at home)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general jurisdiction overview for corporations)
- Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts due process standard)
- Walden v. Fiore, 571 U.S. 277 (2014) (specific jurisdiction requires defendant’s own forum contacts and relation to the litigation)
- Eberhard v. Marcu, 530 F.3d 122 (2d Cir. 2008) (standing under NYDCL §276 limited to creditors or those vested to assert creditors’ rights)
- Scholes v. Lehmann, 56 F.3d 750 (7th Cir. 1995) (receiver standing to assert state-law fraudulent conveyance claims where creditors were within receivership)
- Stern v. Marshall, 564 U.S. 462 (2011) (distinguishes subject-matter jurisdiction from authority to enter final judgment in bankruptcy proceedings)
- Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 639 F.3d 572 (2d Cir. 2011) (related-to jurisdiction in cross-border insolvency matters)