In re OAS S.A., 533 B.R. 83

Background

OAS S.A., Construtora OAS S.A., and OAS Investments GmbH (the OAS Debtors) are members of a Brazil‑based infrastructure group that commenced judicial reorganization proceedings in São Paulo under Brazilian Bankruptcy Law on March 31, 2015.
Renato Tavares was appointed by OAS group boards as foreign representative to seek chapter 15 recognition in the U.S.; he filed petitions on April 15, 2015 seeking recognition of the Brazilian proceedings as foreign main proceedings.
Prior events: OAS Group’s financial distress followed Petrobras‑related investigations and currency/credit deterioration; in December 2014 several intra‑group transactions (asset transfers and a merger) prompted creditor litigation and claims of prejudice by holders of two tranches of 2019 notes (Aurelius, Alden).
Noteholders sued in New York and sought ex parte relief; they and others also petitioned the BVI court which appointed provisional liquidators for certain affiliates (leading to a separate chapter 15 proceeding for OAS Finance).
The Brazilian court approved consolidated reorganization and appointed Alvarez & Marsal as judicial administrator; objecting noteholders appealed the consolidation order and pursued other remedies in Brazil and elsewhere.
The bankruptcy court held an evidentiary hearing and granted recognition of the Brazilian proceedings as foreign main proceedings for the OAS Debtors.

Issues

Issue	Aurelius/Alden's Argument	OAS/Tavares' Argument	Held
Whether a foreign representative must be appointed or authorized by the foreign court	Statutory text and §1515 referencing "appointment" require judicial appointment/authorization	Model Law and case law allow appointment by debtor/board; no foreign‑court appointment is necessary	Court held judicial authorization not required; board appointment suffices (following Vitro)
Whether Tavares qualifies as foreign representative (authority, neutrality, fitness)	Tavares lacks court authorization, is conflicted (involved in December Transactions), and represents debtors not the foreign court	He was validly appointed by debtor boards; Brazilian law leaves management in place (debtors‑in‑possession); no disqualifying misconduct shown	Court held Tavares was duly authorized and qualified to serve as foreign representative
Whether OAS Investments’ COMI is Austria (incorporation) or Brazil	Noteholders: Austria is presumed COMI by registration; therefore Brazilian proceeding cannot be a foreign main proceeding for OAS Investments	OAS: OAS Investments is a SPV with no real Austrian operations; management, creditors’ expectations, and repayment nexus are Brazil	Court found Brazil was OAS Investments’ COMI and recognized the Brazilian proceeding as a foreign main proceeding
Whether recognition is barred by U.S. public policy (§1506) due to alleged unfair Brazilian procedures, substantive consolidation, or denial of avoidance powers	Brazilian consolidation and differing avoidance/remedy rules will deny noteholders redress; Brazilian procedures (ex parte contacts) and possible substantive consolidation are manifestly contrary to U.S. public policy	Brazilian system provides due process; differences are not "manifestly" contrary; objections about plans or relief are premature and reviewable later	Court held recognition is not manifestly contrary to U.S. public policy; §1506 not triggered

Key Cases Cited

Ad Hoc Grp. of Vitro Noteholders v. Vitro S.A.B. de C.V., 701 F.3d 1031 (5th Cir. 2012) (rejects requirement that foreign representative be appointed by foreign court; interprets Model Law/Chapter 15)
Fairfield Sentry Ltd. v. Theodoor GGC Amsterdam, 714 F.3d 127 (2d Cir. 2013) (COMI analysis and chapter 15 interpretive guidance)
In re Bear Stearns High‑Grade Structured Credit Strategies Master Fund, Ltd., 374 B.R. 122 (Bankr. S.D.N.Y. 2007) (chapter 15 purposes and international cooperation principles)
In re SPhinX, Ltd., 351 B.R. 103 (Bankr. S.D.N.Y. 2006) (factors relevant to COMI determination)