Lawrence v. TPG Capital Management, L.P. (In re Hellas Telecommunications (Luxembourg) II SCA )
526 B.R. 499
Bankr. S.D.N.Y.2015Background
- Plaintiffs allege Hellas II issued Sub Notes and used proceeds to fund a December 2006 CPEC Redemption that affected Hellas I, Hellas II, and eight Sponsors.
- Movants seek limited reargument solely on whether §546(e) bars the Plaintiffs’ unjust enrichment claim.
- Prior Opinion granted dismissal of NYDCL claims and dismissed non-U.S. Defendants for lack of personal jurisdiction, but left the unjust enrichment claim intact.
- Movants argued in MTD that §546(e) barred the unjust enrichment claim because transfers were settlement payments involving financial institutions.
- Plaintiffs contested that §546(e) preemption did not apply to the unjust enrichment claim and that extraterritorial and choice-of-law issues remain.
- Court grants reargument for the limited issue of §546(e) as to the unjust enrichment claim but denies dismissal on the merits under current pleadings and leaves extraterritorial/choice-of-law questions open.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §546(e) bar the unjust enrichment claim? | Plaintiffs argue §546(e) does not preempt unjust enrichment. | Movants contend §546(e) bars unjust enrichment as a substitute for avoided transfers. | Denied at this stage; unjust enrichment not precluded by §546(e) on the pleadings. |
| Is the Reargument timely under bankruptcy rules? | Objection argues untimely filing. | Movants claim timely due to holiday extension. | Timely; Reargument motion granted for limited purpose. |
| Did Madoff constitute intervening controlling law? | Plaintiffs argue no new controlling authority overlooked. | Movants argue Madoff is intervening controlling law. | Court grants limited reargument but does not treat Madoff as controlling for dismissal at this stage. |
| Should extraterritoriality affect §546(e) application? | Extraterritorial considerations may keep the issue open. | Extraterrestrial applicability of §546(e) argued. | Not decided; extraterritorial reach remains unresolved and prematurity of dismissal noted. |
| Are choice-of-law issues premature to determine §546(e) effect? | New York law governs unjust enrichment; conflicts with foreign law may alter result. | Foreign law considerations could affect applicability of safe harbor. | Premature to preclude unjust enrichment; choice-of-law issues reserved for later. |
Key Cases Cited
- Lehman Bros. Holdings Inc. v. JPMorgan Chase Bank, N.A., 469 B.R. 415 (S.D.N.Y. 2012) ( Bankruptcy safe harbor; unjust enrichment not necessarily precluded when not identical to avoidance claims)
- In re Madoff Investment Securities LLC, 773 F.3d 411 (2d Cir. 2014) (Interprets §546(e) as protecting settlements; discusses securities contracts scope)
- In re Quebecor World (USA) Inc., 719 F.3d 94 (2d Cir. 2013) (Defines ‘settlement payments’ under §546(e) and the broad meaning of ‘securities contracts’)
- Contemporary Indus. Corp. v. Frost, 564 F.3d 981 (8th Cir. 2009) (Preemption of state-law unjust enrichment when substantially identical to §546(e) avoidance claims)
- AP Servs. LLP v. Silva, 483 B.R. 63 (S.D.N.Y. 2012) (Preemption concerns under §546(e) for unjust enrichment claims)
- Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., 651 F.3d 329 (2d Cir. 2011) (§546(e) and ‘settlement payments’/foreign considerations)