MEMORANDUM OF DECISION
Introduction
The Liquidators of Millennium Global Emerging Credit Master Fund Limited (the “Master Fund”) and Millennium Global Emerging Credit Fund Limited (the “Feeder Fund,” and together with the Master Fund, the “Funds”), two investment funds undergoing liquidation in Bermuda, have moved for an order compelling production of certain documents by BCP Securities LLC (“BCP”), pursuant to 11 U.S.C. § 1521(a)(4) and Rule 2004 of the Federal Rules of Bankruptcy Procedure. BCP has opposed the motion and has also filed its own motion to vacate this Court’s order recognizing the Bermuda proceedings. For the reasons set forth below, the Foreign Representatives’ motion is granted, and BCP’s motion to vacate the recognition order is denied.
Background
A. Liquidation of the Funds in Bermuda and Recognition of the Bermuda Proceedings
The Funds were incorporated in Bermuda to invest in third-world sovereign and corporate debt instruments. In October 2008, the Funds were unable to meet margin calls and the Funds’ directors filed “winding-up” petitions with the Supreme Court of Bermuda, which were granted on November 21, 2008 (the “Bermuda Proceedings”).
By orders of the Bermuda Court, Charles Thresh, Richard Heis, and Mi
On June 30, 2011, the Liquidators filed a petition with this Court for recognition of the Bermuda Proceedings under chapter 15 of the Bankruptcy Code. One of the Liquidators’ stated purposes in filing the chapter 15 petition was to pursue discovery against parties in the United States and to commence litigation if indicated. Declaration of Michael Morrison at ¶4, Dkt. No. 4. On September 19, 2011, this Court entered an order granting recognition of the Bermuda Proceeding as a foreign main proceeding, or in the alternative, as a foreign nonmain proceeding. 1 BCP, one of the targets of the Liquidators’ investigation identified in the chapter 15 petition, vigorously opposed recognition and has appealed this Court’s order granting the Bermuda case recognition as a foreign main proceeding. The appeal is pending in the District Court.
B. The Subpoena to BCP and the Present Motions
After obtaining recognition of the Bermuda Proceeding, the Liquidators served a subpoena for the production of documents by BCP. At the request of BCP’s former counsel, counsel for the Liquidators agreed to two separate extensions of BCP’s deadline for responding to the subpoena. On the date of the second extended deadline, January 18, 2012, the Liquidators’ counsel received a call from BCP’s present law firm, stating that it was replacing prior counsel and requesting an additional two-week extension to respond to the subpoena. The Liquidators’ counsel responded by email, granting the extension on the condition that BCP produce within the following week documents that BCP had provided to the U.S. Securities and Exchange Commission (“SEC”), which had assertedly filed a securities fraud complaint against both a BCP partner and the Funds’ former portfolio manager. 2 The Liquidators reasoned that the SEC documents should already be segregated, bates-stamped and ready to produce, so the burden on BCP would be minimal. BCP produced nothing, instead filing responses and objections to the subpoena.
The Liquidators responded with a motion under § 1521(a)(4) of the Bankruptcy Code and Bankruptcy Rule 2004 for an order compelling BCP to produce a subset
Discussion
Chapter 15 provides for the recognition of a foreign proceeding and an ancillary proceeding to provide assistance thereto. After a foreign proceeding is recognized as either a foreign “main” or “nonmain” proceeding, the foreign representative has general access to all courts in the United States. 11 U.S.C. § 1509(b). In addition, § 1521 of the Bankruptcy Code specifies certain relief that can be granted to the foreign representative in the chapter 15 ancillary proceeding, whether main or non-main. Section 1521(a)(4) provides specifically that the Court may enter an order providing for “the taking of evidence or the delivery of information concerning the debtor’s assets, affairs, rights, obligations or liabilities.” 11 U.S.C. § 1521(a)(4). By its terms, this provision enables a Foreign Representative to take broad discovery concerning the property and affairs of a debtor. 3
The document request specifically at issue in this motion' — documents “concerning the Funds provided to the SEC” by BCP — directly concerns the financial “affairs” of the debtors within the meaning of § 1521(a)(4). In addition, because the requested discovery relates to potential causes of action the Liquidators may assert against BCP, it also concerns contingent property interests of the debtor Funds.
Cf. In re Kane,
Because the requested documents plainly concern both the affairs and assets of the debtors, BCP is mistaken when it asserts that discovery should be denied under
In re Glitnir banki hf.,
At various points, BCP resists discovery on the premise that not it, but its wholly owned Spanish subsidiary, Baer, Crosby and Pike Agencia de Valores, S.A. (“BCP Spain”), participated in the valuation transactions at issue. Because BCP has not denied possession or control of the requested documents, however, the authorship of the documents does not lead to denial of the Liquidators’ motion.
See
Fed.R.Civ.P. 45(a)(1)(A)(iii) (authorizing subpoena commanding non-party to produce designated documents “in that person’s possession, custody, or control”);
see also United States v. Int’l Union of Petroleum and Indus. Workers,
BCP argues that the requested discovery lacks sufficient nexus with the United States because it does not concern the preservation or recovery of property in the United States. Chapter 15, however, is not an independent
in rem
proceeding but an ancillary proceeding designed to assist a foreign representative in administering the foreign estate.
In re JSC BTA Bank,
BCP also argues that discovery is improper under the “pending proceeding rule,” asserting that the Liquidators are seeking to use the instant discovery in arbitration proceedings pending in the United Kingdom. The pending proceeding rule provides that once a formal legal case is commenced, “discovery should be pursued pursuant to [that proceeding’s rules] and not by Rule 2004.”
In re Enron Corp.,
Next, BCP argues that the Stored Communications Act, 18 U.S.C. § 2701
et seq.,
which is part of the Electronic Communications Privacy Act (the “Privacy Act”), bars the requested discovery. This argument is specious. The Privacy Act imposes criminal and civil penalties on a person who,
inter alia,
“intentionally accesses without authorization a facility through which an electronic communication service is provided.” 18 U.S.C. § 2701(a)(1);
see In re Toft,
Finally, BCP argues that discovery is improper based on its assertion that recognition of the Bermuda proceeding should be vacated; BCP has also filed a separate motion seeking that relief. The Court cannot even consider this argument, however, because BCP has appealed the recognition order. The filing of an appeal divests a bankruptcy court of jurisdiction over all aspects of the case that are the subject of the appeal.
In re Prudential Lines, Inc.,
Conclusion
For the foregoing reasons, the Liquidators’ motion to compel discovery of all documents concerning the Funds that BCP has provided to the SEC is granted, and BCP’s motion to vacate recognition is dismissed. The Liquidators may settle an order on three business days’ notice.
Notes
. The Bankruptcy Code defines a “foreign main proceeding” as "a foreign proceeding pending in the country where the debtor has the center of its main interests.” 11 U.S.C. § 1502(4). The Code defines a "foreign non-main proceeding” as "a foreign proceeding, other than a foreign main proceeding, pending in a country where the debtor has an establishment.” 11 U.S.C. § 1502(5).
. The SEC Complaint alleges that between January and October 2008, the Fund’s portfolio manager, Michael Balboa, enlisted a BCP partner, Gilíes De Charsonville, as a purportedly independent broker "to provide phony mark-to-market quotes for two of the Fund's portfolio securities to the Fund's independent valuation agent ... and outside auditor ... in order to inflate the Fund’s reported monthly returns and overall net asset value,” allegedly generating millions of dollars of management and performance fees. SEC Complaint, Exhibit D to Liquidators’ Motion to Compel Discovery, Dkt. No. 81, at ¶¶ 1, 4. BCP says that De Charsonville was not a partner but a "member” because BCP is an LLC and not a partnership.
. The word "debtor" when used in chapter 15 means the foreign debtor. 11 U.S.C. § 1502(1).
. It would also appear, in any event, that the appeal could have no effect on the Liquidators’ discovery motion because BCP on appeal challenged only this Court’s Ending that the Bermuda Proceeding should be recognized as a foreign main proceeding. It apparently has not challenged the alternative finding of nonmain recognition, which provides an independent basis for the Court's grant of discovery.