Opinion
1:20-cv-10299-MKV
06-14-2022
MARTIN NICHOLAS JOHN TROTT and CHRISTOPHER JAMES SMITH, on behalf of and solely in their capacity as the Foreign Representatives and Joint Official Liquidators of MADISON ASSET LLC IN LIQUIDATION, Plaintiffs, v. DEUTSCHE BANK AG, Defendant.
William T. Reid, IV Jeffrey E. Gross Vincenzo Novelli Joshua J. Bruckerhoff (pro hac vice) Jordan L. Vimont, Sr. (pro hac vice) Counsel to Plaintiffs
William T. Reid, IV Jeffrey E. Gross Vincenzo Novelli Joshua J. Bruckerhoff (pro hac vice) Jordan L. Vimont, Sr. (pro hac vice) Counsel to Plaintiffs
CONSENT MOTION TO RELIEVE PLAINTIFFS OF THE OBLIGATION TO ANSWER DEFENDANT'S COUNTERCLAIM
MARY KAY VYSKOCIL, UNITED STATES DISTRICT JUDGE
Plaintiffs, the JOLs, pursuant to Local Rule 7.1(D), file this Consent Motion to Relieve Plaintiffs of the Obligation to Answer Defendant's Counterclaim. In support of this Motion, Plaintiffs state as follows:
Capitalized terms used here have the same meaning as defined in the Second Amended Complaint, Doc. 36, filed May 19, 2021.
1. On May 20, 2022, Defendant filed its Answer, Defenses, and Counterclaim to the JOLs' Second Amended Complaint asserting a counterclaim for indemnity. Doc. 63. The JOLs' deadline to respond, which is June 10, 2022, has not yet passed.
2. Plaintiffs are the joint official liquidators of Madison Asset LLC. There is a Chapter 15 bankruptcy case pending relating to Madison, In re Madison Asset LLC, Case No. 18-12814 (MEW) “the Chapter 15 proceeding”).
3. It is the JOLs' contention that Defendant's assertion of a counterclaim against Madison violates the automatic stay imposed by the entry of the Order granting recognition of Madison's foreign liquidation proceedings in the Chapter 15 proceeding, and thus is either void and of no effect or must be withdrawn. See In re Best Payphones, Inc., 279 B.R. 92, 97 (Bankr. SDNY 2002) (quoting Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 527 (2d Cir.1994)) (“‘[A]ny proceedings or actions described in section 362(a)(1) are void and without vitality if they occur after the automatic stay takes effect.'”); see also Borg-Warner Acceptance Corp. v. Hall, 685 F.2d 1306, 1308 (11th Cir. 1982) (“Actions taken in violation of the automatic stay are void and without effect.”).
4. Defendant has informed the JOLs that they do not believe the counterclaim violates the automatic stay in connection with the Chapter 15 proceeding. Defendant intends to seek a declaratory judgment from the bankruptcy court to that effect or, in the alternative, an order lifting the stay for the purpose of allowing Defendant to assert its counterclaim against Madison. In the interim, Defendant agrees that no answer is required with respect to the counterclaim.
5. The Parties further agree to update and inform this Court as soon as there is any ruling from the bankruptcy court on Defendant's anticipated motion.
6. Based on this agreement, and for good cause, Plaintiffs respectfully request that the Court grant this consent motion and relieve the JOLs of the obligation to answer Defendant's counterclaim.
7. A proposed Order is attached for the Court's consideration.
Plaintiffs Martin Nicholas John Trott and Christopher James Smith, solely in their capacity as the Foreign Representatives and Joint Official Liquidators of Madison Asset LLC filed a Chapter 15 Petition for Recognition of a Foreign Proceeding in the United States Bankruptcy Court for the Southern District of New York, which was granted by the Bankruptcy Court as a foreign main proceeding. See Order Granting Recognition, Dkt. No. 15, In re Madison Asset, LLC, No. 18-12814 (MEW) (Bankr. S.D.N.Y. Oct. 16, 2018). Pursuant to Chapter 15, upon main recognition of a foreign proceeding, the automatic stay of section 362 is applicable to all property of the debtor and stays all litigation against it unless the Bankruptcy Court modifies the automatic stay. See 11 U.S.C. § 1520(a)(1); City Ins. Co. v. Mego Int'l, Inc., 28 B.R. 324, 326 (Bankr. S.D.N.Y. 1983).
Accordingly, because of the automatic stay, Plaintiffs need not answer or otherwise respond to Defendant's counterclaims pending resolution of Defendant's anticipated motion for declaratory judgment or, alternatively, relief from the automatic stay entered by the United States Bankruptcy Court for the Southern District of New York in the case of In re Madison Asset LLC, Case No. 18-12814 (MEW) (“In re Madison”). The parties shall promptly notify the Court of any order related to Defendant's anticipated motion in In re Madison.
SO ORDERED.