The opinion of the court was delivered by: Sweet, District Judge
Appellant Europe Movieco Partners Limited ("Movieco") has moved on an emergency basis pursuant to Rules 8011 and 8019 of the Federal Rules of Bankruptcy Procedure for an expedited determination of Movieco's appeal from an Order of the United State Bankruptcy Court for the Southern District of New York entered on January 8, 2003 (the "Rejection Order"), permitting the debtor, United Pan-Europe Communications, N.V. ("UPC"), to reject an agreement between Movieco and UPC.
For the following reasons, that motion is denied.
UPC is a holding company organized under the laws of The Netherlands, with its statutory seat and principal place of business in Amsterdam, Holland. UPC has no business operations or employees in the United States. UPC's principal assets consist of its direct and indirect interests in approximately 200 operating subsidiaries, which own and operate broadband communication networks that provide telephone, cable and internet services to residential and commercial businesses in eleven countries in Europe.
Movieco is a limited liability company organized under the laws of England, with its principal place of business in London, England. Movieco possesses a broadcast license issued by the Independent Television Commission of the United Kingdom pursuant to Part 1 of the Broadcasting Act of 1990, as amended by the Broadcasting Act of 1996. Movieco operates and broadcasts two movie channels, Cinenova and Cinenova 2, from England via satellite uplink for reception by subscribers in Benelux countries. Movieco is regulated by British television authorities.
UPC and Movieco entered into a Cable Affiliation Agreement (the "Agreement") on December 21, 1999. Under the Agreement, Movieco licensed to UPC, for a period of seven years, the right and the obligation to receive and distribute the Cinenova movie channel to UPC's subscribers on its cable systems in The Netherlands and Flemish-speaking Belgium. In consideration for this license, UPC is required to pay a certain monthly fee to Movieco. UPC has been in breach of its payment obligations under the Agreement since February 2002.
The Dual Insolvency Proceedings
On December 3, 2002, UPC filed a petition with the District Court of Amsterdam (Rechtbank) (the "Dutch Bankruptcy Court"), requesting that it grant UPC a suspension of payments or moratorium under Dutch bankruptcy law. With its petition, UPC filed a proposed plan of compulsory composition under the Dutch Faillissementswet ("Dutch Bankruptcy Code").
Also on December 3, 2002, UPC filed a voluntary bankruptcy petition under Chapter 11 of the United States Bankruptcy Code. With its petition, UPC filed a proposed plan of reorganization and an accompanying disclosure statement. On or about December 23, 2002, UPC filed an amended plan of reorganization (the "Amended Plan") and a related amended disclosure statement. The Amended Plan provides that holders of "rejection claims" will be provided the treatment accorded holders of pre-petition general unsecured claims and, thus, will be satisfied through the distribution of a pro rata share of equity in New UPC. Confirmation of the Amended Plan is scheduled to be heard on February 20, 2003.
Also on December 3, 2002, UPC filed a motion to reject the Agreement under section 365 of the U.S. Bankruptcy Code (the "Rejection Motion"). Movieco objected to the motion on the grounds that extending section 365 of the Bankruptcy Code to permit rejection of a contract between a Dutch company and an English company that is performed entirely overseas is contrary to the laws of the debtor's homeland and ran afoul of well-founded principles of international comity and the presumption against extra-territoriality. Movieco requested that the Bankruptcy Court abstain from hearing the Rejection Motion in deference to Dutch law and the proceedings pending before the Dutch Bankruptcy Court.
The Bankruptcy Court heard oral arguments on January 7, 2003. Concluding that no conflict existed between Dutch insolvency law and the U.S. Bankruptcy Code and that, in any event, the appropriate foreign tribunal would determine the preemptive effect, if any, of the Amended Plan, the Bankruptcy Court granted ...