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January 20, 2004.


The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge Page 2


The facts before this Court have changed from those summarized in this Court's Memorandum Opinion and Order dated December 29, 2003 ["December 29 Order"] only in that defendant Set Top International Inc. ["Set Top"] has given notice of a foreclosure sale of the 50.44% block of shares of Asia Pacific Wire & Cable Corporation ["APWC"], to be held on January 21, 2004.*fn1 Plaintiff and intervenor plaintiff Pacific Electric Wire & Cable Company ["PEWC"]*fn2 both move, by separate Orders to Show Cause, for a temporary restraining order to prevent this sale.*fn3

  Plaintiff (but not intervenor plaintiff) also asks for a temporary restraining order preventing the sale of the 22.4% block of APWC stock. This Court heard arguments from counsel for plaintiff, intervenor plaintiff, defendant Set Top, and defendant Robert Everett Wolin on January 14, 2004.

  Both plaintiff and intervenor plaintiff rely almost exclusively on the language of the December 29 Order, arguing that the imminence that was lacking in December, and on which this Court based (in part) its dissolution of the temporary restraining order, now exists. Therefore, both parties argue, the balance of hardships now tips in favor of PEWC. Plaintiff and intervenor plaintiff also reiterate their claims that the sale of the shares will cause PEWC irreparable harm.

  Set Top argues that foreclosure is proper. The loan between PEWC's subsidiary Pacific U.S.A. Holdings Corp. ["PUSA"] and its creditor Swiss Re Financial Products Corp. ["Swiss Re] (no longer a party to this action), and the pledge of APWC shares as security for that loan; PEWC's default on its obligation to repay PUSA's loan; and Swiss Re's transfer to Set Top of its secured claim against PEWC, Set Top says, are undisputed. Furthermore, Set Top claims that there can be no irreparable harm in this instance because the injury PEWC seeks to avoid was self-inflicted or at least avoidable. Page 3

  Defendant Wolin also submits a memorandum arguing that, because he has no control over the shares and no power to cause or prevent the sale of the shares, an injunction as to him should be denied.


  As none of the most drastic tools in the arsenal of judicial remedies," injunctive relief "must be used with great care." Hanson Trust PLC v. ML SCM Acquisition Inc., 781 F.2d 264, 273 (2d Cir. 1986). An applicant for a preliminary injunction or a temporary restraining order must demonstrate "(1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly in [applicant's] favor." Wisdom Imp. Sales Co. v. Labatt Brewing Co., 339 F.3d 101, 108 (2d Cir. 2003) (quoting TCPIP Holding Co., Inc., v. Haar Communications. Inc., 244 F.3d 88, 92 (2d Cir. 2001)); see Aim Int'l Trading, LLC, v. Valcucine SpA., 188 F. Supp.2d 384, 386 (S.D.N.Y. 2002) (noting that the standard for granting a temporary restraining order is identical to that for a preliminary injunction). Absent an abuse of discretion, a district court's decision granting or denying injunctive relief will not be disturbed on appeal. Aim Int'l, Page 4 188 F. Supp.2d at 387. (quoting Reuters Ltd, v. United Press Int'l, Inc., 903 F.2d 904, 907 (2d Cir. 1990)).

  This Court's December 29 Order denied plaintiff's, intervenor plaintiff's, and defendant's applications for temporary restraining orders. The Court found that, based on the many factual disputes surrounding the case, no party could show that it was likely to succeed on the merits, that the balance of hardships did not tip decidedly in favor of one party over another, and that, in any event, no party could prove imminent harm.*fn4 Although the December 29 Order sets up the lack of imminent harm as a stumbling block for plaintiff and intervenor plaintiff, the removal of that obstacle does not necessarily warrant injunctive relief: Harm may be imminent without being irreparable. Because the December 29 Order discusses only whether the harm is imminent, the Court now considers whether the injury that PEWC may face — sale of either the 50.44% block or the 22.4% block of APWC stock — is irreparable.

  Cases where courts have found irreparable harm in corporate or commercial settings fall into roughly three categories, none of which categorically equate the loss of a majority interest in Page 5 a corporation with irreparable harm. In the first category, courts express a concern for letting the market run its course. To that end, courts have held that preventing a ready, willing, and able buyer from purchasing a majority interest in a corporation — either in the context of an outright purchase or a tender offer — constitutes irreparable harm. See United Acquisition Corp. v. Banque Paribas, 631 F. Supp. 797 (S.D.N.Y. 1985); LTV Corp. v. Grumman Corp., 526 F. Supp. 106 (E.D.N.Y. 1981). The second category demonstrates the courts' concern for protecting the voice of a corporation's shareholders. Thus, courts have found irreparable harm where defendant, the majority shareholder, threatened to elect two directors to the board, which would have reduced the minority shareholder's representation on the board of directors to 10%, see Street v. Vitti, 685 F. Supp. 379 (S.D.N.Y. 1988); where management of a corporation denied shareholders a voice by preventing shareholders from voting their shares or from having representation on the board of directors, see Int'l Banknote Co. v. Muller, 713 F. Supp. 612 (S.D.N.Y. 1989); and where defendant breached an agreement giving plaintiffs certain minority rights, which rights are "irretrievably lost upon breach, and may not be compensable by non-speculative damages [because] [t]he only way to render the [minority rights] provision truly viable is to enforce it," Wisdom, 339 F.3d at 114. Finally, cases falling in Page 6 the third category show the courts' desire to prevent the moving party from losing its livelihood or its position in a business that the movant helped to start. This group of cases includes Davis v. Rondina, 741 F. Supp. 1115 (S.D.N.Y. 1990), in which plaintiff had been denied the opportunity to continue to manage a company which plaintiff helped to build from the ground up and for which plaintiff personally guaranteed substantial loans, and Roso-Lino Beverage Distributors, Inc., v. Coca-Cola Bottling Co., 749 F.2d 124 (2d Cir. 1984) and Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197 (2d Cir. 1970), in which defendant threatened to revoke plaintiffs' franchise agreements, thus depriving plaintiffs of their means of livelihood that they had pursued for many years. None of these cases, however, establish the notion that loss of a majority of shares in a corporation constitutes irreparable harm with the black-letter clarity that plaintiff and intervenor plaintiff urge.

  Moreover, none of the concerns that courts finding irreparable harm have expressed are present in this case. Set Top's planned foreclosure is not preventing market forces from running their course. If anything, PEWC's repeated attempts to block the foreclosure are stalling the market by preventing Set Top, as a creditor, from receiving the money indisputably owed to it. Plaintiff's and intervenor plaintiff's shareholders are not suffering from an impermissible denial of a voice in the Page 7 corporation's affairs brought about by managerial shenanigans. Any loss of voice shareholders suffered occurred when PEWC pledged the APWC shares as security for the loan between Swiss Re and PUSA. Because no party disputes the validity of foreclosure on the APWC shares by Swiss Re, and because no one argues that Set Top's acquisition of Swiss Re's claim caused PEWC to default on its loan payments, plaintiff and intervenor plaintiff cannot complain that Set Top is denying PEWC shareholders a voice in management. Finally, Set Top is not denying any party its means of livelihood. APWC is neither a small family owned business nor a start-up venture where the key participants depend on the business as a means of making a living. The concerns courts have expressed regarding this category of cases, therefore, are not present here.*fn5 Page 8

  In support of its argument that the sale should go forward, Set Top cites a Tenth Circuit case, Salt Lake Tribune Publishing Co. v. AT&T Corp., 320 F.3d 1081 (10th Cir. 2003), in which the court denied injunctive relief to a plaintiff corporation that had sold its controlling interest in a newspaper to a subsidiary of defendant subject to an agreement that plaintiff would retain managerial control of the newspaper for a certain period, and that plaintiff would retain an option to buy back its interest. Id. at 1084-85. The earliest plaintiff could exercise its option to buy back the newspaper was a date one day after the expiration of the period of managerial control. Id. at 1084 When the plaintiff was faced with the gap of several weeks between the end of the period of plaintiff's managerial control and the actual closing of the transaction whereby plaintiff would re-purchase the newspaper, plaintiff sought injunctive relief to prevent defendant from controlling the newspaper during those several weeks. Id. at 1085. The Tenth Circuit denied relief, saying that the change of control "result[ed] from the express terms of Page 9 the contract [plaintiff] negotiated, and therefore the removal of [plaintiff's] managers [was] a harm that [plaintiff] inflicted upon itself." Id. at 1106. Because the harm was self-inflicted, the court concluded, the harm could not be considered irreparable. Id. Therefore, the change in management that plaintiff sought to avoid did not constitute irreparable harm. Id.

  Set Top likens the Salt Lake Tribnue scenario to the situation at hand: Having pledged shares of APWC as collateral in return for millions of dollars in loans, PEWC cannot now avoid the consequences of its default. The harm PEWC seeks to avoid, Set Top says, is self-inflicted and, therefore, not irreparable.

  The Second Circuit has not issued an opinion that is on point with the Salt Lake Tribune opinion. I find the Tenth Circuit's logic persuasive, however, and a neat fit with the facts at hand. Because plaintiff and intervenor plaintiff have failed to demonstrate more than the imminent loss of a majority interest in APWC, and because the harm plaintiff and intervenor plaintiff seek to avoid is self-inflicted, this Court concludes that Set Top's foreclosure on any shares of APWC ...

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