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IN RE CABLEVISION

October 6, 2004.

IN RE CABLEVISION S.A. DEBTOR IN A FOREIGN PROCEEDING.


The opinion of the court was delivered by: SHIRLEY KRAM, Senior District Judge

OPINION AND ORDER

SHL Company LLC ("SHL") moves to withdraw this matter from the Bankruptcy Court pursuant to 28 U.S.C. § 157(d). For the reasons set forth below, the motion is granted.

FACTUAL BACKGROUND

  Defendant Cablevision is a cable television company that provides cable and Internet services in Argentina. It is the largest multi-system operator in Argentina, based on the number of subscribers served. See Cablevision's Memorandum of Law In Opposition To Motion of SHL Company LLC For Withdrawal of The Reference, dated September 23, 2004 ("CV Opp."), at 3. However, Cablevision is apparently owned by two U.S. entities: a Texas buyout firm and a Colorado cable firm. See Transcript of Oral Argument before Honorable Shirley W. Kram, September 29, 2004 ("Tr.") at 5. Cablevision has also issued $800 million of debt in the United States. Id.

  Plaintiff SHL is a U.S. investment group whose members include pension funds and charitable institutions representing approximately six million U.S. pensioners and retirees. SHL claims that it is among the largest of Cablevision's noteholders, holding approximately 35% of the Cablevision securities at issue. See Respondent SHL's Memorandum of Law in Support of Its Motion to Withdraw The Reference of This Matter From The Bankruptcy Court Pursuant to 28 U.S.C. § 157(d), dated September 13, 2004 ("SHL Memo"), at 5.

  The dispute between these parties arises from notes issued by Defendant Cablevision in four series (Series 5, 9, 10 and 11) (the "Notes"). Plaintiff's Statement of Undisputed Facts Pursuant to Local Rule Civil Rule 56.1, dated August 27, 2004 ("56.1 St."), at 1. Plaintiff SHL purchased interests in each of the four series of Notes. Id. The Series 5 and Series 10 notes were registered with the SEC in 1999 and 2000, respectively. Id. at 2.

  Cablevision ceased making interest and principal payments on its U.S. dollar-denominated debt, including the Notes, beginning in February 2002. CV Opp. at 4. According to its own Memorandum for the Tender of Existing Notes, the outstanding principal amount on the Notes is $725 million. See Declaration of Jennifer R. Scullion, dated September 13, 2004 ("Scullion"), Exhibit 17, at 87.

  The Notes are governed by an Indenture, dated August 11, 1998. Importantly, the Indenture contains the following statement: Notwithstanding any other provision in this Indenture or the Notes, any Noteholder shall have the absolute and unconditional right to receive payment, as provided herein . . . and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Noteholder.

 Declaration of William J. Connors, dated August 30, 2004, Exhibit B at ¶ 28.

  The Notes are governed by substantive U.S. and New York law, including the mandatory provisions of the Trust Indenture Act, 15 U.S.C. § 77aaa, (the "TIA"). Scullion Exhibit 16. Among the governing TIA provisions is Section 316, which provides that "the right of any holder of any indenture security to receive payment of the principal and interest on such indenture security . . . shall not be impaired or affected without the consent of such holder." 15 U.S.C. § 77ppp(b).

  In September 2003, Cablevision announced a proposal to cancel all of the Notes and exchange them for roughly 50% of their value under a recently enacted extrajudicial procedure of Argentine law known as an Acuerdo Preventivo Extrajudicial ("APE"). SHL Memo at 6. The primary objective of the APE is to enable Cablevision to restructure substantially all of its outstanding debt. CV Opp. at 5. According to Cablevision, an APE proceeding is similar to a prepackaged (or pre-arranged) case under the Bankruptcy Code. CV Opp. at 1. On September 2, 2003, Cablevision announced a tender offer for the Notes in a written solicitation distributed to U.S. Noteholders. 56.1 St. at 8. On May 14, 2004, Cablevision filed a petition with an Argentine court stating that Cablevision would not count SHL's vote for purposes of calculating the Principal Majority and would exclude SHL's notes from the calculation. 56.1 St. at 4.

  PROCEDURAL HISTORY

  On May 25, 2004, SHL filed an action ("SHL Action") in federal district court for the District of New Jersey claiming that Cablevision's debt restructuring violated the tender offer rules under the Williams Act, 15 U.S.C. § 78n, and the TIA, 15 U.S.C. § 77aaa. SHL Memo at 1-2.

  On August 3, 2004, the SHL Action, by stipulation of the parties, was transferred to the Southern District of New York. The case was ...


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