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