United States District Court, S.D. New York
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, Appellant,
WILLIAM A. BRANDT, JR., TRUSTEE FOR CFG PERU INVESTMENTS PTE. LTD. (SINGAPORE), Appellee.
ORDER AND OPINION
VALERIE CAPRONI, UNITED STATES DISTRICT JUDGE
the Court is a motion seeking leave to appeal a discovery
ruling in a bankruptcy proceeding. Because the matter does
not involve a final order appealable as of right and because
the issue does not warrant an interlocutory appeal, the
motion for leave to appeal is denied.
Shanghai Banking Corporation Limited (“HSBC-HK”
or “Appellant”) seeks to appeal a discovery
ruling by the bankruptcy court. See Memorandum
Decision and Order Granting Trustee's Motion for Order
Authorizing Issuance of Subpoenas to Hongkong Shanghai
Banking Corporation Limited, July 19, 2017 (“Rule 2004
Order”) [Dkt. 1, App'x A]. The underlying bankruptcy
proceeding involves jointly-administered chapter 11 cases for
seventeen related debtor companies (“Debtors”);
the Debtors' value derives from three Peruvian operating
companies that are involved in the fishing industry.
Id. at 3, 5-6. One of the Debtors, CFG Peru
Investments Pte. Limited (Singapore) (“CFG
Peru”), is the 100% direct and indirect owner of the
Peruvian operating companies. Id. at 3.
is one of a group of lenders that have a credit arrangement
with a subset of the Debtors and the three Peruvian operating
companies, with some of those entities as borrowers, some as
guarantors, and some as obligors. Rule 2004 Order at 5-6. CFG
Peru is not a borrower, guarantor, or obligor under the
credit arrangement. Id. at 6. Nonetheless, CFG Peru
has, through its court-appointed Trustee William Brandt, Jr.
(“Trustee” or “Appellee”), filed
proofs of claim against four of the Debtors who are
involved in the credit arrangement (the “Borrowing
Debtors”) on the basis of senior notes issued by one of
the underlying Peruvian operating companies; the four
Borrowing Debtors are guarantors, along with CFG Peru, of the
senior notes, generating potential reciprocal rights of
contribution, indemnification, and reimbursement.
Id. at 3, 8.
November 2015, after the companies involved in the credit
agreement began to experience financial difficulties, HSBC-HK
broke with the other lenders and petitioned, ex
parte, for wind-up proceedings in Hong Kong and the
Cayman Islands for two of the Debtors; those petitions were
ultimately withdrawn per an agreement amongst the two Debtors
and Appellant.Rule 2004 Order at 6-7. Although that
agreement called for sale of the operating companies, the
Debtors instead filed for protection pursuant to chapter 11.
Id. at 7. Appellant has since filed a Notice of
Appearance in the jointly-administered cases, as well as
proofs of claim against the four Borrowing Debtors that are
involved in the credit agreement-the same four against which
Appellee has filed proofs of claim. Id. at 8-9.
of his involvement in the chapter 11 cases, the Trustee
sought discovery from HSBC-HK under Bankruptcy Rule 2004,
contending that HSBC-HK's aggressive conduct in seeking
repayment of its loans may have “interfered with the
[Borrowing Debtors'] relationships with [their] lenders,
suppliers, and trade counterparties, constrained [their]
liquidity, and negatively impacted [their] ability to resume
normal operations.” Id. at 9-10, 11. The
discovery sought, according to the Trustee, could support
defenses to HSBC-HK's claims or identify claims against
other parties. Id. at 10. HSBC-HK opposed the
discovery for a variety of reasons, including that the
Bankruptcy Court lacks personal jurisdiction; the Bankruptcy
Court rejected HSBC-HK's arguments and authorized the
Trustee to proceed with Rule 2004 discovery. See id.
now seeks leave to appeal the Rule 2004 Order, arguing, as
discussed below, that the Order is appealable as of right or,
in the alternative, that an interlocutory appeal of the Order
is warranted. See Appeal Mem. ¶¶ 21-38.
courts have jurisdiction to hear appeals of federal
bankruptcy court decisions pursuant to 28 U.S.C. §
158(a), which provides, in relevant part, that “[t]he
district courts of the United States shall have jurisdiction
to hear appeals . . . from final judgments, orders, and
decrees; . . . [and, ] with leave of the court, from other
interlocutory orders and decrees . . . .” In re
Lehman Bros. Holdings Inc., 566 B.R. 353, 358 (S.D.N.Y.
2017) (quoting 28 U.S.C. § 158(a)) (internal quotation
marks omitted). A district court reviews a bankruptcy
court's “conclusions of law de novo, and
its findings of fact for clear error.” Id.
(citation omitted). Accordingly, this Court must determine
whether the appeal of the Rule 2004 Order is properly before
The Rule 2004 Order is Not a Final Order Affording Appeal as
bankruptcy court's order is ‘final' if it
completely resolve[s] all of the issues pertaining to a
discrete claim, including issues as to the proper
relief.” In re Adelphia Commc'ns Corp.,
333 B.R. 649, 656 (S.D.N.Y. 2005) (internal quotation marks
and citation omitted). Because bankruptcy proceedings can
persist for years, the Second Circuit has determined that the
intent of the governing statute is to allow for immediate
appeal from bankruptcy court orders that “finally
dispose of discrete disputes within the larger case.”
In re Fugazy Exp., Inc., 982 F.2d 769, 775 (2d Cir.
1992) (internal quotation marks and citations omitted).
“[A] ‘dispute, ' for appealability purposes
in the bankruptcy context, means at least an entire claim on
which relief may be granted.” Id. at 775-76.
have routinely found that bankruptcy court orders granting or
denying discovery, including orders related to Rule 2004
discovery, are not final for the purposes of an appeal to a
district court. See In re Towers Fin. Corp., 164
B.R. 719, 720 (S.D.N.Y. 1994) (“Bankruptcy court orders
granting or denying discovery do not finally dispose of an
entire claim on which relief may be granted, and therefore
are generally treated as interlocutory and not appealable as
of right.”) (collecting cases) (citations omitted).
See also In re Royce Homes LP, 466 B.R. 81, 89 (S.D.
Tex. 2012) (“In the bankruptcy context, discovery
orders also are generally considered interlocutory and not
immediately appealable.”) (collecting cases) (citations
omitted); In re Gray, 447 B.R. 524, 531 (E.D. Mich.
2011) (finding that a majority of courts have treated orders
regarding Rule 2004 discovery as interlocutory and not
final). This Court sees no reason to depart from this
nonetheless argues that the Rule 2004 Order is final
“because it resolves the issue of the Trustee's
entitlement to Rule 2004 discovery from HCBC-HK, as well as
whether the Bankruptcy Court has jurisdiction required to
authorize the discovery sought from HSBC-HK.” Appeal
Mem. ¶ 23. See also Appellant's Reply Brief
in Further Support of its Motion in the Alternative for Leave
to Appeal the Bankruptcy Court's July 19, 2017 Order
Authorizing Rule 2004 Discovery (“Reply Mem.”)
[Dkt. 6] ¶ 5. Courts in this Circuit ...