In Re: Oi Brasil Holdings Cooperatief U.A.

Background

The order concerns three bankruptcy appeals. Oi S.A. and Antonio Reinaldo Rabelo Filho, acting as the foreign representative of the Brazilian judicial reorganization proceeding, moved to dismiss the appeals as moot. The Steering Committee of the ad hoc group of bondholders of Oi S.A. and certain subsidiaries joined that motion. Aurelius Capital Management, L.P. filed a cross-motion asking the court to vacate, meaning erase, the Bankruptcy Court’s appealed opinions and related order.

The appealed decisions were Bankruptcy Judge Lane’s December 4, 2017 and March 14, 2018 opinions and related order. The opinion states that Aurelius had participated extensively in the Dutch proceeding, did not object to recognizing Brazil as the center of the main bankruptcy proceeding for the relevant Chapter 15 debtors, and requested language limiting the United States bankruptcy stay to actions and property within the United States. Aurelius later participated in the Brazilian reorganization plan, voted in favor of it, received rights under a backstop agreement, and agreed not to oppose completion of the Brazilian plan. The Dutch composition plan became effective on June 19, 2018, concluding the Dutch proceeding.

Mootness ruling

A case is moot when a court can no longer provide meaningful relief. Aurelius conceded that the Second Circuit had held its petitions for direct appeal moot and that this prevented Aurelius from arguing that the appeals were not moot. Based on that concession and the Second Circuit’s decision, the court found that the appeals were moot and granted the appellees’ motions to dismiss them.

Request to vacate the Bankruptcy Court decisions

Aurelius also sought vacatur under the Munsingwear doctrine. The court explained that vacatur is a discretionary equitable remedy that can prevent an unreviewable decision from producing legal consequences and can clear the way for future litigation. A party does not have an automatic right to vacatur, and the court’s primary concern includes whether the parties caused the appeal to become moot. The court stated that a party loses its interest in vacatur when it knew or should have known that its conduct was substantially likely to make the appeal moot.

Judge Broderick declined to vacate Bankruptcy Judge Lane’s opinions and related order. He relied on Aurelius’s active involvement in the Dutch proceeding, including its failure to object to the Dutch composition plan after agreeing not to oppose completion of the Brazilian reorganization plan. The court also found that vacatur would not serve its stated purposes because Aurelius said it did not intend to resume a competing recognition petition and did not object to an order precluding such litigation.

The court further noted that Aurelius sought vacatur primarily to erase factual findings about its conduct because it claimed reputational harm, rather than to remove the Bankruptcy Court’s legal determinations from future litigation. Considering the circumstances, including Aurelius’s representation by skilled counsel in the Bankruptcy Court and the unlikely effect of those legal determinations on future litigation, the court found that vacatur was not warranted.

Disposition

The court granted the appellees’ motions to dismiss the appeals and denied Aurelius’s cross-request for vacatur. The Clerk was directed to terminate the specified motions and close the appeals.