Bluestone Resources Inc. v. Greensill Capital Limited

Background

The opinion consists of a letter from the plaintiffs’ counsel and Judge Furman’s ruling. The plaintiffs opposed a letter motion by Alexander Greensill and Roland Hartley-Urquhart, referred to as the “Individual Defendants.” Those defendants sought an indefinite stay of the case as to themselves if Greensill Capital (UK) Limited received protection from the United States Bankruptcy Court in connection with recognition of its English administration proceeding under Chapter 15 of the Bankruptcy Code.

The plaintiffs did not oppose a limited temporary stay if Greensill Capital (UK) Limited received bankruptcy protection. They opposed a stay that would continue for the same length of time as any stay covering Greensill Capital (UK) Limited. The plaintiffs proposed a 90-day stay to address procedural and scheduling issues while preserving the parties’ rights.

Parties’ positions

The plaintiffs argued that the bankruptcy automatic stay generally does not apply to non-debtor co-defendants and that the circumstances did not justify extending it to the Individual Defendants. They also argued that Federal Rule of Civil Procedure 19, which addresses required parties, did not expand the bankruptcy stay. According to the plaintiffs, some claims were asserted directly against the Individual Defendants, including common-law fraud against Roland Hartley-Urquhart, fraudulent inducement against both Individual Defendants, and civil conspiracy against all defendants.

The plaintiffs further argued that an indefinite stay would prejudice them by preventing litigation of claims for which Greensill Capital (UK) Limited was not a required party. They maintained that a temporary stay would adequately address any timing problems created by the bankruptcy proceeding. The opinion does not include the Individual Defendants’ full arguments beyond describing their request for an indefinite stay and their position that the plaintiffs’ claims against them were entirely derivative of claims against Greensill Capital (UK) Limited.

Ruling

Judge Furman stated that he was inclined to agree that an indefinite stay as to the non-debtor defendants was inappropriate. He did not decide that issue, however, because the plaintiffs consented to a temporary stay. The court granted a temporary stay and directed the parties to confer and submit an agreed order by September 8, 2021, “along the lines proposed by Plaintiffs” in their letter.

The court also directed the Clerk of Court to terminate Docket No. 37. The ruling addressed the temporary stay and did not resolve the merits of the underlying claims or definitively decide whether an indefinite stay would be available for the Individual Defendants.