Atari, Inc., et al.

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re:
ATARI, INC., et al.,
Debtors
:
:
:
:
:
:
Chapter 11
Case No. 13-10176 (JLG)
(Jointly Administered)
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MEMORANDUM DECISION GRANTING, IN PART, THE MOTION OF
ALDEN GLOBAL VALUE RECOVERY MASTER FUND, L.P., TO REOPEN
THESE CHAPTER 11 CASES, REQUIRE COMPLIANCE WITH THE CHAPTER
11 PLAN AND CONFIRMATION ORDER, AND ENJOIN FURTHER VIOLATIONS
BY THE DEBTORS AND THEIR AFFILIATES
A P P E A R A N C E S :
DLA PIPER LLP (US)
1251 Avenue of the Americas
New York, New York 10020
By: 	John J. Clarke, Jr., Esq.
Daniel G. Egan, Esq.
DLA PIPER LLP (US)
1201 North Market Street
Suite 2100
Wilmington, Delaware 19801
By: 	R. Craig Martin, Esq.
Attorneys for Alden Global Capital LLC, for Alden Global Value Recover Master Fund, L.P.
BROWN RUDNICK LLP
Seven Times Square
New York, New York 10036
By: 	Daniel J. Saval, Esq.
Shoshana B. Kaiser, Esq.
Shivani Poddar, Esq.
Attorneys for Atari S.A., Atari Europe SAS, and the Reorganized Debtors
JAMES L. GARRITY, JR.
United States Bankruptcy Judge
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Introduction
Before the Court is the motion (the “Motion”)1 of Alden Global Value Recovery Master
Fund, L.P. (“Alden”) to reopen these fully administered chapter 11 cases, enforce the release and
exculpation provisions contained in the Debtors’ confirmed chapter 11 plan (the “Plan”) and the
order confirming it (the “Confirmation Order”), and enjoin further violations of the Plan and
Confirmation Order by the Reorganized Debtors and certain of their affiliates; to wit, Atari S.A.
(“Atari S.A.”) and Atari Europe SAS (“Atari Europe,” together with Atari S.A., the “Atari
Entities,” and collectively with Atari S.A. and the Reorganized Debtors, “Atari”). The Motion
was precipitated by proceedings commenced by Atari against Alden in the Tribunal de
Commerce de Paris (the “Commercial Court of Paris”) to recover alleged overpayments by the
Atari Entities under a €20 million credit facility agreement (the “Credit Agreement”) to which
Alden is a party. In those proceedings, Atari contends that the taux effectif global (the effective
global interest rate, or “TEG”) specified by the Credit Agreement was improperly stated and
that, as a result, French law effectively replaces the improperly stated rate with a lower statutory
rate and entitles the Atari Entities to recoup years’ worth of alleged overpayments to Alden and
its predecessors under the agreement.
In the Motion, Alden contends that any claims Atari may have had relating to the Credit
Agreement or the improperly stated TEG are barred by the release and exculpation provisions of
the Plan and Confirmation Order. In light of those provisions, and because the Plan and
Confirmation Order preserved this Court’s jurisdiction to interpret and enforce the releases,
Alden asks this Court to reopen these chapter 11 cases, require Atari to comply with the release
1 Motion of Alden Global Value Recovery Master Fund, L.P., to Reopen these Chapter 11 Cases, Require
Compliance with the Chapter 11 Plan and Confirmation Order, and Enjoin Further Violations by the Debtors
and their Affiliates [ECF No. 579].
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and exculpation provisions, direct Atari to dismiss its pending claims against Alden in the
Commercial Court of Paris, and enjoin Atari from taking further legal action that would violate
the Plan and Confirmation Order.
Atari opposes the Motion. In its opposition (the “Opposition”),2 Atari contends that the
proceedings before the Commercial Court of Paris do not violate the Plan and Confirmation
Order because the releases granted under those documents do not extend to Atari’s claims under
the Credit Agreement and applicable French law. Moreover, Atari contends that Alden has failed
to establish cause to reopen these chapter 11 cases because, inter alia, the Commercial Court of
Paris is an available alternative forum to adjudicate the parties’ disputes and Alden will face no
prejudice if it is forced to litigate before that court. In the alternative, Atari argues that this Court
should abstain from reopening these cases and adjudicating whether the releases apply to Atari’s
claims in favor of a resolution of that issue in the French proceedings.
Following a prehearing conference with the Court, the parties agreed that the question of
whether Atari’s claims are, in fact, barred by the release and exculpation provisions of the Plan
and Confirmation Order will be deferred until the Court has resolved the threshold question of
whether these chapter 11 cases should be reopened. For the following reasons, the Court finds
that Alden has established cause for reopening under § 350(b) of the Bankruptcy Code.
Accordingly, to the extent the Motion seeks entry of an order reopening these cases, the Motion
is GRANTED.
2 Opposition of Atari, S.A., Atari Europe SAS, and the Reorganized Debtors to Motion of Alden Global Value
Recovery Master Fund, L.P., to Reopen these Chapter 11 Cases, Require Compliance with the Chapter 11 Plan
and Confirmation Order, and Enjoin Further Violations by the Debtors and their Affiliates [ECF No. 590].
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Jurisdiction
This memorandum decision constitutes the Court’s findings of fact and conclusions of
law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, applicable here pursuant to
Rules 7052 and 9014(c) of the Federal Rules of Bankruptcy Procedure. The United States
District Court for the Southern District of New York has subject matter jurisdiction over this
contested matter pursuant to § 1334 of title 28 of the United States Code. This Court exercises
authority over the matter pursuant to § 157 of title 28 and the District Court’s standing order of
reference for bankruptcy cases and related proceedings. See Am. Standing Order of Reference,
No. M10-468, 12 Misc. 00032 (S.D.N.Y. Jan. 31, 2012) (Preska, C.J.). This matter is a core
proceeding. See 28 U.S.C. § 157(b)(2)(A); see also infra note 10.
Background
The facts are largely undisputed. On January 21, 2013, the Debtors each filed voluntary
petitions for relief in this Court, thereby initiating these chapter 11 cases. As of the petition date,
nondebtors Atari Europe (as borrower) and Atari S.A. (as guarantor) were parties to a €20
million credit facility agreement with Bluebay Value Recovery (Master) Fund Limited, as
assignee of Banc of America Securities Limited. None of the Debtors – which are subsidiaries of
Atari S.A. and affiliates of Atari Europe – are parties to the Credit Agreement. However, the
Atari Entities’ obligations under the agreement were secured by liens on, inter alia, (1) certain of
the Debtors’ intellectual property assets, and (2) certain intercompany claims held by the Atari
Entities against the Debtors. In February 2013, the Credit Agreement was assigned to Alden,
which was also the Debtors’ postpetition lender.
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In September 2013, the Debtors and Atari S.A. proposed the Plan pursuant to a term sheet
(the “Term Sheet”) by and among the Debtors, Atari S.A., Alden, and the creditors’ committee
appointed in these cases.3 As set forth in the Term Sheet, the Plan constituted
a global settlement and compromise among the Parties, which includes the
agreement of the Parties to support the Plan, and provide customary waivers and
releases with respect to potential Claims and Causes of Action against (i) [the
Atari Entities] and their respective affiliates, directors, officers, managers,
employees, agents, and professionals, (ii) the Debtors and their directors, officers,
employees, agents, and professionals, [and] (iii) Alden and its affiliates, directors
officers, employees, agents and professionals . . . .
(Term Sheet 5.) 4 Accordingly, under the Plan the Debtors agreed to release Atari S.A., Atari
Europe, and Alden – and those entities each agreed to release one another – from any and all
claims, “whether known or unknown, foreseen or unforeseen, existing or hereafter arising,”
subject to the caveat that such releases were “to the maximum extent permitted by applicable
law.” (Plan §§ 12.7, 12.9.) The Plan also provided for this Court to retain exclusive jurisdiction,
to the fullest extent permitted by law, to “issue . . . orders in aid of execution, enforcement,
implementation, and consummation of the Plan,” “hear and determine disputes or issues arising
in connection with the interpretation, implementation, or enforcement of the Plan [and] the
Confirmation Order,” and “issue injunctions and effect any other actions that may be necessary
or appropriate to restrain interference by any person or entity with the consummation,
implementation or enforcement of the Plan [and] Confirmation Order.” (Id. § 13.1(f), (h), (k).)
The Confirmation Order approved the releases and the retention of exclusive jurisdiction as set
forth in the Plan. (See Confirmation Order ¶¶ 29-30, 78, 128.)
3 A copy of the Term Sheet was attached as Annex I to the Sponsor Commitment Letter, which was attached as
Schedule 2 to the Plan.
4 “Parties” was defined in the Term Sheet to include the Debtors, Atari S.A., Alden, and the committee.
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Although the Debtors were not parties to the Credit Agreement, the Plan provided for
various modifications of Alden’s rights in connection with that agreement. Under the Plan,
Alden waived its right to receive distributions from the Debtors or enforce its security interest in
certain of the Debtors’ intellectual property assets that secured the Atari Entities’ obligations
under the Credit Agreement. (See Plan § 4.2(c)(ii).) The Plan also provided for the Atari Entities
to waive their intercompany claims against the Debtors, which claims had also served as
collateral under the agreement. (See id. § 4.2(e)(ii).)
After the Plan was confirmed, the parties agreed to further modifications of their rights in
furtherance of the global restructuring of the financial relationship between Atari and Alden.
Specifically, on December 24, 2013, the effective date under the Plan, Alden and the Atari
Entities entered into Amendment No. 16 to the Credit Agreement (“Amendment No. 16”).5
Pursuant to that amendment, the parties agreed to extend the final maturity date under the Credit
Agreement to September 30, 2015. (See Amend. No. 16 ¶ 5.1.) In consideration of that extension
and certain other concessions, each of the Reorganized Debtors pledged substantially all of its
assets as additional collateral to secure the Atari Entities’ obligations under the agreement. (See
id. ¶ 8(d).) Accordingly, although the Debtors were not themselves parties to the Credit
Agreement, the Debtors and these chapter 11 cases were integral to the larger restructuring of the
financial relationship between Alden and the Atari Entities.
5 Amendment No. 16 contains a choice of law and exclusive forum selection provision in favor of French law and
the Commercial Court of Paris, respectively:
This Amendment No. 16 shall form one and single agreement with the [Credit Agreement] and
shall be governed by and construed in accordance with the laws of France. The Tribunal de
Commerce de Paris [i.e., the Commercial Court of Paris] shall have exclusive jurisdiction over
any dispute arising out of or in connection with the [Credit Agreement] as modified by this
Amendment No. 16 or this Amendment No. 16 . . . .
(Amend. No. 16 ¶ 12.)
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In early 2015, after these chapter 11 cases had been closed, a dispute arose between the
parties as to whether – and when – payments were due to Alden under the Credit Agreement.
According to Alden, Amendment No. 16 required the Atari Entities to begin making quarterly
interest payments under the agreement, the first of which was due no later than March 31, 2015.
(Motion ¶ 28.) According to Atari, however, a separate letter agreement (the “Letter
Agreement”) that the parties entered into in December 2014 had “suspend[ed] all interest and
principal payments under the Credit Agreement until September 30, 2015.” (Opp’n ¶ 29.) Thus,
according to Atari, no payment was due to Alden on March 31, 2015.
After the Atari Entities failed to make an interest payment under the Credit Agreement by
March 31, 2015 – which Atari contends, by application of the Letter Agreement, was not
due – Alden declared an event of default under the agreement and accelerated the remaining
balance due. (Motion ¶ 32.) On July 7, 2015, Alden notified Atari of its intent to proceed with a
public auction sale of the Reorganized Debtors’ assets based on the default. (Opp’n ¶ 51.) In
response, on July 10, 2015, Atari commenced an action (the “Grace Period Action”) in the
Commercial Court of Paris seeking a statutory grace period under French law with respect to the
Atari Entities’ obligations under the Credit Agreement. (Id. ¶ 42.) On July 23, 2015, that court
granted Atari’s request for the statutory grace period, thereby deferring payment of any amounts
due under the Credit Agreement pursuant to Article 1244-1 of the French Civil Code and staying
any enforcement proceedings against Atari or any of the assets of the Reorganized Debtors
pursuant to Article 1244-2. (Id. ¶¶ 45-46.) Alden has appealed the grant of the grace period,
which is currently scheduled to run through July 2017. (Id. ¶ 47.)
In addition to the Grace Period Action, Atari initiated two other actions before the
Commercial Court of Paris: (1) an action for damages on account of the Atari Entities’ alleged
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overpayments of interest under the Credit Agreement due to the improperly stated TEG (the
“TEG Action”), in which Atari seeks damages of approximately €14.7 million; and (2) an action
against Alden for allegedly breaching the Letter Agreement by pursuing a nonjudicial
foreclosure sale of the Reorganized Debtors’ assets when, according to Atari, no payment was
due under the Credit Agreement (the “Letter Agreement Action,” together with the Grace
Period Action and the TEG Action, the “French Actions”). (Id. ¶¶ 49-50.) Although the
Reorganized Debtors are not parties to the Credit Agreement, they are named as co-plaintiffs in
the French Actions along with the Atari Entities.6
On October 28, 2015, Alden filed the Motion in which it seeks to reopen these chapter 11
cases, enforce the Plan and Confirmation Order in order to bar the continued prosecution of
certain claims asserted by Atari in the French Actions,7 and enjoin further violations of the Plan
and Confirmation Order by Atari and other associated persons. On January 21, 2016, Atari filed
the Opposition. On February 25, 2016, Alden filed its reply (the “Reply”).8 As set forth in a
letter to the Court dated February 25, 2016 [ECF No. 599], the parties have agreed to defer
consideration of whether the release and exculpation provisions of the Plan and Confirmation
Order bar claims asserted against Alden in the French Actions until after this Court resolves the
“threshold question” of whether to reopen these chapter 11 cases.
6 At oral argument, counsel for Atari argued that the Reorganized Debtors were named as plaintiffs in the French
Actions only “in an abundance of caution.” (Mar. 30, 2016 Hr’g Tr. 48:11.)
7 At oral argument, counsel for Alden stated that the claims subject to the releases are those that “relate to the TEG,
which Atari is seeking recovery of damages from Alden for events that are indisputably prepetition events that
were released as part of the fundamental compromise that allowed the Reorganized Debtors to emerge from
chapter 11 in December 2013.” (Mar. 30, 2016 Hr’g Tr. 8:9-13.)
8 Reply in Further Support of Motion of Alden Global Capital LLC, for Alden Global Value Recovery Master Fund,
L.P., to Reopen these Chapter 11 Cases, Require Compliance with the Chapter 11 Plan and Confirmation Order,
and Enjoin Further Violations [ECF No. 600].
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Discussion
I. 	“Other Cause” Exists to Reopen these Cases
A bankruptcy case that has been closed may be reopened “to administer assets, to accord
relief to the debtor, or for other cause.” 11 U.S.C. § 350(b). The parties concur that only the
“other cause” element of § 350(b) is relevant to the Motion. The Bankruptcy Code does not
specify what constitutes “other cause” to reopen a closed case; thus, the determination of
whether a case should be reopened for other cause is committed to the “broad discretion” of the
bankruptcy court. Batstone v. Emmerling (In re Emmerling), 223 B.R. 860, 864 (B.A.P. 2d Cir.
1997). In exercising that discretion, a court “may consider numerous factors including equitable
concerns, and ought to emphasize substance over technical considerations.” Id. Courts in this
district have identified six factors that may be relevant in determining whether a case should be
reopened for cause:
(1) 	the length of time that the case was closed;
(2) 	whether a nonbankruptcy forum has jurisdiction to determine the
issue that is the basis for reopening the case;
(3) 	whether prior litigation in the bankruptcy court determined that
another court would be the appropriate forum;
(4) 	whether any parties would suffer prejudice should the court grant
or deny the motion to reopen;
(5) 	the extent of the benefit to any party by reopening;9 and
9 Although some courts specify that the benefit to consider is the benefit to the debtor if the case is reopened, see,
e.g., In re Easley-Brooks, 487 B.R. 400, 407 (Bankr. S.D.N.Y. 2013) (stating that courts should consider “the
extent of the benefit to the debtor”), other courts consider the benefit to any party, including both the debtor and
creditors, see, e.g., Katz v. I.A. Alliance Corp. (In re I. Appel Corp.), 300 B.R. 564, 571-72 (S.D.N.Y. 2003)
(considering the benefit to both the debtor and creditors); In re Koch, 229 B.R. 78, 86-87 (Bankr. E.D.N.Y. 1999)
(same). Consistent with the principle that the reopening of a case “invoke[s] the exercise of a bankruptcy court’s
equitable powers,” State Bank of India v. Chalasani (In re Chalasani), 92 F.3d 1300, 1307 (2d Cir. 1996), this
Court agrees that it is appropriate to consider the extent of the benefit to any party, not just the debtor, in
determining whether reopening is appropriate.
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(6) 	whether it is clear at the outset that no relief would be forthcoming
if the motion to reopen is granted.
See In re Easley-Brooks, 487 B.R. 400, 407 (Bankr. S.D.N.Y. 2013) (applying factors); In re
PlusFunds Grp., Inc., No. 06-10402 (JLG), 2015 WL 1842224, at *6-7 (Bankr. S.D.N.Y. Apr.
21, 2015) (same). The moving party bears the burden of establishing other cause to reopen.
Easley-Brooks, 487 B.R. at 406.
For the reasons set forth below, application of the factors weighs in favor of reopening
these cases.
A. 	Factor One: The Length of Time that the Case Was Closed
Although “the doctrine of laches may be a basis to deny a motion to reopen,” In re Stein,
394 B.R. 13, 16 (Bankr. E.D.N.Y. 2008), nothing in the Bankruptcy Code or Federal Rules of
Bankruptcy Procedure proscribes the time within which a motion to reopen a closed case must be
made. However, courts have recognized that, “[a]s the time between closing of a bankruptcy case
and its reopening increases, so must the cause for reopening increase in weight.” In re Lowery,
398 B.R. 512, 515 (Bankr. E.D.N.Y. 2008).
Here, the Atari Entities argue that they have been prejudiced by Alden’s delay in seeking
to reopen these cases because “Alden waited more than seven months – until multiple
proceedings were pending in France, in which both Alden and [the Atari Entities] have actively
participated, and during which time Alden attempt to foreclose on the assets securing the
loan – to file the Motion.” (Opp’n ¶ 75.). Atari calculates this seven-month period as the time
between March 2015 – when Atari notified Alden that it believed the Credit Agreement had
improperly stated the TEG – and October 2015 when the Motion was filed. (Id.) But this is
incorrect. Alden did not have any reason to seek to reopen these cases until Atari had actually
commenced the French Actions in July 2015. See In re PlusFunds Grp., Inc., 492 B.R. 202, 210
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n.7 (Bankr. S.D.N.Y. 2013) (time the case was closed was “not a meaningful factor” during
periods where party did not have any reason to seek reopening). Thus, Alden’s delay was, at
most, a mere three months. This was not a meaningful delay. See, e.g., In re Arana, 456 B.R.
161, 175-76 (Bankr. E.D.N.Y. 2011) (case existed to reopen a bankruptcy case that had been
closed for nearly five years); Stein, 394 B.R. at 16 (same with respect to case that had been
closed for more than eight years).
Moreover, even if Alden did delay in filing the Motion, Atari must show some prejudice
from the delay for the first Easley-Brooks factor to be relevant. See Emmerling, 223 B.R. at 865
(“In the absence of some meaningful prejudice, a court of equity would abuse its discretion by
barring the reopening of a case.”). “The mere lapse of time [between the closing of a case and its
reopening] does not constitute prejudice.” Stein, 394 B.R. at 16. Atari has failed to show how
Alden’s delay in filing the Motion caused any actual prejudice, particularly where the French
Actions remain in their early procedural stages. Thus, the length of time that these cases have
been closed is not a significant factor in the Court’s analysis.
B. 	Factor Two: Whether a Nonbankruptcy Forum Has Jurisdiction to Adjudicate
the Dispute that Is the Basis for Reopening
Bankruptcy courts “plainly ha[ve] jurisdiction to interpret and enforce [their] own prior
orders.” Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151 (2009). Even postconfirmation, such
interpretation and enforcement falls within the bankruptcy court’s core jurisdiction. See Moelis
& Co. v. Wilmington Trust FSB (In re Gen. Growth Props., Inc.), 460 B.R. 592, 598 (Bankr.
S.D.N.Y. 2011) (postconfirmation dispute constitutes a core proceeding where it “implicates the
enforcement or construction of a bankruptcy court order”); In re Portrait Corp. of Am., Inc., 406
B.R. 637, 641 (Bankr. S.D.N.Y. 2009) (finding interpretation and enforcement of sale order to be
a core proceeding and stating that “[i]t does not matter that the dispute is now between two
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nondebtors . . . or that the Debtor’s chapter 11 plan has been confirmed”); accord Luan Inv. S.E.
v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304 F.3d 223, 231 (2d Cir. 2002).10 Courts have
held that the bankruptcy court that issues an order is “undoubtedly the best qualified” to interpret
and enforce it. Texaco Inc. v. Sanders (In re Texaco Inc.), 182 B.R. 937, 947 (Bankr. S.D.N.Y.
1995). Atari does not dispute these principles or argue that this Court does not have
postconfirmation jurisdiction to interpret and enforce the Plan and Confirmation Order.11 Instead,
it argues that this Court should decline to reopen these cases because another forum – the
Commercial Court of Paris – also has jurisdiction to interpret and, if necessary, enforce the
releases contained in the Plan and Confirmation Order. (Opp’n ¶ 61.)
10 In Petrie Retail, the Second Circuit held that the interpretation of a prior order of the bankruptcy court was a core
proceeding due to the “combination” of three factors: (1) the dispute involved rights that were established by the
prior order; (2) the bankruptcy court had retained jurisdiction to interpret and enforce the prior order; and (3) the
issue for which the prior order was being interpreted was before the bankruptcy court in connection with another
pending motion. Petrie Retail, 304 F.3d at 229-31 (2d Cir. 2002). At oral argument in this case, counsel for Atari
attempted to distinguish Petrie Retail on the basis that the third factor – whether the issue that is the subject of the
dispute is already pending before the bankruptcy court in another form – is not present here. (See Mar. 30, 2016
Hr’g Tr. 36:2–37:2.) However, courts interpreting Petrie Retail have held that the third factor is not strictly
necessary and that a proceeding is core even if only the first two Petrie Retail factors are present. See Morgan
Olson, LLC v. Frederico (In re Grumman Olson Indus., Inc.), 445 B.R. 243, 248 (Bankr. S.D.N.Y. 2011) (“The
presence of [the first two Petrie Retail factors] renders the dispute core.”); see also NWL Holdings, Inc. v. Eden
Ctr., Inc. (In re Ames Dep’t Stores, Inc.), 317 B.R. 260, 271-72 (Bankr. S.D.N.Y. 2004) (finding dispute to be
core based on existence of first two Petrie Retail factors). Here, it is undisputed that the rights Alden is seeking to
enforce (i.e., the releases) were established by the Plan and Confirmation Order and that this Court expressly
retained jurisdiction to interpret and enforce that order. Thus, Alden’s request in this case represents a core
proceeding.
11 Atari does, however, argue that if this dispute is core, it is core “in the most technical and formalistic sense.”
(Mar. 30, 2016 Hr’g Tr. 40:25-41:1.) This is because, according to Atari, the releases at issue are mutual releases
that could have been agreed to outside of bankruptcy and were not specifically adjudicated in connection with
confirmation of the Plan. (See id. at 40:5-9 (“[W]hat we’re dealing with here is a mutual release. It was a release
by agreement. So when Alden says that what they’re seeking is to enforce a confirmation order, what they’re
talking about in substance is enforcing an agreement between Alden and Atari.”); 40:20-22 (“There was no
adjudication or merits determination by [the Court] as to those consensual releases within the plan confirmation
proceedings.”).) Atari is incorrect. In the Confirmation Order, the Court specifically found that the mutual
releases between Atari and Alden were “necessary and important” to the Plan, (Confirmation Order ¶ 30), and
were “an essential means of implementing the Plan,” “an integral element of the transactions incorporated into the
Plan, and “important to the overall objectives of the Plan,” (id. ¶ 35). Thus, this case is unlike In re Bay Point
Associates, 2008 WL 822122 (E.D.N.Y. Mar. 19, 2008), relied on by Atari, where the bankruptcy court abstained
from interpreting its own prior order where that order was a stipulation between the parties that the court had “so
ordered” and the proceeding was therefore core “only in form.”
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In support of their argument, Atari correctly contends that bankruptcy courts “routinely
decline to exercise their discretion to reopen bankruptcy cases where the parties are seeking or
could seek relief in a competent alternative forum.” In re HBLS, L.P., 468 B.R. 634, 640 (Bankr.
S.D.N.Y. 2012) (collecting cases); see also Mid-City Bank v. Skyline Woods Homeowners Ass’n
(In re Skyline Woods Country Club), 636 F.3d 467, 472 (8th Cir. 2011) (“[T]he availability of an
alternative forum . . . [is] a strong reason not to reopen a closed bankruptcy case.”); Apex Oil Co.
v. Sparks (In re Apex Oil Co.), 406 F.3d 538, 542 (8th Cir. 2005) (“The availability of relief in an
alternative forum is a permissible factor upon which to base a decision not to reopen a closed
bankruptcy case.”); Elias v. U.S. Trustee (In re Elias), 188 F.3d 1160, 1162 (9th Cir. 1999)
(affirming denial of motion to reopen where “the state court is fully capable of resolving
the . . . dispute in this case”).
Here, although this Court does not doubt the competence of the Paris Commercial Court
to interpret and apply the releases contained in the Plan and Confirmation Order, the Court finds
that the availability of that court as an alternative forum for the resolution of the parties’ dispute
does not provide a basis for refusing to reopen these cases.
As set forth above, the Plan was part of a global settlement of disputes among the
Debtors, the Atari Entities, and Alden. Although the Debtors were not parties to the Credit
Agreement, the Plan modified Alden’s rights in collateral securing its claims under that
agreement. (See Plan § 4.2(c)(ii), (e).) The Debtors and these chapter 11 cases were therefore
integral to the restructuring of the financial relationship between Alden and the Atari Entities,
including the parties’ rights under the Credit Agreement. Accordingly, in the Plan and
Confirmation Order, this Court retained exclusive jurisdiction, to the fullest extent permitted by
law, to “issue . . . orders in aid of execution, enforcement, implementation, and consummation of
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the Plan,” “hear and determine disputes or issues arising in connection with the interpretation,
implementation, or enforcement of the Plan [and] the Confirmation Order, and “issue injunctions
and effect any other actions that may be necessary or appropriate to restrain interference by any
person or entity with the consummation, implementation or enforcement of the Plan [and]
Confirmation Order.” (Id. § 13.1(f), (h), (k).); see also Confirmation Order ¶ 128 (approving the
retention of jurisdiction as set forth in the Plan).) Bankruptcy courts in this district regularly
enforce such exclusive jurisdiction provisions contained in their prior orders. See, e.g., In re
Motors Liquidation Co., 457 B.R. 276, 286-88 (Bankr. S.D.N.Y. 2011) (enforcing exclusive
jurisdiction provisions of sale order); In re Lyondell Chem. Co., 445 B.R. 277, 285-88 (Bankr.
S.D.N.Y. 2011) (same with respect to plan and confirmation order); In re Charter Commnc’ns,
No. 09-11435 (JMP), 2010 WL 502764, at *4 (Bankr. S.D.N.Y. Feb. 8, 2010) (same with respect
to confirmation order); see also Petrie Retail, 304 F.3d at 231-32 (affirming bankruptcy court’s
exercise of jurisdiction pursuant to exclusive jurisdiction retention provisions of sale order and
chapter 11 plan).
The cases on which the Atari Entities rely, (see Opp’n ¶ 64), are not to the contrary. In
each of Skyline Woods, Apex Oil, and Elias, the courts were asked to reopen bankruptcy cases
where the bankruptcy court’s exercise of jurisdiction would have been concurrent with that of
another court. See Skyline Woods, 636 F.3d at 471 (“Assuming the bankruptcy court had
jurisdiction over this postbankruptcy dispute . . . , it was nonexclusive jurisdiction . . . .”)
(emphasis in original); Apex Oil, 406 F.3d at 542 (denying reopening where state court had
concurrent jurisdiction over dispute pursuant to 28 U.S.C. § 1334(b)); Elias, 188 F.3d at 1162
(denying reopening where dispute was “ancillary to the bankruptcy court’s core function” and
one that state courts were “fully capable” of resolving). Similarly, in HBLS, the bankruptcy court
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denied a request to reopen the case based upon, inter alia, the fact that the courts of Anguilla,
where the parties had been litigating before one party sought to reopen the bankruptcy case, were
“available and competent” to address the disputes between the parties if the case were not
reopened. 468 B.R. at 640.
None of these cases involved a request to reopen in order to exercise the exclusive
jurisdiction of the bankruptcy court. In such situations, courts have held that reopening is
appropriate. See, e.g., In re Padilla, 84 B.R. 194, 197 (Bankr. D. Colo. 1987) (cause existed to
reopen to permit bankruptcy court to exercise its exclusive jurisdiction to adjudicate
dischargeability dispute under §§ 523(a)). Indeed, courts have specifically held that cause exists
under § 350(b) to reopen a closed case to permit a bankruptcy court to interpret and enforce its
own prior orders. See In re Lazy Days’ RV Ctr. Inc., 724 F.3d 418, 422-23 (3d Cir. 2013) (cause
existed to reopen bankruptcy case in order to interpret agreement incorporated into confirmed
chapter 11 plan);12 Zinchiak v. CIT Small Bus. Lending Corp. (In re Zinchiak), 406 F.3d 214,
223-224 (3d Cir. 2005) (cause existed to reopen bankruptcy case in order to interpret order
granting relief from the automatic stay); accord McGhan v. Rutz (In re McGhan), 288 F.3d 1172,
1182 (9th Cir. 2002) (holding that the bankruptcy court abused its discretion by refusing to
reopen a case in order to “protect its exclusive jurisdiction over the enforcement of its own
orders”).
12 At oral argument, counsel for Atari attempted to distinguish Lazy Days on the basis that, in that case, the court
was interpreting whether the provisions of a contract were valid in light of § 365(f)(3), a federal question which
has “no common law analogue.” (Mar. 30, 2016 Hr’g Tr. 49:10-17 (quoting Lazy Days, 724 F.3d at 423).) By
contrast, in this case, Atari argues that this Court “doesn’t need to determine any issues under the Bankruptcy
Code or . . . to make any bankruptcy specific determination.” (Id. at 49:19-21.) The Court disagrees. “By
definition, plan-related matters arise only in the context of a chapter 11 bankruptcy case,” Penthouse Media Grp.
v. Guccione (In re Gen. Media, Inc.), 335 B.R. 66, 74 (Bankr. S.D.N.Y. 2005), and the postconfirmation
interpretation and enforcement of a chapter 11 plan bears a “significant connection” to a bankruptcy case, Rahl v.
Bande, 316 B.R. 127, 133 (S.D.N.Y. 2004).
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In this case, pursuant to the jurisdiction retention provisions of the Plan and Confirmation
Order, this Court is the exclusive forum for interpreting and enforcing the releases that are the
subject of the dispute between Atari and Alden.13 These releases were essential to the
consummation of the Plan and an integral part of the parties’ bargain – a global resolution of
disputes among the Debtors, the Atari Entities, and Alden, which was a lender to both the
Debtors (pursuant to Alden’s agreement to provide postpetition financing) and the Atari Entities
(pursuant to the Credit Agreement). In light of this Court’s express retention of exclusive
jurisdiction over disputes involving the Plan and Confirmation Order, the Court will not now
decline to reopen these cases to exercise that jurisdiction in favor of the Commercial Court of
Paris.
Moreover, even if the Plan did not provide that this Court is the exclusive forum to
interpret and enforce the Plan and Confirmation Order, application of the second Easley-Brooks
factor favors Alden because this Court is clearly more closely connected to the releases granted
pursuant to the Plan and Confirmation Order than the Commercial Court of Paris, making it the
appropriate forum for such interpretation and enforcement. See Charter Commnc’ns, 2010 WL
502764, at *3 (“[A]lthough both this Court and the District Court are clearly competent to rule
on the Plan releases as they relate to the action pending in the District Court, the bankruptcy
court is more closely connected to the current dispute and is the proper forum to rule with respect
to the Enforcement Motion.”). This is especially true because the releases contained in the Plan
13 At oral argument, counsel for Atari argued that the Plan and Confirmation Order expressly had retained
jurisdiction over disputes regarding the “discharges” provided by the Plan, but not the “releases.” (Mar. 30, 2016
Hr’g Tr. 37:25-38:14 (citing Plan § 13.1(j)).) This is of no moment. Section 13.1(k) of the Plan provides that this
Court retains exclusive jurisdiction “to issue injunctions and effect any other actions that may be necessary or
appropriate to restrain interference by any person or entity with the consummation, implementation or
enforcement of the Plan, the Confirmation Order or any other order of the Bankruptcy Court.” (Plan § 13.1(k).
When pressed on this issue, counsel conceded that that he “[was] not saying that enforcing the releases isn’t
necessarily caught by [§] 13.1.” (Mar. 30, 2016 Hr’g Tr. 38:24-25.)
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and Confirmation Order prohibit the prosecution of certain claims, and the enforcement of such
prohibitions is “critical to the functioning of the bankruptcy process” and “closely tethered to
core bankruptcy jurisdiction.” Id. at *4.
The Court disagrees with Atari that its recent decisions denying a motion to reopen a
closed bankruptcy case in In re PlusFunds Group, 492 B.R. 202 (Bankr. S.D.N.Y. 2013)
(“PlusFunds I”), and a renewed motion to reopen the case in In re PlusFunds Group, Inc., No.
06-10402 (JLG), 2015 WL 1842224 (Bankr. S.D.N.Y. Apr. 21, 2015) (“PlusFunds II”), compel
a different result. (See Opp’n ¶¶ 60-61.) There, the trustee of a litigation trust sought to reopen a
closed bankruptcy case to extend the term of the trust nunc pro tunc to its stated expiration date,
which had passed without extension. PlusFunds I, 492 B.R. at 206. The trustee did so in
response to a motion filed by certain defendants in an action brought against them by the trustee
for summary judgment based in part on the argument that the trustee lost standing to prosecute
its claims when the trust term expired. Harbour Trust Co. v. Aaron (In re PlusFunds Grp., Inc.),
505 B.R. 419, 423 (S.D.N.Y. 2014), aff’g PlusFunds I, 492 B.R. 202). In that litigation and
before this Court, the trustee took the position that the extension was not strictly necessary
because, inter alia, the trust would continue in existence until the trustee had distributed its
assets to the trust beneficiaries. PlusFunds I, 492 B.R. at 206. In denying the trustee’s motion to
reopen the case, the Court held that an adequate alternative forum – the district court in which
the trust’s claims were pending – was available to adjudicate “questions raised as to the ongoing
viability of the Trust.” Id. at 210; see also PlusFunds II, 2015 WL 1842224, at *6 (noting that
“there is a nonbankruptcy forum capable of addressing issues related to the [trust]”). Those cases
are not dispositive here because there – unlike here – no party was seeking to interpret or enforce
a prior order over which the bankruptcy court had retained exclusive jurisdiction. Rather, the
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parties were litigating over the status of the trust, an issue over which other courts indisputably
had concurrent jurisdiction. See PlusFunds I, 492 B.R. at 210 (stating that, in that case, “the
District Court (or a state court) has the unquestioned authority to decide [the ongoing viability of
the trust]”).
Based upon the foregoing, the Court finds that the second Easley-Brooks factor weighs in
favor of reopening these cases.
C. 	Factor Three: Whether the Bankruptcy Court Previously Determined the
Appropriate Forum to Adjudicate the Dispute
Closely related to the second Easley-Brooks factor – whether a nonbankruptcy forum has
jurisdiction over the dispute that is the basis for reopening – is the third factor, which asks
whether the bankruptcy court previously determined the appropriate forum to adjudicate the
dispute. In the Plan and Confirmation Order, this Court previously determined that it would be
the exclusive forum to interpret and enforce the Plan and Confirmation Order. (See Plan
§ 13.1(f), (h), (k); Confirmation Order ¶ 128.) Although neither of the Atari Entities were debtors
in these chapter 11 cases, Atari S.A. was a co-proponent of the Plan, and both of the Atari
Entities were releasors and released parties under the Plan. At the time of confirmation, neither
the Debtors nor either of the Atari Entities objected to the retention of exclusive jurisdiction by
the Bankruptcy Court. See Luan Inv. S.E. v. Franklin 145 Corp. (In re Petrie Retail, Inc.), 304
F.3d 223, 232 (2d Cir. 2002) (holding that landlord submitted to bankruptcy court’s exclusive
jurisdiction over sale order by failing to object to jurisdiction retention provisions included in
that order and incorporated into the plan). Accordingly, the third Easley-Brooks factor weighs in
favor of reopening these chapter 11 cases.
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D. 	Factor Four: Whether Any Party Would Suffer Prejudice if the Court Grants or
Denies the Motion to Reopen
The Court is also required to consider whether any party would be prejudiced by the
Court granting or denying the Motion. According to Alden, if the Motion is denied, it will be
prejudiced by having to defend Atari’s claims – which it contends are barred by the
release – before the Commercial Court of Paris. (See Motion ¶ 48 (“If these cases are not
reopened, Alden faces significant risk of . . . the incurrence of significant legal fees and expenses
in needless litigation . . . in France.”).) Atari argues that Alden will not be prejudiced because
Alden’s arguments regarding the application of the releases will be preserved; it will “simply be
required to litigate . . . before a French court.” (Opp’n ¶ 69.)
Generally, a party’s obligation to defend a claim on the merits in another forum is not the
type of “legal prejudice” that is relevant to whether a bankruptcy case should be reopened. See,
e.g., PlusFunds II, 2015 WL 1842224, at *4 (“[C]ourts do not view the obligation to defend a
claim on the merits as legal prejudice that weighs against the reopening of the case even when
the merits would not be reached but for the reopening of the case.”); In re Arana, 456 B.R. 161,
174 (Bankr. E.D.N.Y. 2011) (obligation to defend a claim on the merits is “not the kind of legal
prejudice” that should be a bar to reopening a case). However, that general rule is not applicable
where, as here, the issue is not merely whether the litigation should go forward in another forum,
but rather whether the release provisions of the Plan and Confirmation Order bar prosecution of
the claims in any forum. The Court finds that Alden would be prejudiced by having to litigate
issues relating to the scope of the Plan’s release provisions in France since, as part of the global
restructuring between Atari and Alden effectuated by the Plan, the parties agreed to resolve those
issues in this Court. The parties could have agreed not to address these claims under the Plan at
all or to resolve those claims in another forum. They did not do so. The Court finds that denying
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Alden the ability to litigate in this Court – the exclusive forum agreed to by the parties – would
be unduly prejudicial. Cf. In re Otto, 311 B.R. 43, 48 (Bankr. E.D. Pa. 2004) (declining to reopen
a closed case based on the availability of an alternative forum but noting that, “[i]f [a party
seeking reopening] had no other forum to [pursue its claims], the prejudice [that party] would
suffer were relief under section 350(b) denied would outweigh countervailing circumstances”).
In addition to whether Alden will be prejudiced if the Motion is denied, relevant to the
Court’s analysis is whether any party will be prejudiced if the Motion is granted. See Harbour
Trust Co. v. Aaron (In re PlusFunds Grp., Inc.), 589 Fed. App’x 41, 42-43 (2d Cir. 2015)
(reversing PlusFunds I based on the Court’s failure to “fully consider . . . whether any prejudice
would result from granting the Trustee’s request [to reopen the case]”) (emphasis in original);
see also PlusFunds II, No. 06-10402 (JLG), 2015 WL 1842224, at *6-7 (considering the lack of
prejudice to any party that would result from reopening in determining whether a case should be
reopened under § 350(b)).
Here, the Court finds that no party will be prejudiced by granting the Motion and
reopening these cases. As set forth above, Atari S.A. was a co-proponent of the Plan, and both of
the Atari Entities were releasors and released parties under § 12.9 the Plan. None of the Debtors,
Atari S.A., or Atari Europe objected to the jurisdiction retention provisions of the Plan and
Confirmation Order. Thus, they “submitted [themselves] to the jurisdiction of the bankruptcy
court” with respect to the interpretation and enforcement of the Plan and Confirmation Order,
Petrie Retail, 304 F.3d at 232, and cannot now claim to be prejudiced by this Court’s exercise of
its exclusive jurisdiction as set forth those documents.
Accordingly, the Court finds that the fourth Easley-Brooks factor weighs in favor of
reopening these cases.
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E. 	Factor Five: The Extent of the Benefit to Any Party by Reopening
The next factor for the Court to consider is the extent of the benefit to any party, if any,
by reopening these cases. According to Atari, there can be no benefit to the Reorganized Debtors
because all distributions under the Plan have been made and the estates have been fully
administered. (See Opp’n ¶ 74.) In addition, Atari argues that any determination regarding the
application of the releases granted by the Plan to claims arising under the Credit Agreement will
have no effect on the Debtors because they are not parties to that agreement. (See id.) These
arguments ignore the fact that, although the Debtors were not actual signatories to the Credit
Agreement, these chapter 11 cases were integral to the larger restructuring of the financial
relationship between Atari and Alden.
As set forth above, the Plan constituted a global settlement and compromise among
various parties including the Debtors, Atari S.A., Atari Europe, and Alden. Pursuant to the Plan,
Alden waived its right to enforce its security interest in the Debtors’ intellectual property assets,
which had secured the Atari Entities’ obligations under the Credit Agreement. In addition, Alden
consented to the release of certain intercompany claims against the Debtors, which also served as
collateral under the agreement. In exchange, the Debtors released Atari S.A., Atari Europe, and
Alden – and each of those entities released one another – from any and all claims “whether
known or unknown, foreseen or unforeseen, existing or hereafter arising.” (Plan §§ 12.7, 12.9.)
Thereafter, upon the effective date of the Plan, each of the Reorganized Debtors pledged all of
their assets to Alden to further secure the Atari Entities’ obligations under the Credit Agreement.
Alden’s attempts to enforce those pledges and foreclose on the Reorganized Debtors’ assets
precipitated the filing of the Grace Period Action by Atari. As a result of this interconnected
relationship in these cases between the Debtors, the Atari Entities, Alden, and the Credit
Agreement, the facts of this case are distinguishable from those in Neil’s Mazel, a case on which
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Atari relies, where the debtor’s involvement in the disputes at issue was described by the court as
“peripheral” and “almost an afterthought.” In re Neil’s Mazel, Inc., 492 B.R. 620, 628-29 (Bankr.
E.D.N.Y. 2013).
As a result, the Court disagrees with Atari that the reopening of these cases will not
provide any benefit. (Opp’n ¶ 74.) Courts have held that the need to enforce rights that were
bargained for in a confirmed plan of reorganization constitutes a sufficient “benefit” to justify
reopening a bankruptcy case. See Katz v. I.A. Alliance Corp. (In re I. Appel Corp.), 300 B.R.
564, 571 (S.D.N.Y. 2003) (affirming order reopening a closed case to allow the debtor to pursue
unscheduled causes of action where creditors had “bargained to have the reorganized debtors
retain [those causes of action]” in the confirmed chapter 11 plan). The Court agrees with Alden
that the enforcement of the global settlement and releases embodied in the Plan and
Confirmation Order is sufficiently beneficial to warrant the reopening of these cases. Thus, the
fifth Easley-Brooks factor weighs in favor of reopening.
F. 	Factor Six: Whether It Is Clear at the Outset that No Relief Would Be
Forthcoming If the Case Is Reopened
Courts routinely decline to reopen cases where there is no merit to the ultimate relief
being requested. See, e.g., Cohen v. CDR Creances S.A.S. (In re Euro-Am. Lodging Corp.), 549
Fed. App’x 52, 54 (2d Cir. 2014) (affirming denial of a nondebtor’s motion to reopen a closed
chapter 11 case in order to enforce his discharge under the confirmed plan where “the plan
clearly didn’t grant a discharge to [the nondebtor]” and “no order [discharging the nondebtor]
could have been issued”); In re Wilson, 492 B.R. 691, 695 (Bankr. S.D.N.Y. 2013) (declining to
reopen case based on alleged violations of the discharge injunction where postpetition
foreclosure action clearly did not violate that injunction). In such a situation, where the ultimate
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relief being sought has no merit, reopening the case would be “meaningless.” State Bank of India
v. Chalasani (In re Chalasani), 92 F.3d 1300, 1307 (2d Cir. 1996).
In its Opposition, Atari argues that it is clear at the outset that no relief will be
forthcoming if these cases are reopened because the releases contained in the Plan and
Confirmation Order are insufficiently specific to release Atari’s claims against Alden based upon
the improperly stated TEG in the Credit Agreement. (See Opp’n ¶ 78.) According to Atari’s
French law expert, Mr. David Malamed, 14 Article 1338 of the French Civil Code precludes the
release of such claims “unless the claims are known and the waiver is intentional and explicit.”
(Malamed Decl. ¶ 31 (citing C. civ. art 1338 (Fr.).) Because Atari allegedly did not know of the
TEG claims at the time the Plan was confirmed,15 and because § 12.9 of the Plan does not
expressly reference any such claims, Mr. Malamed asserts that the release does not apply to the
claims asserted by Atari in the French Actions. (Id. ¶ 35.)
Alden’s French law expert, Professor Rémy Libchaber,16 disagrees. Professor Libchaber
asserts that Article 1338 of the French Civil Code is “simply irrelevant” in this case. (Libchaber
Decl. ¶ 11.) Instead, Professor Libchaber argues that, under French law, “a right can always be
waived once it is born.” (Id. ¶ 23.) Based upon applicable principles of French law and the broad
language of § 12.9 of the Plan, Professor Libchaber concludes:
[R]egarding the question of whether by its agreement to the Plan, Atari has
validly – under French law – waived its right to criticize the flaws possibly
entering the TEG concerning the [Credit Agreement] and the amendments thereto
14 See Declaration of David Malamed in Support of Opposition of Atari, S.A., Atari Europe, SAS, and the
Reorganized Debtors to Motion of Alden Global Capital Recovery Master Fund, L.P., to Reopen these Chapter
11 Cases, Require Compliance with the Chapter 11 Plan and Confirmation Order, and Enjoin Further Violations
by the Debtors and their Affiliates [ECF No. 592] (the “Malamed Declaration”).
15 Alden has disputed Atari’s allegation that it did not know of the TEG claims at the time the Plan was confirmed.
The parties have agreed to defer a determination of that disputed issue of fact until after the Court has determined
whether to reopen these chapter 11 cases.
16 See Declaration of Rémy Libchaber [ECF No. 601] (the “Libchaber Declaration”).
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entered into before confirmation of the Plan in December 2013, in my opinion,
the answer is unequivocally yes.
(Id. ¶ 52.)
As set forth above, the parties have now agreed to defer consideration of the merits of
this question – whether Atari’s claims in the French Actions are barred by the Plan release – until
after the Court resolves the threshold question of whether these cases should be reopened. Thus,
the Court need not determine, at this juncture, whether the ultimate relief Alden is requesting
will be forthcoming if the case is reopened. See PlusFunds I, 492 B.R. at 210 n.7 (finding sixth
Easley-Brooks factor irrelevant where it was “unnecessary now to determine whether appropriate
relief is available . . . as a result of [re]opening the case”). However, even if the parties had not
agreed to defer consideration of the merits, the Court would find that it is not clear at the outset
that no relief will be forthcoming if the case is reopened. Courts that have applied this rationale
in declining to reopen cases have done so where the ultimate relief being sought was clearly
frivolous. See Euro-Am. Lodging, 549 Fed. App’x at 54; Wilson, 492 B.R. at 695. As
demonstrated by the parties’ competing interpretations of applicable French law, the Court finds
that Alden’s contention here that the release applies to the claims asserted in the French Actions
is not clearly frivolous.
Atari also argues that it is clear at the outset that no relief can be granted if these cases are
reopened because Alden cannot establish its entitlement to the issuance of an antisuit injunction
against the continued prosecution of the French Actions.17 In the Second Circuit, “[i]t is beyond
17 According to Alden, it is not seeking an antisuit injunction because it is seeking relief only against Atari and those
acting on its behalf, not against the Commercial Court of Paris itself. (See Reply ¶ 46.) This is incorrect. Antisuit
injunctions are always directed to the parties, not to the foreign court in which they are litigating. See Ibeto
Petrochem. Indus. Ltd. v. M/T Beffen, 475 F.3d 56, 65 (2d Cir. 2007) (antisuit injunctions “should be directed
specifically to the parties, for it is only the parties before a federal court who may be enjoined from prosecuting a
suit in a foreign country”). Thus, the fact that Alden is not seeking to directly enjoin the Commercial Court of
Paris has no bearing on whether it is seeking an antisuit injunction.
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question that a federal court may enjoin a party from pursuing litigation in a foreign forum.”
Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645,
652 (2d Cir. 2004). However, such an antisuit injunction may be issued only where two threshold
requirements are met: “(1) the parties must be the same in both matters, and (2) resolution of the
case before the enjoining court is dispositive of the action to be enjoined.” China Trade & Dev.
Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987). If those threshold requirements are
met, courts determining whether to issue an antisuit injunction must consider additional
“discretionary factors,” including (1) whether the foreign action would frustrate a policy in the
enjoining forum, (2) whether the foreign action would be vexatious, (3) whether the foreign
action would be a threat to the enjoining court’s jurisdiction, (4) whether the proceedings in the
other forum will prejudice other equitable considerations, and (5) whether adjudication of the
same issues in separate actions will result in delay, inconvenience, expense, inconsistency, or a
race to judgment. Id. at 35 (citing Am. Home Assurance Co. v. Ins. Corp. of Ir. Ltd., 603 F. Supp.
636, 643 (S.D.N.Y. 1984)). Although courts should consider all five factors, see Ibeto
Petrochem. Indus. Ltd. v. M/T Beffen, 475 F.3d 56, 64 (2d Cir. 2007), the first and third
factors – the frustration of the enjoining court’s public policies and the threat to its
jurisdiction – have a “greater significance” than the other factors, China Trade, 837 F.2d at 36.
Here, Alden has made at least a colorable claim that an antisuit injunction should issue in
order to protect the releases contained in the Plan and Confirmation Order; thus, it is not clear at
the outset that no relief will be forthcoming if these cases are reopened. As to the threshold
requirements, there is no dispute that the parties before this Court are the same as those in the
French Actions and, if the Court ultimately finds that Atari’s claims in the French Actions are
barred by the releases contained in the Plan and Confirmation Order, the resolution before this
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Court will be dispositive of those issues in the French Actions. As to the remaining discretionary
factors, such factors “will tend to weigh in favor of an anti-foreign-suit injunction that is sought
to protect a federal judgment.” Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara, 500 F.3d 111, 120 (2d Cir. 2007); accord Paramedics Electromedicina, 369
F.3d at 654 (“An antisuit injunction may be needed to protect the court’s jurisdiction once a
judgment has been rendered.”). Here, the Confirmation Order constitutes a final judgment of this
Court; thus, the discretionary factors will tend to weigh in favor of the issuance of an antisuit
injunction. See Karaha Bodas, 500 F.3d at 126-27 (antisuit injunction warranted to protect
federal judgment); Paramedics Electromedicina, 369 F.3d at 654 (antisuit injunction warranted
to protect federal order compelling arbitration).
This does not, of course, mean that Alden’s arguments will or will not ultimately be
successful once these cases are reopened; only that the relief that Alden is seeking in this Court
is not so plainly meritless that the Court will deny Alden the opportunity to request it by
declining to reopen these cases.
II. 	The Court Will Not Abstain from Resolving this Dispute
Finally, in the alternative, Atari argues that, notwithstanding this Court’s jurisdiction over
the issues raised in the Motion, the Court should abstain from exercising that jurisdiction in favor
of the Commercial Court of Paris. “[F]ederal courts have the inherent, discretionary power to
abstain from exercising [their] jurisdiction in order to extend comity to related proceedings
pending in other countries.” United Feature Syndicate, Inc. v. Miller Features Syndicate, Inc.,
216 F. Supp. 2d 198, 210 (S.D.N.Y. 2002). According to Atari, abstention is appropriate here
because, inter alia, the proceedings before the Commercial Court of Paris were filed first, the
parties to each proceeding are the same, the issues raised by the proceedings in that court and this
one are “sufficiently similar,” the parties contractually consented to the exercise of jurisdiction
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by the Commercial Court of Paris, and the dispute between the parties principally concerns the
application of French law. (See Opp’n ¶¶ 101-06.) Atari also contends that abstention is
appropriate because the Motion “plainly constitutes forum shopping” by Alden. Id. ¶ 107.18
The Court disagrees. The issue here is not whether French law precludes enforcement of
the Plan; it is whether the release and exculpation provisions of the Plan bar Atari’s prosecution
of certain claims in the French Actions. Courts in this district have recognized that it is not
appropriate for a court to abstain from hearing disputes regarding the interpretation and
enforcement of its own prior orders. See U.S. Home Corp. v. Los Prados Community Ass’n (In re
U.S.H. Corp.), 280 B.R. 330, 338 (Bankr. S.D.N.Y. 2002) (“[T]he policy of this district does not
favor abstention in matters involving a court’s interpretation of its own orders.”); Texaco Inc. v.
Sanders (In re Texaco Inc.), 182 B.R. 937, 947 (Bankr. S.D.N.Y. 1995) (“A bankruptcy court is
undoubtedly the best qualified to interpret and enforce its own orders . . . and, therefore, should
not abstain from doing so.”); see also In re Motors Liquidation Co., 457 B.R. 276, 291 (Bankr.
S.D.N.Y. 2011) (“[I]n most instances, whether asked to enforce or construe [its prior orders], [a
bankruptcy court] will decline invitations to abstain.”); accord Lawski v. Frontier Ins. Grp., LLC
(In re Frontier Ins. Grp., LLC), 517 B.R. 496, 504-05 (Bankr. S.D.N.Y. 2014) (declining to
abstain from proceeding to interpret plan and confirmation order).
18 In support of its forum shopping argument, Atari contends that equitable considerations do not support Alden’s
position because, after Atari obtained the statutory grace period from the Commercial Court of Paris, Alden was
“clearly seeking to avoid its obligations to litigate in France.” (Mar. 30, 2016 Hr’g Tr. 54:17-18; see also id. at
54:2-15 (“[O]nce the TEG issues were raised, . . . Alden came to the U.S. not to reopen these cases, not to enforce
the plan release, but to try and foreclose on the [Reorganized Debtors’] assets. So that was their Plan A, Your
Honor. . . . [T]his [Motion] was Plan B . . . .”).) The Court is not persuaded. This Court was the situs of these
chapter 11 cases, and the Plan manifested an agreement among the parties that this Court would retain exclusive
jurisdiction over disputes regarding the interpretation and enforcement of the Plan into which the releases were
embodied. Thus, Alden’s effort to enforce the releases in this Court does not constitute forum shopping. See
LaRoche Indus., Inc. v. Orica Nitrogen LLC (In re LaRoche Indus., Inc.), 312 B.R. 249, 255 (Bankr. D. Del.
2004) (commencement of action in bankruptcy court was not forum shopping where court was the location of the
debtor’s chapter 11 case and parties had previously consented to bankruptcy court as the proper forum to
adjudicate the dispute).
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Because Alden has asked this Court to interpret and enforce the release and exculpation
provisions of the Court’s Confirmation Order, the Court finds that abstention in favor of the
Commercial Court of Paris would not be appropriate.
Conclusion
For these reasons, the Court finds that Alden has established “other cause” to reopen
these chapter 11 cases pursuant to § 350(b) of the Bankruptcy Code. Further, the Court finds that
abstention would be inappropriate. Accordingly, the Motion is GRANTED insofar as it seeks an
order reopening these chapter 11 cases. Counsel for Alden is hereby directed to settle an order
consistent with this memorandum decision on not less than seven days’ notice.
Dated: New York, New York
April 20, 2016
/s/ James L. Garrity, Jr.
JAMES L. GARRITY, JR.
United States Bankruptcy Judge
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