Perez v. TerreStar Corporation

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
-----------------------------------------------------------x
In re:
Chapter 11
TERRESTAR CORPORATION, et al.,
Case No. 11-10612 (SHL)
Debtors. 	Jointly Administered
-----------------------------------------------------------x
ALDO ISMAEL PEREZ
Plaintiff, 	Adv. Proc. No. 13-01334 (SHL)
v.
TERRESTAR CORPORATION, et al.,
Defendants.
‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐x
MEMORANDUM OF DECISION
A P P E A R A N C E S :
HOLLAND & KNIGHT
Counsel to Aldo Ismael Perez
701 Brickell Avenue, Suite 3300
Miami, Florida 33131
By: 	Juan C. Zorrilla, Esq.1
AKIN GUMP STRAUSS HAUER & FELD LLP
Counsel to the Debtors
One Bryant Park
New York, New York 10036
By: 	Ira S. Dizengoff, Esq.
Arik Preis, Esq.
Joseph L. Sorkin, Esq.
Nicholas P. Stabile, Esq.
-and-
1 	Subsequent to oral argument, counsel filed a motion to withdraw from representation of Mr. Perez in this
matter, which was granted by order dated September 2, 2015. (ECF No. 39).
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 1 of 15

1
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
By: 	Sarah Link Schultz, Esq.
SEAN H. LANE
UNITED STATES BANKRUPTCY JUDGE
Before the Court is the Debtors’ motion to dismiss the second amended complaint (ECF
No. 18-30) (the “Complaint”) of the Plaintiff, Aldo Ismael Perez, in the above-captioned
adversary proceeding. Pursuant to Section 1144 of the Bankruptcy Code, the Complaint seeks to
revoke this Court’s order confirming the Debtors’ plan of reorganization on the basis that the
order was procured by fraud. The Defendants argue, among other things, that the Complaint is
equitably moot. For the reasons set forth below, the Defendants’ motion is granted and the
Complaint is dismissed.
BACKGROUND
Prior to its bankruptcy filing, Terrestar Corporation (“TSC”) and its affiliates held equity
interests in several companies that operated a terrestrial satellite network and provided two-way
mobile and Internet communications services. On October 19, 2010 and February 16, 2011, TSC
and certain of its affiliates (collectively, the “TSC Debtors”) filed petitions for relief under
Chapter 11 of the Bankruptcy Code. The Plaintiff is a former common shareholder of the TSC
Debtors and owned 220,000 shares of TSC’s common stock as of February 16, 2011. Compl. ¶
7.
The Plaintiff filed numerous motions and objections throughout the TSC bankruptcy
proceedings, as well as in the related Chapter 11 case of Terrestar Networks, Inc., Case No. 10-
15446. Pleadings filed by Mr. Perez in the TSC Debtors’ cases include several requests for the
appointment of an equity committee and/or an examiner in the TSC Debtors’ cases, which were
denied. (Case No. 11-10612, ECF Nos. 157, 180, 216, 217). Mr. Perez sought reconsideration
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 2 of 15

2
of this Court’s order denying his motion to appoint an examiner, which was also denied. (See
Hr’g Tr. 65:3-73:21, Nov. 16, 2011; ECF Nos. 232, 290). Mr. Perez subsequently filed
numerous objections to the TSC Debtors’ second amended disclosure statement (the “Disclosure
Statement”) (Case No. 11-10612, ECF Nos. 157, 207, 216, 331), which the Court heard and
overruled, ultimately approving the Disclosure Statement on August 24, 2012. Mr. Perez then
filed a pleading requesting a stay of the “financial disclosure,” which this Court construed as a
request to stay the order approving the Disclosure Statement until the District Court ruled on Mr.
Perez’s examiner appeal. (Case No. 11-10612, ECF No. 386). The Court denied Mr. Perez’s
motion to stay pending appeal. See Memorandum Opinion and Order Denying Request for Stay
Pending Appeal, Case No. 11-10612, ECF No. 442. Numerous issues were raised by Mr. Perez
and considered by the Court in the litigation of these various pleadings.
On June 27, 2012, TSC filed its third amended joint chapter 11 plan of reorganization
(the “Plan”), to which the Plaintiff filed multiple objections. (See Case No. 11-10612, ECF Nos.
556, 639, 661, 664). Mr. Perez’s filings raised, among other issues, objections to the failure to
auction off certain of the TSC Debtors’ assets, questions regarding the TSC Debtors’ asset
valuation and the feasibility of the Plan, and objections to the third-party releases contained in
the Plan. See id. A hearing on confirmation of the Plan was held before the Court on October
10, 2012 (the “Confirmation Hearing”). Mr. Perez appeared on his own behalf and argued
against confirmation. He also cross-examined Steven Zelin of Blackstone Group, the TSC
Debtors’ financial advisor. See Hr’g Tr. 88:18-89:7 (Oct. 10, 2012). During the hearing, Mr.
Perez again raised issues regarding the valuation of TSC assets and alleged that insider
transactions and fraud had taken place. At the conclusion of the hearing, the Court overruled
Perez’s objections, along with several other pro se objections, and confirmed the TSC Debtors’
Plan. See Hr’g Tr. 121:7-135:17 (Oct. 10, 2015). On October 24, 2012, the Court entered an
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 3 of 15

3
order confirming the Plan (the “Confirmation Order”). (Case No. 11-10612, ECF No. 668). The
Plan subsequently became effective on March 7, 2013. (Case No. 11-10612, ECF No. 734).
Mr. Perez has twice appealed orders of this Court. In both instances, the District Court
for the Southern District of New York found Mr. Perez’s appeals equitably moot. 	Mr. Perez
first appealed this Court’s order denying reconsideration of a request to appoint an examiner.
The District Court dismissed the appeal as equitably moot, finding that the Plan had been
substantially consummated and that Mr. Perez had failed to rebut the presumption of mootness.
Perez v. Terrestar Corp. (In re Terrestar Corp.), 2013 U.S. Dist. LEXIS 58814, at *12-14
(S.D.N.Y. April 24, 2013) (Abrams, J.). The District Court specifically noted that the relief
sought by Mr. Perez would “require unraveling intricate transactions and cause harm to the
vitality of Reorganized TSC.” Id. at *16. Mr. Perez next appealed the Confirmation Order. The
District Court again dismissed the appeal as equitably moot, as the Plan had been substantially
consummated. Perez v. Terrestar Corp. (In re Terrestar Corp.), 2013 U.S. Dist. LEXIS 118918,
at *10-11 (S.D.N.Y. Aug. 16, 2013) (Daniels, J.).
On April 22, 2013 Plaintiff filed this adversary proceeding seeking to revoke the
Confirmation Order pursuant to Section 1144 of the Bankruptcy Code. By leave of the Court, he
filed the second amended complaint in May 2014. In that Complaint, Plaintiff again alleges that
TSC violated a duty to disclose certain facts in the Plan and Disclosure Statement and seeks
revocation of the Confirmation Order. In their motion to dismiss, the TSC Debtors argue that the
Plaintiff’s complaint is equitably moot, that Plaintiff is collaterally estopped from raising
allegations that have already been addressed in earlier proceedings, and that Plaintiff has failed
to adequately plead that the Confirmation Plan was procured by fraud under Bankruptcy Code
Section 1144.
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 4 of 15

4
DISCUSSION
Equitable mootness is “‘a prudential doctrine . . . that is invoked to avoid disturbing a
reorganization plan once implemented.’” R2 Invs. LDC v. Charter Commc’ns Inc. (In re Charter
Commc’ns Inc.), 449 B.R. 14, 22 (S.D.N.Y. 2011) (quoting Official Comm. of Unsecured
Creditors of LTV Aerospace & Def. Co. v. Official Comm. of Unsecured Creditors of LTV Steel
Co. (In re Chateaugay Corp.), 988 F.2d 322, 325 (2d Cir. 1993)). The doctrine “is not an Article
III inquiry into whether a live case or controversy exists, but rather a recognition that there is a
point beyond which a court cannot order fundamental changes in reorganization actions.” Bank
of New York Trust Co. v. Pacific Lumber Co. (In re ScoPac), 624 F.3d 274, 281 (5th Cir. 2010).
While the equitable mootness doctrine is often dealt with on appeal, it has also been applied in
proceedings under Section 1144 of the Bankruptcy Code. See, e.g., In re Delta Air Lines, Inc.,
386 B.R. 518, 537 n.15, 538 (Bankr. S.D.N.Y. 2008) (citing cases).
The doctrine of equitable mootness arises from a “common-sense notion that the
piecemeal dismantling of the [r]eorganization [p]lan in subsequent appeals of individual
transactions is, in practical terms if nothing else, a virtually impossible task.” In re Texaco Inc.,
92 B.R. 38, 46 (Bankr. S.D.N.Y. 1988) (internal citations and quotations omitted). “In certain
situations, it may be highly impractical for a court to undo a reorganization plan due to the
complex nature of the transactions involved.” In re Delta, 386 B.R. at 537. For instance, the
Second Circuit has held that equitable mootness applies where a vacatur and remand would
unsettle critical components of a reorganization or require completed transactions to be undone,
causing violence to such overall arrangements. In re Metromedia Fiber Network, Inc., 416 F.3d
136, 145 (2d Cir. 2005).
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 5 of 15

5
An appeal is presumed to be equitably moot once a debtor’s plan of reorganization has
been substantially consummated. See R2 Invs. LDC v. Charter Commc’ns Inc. (In re Charter
Commc’ns Inc.), 691 F.3d 476, 482 (2d Cir. 2012). A plan is considered substantially
consummated where: (1) all or substantially all of the proposed property transfers in a plan have
taken place, (2) the successor company has assumed the business or management of the property
dealt with by the plan, and (3) the distributions established in the plan have commenced. See 11
U.S.C. § 1101(2).
The presumption of equitable mootness can be rebutted through the five factor test
established by the case of In re Chateaugay Corp., 10 F.3d 944 (2d Cir. 1993). The burden is on
the party contesting equitable mootness to show that each of the following circumstances exist:
(a) the court can still order some effective relief;
(b) such relief will not affect the re-emergence of the debtor as a revitalized
corporate entity;
(c) such relief will not unravel intricate transactions so as to knock the props out
from under the authorization for every transaction that has taken place and
create an unmanageable, uncontrollable situation for the Bankruptcy Court;
(d) the parties who would be adversely affected by the modification have notice
of the appeal and an opportunity to participate in the proceedings; and
(e) the appellant pursued with diligence all available remedies to obtain a stay of
execution of the objectionable order . . . if the failure to do so creates a
situation rendering it inequitable to reverse the orders appealed from.
Id. at 952-53 (internal citations and quotations omitted).
Applying these principles here, the Court finds that Mr. Perez’s action is equitably moot
because TSC’s Plan has been substantially consummated. The Confirmation Order was entered
on October 24, 2012, and the Plan became effective on March 7, 2013. Plaintiff filed his initial
complaint on April 22, 2013, exactly 180 days after the Confirmation Order was entered. He
then filed the Second Amended Complaint in May 2014, over a year and half after confirmation
of the Plan.
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 6 of 15

6
But by April 24, 2013, the District Court had already ruled that the TSC Plan was
substantially consummated. In a written decision on Mr. Perez’s first appeal, the District Court
specifically found that substantial consummation had occurred based on:
 	the reorganization of TSC as a ‘new, privately held corporation’ . . . including
the adoption of bylaws and appointment of a board of directors;
 	the cancellation of preferred and common stock in TSC;
 	entry into ‘an approximately $27 million loan designed to finance
Reorganized TSC’s operations and to fund ongoing chapter 11 activities’ . . . ;
 	‘distribution to substantially all secured and unsecured creditors with allowed
claims under the Plan’;
 	repayment of a $4.5 million loan . . . provided by certain TSC preferred
shareholders in November 2010; and
 	transfer of control of TerrStar Holdings 1.4 Holdings, which holds the license
to the 1.4 GHz spectrum, to Reorganized TSC.
Perez v. Terrestar Corp. (In re Terrestar Corp.), 2013 U.S. Dist. LEXIS 58814, at *12-13
(S.D.N.Y. April 24, 2013) (Abrams, J.). In a written decision on Mr. Perez’s second appeal,
another Judge of the District Court also found that the TSC Plan was substantially consummated,
based upon:
 	The cancellation of preferred and common stock in TSC, and the delisting of
the formerly-public common shares;
 	The reorganization of TSC as a new privately held corporation pursuant to an
amended and restated certificate of incorporation and new bylaws
 	The merger of certain TSC debtors pursuant to a series of certificates of
merger;
 	The process of issuing and distributing the new common stock in the
reorganized company;
 	The transferring of property from each TSC Debtor estate to each respective
reorganized TSC entity;
 	The entry into an approximately $27 million loan (the "Exit Facility")
designed to finance Reorganized TSC's operations, repay its debtor-in-
possession financing, fund certain settlements that the TSC Debtors reached
with certain of its creditors and fund other ongoing Chapter 11 activities,
including $6.3 million of payments to various creditors;
 	The repayment of millions of dollars in loans provided by certain TSC
preferred shareholders;
 	The transfer of control of TerreStar Holdings 1.4 GHz spectrum (the
subsidiary that held the licenses), to Reorganized TSC, including FCC
approval for the transfer of the spectrum licenses;
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 7 of 15

7
 	The first meeting of the board occurred on March 26, 2013, and the officers of
the reorganized company took their seats.
Perez v. Terrestar Corp. (In re Terrestar Corp.), 2013 U.S. Dist. LEXIS 118918, at *10-11
(S.D.N.Y. Aug. 16, 2013) (Daniels, J.).
The findings of the District Court are the law of the case. The law of the case doctrine
provides that “when a court has ruled on an issue, that decision should generally be adhered to by
that court in subsequent stages in the same case unless cogent and compelling reasons militate
otherwise.” De Johnson v. Holder, 564 F.3d 95, 99 (2d Cir. 2009) (internal citations and
quotations omitted). It also applies to the “re-litigation of an issue at the appellate level.” Mui v.
United States, 614 F.3d 50, 53 (2d Cir. 2010). “[T]he law of the case doctrine is, at best, a
discretionary doctrine which does not constitute a limitation on the court’s power but merely
expresses the general practice of refusing to reopen what has been decided.” Brody v. Vill. of
Port Chester, 345 F.3d 103, 110 (2d Cir. 2003) (internal citations and quotations omitted). The
law of the case doctrine applies here on the question of equitable mootness. See Free-Tan Corp.
v. 49-50 Assocs. (In re Liberty Music & Video, Inc.), 1985 U.S. Dist. LEXIS 15016, at *7-8
(S.D.N.Y. Oct. 11, 1985) (holding prior appellate decision addressing identical issue as was
before the court to be law of the case); Bourdeau Bros., Inc. v. Montagne (In re Montagne), 2010
WL 396252, at *6 (Bankr. D. Vt. Jan. 25, 2010) (“Since different adversary proceedings filed in
the same main case do not constitute different ‘cases,’ it would follow that the law of the case
doctrine as articulated in one adversary proceeding would apply in another adversary proceeding
filed in the same case.”) (citing Cohen v. Bucci, 905 F.2d 1111, 1112 (7th Cir. 1990); Artra
Group, Inc. v. Salomon Bros. Holding Co., 1996 WL 637595, at *5 (N.D. Ill. Oct. 31, 1996); In
re Gosman, 382 B.R. 826, 841-42 (S.D. Fla. 2007)); see also In re E.R. Fegert, Inc., 887 F.2d
955, 957-58 (9th Cir. 1989) (“Whether these facts were supported by the record in this adversary
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 8 of 15

8
proceeding is unclear; however, all of the facts are supported by the record of the underlying
bankruptcy matter. . . . ‘The record in an adversary proceeding in bankruptcy presumes and in
large measure relies upon the file in the underlying case. . . .’”) (quoting Berge v. Sweet (In re
Berge), 37 B.R. 705, 708 (W.D. Wis. 1983)); Citizens Bank v. Leach (In re Leach), 35 B.R. 100,
101-02 & n.5 (Bankr. W.D. Ky. 1983) (bankruptcy judge’s use of “entire file” is consistent with
the Federal Rules of Evidence given connections between a “case” and a “proceeding”) (citing
Leather Comfort Corp. v. Chem. Sales & Serv. Co. (In re Saco), 30 B.R. 862, 865 (Bankr. D.
Me. 1983) (“[B]ankruptcy judges would be remiss” if they did not take judicial notice of the
debtor’s bankruptcy case as a whole, including the documents filed in the case because of
bankruptcy’s unique interrelated multi-part nature and duty to “notice . . . records and files in
[the] cause . . . .”); cf Aramony v. United Way of Am., 254 F.3d 403, 410 (2d Cir. 2001) (“The
doctrine of the law of the case posits that if a court decides a rule of law, that decision should
continue to govern in subsequent stages of the same case. Courts apply the law of the case
doctrine when their prior decisions in an ongoing case either expressly resolved an issue or
necessarily resolved it by implication.”) (internal citations and quotation marks omitted).
The sum of TSC’s actions since entry of the Confirmation Order (issuing new common
stock, preparing the required FCC application, finalizing the exit facility and performing the
restructuring transactions) complies with the definition of “substantially consummated”
established in Section 1101 of the Bankruptcy Code. As two different District Court Judges have
already concluded, the TSC Debtors’ Plan was substantially consummated since at least April
24, 2013. Additionally, because numerous transactions had taken place in reliance on the Plan,
the Plaintiff’s Complaint is equitably moot as it would be inequitable to revoke the Confirmation
Order for TSC, creditors, banks, and numerous other interested parties. As the current adversary
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 9 of 15

9
proceeding raises the same concerns previously raised and reviewed twice by the District Court,
equitable mootness provides a basis for granting the motion to dismiss.
The Plaintiff fails to rebut the presumption of equitable mootness through the five
Chateaugay factors. Indeed, the Plaintiff does not even address the factors in his voluminous
pleadings. In any event, none of them appear satisfied. As to the first three factors, there is no
way for this Court to provide the Plaintiff effective relief. See Chateaugay, 10 F.3d at 952-53.
Revocation of the Confirmation Order would require the TSC Debtors to claw back over $6
million in payments to creditors, causing problematic common stock ramifications for preferred
shareholders. Additionally any relief granted would be wholly inequitable as complicated
financial, legal, and operational questions would surface, resulting in a need for additional
review and litigation. Inquiries into transactions that occurred prior to and since consummation
of the Plan would create an unmanageable and uncontrollable situation for this Court. For these
reasons, even if this Court could provide relief, the Plaintiff has not met the standard established
in the second and third factors of Chateaugay, barring revocation of the Plan. See id.
With regard to the fourth and fifth Chateaugay factors, the Plaintiff failed to give notice
of the Complaint to all parties who would be adversely affected by a potential revocation of the
Plan, ultimately denying key party members, such as preferred shareholders and creditors, a
chance to participate and object to the proceedings. The Plaintiff also failed to seek a stay of the
Plan after the entry of the Confirmation Order on October 24, 2012. Instead the Plaintiff
appealed the Confirmation Order on January 25, 2013 and, as noted above, the appeal was
dismissed by the District Court. See In re Terrestar, 2013 U.S. Dist. LEXIS 118918. The
Plaintiff’s failure to seek a stay of the Confirmation Plan, failure to address and provide
compelling arguments addressing the five Chateaugay factors and the substantial consummation
of the TSC Debtors’ Plan all support a finding that the Complaint is equitably moot.
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 10 of 15

10
Citing to In re Trico Marine Services, Inc., 337 B.R. 811 (Bankr. S.D.N.Y. 2006), the
Plaintiff argues that the standard for equitable mootness in a Section 1144 action must be set at a
higher bar. The Plaintiff argues that the test should focus solely on whether the confirmation
order can be revoked while still protecting innocent third parties. But even if this were the test,
Mr. Perez has failed to show that innocent third parties would be protected were the
Confirmation Order to be revoked. In a conclusory fashion, the Plaintiff argues that only bad
actors would be negatively impacted by revocation. He focuses solely on those parties that
received new common stock and states that they were all purportedly “involved in the
perpetrating of the fraud alleged in the Second Amended Complaint.” See Plaintiff’s Response
at 16. But this is an overly simplified view of the case. It does not address those unsecured
creditors that have long ago received recoveries under the Plan. Mr. Perez simply argues that
such unsecured creditors have not been identified or that “there would be at least $1.9 million
available to pay these creditors, assuming that they are innocent third parties.” Id. at 21. But
these simplistic assumptions are insufficient to support the argument that no innocent third
parties will be harmed.
In addition to equitable mootness, the Complaint fails because it does not comply with
the statutory requirements. Section 1144 of the Bankruptcy Code, provides the only means by
which a court can revoke an order confirming a Chapter 11 plan. See In re Delta, 386 B.R. at
532 (citing In re Longardner & Assoc., Inc., 855 F.2d 455, 460 (7th Cir. 1988)). The statute
provides that:
On request of a party in interest at any time before 180 days after the date of the
entry of the order of confirmation, and after notice and a hearing, the court may
revoke such order if and only if such order was procured by fraud. An order under
this section revoking an order of confirmation shall—
(1) contain such provisions as are necessary to protect any entity acquiring rights
in good faith reliance on the order of confirmation; and
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 11 of 15

11
(2) revoke the discharge of the debtor.
11 U.S.C. § 1144. The decision of whether to revoke a confirmation order pursuant to Section
1144 rests in the sound discretion of the court. See In re Delta, 386 B.R. at 532 (noting “[t]he
importance of the auxiliary verb ‘may’” in the statute), and a court can decline to revoke an order
of confirmation even if it was procured by fraud. See id. (citing Salsberg v. Trico Marine Servs.
(In re Trico Marine Servs.), 343 B.R. 68, 74 (Bankr. S.D.N.Y. 2006) (dismissing an action
brought under Section 1144 because even if the plaintiff could prove fraud, the court could not
fashion a remedy that met the requirements of Section 1144); Ogden v. Ogden Modulars (In re
Ogden Modulars), 180 B.R. 544, 547 (Bankr. D. Mo. 1995); 8 Collier on Bankruptcy ¶
1144.03[4] at 1144–5 (15th ed. rev. 2006) (“[T]he court may decline to revoke the order even
after finding that fraud has occurred.”)).
The statute’s language states that an order revoking confirmation “shall---(1) contain
such provisions as are necessary to protect any entity acquiring rights in good faith reliance on
the order of confirmation. . . .” 11 U.S.C. § 1144. This language is non-discretionary, and any
order revoking confirmation must protect all innocent parties. See In re Delta, 386 B.R. at 532.
If a court is unable to create a revocation order that protects innocent parties who acquired rights
in reliance on the confirmation order, the court is barred from revoking the confirmation order,
even when procured by fraud. See id.; see also In re Trico Marine, 337 B.R. at 814 (court cannot
revoke the plan unless it can restore the status quo existing before confirmation and protect those
who relied in good faith on the confirmation). As noted above, the Plaintiff does not explain—
and the Court can see no way—to guarantee the rights of any innocent unsecured creditors that
acquired rights in reliance on the Confirmation Order. It matters not how many such parties
exist or the amount of their recovery, as the language of Section 1144 is clear that the Court
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 12 of 15

12
lacks discretion unless it can craft an order that “protect[s] any entity acquiring rights in good
faith.” 11 U.S.C. § 1144.
In addition, the delay in filing this lawsuit weighs against the Court’s exercise of its
discretion under Section 1144. The statute provides a distinct time frame for when such causes
of actions must be filed, requiring that a request to revoke the confirmation order be made
“before 180 days after the date of the entry of the order of confirmation.” 11 U.S.C. § 1144
(emphasis added). The deadline is absolute and cannot be extended by the court. See In re BGI,
Inc. f/k/a Borders Group Inc., 2012 WL 5392208, at *3 (Bankr. S.D.N.Y. Nov. 2, 2012); see also
In re Delta, 386 B.R. at 532-33 (citing In re Orange Tree Assocs., 961 F.2d 1445, 1447 (9th Cir.
1992); In re Medical Analytics, Inc., 410 F. Supp. 922, 923 (S.D.N.Y. 1975) (holding that the
180–day period runs from the date of the confirmation order, even if the fraud was not
discovered during that time period)). In cases involving complicated reorganization plans that
impact more interested parties, the time frame should be shortened because of increased
difficulty in protecting innocent third parties. See In re Delta, 386 B.R. at 533. The Plaintiff
here filed this adversary proceeding to revoke the Confirmation Order on April 22, 2013, which
is the 180th day following the entry of the Confirmation Order. The Plan was approved on
October 24, 2012. At no point throughout the subsequent three month period did the Plaintiff
seek a stay of the Confirmation Order. For the reasons stated in the Delta case, it is not at all
clear that the Plaintiff complied with the letter of the law because he did not file before the 180th
day. See Delta, 386 B.R. at 533 n.11. In any event, he certainly failed to comply with its spirit.
See id. at 533.
Finally, the Court notes that many of the arguments raised in the Complaint were
previously raised and rejected by this Court and, therefore, may not be reargued here. See Allen
v. McCurry, 449 U.S. 90, 94, (1980); Burgos v. Hopkins, 14 F.3d 787, 789 (2d Cir. 1994) (“[A]
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 13 of 15

13
final judgment on the merits of an action precludes the parties or their privies from re-litigating
issues that were or could have been raised in that action.”); In re Crispo, 1997 WL 258482, at *7
(Bankr. S.D.N.Y. May 13, 1997) (“Res judicata thus encourages reliance on judicial decisions,
bars vexatious litigation, and frees the courts to resolve other disputes.”) Most notably, this
includes allegations regarding the value of the TSC assets. See Hr’g Tr. 122:13-127:11, Oct. 10,
2012 (Court ruling at Confirmation Hearing on valuation objections regarding the 1.4 GHz
spectrum); Compl. ¶¶ 99-117 (raising arguments regarding the value of the 1.4 GHz spectrum).2
Mr. Perez’s Complaint also includes allegations regarding events in cases other than the TSC
bankruptcy, none of which are properly before this Court. See Compl. ¶¶ 84-98 (raising issues
regarding the sale of the 2.0 GHz spectrum in the Terrestar Networks bankruptcy proceeding);
see also Hr’g Tr., 115:7-25, Oct. 10, 2012 (the Court noting at Confirmation Hearing that TSN
was a different case that had already been confirmed). 3
2 	The 1.4 GHz spectrum was the subject of valuation testimony during the Confirmation Hearing by Steven
Zelin of Blackstone Advisors, the TSC Debtors’ financial advisor. Mr. Zelin both submitted a declaration in support
of confirmation and testified on behalf of the TSC Debtors about the uses of the 1.4 GHz Spectrum and disagreed
with the notion that the asset could be used in alternative ways without modification. See Decl. of Steven Zelin in
Support of Confirmation of the Third Amended Joint Chapter 11 Plan ¶¶ 12-16 (Case No. 11-10612, ECF No. 650);
Hr’g Tr. 82:13-84:25, 91:5-23, 93:5-16, Oct. 10, 2012. The Plaintiff now argues that Mr. Zelin presented an overly
limited use for the 1.4 GHz Spectrum asset which contributed to the undervaluation. Relying on a report issued by
an entity named Jarvinian, the Plaintiff contends that there were other known uses for 1.4 GHz Spectrum that would
create a higher valuation for the asset. But the Jarvinian report was released on September 13, 2013, almost a year
after the Confirmation Hearing, and the Plaintiff does not plausibly explain how this newer report could serve as a
basis to impeach the older value. Moreover, it would be improper and incredibly inefficient for courts to reconsider
cases based on information about valuation provided after the fact. If such subsequent valuations were to be
considered, it would require bankruptcy courts to constantly revisit sales and confirmations, something prohibited
under the doctrine of res judicata. Moreover, Mr. Perez does not meet the pleadings requirements with respect to
his allegations regarding the valuation of the 1.4 GHz spectrum. Mr. Perez asserts that the Jarvinian report discloses
other feasible uses for the 1.4 GHz spectrum that would result in “significantly” higher valuation of the spectrum
and that the TSC Debtors concealed these uses from the Court. Compl. ¶¶ 108, 111. But Mr. Perez does not
provide allegations sufficient to show that the TSC Debtors had such information available to them at the time of the
hearing on confirmation of the Plan. Indeed, Mr. Perez admits in the Complaint that the achievability of these uses
would have required both regulatory modifications by the Federal Communications Commission and the acquisition
of additional spectrum by the TSC Debtors. Compl. ¶¶ 112-13, 116. The TSC Debtors based their valuation on the
circumstances that existed at the time of the hearing on confirmation of the Plan. This does not constitute fraud on
the Court.
3 	The Complaint also contains allegations that are unrelated to the actual confirmation of the Plan. These
include the Plaintiff’s allegations that the Debtors fabricated venue for the filing of the bankruptcy. See Compl. ¶
15. The Plaintiff does not plausibly allege any basis for relief from the Confirmation Order under Section 1144
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 14 of 15

14
CONCLUSION
For all the reasons set forth above, the Court concludes that the Debtors’ motion to
dismiss should be granted and Mr. Perez’s Second Amended Complaint should be dismissed
under the doctrine of equitable mootness and for failure to meet the standard for revocation of
the Confirmation Order under Section 1144 of the Bankruptcy Code. The Debtors should settle
an order on three days’ notice. The proposed order must be submitted by filing a notice of the
proposed order on the Case Management/Electronic Case Filing docket, with a copy of the
proposed order attached as an exhibit to the notice. A copy of the notice and proposed order
shall also be served upon Mr. Perez.
Dated: New York, New York
September 29, 2015
/s/ Sean H. Lane
UNITED STATES BANKRUPTCY JUDGE
based on venue. See In re AP Indus., Inc., 117 B.R. 789, 797 (Bankr. S.D.N.Y. 1990) (stating “venue statutes are
not jurisdictional” and thus, objections to venue are waivable); see also Morgenstein v. Motors Liquidation Co. (In
re Motors Liquid. Co.), 462 B.R. 494, 505–06 (Bankr. S.D.N.Y. 2012) (noting that claims of fraud under Section
1144 of the Bankruptcy Code must meet the heightened pleading standard for fraud under Rule 9(b) of the Federal
Rules of Civil Procedure and that conclusory allegations or speculation are not sufficient to meet the pleading
standard for Rule 9(b)).
13-01334-shl Doc 40 Filed 09/29/15 Entered 09/29/15 10:08:03 Main Document
Pg 15 of 15