Core Litigation Trust v. Apollo Global Management, LLC et al

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------X
In re: 	:
:
AOG ENTERTAINMENT, INC., et al., 	: 	Chapter 11
: 	Case No. 16-11090 (SMB)
Debtors. 	: 	(Jointly Administered)
--------------------------------------------------------X
CORE LITIGATION TRUST, by and through 	:
its duly appointed trustee, Peter Kravitz, 	:
:
Plaintiff, 	:
:
‒ against ‒ 	: 	Adv. Pro. No. 18-01540 (SMB)
:
APOLLO GLOBAL MANAGEMENT, LLC; 	:
TRAVIS HENNINGS; LEE SOLOMON; 	:
AARON STONE; AP NMT COOPERATIEF 	:
U.A.; APOLLO CORE HOLDINGS, L.P.; CORE :
ENTERTAINMENT HOLDINGS INC.; and 	:
and DOES 1-100, 	:
:
Defendants. 	:
--------------------------------------------------------X
MEMORANDUM DECISION GRANTING
MOTION FOR PERMISSIVE ABSTENTION
A P P E A R A N C E S:
QUINN EMANUEL URQUHART QUINN
EMANUEL URQUHART & SULLIVAN, LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
Jennifer Nassiri, Esq.
Scott C. Shelley, Esq.
Eric D. Winston, Esq.
Of Counsel
Attorneys for Plaintiff
O’MELVENY & MYERS LLP
7 Times Square
New York, New York 10036
Jonathan Rosenberg, Esq.
Daniel S. Shamah, Esq.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 1 of 31

2
Of Counsel
Attorneys for Defendants
STUART M. BERNSTEIN
United States Bankruptcy Judge:
The CORE Litigation Trust (“Trust”) commenced this adversary proceeding
alleging that one or more of the Defendants breached their fiduciary duties, aided and
abetted the same, and benefitted from an intentional fraudulent transfer to a non-party.
The Defendants have moved for permissive abstention pursuant to 28 U.S.C. §
1334(c)(1), or alternatively, to dismiss the Trust’s complaint, dated Apr. 27, 2018
(“Complaint”) (ECF Doc. # 1)1 for failure to state a claim pursuant to Rule 12(b)(6)
Federal Rules of Civil Procedure. 2 For the reasons that follow, the Court will abstain in
1 	Unless otherwise indicated, “ECF” refers to the electronic docket in this adversary proceeding.
2 	Defendants’ motion to dismiss was supported by a Defendants’ Joint Memorandum of Law in
Support of Defendants’ Motion For Permissive Abstention or in the Alternative to Dismiss for Failure to
State a Claim, dated June 29, 2018 (“Motion” or “MTD”) (ECF Doc. # 7), along with ten document
exhibits appended to the Declaration of Daniel S. Shamah, Esq. in Support of Defendants’ Motion for
Permissive Abstention or in the Alternative to Dismiss for Failure to State a Claim (“Shamah Decl.”)
(ECF Doc. # 8). On August 23, 2018, the Trust filed its response to Defendants’ Motion (see Core
Litigation Trusts [sic] Memorandum of Law in Opposition to Defendants’ Motion for Permissive
Abstention or in the Alternative to Dismiss for Failure to State a Claim (“Opposition” or “Opp.”) (ECF
Doc. # 16)), and on September 27, 2018, Defendants filed their reply (see Reply Memorandum of Law in
Support of Defendants’ Motion for Permissive Abstention of in the Alternative to Dismiss the Complaint
for Failure to State a Claim (“Reply”) (ECF Doc. # 18)). The Reply was accompanied by another
declaration (see Reply Declaration of Daniel S. Shamah Esq. in Support of Defendants’ Motion for
Permissive Abstention or in the Alternative to Dismiss for Failure to State a Claim (“Reply Decl.”) (ECF
Doc. # 19). The Reply Decl. appended two additional exhibits, one of which was filed under seal on leave
of the Court. (See Order Granting Defendants’ Motion to File Exhibit B to Reply Declaration Under Seal,
dated October 18, 2018 (ECF Doc. # 22).) Thereafter, on November 21, at the Court’s request, counsel for
the Trust provided the Court with the following additional documents incorporated by reference in the
Complaint: (i) the proofs of claim filed in the main bankruptcy case by Defendants Travis Hennings, Lee
Solomon, and Aaron Stone (see Complaint at ¶¶ 20-22); (ii) a term sheet allegedly provided by Apollo to
certain of CORE Media’s officers (see id. at ¶ 44); (iii) minutes of CORE Holdings’ 2018 board meetings
on February 18, 24, and 26 (see id. at ¶¶ 59, 60, 65, 67, 74); and (iv) a Powerpoint presentation provided
at the February 24 board meeting (see id. at ¶¶ 69-72).
At oral argument, the Court instructed the parties to submit further briefing relating to the Trust’s
intentional fraudulent transfer claims. On December 11, 2018, the parties filed supplemental briefs.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 2 of 31

3
the exercise of its discretion in light of a pending state court action involving the same
facts and inconsistent claims.
BACKGROUND
The background discussion is derived from the well-pleaded factual allegations of
the Complaint, the documents on which the Complaint relies or are integral to the
Complaint and other information which is subject to judicial notice.
CORE Media Group, Inc. (“CORE Media”) was a television and entertainment
company whose assets included the rights to the television programs “American Idol”
and “So You Think You Can Dance.” (¶ 28.) 3 In addition, CORE Media had owned
certain intellectual property rights related to the works and likenesses of Elvis Presley
and Muhammad Ali (“Elvis/Ali Rights”). (¶ 29.) On April 28, 2016, CORE Media and
certain affiliates (but not Defendant CORE Entertainment Holdings, Inc. (“CORE
Holdings”)) filed for chapter 11 protection. (¶ 14.) The Trust was formed under the
Debtors’ confirmed plan and is the successor to Debtors’ claims against Defendants and
certain claims assigned by the Debtors’ secured creditors. (¶ 17.)
Defendants Travis Hennings, Lee Solomon, and Aaron Stone (collectively,
“Director Defendants”) were directors of CORE Media beginning June 16, 2011. (¶¶ 20-
22.) The other named Defendants are AP NMT Cooperatief U.A. (“AP Coop”)—a
3 	The citation “¶” refers to a paragraph in the Complaint.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 3 of 31

4
Netherlands-based Apollo affiliate, non-Debtor CORE Holdings, and Apollo CORE
Holdings, L.P. (¶¶ 23, 25, 26.)4
A. 	Apollo Global Acquires Control of CORE Media
As of June 2011, CORE Media, then known as CKx, Inc., was a publicly-traded
company. In June 2011, Apollo Global Management, LLC (“Apollo”) acquired control of
CORE Media through a leveraged buyout (“LBO”) tender offer that merged CORE Media
indirectly into Apollo. The merger was effectuated by Apollo affiliates. (¶ 30.) It
appears that after the merger, Apollo affiliate, Defendant Apollo CORE Holdings, L.P.
(“Apollo Holdings”), owned 100% of the shares of Defendant CORE Holdings, CORE
Media’s indirect parent. (¶ 23; see Declaration of Peter Hurwitz, President of Certain
Debtors, in Support of Chapter 11 Petitions and First Day Pleadings, dated Apr. 28,
2016, at ¶ 19 (ECF Main Case Doc. # 3).) 	At some point, Apollo “hand-picked”
Defendants Travis Hennings, Lee Solomon, and Aaron Stone (collectively, “Director
Defendants”), its employees, (see MTD at 6), to serve as the directors of CORE Holdings
and CORE Media. (¶¶ 1, 19.) Each Director Defendant filed a proof of claim asserting
contingent and unliquidated claims arising from his service as a CORE Media director.
(¶¶ 20-22.)
The LBO had been financed, in part, by a $360 million bridge loan. (¶ 30.) 	In
December 2011, Apollo refinanced the bridge loan through two secured term loans,
whereby Debtor CORE Entertainment, Inc. (“CORE Entertainment”), CORE Media’s
indirect parent, borrowed $200 million pursuant to a First Lien Loan, and another $160
4 	Another Defendant, AP NMT JV Newco B.V., was voluntarily dismissed pursuant to Federal Rule
of Civil Procedure 41(a)(1)(A)(i). (Notice of Dismissal, dated Aug. 23, 2018 (ECF Doc. # 15).)
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 4 of 31

5
million pursuant to a Second Lien Loan (together, “Secured Loans”). (¶¶ 31-32.) 5
Under the Secured Loans’ terms, so long as CORE Entertainment did not default, no
principal payments were due until the loans matured in June 2017 and 2018. (¶¶ 31-
32.)
B. 	Huff Shareholder Litigation
The LBO was valued at over $500 million (“LBO”) or $5.50 per share for CORE
Media stock. (¶ 30.) Not everyone was satisfied. On September 8, 2011, the Huff Fund
Investment Partnership (“Huff”), a CORE Media shareholder at the time of the LBO,
commenced an appraisal action in the Delaware Chancery Court to contest the tendered
price per share. (¶ 33.) Following a trial, the Chancery Court held that the $5.50 merger
price constituted fair value and in or about June or July 2014, entered a judgment
against CORE Media in Huff’s favor for $75,443.549.60, plus interest in the sum of
$13,831.140.19 (“Huff Judgment”).6 Interest on the Huff Judgment continued to accrue
“in the amount of $14,061.61 per diem from June 1, 2014,” with interest compounding
after June 30, 2014, until the judgment was paid in full. (Huff Judgment at 3.) On
February 12, 2015, the Delaware Supreme Court affirmed the Huff Judgment. (¶ 36.)
Consequently, CORE Media was required to pay Huff approximately $75 million, plus
approximately $18 million in accrued interest. (Id.)
C. 	CORE Sells the Elvis/Ali Rights
5 	CORE Holdings, CORE Media, and other CORE subsidiaries were guarantors under the Secured
Loans. (Id. ¶¶ 31-32.)
6 	A copy of the Huff Judgment is annexed as Exhibit B to the Shamah Declaration.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 5 of 31

6
In the first quarter of 2012, Apollo acquired an equity interest in Endemol USA
Holding, Inc. (“Endemol”), a distributor of popular U.S. television franchises “Big
Brother,” “Fear Factor,” and “Deal or No Deal.” (¶ 40.) In October 2012, Apollo and
Twenty-First Century Fox (“Fox”) entered into a confidentiality agreement in
contemplation of a business combination by and among Fox’s Shine Group (“Shine”),
Endemol, and Core Media (“Joint Venture”). 7 (¶ 41.)
In 2013, at Apollo’s direction, CORE Media sold the Elvis/Ali Rights—a revenue
stream worth $16 million in EBITDA that year—for approximately $115 million
(“Elvis/Ali Proceeds”) and placed the Elvis/Ali Proceeds in an unrestricted subsidiary in
furtherance of Apollo’s scheme to free up cash on CORE Media’s balance sheet to
enhance its value as a target and boost Apollo’s ability to cash out its equity. (¶¶ 42, 43.)
Apollo represented to CORE Media’s officers that the Elvis/Ali Proceeds would be
available for new investments. (¶ 43.)
In or about February 2014, Apollo drafted a term sheet summarizing the details
of a proposed business combination of CORE Media, Endemol and Shine. (¶ 44.) The
term sheet, drafted by Apollo and provided to CORE Media’s officers, indicated that one
source of funding for the Joint Venture would be “up to $117 million direct or indirect
investment in NewCo by unrestricted subsidiaries of CORE [Media](the “CORE
Investment”) (it being understood that the amount of the CORE Investment represents
the entirety of the [Elvis/Ali Proceeds]).” (¶ 44.)
7 	The Complaint initially defined the Joint Venture as a combination of CORE Media, Endemol and
Shine. (¶ 2.) It subsequently defined the Joint Venture as former defendant AP NMT JV Newco B.V., the
100% owner of CORE Media as of the Petition Date. (¶ 24.)
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 6 of 31

7
Apollo also made personal representations to CORE Media’s management
suggesting the Elvis/Ali Proceeds would be used for CORE Media’s benefit—either for
generating revenue-producing projects or in furtherance of a business combination. (¶¶
45-46). For example, Apollo told a senior officer at CORE Media that the Sale Proceeds
could be used to acquire a stake for CORE Media in a merger with Endemol. (¶ 45.) In
addition, Director Defendant Aaron Stone purportedly told Marc Graboff, CORE
Media’s president at the time, that CORE Media’s debt was “distressed,” and that Apollo
planned to facilitate a “full operational merger” of CORE with Endemol. (¶ 46.)
Instead, the Trust alleges, Apollo “refused” to let CORE Media invest the Elvis/Ali
Proceeds in return for a stake in the Joint Venture or for any other “commercially
reasonable” purpose and kept it in a low-interest bearing account. (¶¶ 2, 3, 47, 84.) The
Trust asserts on information and belief that Apollo preferred that the Elvis/Ali Proceeds
remain on the CORE subsidiary’s balance sheet to make it easier for Apollo to obtain
financing for a CORE business combination. (¶ 47.) During this time, the CORE Media
Board apparently consisted exclusively of the Director Defendants. (¶ 51 (“Throughout
2014, the Director Defendants were directors of CORE Media.”); MTD at 6 (“The CORE
Media board at that time consisted of Defendants Travis Hennings, Lee Solomon, and
Aaron Stone, who were Apollo employees.”).) The Complaint does not refer to any other
CORE Media directors. The Complaint further avers that throughout 2014, while the
Elvis/Ali Proceeds sat in a bank account, the CORE Media Board did not hold any
meetings. Instead, decisions were made through an executive committee consisting of
the Director Defendants, and there are no minutes or other corporate governance
records relating to the use, if any, of the Elvis/Ali Proceeds. (¶ 51.)
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 7 of 31

8
D. 	Business Combination Agreement
On October 9, 2014, Defendant AP Coop, apparently an Apollo affiliate,
Defendant Apollo Holdings and non-party 21 st Century Fox Europe and Asia, Inc.
entered into the Business Combination Agreement (“BCA”). 8 (¶ 48.) In substance,
through a complicated set of transactions outlined in BCA at § 2.1, Apollo Holdings
transferred its stock in CORE Holdings (and hence, its indirect ownership of CORE
Media), as well as its interest in Endemol, to the Joint Venture (defined as “HoldCo”)
(BCA at p. 9), Fox simultaneously transferred its interest in Shine to HoldCo, and Fox
and AP Coop each received a 50% ownership stake in HoldCo. In addition, Apollo
received between $100 and $175 million in cash from Fox. (¶ 48.)
The BCA included several key provisions concerning the Huff Judgment, which
was pending appeal at the time of closing. First, CORE Holdings represented that CORE
Media maintained a Citibank account with $75.6 million in cash, reserved exclusively to
satisfy the Huff Judgment (“Huff Reserve”). (¶ 35; see also BCA at § 3.22 (“As of the
date hereof, [CORE Media] maintains the Huff Reserved Account with respect to the
Huff Appraisal Rights Matter, which had a balance as of the date hereof equal to the
amount set forth on Section 3.22(a) of the CORE Disclosure Schedule (the ‘Huff
Reserved Amount’) . . . .”); CORE Disclosure Schedule 3.22 (designating $75.6 million as
Huff Reserved Amount).) 9 Second, AP Coop and CORE Holdings covenanted that
pending the closing the Huff Reserve would not be used for any purpose other than to
8 	The BCA is attached as Exhibit C to the Shamah Decl.
9 	The CORE Disclosure Schedule 3.22 is attached as Exhibit D to the Shamah Decl.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 8 of 31

9
satisfy the Huff Judgment and related costs and expenses. (¶ 49.) 10 Third, AP Coop
agreed to indemnify Fox “from, against and in respect to all Losses . . . based upon,
arising out of or incurred as a result of”
(c) (i) any Huff Interest and Huff Legal Fees actually paid or required to be
paid by CORE or its Subsidiaries and (ii) without duplication of the
amount set forth in clause (i) above, the aggregate amount actually paid or
required to be paid by CORE or its Subsidiaries (including any such
amounts actually paid by CORE or its Subsidiaries pursuant to any
settlement or judgment) pursuant to the Huff Appraisal Rights Matter in
excess of (x) the Huff Reserved Amount plus (y) any interest accrued
thereon from and after the date hereof (collectively, “Huff Appraisal Rights
Losses”)[.]
(BCA at § 10.2(c) (emphasis added).) 11
The indemnity was subject to two limitations. First, AP Coop did not have to
indemnify Fox until the Huff Appraisal Rights Losses exceeded $15 million, i.e., when
the Huff Judgment liability surpassed the $75.6 million Huff Reserve by $15 million.
(BCA at § 10.4(b)(iii) (“AP Coop shall not have any obligation to indemnify [Fox]
pursuant to Section 10.2(c) unless and until the aggregate amount of all Huff Appraisal
10 	The covenant stated, in pertinent part, that:
From the date of this Agreement until the Closing, CORE Holdings shall cause CORE and
each of CORE’s Subsidiaries to conduct their business and operations in the ordinary
course of business consistent with past practice . . .
Without limiting the generality of the foregoing, except as contemplated by this
agreement . . . CORE Holdings shall not and shall cause CORE and each of CORE’s
Subsidiaries not to:
. . .
(xvi) distribute or use any funds from the Huff Reserved Account other than for the
purpose of paying any Huff Legal Fees, Huff Interest or any other amounts in connection
with the Huff Appraisal Matter[.]
(BCA at § 6.1(a)(xvi) (emphasis added).)
11 	According to CORE Disclosure Schedule 3.22, as of October 3, 2014, Huff Interest totaled $15.7
million, and CORE Media had incurred $8.3 million in Huff Legal Fees, $6.8 million of which it had
already paid.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 9 of 31

10
Rights Losses exceeds $15,000,000 . . . .”).) Second, once the Huff Appraisal Rights
Losses exceeded the $15 million hurdle, AP Coop’s obligation to indemnify Fox was
limited to the losses apportioned to Fox’s 50% share of HoldCo. (Id.) In short, AP Coop
only had to indemnify Fox for 50% of the amount paid on account of the Huff Judgment
in excess of $90.6 million.
According to the Trust, no CORE Media officer saw the “full” BCA until 2017. (¶
50.) The Complaint alleges that the Defendants hid the BCA from CORE to conceal the
covenant and indemnification provisions relating to the Huff Judgment. (Id.)
E. 	CORE Descends into Insolvency
CORE 12 was “likely” insolvent by early 2014. (¶ 52.) According to CORE’s
consolidated financial statements for 2013, its total liabilities exceeded its total assets by
over $14 million and it was operating at a net loss of $134 million. Id.) Declining
revenues from key assets like “American Idol” and “So You Think You Can Dance”
aggravated CORE’s financial hardships. (¶¶ 53, 55.) Moody’s downgrade of CORE’s
corporate family rating further exacerbated the situation. (¶ 55.) The Complaint avers
that the downgrade was caused, at least in part, by CORE Media’s failure to reinvest the
Elvis/Ali Proceeds. (Id.) By February 2015, when the Delaware Supreme Court
affirmed the Huff Judgment, CORE Media’s assets were worth far less than the $360
million it still owed under the Secured Loans. (¶ 57; see ¶¶ 56, 58.)
F. 	CORE Media Pays the Huff Judgment
12 	The term “CORE” is defined in the Complaint as “CORE Media and various of its affiliates.” (¶
14.)
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 10 of 31

11
After the Huff Judgment was affirmed, the Board of Directors for CORE Holdings
convened three times to deliberate, and eventually authorize, payment of the Huff
Judgment. (¶¶ 59, 67, 73.) By then, the Board consisted of ten directors: the three
Director Defendants (Hennings, Solomon, and Stone), three directors appointed by Fox
(David DeVoe, Eleni Lionaki, and Jeff Palker), and four directors with no alleged
affiliations (Peter Brown, Ross Lukatsevich, Barry Siegel, and Priscilla Presley). (¶ 59.)
The Complaint does not allege whether the CORE Media Board met simultaneously or
separately, if at all, or whether it shared the same directors as the CORE Holdings
Board.
The first meeting took place on February 18, 2015, with the full CORE Holdings
Board in attendance. (¶ 59.) Attorneys from Paul Weiss Rifkind Wharton & Harrison
LLP (“Paul Weiss”), counsel to CORE Holdings and CORE Media, also attended. (¶
59.)13 Paul Weiss distributed a presentation to CORE Holdings, which explained that on
February 27, the Huff Judgment would be remanded to the Chancery Court with a
mandate to satisfy the $93.1 million judgment to follow soon after. (¶ 60; Reply Decl. at
Ex. B [Under Seal] (“February 18 Presentation”), 2, 5.) The February 18 Presentation
urged the Board to decide the payment issue in light of their fiduciary duties by
February 27. (February 18 Presentation at 5-8.) The Board was advised that non-
payment could lead Huff to “seize CORE 14 bank accounts or other assets to collect the
judgment.” (February 18 Presentation at 9.) Paul Weiss further advised that CORE
13 	The Complaint alleges that Paul Weiss was also representing Apollo at the time but does not
elaborate on the nature of the representation. (¶ 59.)
14 	In the presentations to the Board, “CORE” referred to CORE Media.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 11 of 31

12
could seek chapter 11 relief to prevent asset seizures and might even be able to
subordinate the Huff Judgment, but filing a petition without a negotiated plan in place
posed a “time consuming, costly and uncertain proposition.” (February 18 Presentation
at 9; see also Complaint at ¶ 61.)
The Trust asserts that the February 18 Presentation did not disclose the terms of
the BCA, and specifically, the covenant and indemnity regarding the Huff Judgment. (¶
63.) Nor did Apollo heed the warnings of CORE Media’s senior officers about CORE
Media’s potential insolvency. (¶ 64.) In fact, the draft of the February 18 minutes
deleted specific references to CORE Media’s insolvency. (¶ 65.) CORE Media’s officers
were bewildered by Apollo and Paul Weiss’s insistence on satisfying the Huff Judgment.
(¶ 66.)
The Board next met on February 24; all but one of the directors, a Fox appointee,
attended. (¶ 67.) Paul Weiss provided another presentation at the meeting (“February
24 Presentation”) which reiterated the implications of non-payment (see February 24
Presentation at 8) and warned that a non-negotiated chapter 11 filing could “have a
significant adverse affect [sic] on the company.” (February 24 Presentation at 10.)
Paul Weiss also cautioned the Holdings Board that a free-fall chapter 11 filing could
expose CORE to litigious creditors and a lengthy, costly path to confirmation. (Id.)
Conversely, satisfying the judgment would enable CORE “to embark upon an orderly
process to restructure or refinance the debt” owed to the CORE’s lenders under the
Secured Loans (“Secured Lenders”). (February 24 Presentation at 4; Complaint at ¶
69.) The February 24 Presentation included financial data that showed CORE Media’s
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 12 of 31

13
total liabilities for year-end 2014 exceeded its total assets by over $100 million.
(February 24 Presentation at 19.)
The Complaint characterizes the February 24 Presentation as “intentionally, and
unduly, optimistic” about the merits of satisfying the Huff Judgment. (¶ 69.) According
to the Trust, Paul Weiss lacked any basis to claim that paying Huff would better position
CORE to refinance the Secured Loans, which were coming due in 2017 and 2018, and
already required significant interest payments in 2015 and 2016. (¶ 69.) The Trust also
claims that the February 24 Presentation falsely portrayed “American Idol” as
stabilizing, even though its ratings and revenue had been trending downward, and Fox
would announce within the month that it was not renewing the show. (¶ 70.)
On February 26, the Holdings Board met for the third and final time and
unanimously voted to pay the Huff Judgment (“Huff Payment”). (¶¶ 73, 74; Minutes of
the Board of Directors of CORE Entertainment Holdings, Inc., February 26, 2015
(“February 26 Minutes”).)15 The February 26 Minutes did not disclose whether Apollo
had an interest in authorizing the Huff Payment or if any Director Defendant had a
personal conflict. (¶ 74.) The Huff Payment was made in March 2015. (¶ 77.) Shortly
thereafter, CORE Media’s financial statements revealed significant deterioration in year-
over-year adjusted EBITDA. (¶¶ 78-79.) In June 2015, CORE Entertainment missed an
interest payment on the Second Lien Loan, resulting in default. (¶ 80.) Less than a year
later, the Debtors filed for chapter 11.
15 	Although the Complaint alleges that the meeting was fully attended (¶ 73), the February 26
Minutes indicate that Mr. Davoe, a Fox appointee, was absent.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 13 of 31

14
G. 	The State Court Lender Action
On December 12, 2016, the Trust filed a complaint in Los Angeles County
Superior Court asserting tortious interference and breach of contract claims against
Apollo and others (“Lender Action”). (CORE Litig. Tr. v. Apollo Glob. Mgmt., LLC, No.
BC643732 (Cal. Sup. Ct.), filed Dec. 12, 2016 (“California Complaint”).)16 The
California Complaint claims had been assigned to the Trust by the Secured Lenders.
(Opp. at 4; see also Findings of Fact, Conclusions of Law and Order Signed on
9/22/2016 Confirming Second Amended Joint Chapter 11 Plan of Reorganization for
AOG Entertainment, Inc. and Its Affiliated Debtors, entered September 23, 2016, at §§
1.88, 7.1 (“Plan”) (ECF Main Case Doc. # 436).) Certain defendants in the Lender
Action are not named in the Complaint, including Fox, Endemol and certain Apollo-
related entities. (See California Complaint at ¶¶ 23-44).) The Director Defendants, on
the other hand, are not defendants in the Lender Action. (Opp. at 5.) AP NMT JV
Newco B.V., d/b/a Endemol Shine Group, i.e., the Joint Venture, is a defendant in the
Lender Action but has been dismissed as a defendant from this adversary proceeding.
The allegations in the California Complaint were summarized by the Court in the
Mandatory Abstention Decision (defined below). In the main, the Trust asserted that
Apollo and its co-defendants tortuously interfered with agreements governing the
Secured Loans (“Loan Agreements”), triggering breaches under the Successor Obligor
and Change of Control Clauses in the parties’ Loan Agreements. 17 These transactions
16 	The California Complaint is attached as Exhibit E to the Shamah Decl.
17 	Section 6.05(a)(1) of each Loan Agreement provided that CORE Entertainment f/k/a CKx
Entertainment, Inc. (the “Borrower”), CORE Media’s indirect parent, would not merge with or sell
substantially all of their assets to another company unless the successor entity expressly assumed all of its
obligations under the Loan Agreements (the “Successor Obligor Clause”). (California Complaint at ¶ 56.)
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 14 of 31

15
caused CORE Entertainment and the guarantors to default in their payment obligations
and drained the CORE entities of liquidity, interfered with the rights of creditors under
the Loan Agreements, prevented the CORE entities from exploiting opportunities and
made the exercise of the Secured Lenders’ rights more costly and burdensome.
H. 	Mandatory Abstention Decision
After the California defendants removed the Lender Action to California federal
court, they successfully moved to transfer the action to this District. (Opp. at 4; MTD at
11.) Following referral to this Court by the District Court, the Trust moved for both
mandatory and permissive abstention pursuant to 28 U.S.C. § 1334(c). The Court
granted the Trust’s motion for mandatory abstention and remanded the Lender Action
to California state court. Core Litig. Tr. v. Apollo Glob. Mgmt., LLC, et al. (In re AOG
Entm’t, Inc.), 569 B.R. 563, 585 (Bankr. S.D.N.Y. 2017) (“Mandatory Abstention
Decision”). 18
I. 	New York Complaint
Following remand to the California Court, the Defendants moved to dismiss or
stay the Lender Action on forum non conveniens grounds. (MTD at 11.) On October 3,
2017, the motion was granted, prompting the Trust to re-file the Lender Action in New
York State Supreme Court. (MTD at 11-12; see generally Core Litig. Tr. v. Apollo Glob.
Section 2.08(f) of each Loan Agreement stated that in the event of a “Change of Control,” the Borrower
would prepay all outstanding loans plus a premium within 30 days of the Change of Control (the “Change
of Control Clause”). (Id. at ¶ 57.) A “Change of Control” was defined as an acquisition by any person or
group of more than 50% of the total voting power of the Voting Stock of the Borrower. (Id.)
18 	The Court did not rule on the Trust’s motion for permissive abstention. Id.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 15 of 31

16
Mgmt., LLC, No. 656856/2017 (N.Y. Sup. Ct.), filed Nov. 9, 2017 (“New York
Complaint”).)19
The New York Complaint is essentially identical to the California Complaint. It
alleges that Apollo 20 and the other defendants intentionally interfered with the Loan
Agreements by executing the BCA transaction, causing Apollo to lose “control” of CORE,
thus triggering the Secured Lenders’ “Change of Control” rights. (New York Complaint
at ¶¶ 92-96, 99-100; MTD at 12.) The Trust alleges that transactions executed to
advance the BCA transaction, including the sale of the Elvis and Ali Rights (New York
Complaint at ¶¶ 152, 155), “drained CORE of revenue generating potential” and “caused
CORE to shift its strategic focus in directions intended to benefit the anticipated Joint
Venture rather than benefit CORE itself . . . .” (Id. at ¶ 98.) These actions allegedly
“interfered with CORE’s performance of its obligations under the [Loan Agreements] by
crippling its ability to exploit new opportunities and . . . further distressed CORE’s
financial condition.” (Id. at ¶ 100.)
The Apollo-affiliated defendants moved to dismiss the New York Complaint for
failure to state a claim on January 18, 2018. The state court heard argument on May 17,
2018, and took the motion under advisement. (MTD at 13.)
19 	The New York Complaint is attached as Exhibit J to the Shamah Decl.
20 	The New York Complaint uses “Apollo” to mean all of the Apollo-affiliates, including Apollo
Global Management, LLC, a defendant in this adversary proceeding. The New York Complaint alleges
that the Joint Venture is an alter ego of CORE Holdings. (New York Complaint at ¶ 25.).
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 16 of 31

17
K. 	This Adversary Proceeding
The Trust commenced this adversary proceeding on April 27, 2018. The
Complaint asserts the following six claims for relief:
Count 	¶¶ 	Defendants 	Nature of Claim
1 	81-90 	Director Defendants 	Breach of fiduciary duty of loyalty in
refusing to permit CORE Media to
invest the Elvis/Ali Proceeds in the
Joint Venture or in any other
commercially reasonable manner.
2 	91-94 	Apollo 	Aiding and abetting the Director
Defendants’ breach of their duty of
loyalty.
3 	95-103 	CORE Holding and the
Director Defendants
Breach of the fiduciary duty of loyalty in
paying the Huff Judgment.
4 	104-07 	Apollo, Apollo Holdings,
AP Coop, CORE
Holdings and the
Director Defendants
Aiding and abetting the breach of the
fiduciary duty of loyalty in connection
with the payment of the Huff Judgment.
5 	108-13 	Apollo 	Recovering the Huff Payment from
Apollo under 11 U.S.C. § 550(a) because
the Huff Payment was an intentional
fraudulent transfer under the
Bankruptcy Code and the Apollo was the
beneficiary of the transfer.
6 	114-21 	Apollo 	Recovering the Huff Payment from
Apollo under 11 U.S.C. § 550(a) because
the Huff Payment was an intentional
fraudulent conveyance under the New
York Debtor & Creditor Law and Apollo
was the beneficiary of the transfer.
The Defendants have moved for permissive abstention, or alternatively, to
dismiss the Complaint for failure to state a claim on which relief can be granted. As to
the former, they accuse the Trust of forum shopping and splitting its claims between the
Lender Action and this adversary proceeding. 	They further argue that the adversary
proceeding will not impact the administration of the estate, Delaware state law issues
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 17 of 31

18
predominate, the sole basis of jurisdiction is 28 U.S.C. § 1334 and the pendency of the
two New York litigations before different courts raises the danger of conflicting findings.
(MTD at 3, 14-20.) Alternatively, they argue that the Complaint is legally insufficient for
several reasons discussed below. (Id. at 3-5, 20-31.) 	In response, the Trust argues that
abstention is inappropriate because it has not engaged in forum shopping, the
fraudulent transfer claims are “core,” and the claims in the Lender Action are not closely
related to the claims in this adversary proceeding. (Opp. at 5-14.) Furthermore, the
Complaint adequately states claims, (id. at 14-39) and seeks leave to amend to the
extent the Complaint is deficient. (Id. at 39.) 21
DISCUSSION
A. 	Permissive Abstention
Pursuant to 28 U.S.C. § 1334(c)(1), a court may abstain from hearing a
proceeding within its jurisdiction “in the interest of justice, or in the interest of comity
with State courts or respect for State law.” Permissive or discretionary abstention was
intended to codify non-bankruptcy judicial abstention doctrines, Coker v. Pan Am.
World Airways (In re Pan Am. Corp.), 950 F.2d 839, 845 (2d Cir. 1991), which
recognized “the virtually unflagging obligation of the federal courts to exercise the
jurisdiction given them.” Colorado River Water Conservation Dist. v. United States,
424 U.S. 800, 817 (1976); see also Lothian Cassidy, LLC v. Lothian Expl. & Dev. II, L.P.,
487 B.R. 158, 165 (S.D.N.Y. 2013) (noting “presumption against abstention”).
21 	Given the Court’s decision to abstain, it does not address the legal sufficiency of the claims or the
request for leave to amend.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 18 of 31

19
The movant bears the burden of establishing that permissive abstention is
warranted, Bickerton v. Bozel S.A. (In re Bozel, S.A.), 434 B.R. 86, 102 (Bankr. S.D.N.Y.
2010), and the decision whether to abstain is committed to the Court’s discretion. See
Abir v. Malky, Inc. (In re Abir), No. 09 CV 2871(SJF), 2010 WL 1169929, at *7
(E.D.N.Y. Mar. 22, 2010) (citing In re Petrie Retail, Inc., 304 F.3d 223, 232 (2d Cir.
2002)). Among the factors the Court may consider are
(1) the effect or lack thereof on the efficient administration of the estate if a Court
recommends abstention, (2) the extent to which state law issues predominate
over bankruptcy issues, (3) the difficulty or unsettled nature of the applicable
state law, (4) the presence of a related proceeding commenced in state court or
other nonbankruptcy court, (5) the jurisdictional basis, if any, other than 28
U.S.C. § 1334, (6) the degree of relatedness or remoteness of the proceeding to
the main bankruptcy case, (7) the substance rather than form of an asserted ‘core’
proceeding, (8) the feasibility of severing state law claims from core bankruptcy
matters to allow judgments to be entered in state court with enforcement left to
the bankruptcy court, (9) the burden of [the court’s] docket, (10) the likelihood
that the commencement of the proceeding in a bankruptcy court involves forum
shopping by one of the parties, (11) the existence of a right to a jury trial, and (12)
the presence in the proceeding of nondebtor parties.
New York City Emps. Ret. Sys. v. Ebbers (In re Worldcom Secs. Litig.), 293 B.R. 308,
332 (S.D.N.Y. 2003) (quoting Masterwear Corp. v. Rubin Baum Levin Constant &
Friedman (In re Masterwear Corp.), 241 B.R. 511, 520 (Bankr. S.D.N.Y. 1999));
Peterson v. 610 W. 142 Owners Corp. (In re 610 W. 142 Owners Corp.), No. 94 B
44488(JGH), 1999 WL 294995, at *3 (S.D.N.Y. May 11, 1999). Not all of the factors
need be applied, and the “balance [of the factors] should be ‘heavily weighted in favor of
the exercise of jurisdiction.’” In re Portrait Corp. of Am., 406 B.R. 637, 642 (Bankr.
S.D.N.Y. 2009) (quoting Eastern Air Lines, Inc. v. Int’l Ass’n of Machinists & Aerospace
Workers, AFL–CIO (In re Ionosphere Clubs, Inc.), 108 B.R. 951, 954 (Bankr. S.D.N.Y.
1989)).
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 19 of 31

20
Several of the factors plainly weigh in favor of abstention. First, the adversary
proceeding will not affect the administration of the estates that remain open (Factor #
1). The Trust apparently agrees. (Opp. at 13 (“The Trust does not disagree that any
effect will be minor, at best.”).) In fact, the Mandatory Abstention Decision dealt with
same issue in a different context, ruling that remanding the removed action back to the
California state court would not prolong the administration or liquidation of the estates;
the Debtors had confirmed their plan, the cases remained open for independent
reasons, were otherwise fully administered and any proceeds recovered by the Trust
would be distributed in accordance with the plan. Mandatory Abstention Decision, 569
B.R. at 584-85. Second, except for Count 5 and to some extent Count 6, state law issues
predominate (Factor # 2), the claims arose pre-petition and are non-core (Factor # 7)
and are remote from the bankruptcy cases (Factor # 6). Even the intentional fraudulent
transfer claim alleged in Count 6 is based on state law. Third, the only jurisdictional
basis for the adversary proceeding is 28 U.S.C. § 1334(b) (Factor # 5). 22
Other factors militate against abstention. The state law claims are not
particularly unsettled or difficult (Factor # 3). The breach of fiduciary duty and
probably the aiding and abetting claims are governed by Delaware law which is well-
settled and has been applied by this Court in the past. E.g., Responsible Pers. of
Musicland Holding Corp. v. Best Buy Co., Inc. (In re Musicland Holding Corp.), 424
B.R. 95 (Bankr. S.D.N.Y. 2010); Responsible Pers. of Musicland Holding Corp. v. Best
Buy Co., Inc. (In re Musicland Holding Corp.), 398 B.R. 761 (Bankr. S.D.N.Y. 2008). In
22 	The parties are also entitled to a jury trial. (Factor # 11). No party has made a jury demand but
the time within which to do so has not expired.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 20 of 31

21
addition, although any litigation is a burden on the Court’s docket (Factor # 9), I cannot
conclude that this factor weighs in favor of abstention for that reason.
B. 	Forum Shopping and Relatedness
The two most controversial factors raised by the parties concern relatedness to
the Lender Action (Factor # 4) and forum shopping (Factor # 10). “Forum shopping
occurs when a litigant selects a forum with only a slight connection to the factual
circumstances of his action, or where forum shopping alone motivated the choice.”
Riviera Trading Corp. v. Oakley, Inc., 944 F. Supp. 1150, 1158 (S.D.N.Y.1996) (citation
omitted); accord Star Indem. & Liab. Co. v. Brightstar Corp., 324 F. Supp. 3d 421, 434-
35 (S.D.N.Y. 2018); Everest Capital Ltd. v. Everest Funds Mgmt., L.L.C., 178 F. Supp.
2d 459, 470 (S.D.N.Y. 2002). The Defendants’ forum shopping argument, to the extent
directed at the initiation of the Lender Action first in California and then in New York,
lacks merit. The Trust always wanted to litigate the Lender Action in California. The
Defendants removed the Lender Action to California federal district court and
successfully moved to transfer the Lender Action to New York. In the Mandatory
Abstention Decision, this Court granted the Trust’s motion to remand it back to
California state court under principles of mandatory abstention. Once back in
California, the Defendants successfully moved to dismiss or stay the California
Complaint on forum non conveniens grounds. This left the Trust no choice but to refile
the Lender Action in the New York State Supreme Court. Moreover, by convincing the
California Court that the New York forum was more convenient, the Defendants cannot
contend that New York lacks a significant connection to the facts of the Lender Action.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 21 of 31

22
Instead, the forum shopping and relatedness arguments focus on the Trust’s
decision to file the Lender Action in New York state court and the adversary proceeding
less than six months later in this Court even though, the Defendants contend, the two
are related. (See MTD at 3, 15-17.) The Defendants suggest that the Trust bifurcated its
claims in order to advance incompatible arguments in separate fora without exposing
the factual and legal commonalities and inconsistencies between the two lawsuits. (See
id. at 17.) The selection of a different venue to litigate an incompatible theory does
imply forum shopping. Cf. Iragorri v. United Tech. Corp., 274 F.3d 65, 72 (2d Cir.
2001) (forum shopping under a forum non conveniens multi-factor analysis includes an
attempt to win a tactical advantage). While I give the Trust the benefit of the doubt on
this factor and find it neutral, it is nevertheless clear that the two lawsuits are so related
that trying them separately will waste judicial resources and possibly lead to
inconsistent results.
In deciding whether to permissively abstain, “courts weigh considerations of
comity and federalism, judicial economy, and efficiency.” Delaware Tr. Co. v.
Wilmington Tr., N.A., 534 B.R. 500, 512 (S.D.N.Y. 2015); accord Little Rest. Twelve,
Inc. v. Visan, 458 B.R. 44, 61 (S.D.N.Y. 2011) (abstaining in the exercise of discretion
where the claims arose from the same basic factual background, some issues overlapped
and combining the two actions in one court would promote judicial economy); Wallace
v. Guretzky, No. CV–09–0071 (SJF), 2009 WL 3171767, at *3 (E.D.N.Y. Sept. 29, 2009)
(“[J]udicial economy is better served by the bankruptcy court’s decision to abstain, since
allowing parallel proceedings on issues which are admittedly ‘nearly identical’ to
proceed would require two (2) separate trials with the same witnesses.”); In re Portrait
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 22 of 31

23
Corp. of Am., Inc. 406 B.R. 637 (Bankr. S.D.N.Y. 2009) (overlapping factual issues
weigh in favor of permissive abstention); In re Schick, 232 B.R. 589, 600 (Bankr.
S.D.N.Y. 1999) (“[T]he considerations that drive an abstention motion coincide with the
most relevant Sonnax factors, to wit, judicial economy and efficient administration.”);
cf. Raul v. Bande, 316 B.R. 127, 138 (S.D.N.Y. 2004) (denying permissive abstention and
equitable remand, inter alia, in the interest of judicial economy). Here, many of the
claims are substantially related, are based on the same facts and require the same
witnesses and evidence to prove or counter the Trust’s allegations in both litigations.
Moreover, counsel are the same in both cases.
1. 	Claims relating to the Joint Venture
a. 	The Lender Action
The claims asserted in the First and Second Causes of Action in the Lender Action
allege that the Defendants tortiously interfered with CORE’s performance under the
Loan Agreements and induced their breach. According to the New York Complaint,
Apollo embarked on a scheme to recover its investment in an insolvent CORE Media. It
began by selling the Elvis/Ali Rights for $115 million, falsely telling a CORE Media
senior officer that the proceeds would be deployed to generate revenue-producing
projects for CORE Media’s benefit. (New York Complaint at ¶ 55.) Instead, Apollo
wanted the $115 million to sit on CORE Media’s balance sheet, earning virtually no
interest, to make it easier to obtain financing for the combined Endemol-CORE Media
entity. (Id. at ¶ 56.)
Apollo’s scheme required that it remain secret from the CORE family. At the
beginning of 2014, Apollo caused CORE Holdings to cease conducting board meetings,
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 23 of 31

24
and all corporate actions were conducted by an executive of Apollo designees (the
Director Defendants) with no known meeting minutes, allowing Apollo to operate in
secret and force CORE to enter into secret transactions. (Id. at ¶¶ 60, 152.) Apollo
refused to permit CORE Media to invest in Endemol, pay the Secured Lenders or re-
invest the Elvis/Ali Proceeds in new projects; this was commercially unreasonable from
the perspective of CORE Media and the Secured Lenders. (Id. at ¶ 56.)
In February 2014, Apollo and Fox signed a term sheet to form a combined entity
consisting of CORE, Shine and Endemol. (Id. at ¶ 57.) After acquiring 100% of
Endemol, and based on an overvaluation of CORE Media’s equity (CORE Media was
insolvent), Apollo engineered the formation of the Joint Venture. It contributed 100%
0f its equity interests in CORE Holdings and Endemol to the Joint Venture and expected
to receive between $100 million and $175 million from Fox for its contribution. (Id. at ¶
58.) Important to the Trust’s theory, the management of the Joint Venture, which
consisted of two Fox appointees and one Apollo appointee, gave Fox majority voting
power over the Joint Venture, and hence CORE Media’s, business. (See id. at ¶¶ 59, 81.)
“But to ensure no interference from third parties, the Defendants intentionally hid the
Business Combination Agreement from CORE and its creditors [and] the Trust first
obtained a copy of the Business Combination Agreement only in 2017. . . .” (Id. at ¶ 80.)
The entry into the BCA and the formation of the Joint Venture caused CORE to breach
the Change of Control and Successor Obligor Clauses and interfered with its ability to
perform its obligations under the Loan Agreements as alleged in the First Cause of
Action in the New York Complaint (id. at ¶¶ 112-28), and induced CORE to breach the
Lender Agreements as alleged in the Second Cause of Action. (Id. at ¶¶ 129-44.)
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 24 of 31

25
b. 	This Adversary Proceeding
The same factual allegations in the Complaint underlie the Trust’s breach of
fiduciary duty claim in Count 1 and the related aiding and abetting claim in Count 2.
The Complaint alleges that Apollo embarked on a scheme to cash out its equity in the
insolvent CORE Media. (¶ 41.) As part of its scheme, Apollo directed CORE Media to
sell the Elvis/Ali Rights for approximately $115 million in cash and place the proceeds in
an unrestricted subsidiary of CORE Media. (¶ 42.) It was represented to CORE Media
officers, presumably by Apollo, that the proceeds would be invested in new projects or
used to acquire a stake in Endemol or in a revenue-producing project. (¶¶ 45 43, 86.)
However, Apollo “needed the $115 million in cash to remain on the balance sheet at
CORE, which on information and belief, would make it easier for Apollo to obtain
financing for the combined Endemol-Core entity” and “refused to permit CORE to do
anything commercially reasonable with the cash generated from the sale of the Elvis
Rights and the Ali Rights.” (¶ 47; see ¶¶ 84, 88, 89.)
Again, secrecy was required. To hide its intentions from CORE Media, the
Director Defendants, who were directors of CORE Media, made sure not to conduct
board meetings throughout 2014. (¶ 51.) Instead, they made decisions through an
executive committee established by Apollo and there are no minutes of any meetings of
the CORE Media board. (Id.)
In February 2014, Apollo drafted a term sheet involving Apollo, Endemol, CORE
Media, Shine and Fox “to effectuate the consolidation, merger, or amalgamation of the
Endemol, CORE and Shine businesses.” (¶ 44.) The term sheet stated that the
contemplated business, which ultimately became the Joint Venture, would be partially
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 25 of 31

26
funded with the proceeds from the sale of the Elvis/Ali Rights. (Id.) In October 2014, it
entered into the BCA under which, “Apollo Global transferred its stock in CORE
Holdings to the Joint Venture, which combined CORE Holdings, Endemol and Shine,
and, using an inflated value, Apollo received, on information and belief, at least $100
million (and as much as $175 million) in cash from Fox.” (¶ 48.) “But to ensure no
interference from third parties, the Defendants intentionally hid the existence of the
BCA from CORE Media’s officers and its creditors. Indeed, it was not until 2017 that the
Trust first obtained a copy of the BCA. . . .” (¶ 50.)
The foregoing recitation shows that the First and Second Causes of Action in the
Lender Action and Counts 1 and 2 in the Complaint arise from Apollo’s alleged scheme
to extract its investment in CORE by selling the Elvis/Ali rights, hoarding instead of
investing the proceeds to facilitate financing the Joint Venture, hiding its intentions and
actions from CORE’s senior officers and creditors, and finally, forming the Joint
Venture. In the Lender Action, the Trust argues that the execution of the scheme,
including the hoarding of the Elvis/Ali Proceeds and the formation of the Joint Venture,
tortiously interfered with the Secured Lenders’ contract rights and induced CORE
Entertainment’s breach. In the adversary proceeding, the Trust argues that the
execution of the same scheme, including the hoarding of the Elvis/Ali Proceeds Joint
Venture and culminating in the formation of the Joint Venture, stole a corporate
opportunity that belonged to CORE Media. The circumstances surrounding the alleged
scheme and the formation of the Joint Venture are common to both cases, form the
basis of both sets of claims and will require the same evidence to prove or rebut.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 26 of 31

27
2. 	Claims relating to the Huff Judgment
The allegations in the Lender Action do not directly concern the payment of the
Huff Judgment. Nevertheless, the findings regarding the change of control bear directly
on the Counts 3 through 6 in the Complaint and splitting the litigation between two
courts may lead to inconsistent results. The substance of the Lender Action is that Fox
acquired control of CORE Holdings and its affiliates, including CORE Media, through its
control of the Joint Venture (CORE Holdings’ parent), triggering the Change of Control
and Successor Obligor Clauses. Moreover, the change of control was not a mere
technical breach leaving Apollo in actual control; the Joint Venture and Fox acquired
actual control of CORE Media. The Trust alleges that “[t]he Joint Venture . . . inherited
Apollo’s complete control and domination over CORE Holdings (and, by extension,
CORE)” (New York Complaint at ¶ 83), “Fox ha[d] the power to block the Joint Venture
from taking action in numerous, material circumstances” (id. at ¶ 93), the practical
effect of the management of the Joint Venture was “to dilute the voting power of
Apollo’s Voting Stock in CORE to less than a majority,” (id. at ¶ 94), and importantly,
“Fox in fact actually controlled the business of the Joint Venture (thereby controlling
CORE) because it could appoint the majority of the Joint Venture’s management
committee.” (Id. at ¶ 95.) Furthermore, “[t]he Joint Venture, through Endemol, treated
CORE’s assets as if such assets were the Joint Venture’s own property and continued
operating CORE's businesses.” (Id. at ¶ 154.)
Counts 3 and 4 asserted in the Complaint conflict with the theory of the Lender
Action because they are premised on Apollo’s continuing control of CORE Media after
the formation of the Joint Venture. Count 3 alleges that CORE Holdings, acting through
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 27 of 31

28
the Director Defendants, breached their fiduciary duties “when they forced CORE Media
to authorize and pay the [Huff] Payment,” (¶ 99) (emphasis added), “instead of pursuing
restructuring options that would have provided a far better return for CORE Media’s
creditors, at a time when CORE Media was insolvent and lacked reasonable capital,” (¶
101 (a)), and Count 4 alleges that the Defendants aided and abetted the breach of
fiduciary duty by “[d]irecting CORE Media to pay the Huff Judgment instead of
pursuing restructuring options.” (¶ 106(a) (emphasis added).)
These allegations contradict the theory underpinning New York Complaint.
While CORE Holdings remained the indirect parent of CORE Media, and the CORE
Holdings Board approved the Huff Payment, Fox and the Joint Venture controlled
CORE Holdings and CORE Media after the formation of the Joint Venture. According
to the Complaint, however, Apollo’s designees, the Director Defendants, continued to
control CORE Holdings and forced CORE Media to pay the Huff Judgment 23 in breach
of their fiduciary duties. Some Court (but not two) must decide who controlled CORE
Holdings and CORE Media following the formation of the Joint Venture ─Fox and the
Joint Venture or Apollo and CORE Holdings through the Director Defendants ─ and
thereby “directed” CORE Media to pay the Huff Judgment.
Counts 5 and 6 substantially overlap with the breach of fiduciary duty claims
asserted in Counts 3 and 4 and face the same inconsistencies with the Lender Action.
Counts 5 and 6 seek to avoid the Huff Payment as an intentional fraudulent transfer
23 	The allegation also ignores the fact that by this time the CORE Holdings Board consisted of ten
directors, three designated by Apollo, three designated by Fox and four unaffiliated, and the nine voting
directors unanimously approved the Huff Payment.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 28 of 31

29
under bankruptcy law (Count 5) 24 and the New York Debtor and Creditor Law
(“NYDCL”) (Count 6). 25 Notwithstanding the fraudulent nature of the Huff Payment,
the Trust did not sue Huff; instead it seeks to recover the value of the Huff Payment
from Apollo Global on the theory that it was the party for whose benefit the transfer was
made.26 Relying on the Director Defendants’ and Apollo’s wrongful intent, which the
Complaint imputes to CORE Media, (¶¶ 110, 118), the Trust alleges the following badges
of fraud: Apollo Global and the Director Defendants (i) directed the insolvent CORE
Media to pay the Huff Judgment instead of pursuing restructuring options that would
have provided a better return for other creditors; (ii) intentionally failed to disclose to
24 	Bankruptcy Code § 548(a)(1)(A) provides in pertinent part:
The trustee may avoid any transfer . . . of an interest of the debtor in property . . . that
was made or incurred on or within 2 years before the date of the filing of the petition, if
the debtor voluntarily or involuntarily-
(A) made such transfer . . . with actual intent to hinder, delay, or defraud any entity to
which the debtor was or became, on or after the date that such transfer was made . . .,
indebted.
25 	NYDCL § 276 states in pertinent part:
Every conveyance made . . . with actual intent, as distinguished from intent presumed in
law, to hinder, delay, or defraud either present or future creditors, is fraudulent as to both
present and future creditors.
The Trust can utilize the provisions of NYDCL § 276 through the operation of Bankruptcy Code
§ 544(b)(1), which provides in pertinent part:
[T]he trustee may avoid any transfer of an interest of the debtor in property . . . that is
voidable under applicable law by a creditor holding an unsecured claim that is allowable
under section 502 of this title or that is not allowable only under section 502(e) of this
title.
26 	Bankruptcy Code § 550(a)(1) provides:
(a) Except as otherwise provided in this section, to the extent that a transfer is avoided
under section 544, 545, 547, 548, 549, 553(b), or 724(a) of this title, the trustee may
recover, for the benefit of the estate, the property transferred, or, if the court so orders,
the value of such property, from-
(1) the initial transferee of such transfer or the entity for whose benefit such transfer was
made; or
(2) any immediate or mediate transferee of such initial transferee.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 29 of 31

30
the CORE Holdings board that Apollo affiliates were contractually obligated to pay the
Huff Judgment and faced indemnification liability if it was not paid; (iii) hid the BCA
from CORE Media’s creditors and senior officers; (iv) ignored the recommendations of
CORE Media’s officers not to pay the Huff Judgment; (v) caused CORE Media to pay the
Huff Judgment before independent directors were appointed to CORE Entertainment’s
board; (vi) and actively discouraged the full and fair exploration of maximizing value
alternatives including a chapter 11 reorganization. (¶¶ 111, 119.) Except for hiding the
BCA from CORE Media’s senior officers and creditors, these are the exact same
allegations that the Trust made in support of its breach of fiduciary duty claim in Count
3, (id. at ¶ 101), and substantially track the aiding and abetting claim in Count 4. (Id. at
¶ 106) (alleging the Defendants aided and abetted the Director Defendants’ and CORE
Holdings’ breach of fiduciary duty by directing CORE Media to pay the Huff Judgment
instead of pursuing restructuring alternatives that provided a better return to creditors
and by failing to disclose to the board that Apollo Global affiliates were contractually
obligated to pay the Huff Judgment and faced indemnification liability if it did not).
Notwithstanding their core nature, the intentional fraudulent transfer claims rely
on the same wrongful conduct as the claims in Counts 3 and 4 and suffer from the same
inconsistencies with the Lender Action. 27 While some of the badges are independent of
27 	The Trust argues that the Court retained exclusive jurisdiction under the confirmed plan “[t]o
recover all assets of the Debtors and property of the Estates,” Plan, Art. XIII(q), and while the Plan cannot
confer jurisdiction, the Plan provision “is evidence that this Court is the proper forum to exercise
jurisdiction over ‘core’ fraudulent transfer claims arising under the Bankruptcy Code and related estate
causes of action.” (Opp. at 8.) I do not dispute that this Court is a proper forum, but I reject the implicit
notion that is the only proper forum, see 28 U.S.C. § 1334(b) (granting the district courts original but not
exclusive jurisdiction over bankruptcy proceedings), or the most appropriate forum in this case. The
decision in this case to abstain cannot be viewed in a vacuum. It results from the way the Trust has split
factually similar claims between two different actions pending in two different courts.
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 30 of 31

31
the control issue (the non-disclosure issues), the “core” claim is that the Director
Defendants and Apollo Global, through their control of CORE Holdings, caused CORE
Media to pay the Huff Judgment for Apollo’s selfish purposes. Whether the Director
Defendants or Apollo controlled CORE Holdings or could have caused CORE Media to
do anything once the Joint Venture was formed is also the issue presented in the Lender
Action. There, the Trust alleges that Apollo lost control of CORE Holdings and CORE
Media; here, it alleges that it did not. For the reasons stated, the Trust should present
its overlapping and inconsistent theories to one court, not two.
Accordingly, the Court will abstain in the exercise of its discretion from deciding
the claims asserted by the Trust and does not reach the alternative issue of whether the
Complaint fails to allege legally sufficient claims for relief. Settle order on notice.
Dated: 	New York, New York
March 5, 2019
/s/ Stuart M. Bernstein
STUART M. BERNSTEIN
United States Bankruptcy Judge
18-01540-smb Doc 30 Filed 03/05/19 Entered 03/05/19 08:12:20 Main Document
Pg 31 of 31