Martin Nicholas John Trott v. Deutsche Bank, AG

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------X MARTIN NICHOLAS JOHN TROTT and CHRISTOPHER JAMES SMITH, Case No. 1:20-cv-10299-MKV on behalf of and solely in their capacity as the Foreign Representatives and Joint USDC SDNY Official Liquidators of MADISON DOCUMENT ASSET LLC (IN LIQUIDATION), ELECTRONICALLY FILED DOC #: Plaintiffs, DATE FILED: 6/14/2 022 -against- DEUTSCHE BANK AG, Defendant. -----------------------------------------------------X CONSENT MOTION TO RELIEVE PLAINTIFFS OF THE OBLIGATION TO ANSWER DEFENDANT’S COUNTERCLAIM Plaintiffs, the JOLs,1 pursuant to Local Rule 7.1(D), file this Consent Motion to Relieve Plaintiffs of the Obligation to Answer Defendant’s Counterclaim. In support of this Motion, Plaintiffs state as follows: 1. On May 20, 2022, Defendant filed its Answer, Defenses, and Counterclaim to the JOLs’ Second Amended Complaint asserting a counterclaim for indemnity. Doc. 63. The JOLs’ deadline to respond, which is June 10, 2022, has not yet passed. 2. Plaintiffs are the joint official liquidators of Madison Asset LLC. There is a Chapter 15 bankruptcy case pending relating to Madison, In re Madison Asset LLC, Case No. 18-12814 (MEW) “the Chapter 15 proceeding”). 3. It is the JOLs’ contention that Defendant’s assertion of a counterclaim against Madison violates the automatic stay imposed by the entry of the Order granting recognition of 1 Capitalized terms used here have the same meaning as defined in the Second Amended Complaint, Doc. 36, filed May 19, 2021. Madison’s foreign liquidation proceedings in the Chapter 15 proceeding, and thus is either void and of no effect or must be withdrawn. See In re Best Payphones, Inc., 279 B.R. 92, 97 (Bankr. SDNY 2002) (quoting Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 527 (2d Cir.1994)) (“‘[A]ny proceedings or actions described in section 362(a)(1) are void and without vitality if they

occur after the automatic stay takes effect.’”); see also Borg-Warner Acceptance Corp. v. Hall, 685 F.2d 1306, 1308 (11th Cir. 1982) (“Actions taken in violation of the automatic stay are void and without effect.”). 4. Defendant has informed the JOLs that they do not believe the counterclaim violates the automatic stay in connection with the Chapter 15 proceeding. Defendant intends to seek a declaratory judgment from the bankruptcy court to that effect or, in the alternative, an order lifting the stay for the purpose of allowing Defendant to assert its counterclaim against Madison. In the interim, Defendant agrees that no answer is required with respect to the counterclaim. 5. The Parties further agree to update and inform this Court as soon as there is any ruling from the bankruptcy court on Defendant’s anticipated motion.

6. Based on this agreement, and for good cause, Plaintiffs respectfully request that the Court grant this consent motion and relieve the JOLs of the obligation to answer Defendant’s counterclaim. 7. A proposed Order is attached for the Court’s consideration. Respectfully submitted,

/s/ Jeffrey E. Gross William T. Reid, IV Jeffrey E. Gross Vincenzo Novelli 330 West 58th Street, Suite 403 New York, NY 10019 Tel.: 212.344.5200 wreid @reidcollins.com jgross @reidcollins.com vnovelli @reidcollins.com Joshua J. Bruckerhoff (pro hac vice) Jordan L. Vimont, Sr. (pro hac vice) 1301 S. Capital of Texas Hwy Building C, Suite 300 Austin, Texas 78746 Tel.: 512.647.6100 jbruckerhoff @reidcollins.com jvimont @reidcollins.com Counsel to Plaintiffs

Plaintiffs Martin Nicholas John Trott and Christopher James Smith, solely in their capacity as the Foreign Representatives and Joint Official Liquidators of Madison Asset LLC filed a Chapter 15 Petition for Recognition of a Foreign Proceeding in the United States Bankruptcy Court for the Southern District of New York, which was granted by the Bankruptcy Court as a foreign main proceeding. See Order Granting Recognition, Dkt. No. 15, Jn re Madison Asset, LLC, No. 18-12814 (MEW) (Bankr. S.D.N.Y. Oct. 16, 2018). Pursuant to Chapter 15, upon main recognition of a foreign proceeding, the automatic stay of section 362 is applicable to all property of the debtor and stays all litigation against it unless the Bankruptcy Court modifies the automatic stay. See 11 U.S.C. § 1520(a)(1); City Ins. Co. v. Mego Int'l, Inc., 28 B.R. 324, 326 (Bankr. S.D.N.Y. 1983). Accordingly, because of the automatic stay, Plaintiffs need not answer or otherwise respond to Defendant’s counterclaims pending resolution of Defendant’s anticipated motion for declaratory judgment or, alternatively, relief from the automatic stay entered by the United States Bankruptcy Court for the Southern District of New York in the case of In re Madison Asset LLC, Case No. 18-12814 (MEW) (“In re Madison”). The parties shall promptly notify the Court of any order related to Defendant’s anticipated motion in In re Madison.

SO ORDERED.

Date: 6/14/2022 K. {/ New York, New York Mary|Kay V¥skocil nited States District Judge

CERTIFICATE OF SERVICE I hereby certify that on June 10, 2022, the foregoing Consent Motion to Relieve Plaintiffs of the Obligation to Answer Defendant’s Counterclaim was served on counsel for Defendant using

the Court’s CM/ECF system.

/s/ Jeffrey E. Gross Jeffrey E. Gross