LBHI Litigation Update

AMLG, as part of a joint defense group in the pending litigation in bankruptcy court in New York, has joined in the drafting and filing of an omnibus motion attacking LBHI’s complaint on two grounds: subject matter jurisdiction (“SMJ”) and improper venue (“Venue”). Both attacks have a reasonable opportunity to succeed. However, if they do not due to the strong propensity of the bankruptcy judge to more often than not to find for the debtor in these matters, are poised to be certified to the Second Circuit Court of Appeals. The basic argument for SMJ is that after a bankruptcy plan is confirmed in a bankruptcy matter (different from regular civil litigation), jurisdiction shrinks, and the debtor is required to establish a “close nexus” to the administration or implementation of the plan. The claims LBHI is making are non-core state law contract claims and have very little, if any, “close nexus” to the bankruptcy plan. As for the venue argument, the basic idea is that venue is improper because the entities sued by LBHI are not New York corporations nor did they do business in New York rendering the choice of venue in the bankruptcy court in the southern district of New York improper. This omnibus opposition was just filed on March 31, 2017 and LBHI’s Reply is now due May 31, 2017. AMLG does not expect hearings to be held until July or August on the matter as further briefing schedules are being set by the Court.