Opinion

Odebrecht Engenharia E Construcao S.A. and Adriana Henry Meirelles

Court: United States Bankruptcy Court, S.D. New York
Filed: Apr 21, 2025
Cited by: 0 cases
Authority: More cited than 34.9%

enforcing third party releases in a Canadian plan of arrangement

How later courts described this case

enforcing third party releases in a Canadian plan of arrangement
recognizing and enforcing scheme of arrangement that released affiliate guarantees
enforcing foreign order containing third-party releases
recognizing and enforcing foreign court order approving non- debtor release

Written by the judges who cited it.

The opinion

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

In re:

Case No. 25-10482 (MG)

Odebrecht Engenharia e Construção S.A. -

Em Recuperação Judicial, et al., Chapter 15

Debtors in a Foreign Proceeding.

MEMORANDUM OPINION GRANTING MOTION FOR RECOGNITION OF

FOREIGN MAIN PROCEEDINGS AND OVERRULING UST OBJECTIONS

A P P E A R A N C E S:

CLEARY GOTTLIEB STEEN & HAMILTON LLP

Attorneys for the Foreign Representative of Odebrecht Engenharia e Construção S.A.

- Em Recuperação Judicial and affiliated debtors

One Liberty Plaza

New York, New York 10006

By: Luke A. Barefoot, Esq.

Thomas S. Kessler, Esq.

WILLIAM K. HARRINGTON

UNITED STATES TRUSTEE, REGION 2

Alexander Hamilton Custom House

One Bowling Green, Room 534

New York, NY 10004

By: Greg M. Zipes, Esq.

MARTIN GLENN

CHIEF UNITED STATES BANKRUPTCY JUDGE

This Court has already entered an order (“Order,” ECF Doc. 21) granting all the relief

requested by the foreign representative (Adriana Henry Meirelles, or “Foreign Representative”)

of the above-captioned foreign debtors (“Debtors”): recognizing the Debtors’ Brazilian

recuperação judicial (“RJ”) proceeding as the Debtors’ foreign main proceeding, recognizing the

full force and effect of the subsequent RJ plan (“RJ Plan”), giving full force and effect to the

related Brazilian court confirmation order, and providing further relief which this Court deemed

just and proper. No party objected to the recognition of the Brazilian RJ proceeding as the

foreign main proceeding, nor to the recognition and enforcement of the RJ Plan in the United

States. The only objection was filed by the United States Trustee (“UST”), which objected to

language in the Debtors’ proposed order1 which provided additional relief. (“Objection,” ECF

Doc. # 16.) The Foreign Representative filed a reply (“Reply,” ECF Doc. # 18).

The Court entered the Debtors’ final proposed order without further modifications. The

Court now writes separately to address two of the UST’s objections, both of which were

overruled at the hearing, to provide further clarification, as the UST has made similar objections

in multiple Chapter 15 cases.

I. BACKGROUND

A. Company Structure and History

The Debtors, along with certain other related entities and affiliates (the “OEC Group”),

are part of the business division of Novonor S.A. – Em Recuperação Judicial (“Novonor”) and

its related entities and affiliates (the “Novonor Group”), one of the largest private business

groups in Brazil today, with businesses in engineering, construction and in the development and

operation of infrastructure. (ECF Doc. # 2 at 3.) The OEC Group is one of the largest

construction companies in the world and employs over 17,000 people. (Id. at 10.) The OEC

Group’s operational and economic activities are primarily concentrated in Brazil. (Id. at 12.)

The Foreign Representative’s motion seeking recognition and enforcement of the RJ Plan

provides additional details on each of the Debtors and on the OEC Group as a whole. (See

generally id.)

The Debtors or their affiliates have filed two previous Chapter 15 proceedings. On

August 26, 2019, Novonor (formerly known as Odebrecht S.A.) and certain affiliates (the

1 The proposed order was edited twice, but the language to which the UST objected remained the same

throughout. This opinion therefore relies on the language in the order ultimately entered, see ECF Doc. # 21.

“Novonor Debtors”) filed a petition (“Novonor Petition”) seeking recognition of the jointly

administered judicial reorganization proceeding pending at the time before a Brazilian court. (Id.

at 3 n.3.) On September 18, 2019, this Court entered an order granting the relief sought in the

Novonor Petition and recognizing the Brazilian RJ proceeding as a foreign main proceeding for

all the Novonor Debtors. (Id.) A bit over a year later, on November 24, 2020, a subset of three

of the Debtors sought recognition of an extrajudicial reorganization (recuperação extrajudicial,

or “EJ”) and enforcement of an agreed plan of reorganization (“EJ Plan”) which had been

approved by the First Bankruptcy and Judicial Recovery Court of the District of the Capital of

the State of São Paulo. (Id. at 3–4.) The aim of the Brazilian EJ Proceeding was to optimize the

OEC Group’s capital structure and provide additional runway for the OEC Group to reach an

environment favorable to the resumption of its growth. (Id.) The EJ Plan only involved the

obligations of a subset of the current set of Debtors and resulted in the replacement of certain

New York law-governed notes with new notes, enabling a restructuring of a financial liability

exceeding $3.1 billion. (Id. at 4–5.)

Due to the pressures of the pandemic, a financial crisis in Brazil, a reduction in

infrastructure investments, and lower demand for infrastructure projects in countries where the

OEC Group operates, a broader restructuring became necessary. (Id. at 5.) In June 2024, the

Debtors filed the Brazilian RJ Proceeding to implement a comprehensive restructuring of the

OEC Group’s liabilities to ensure the preservation and continuation of its business through an

agreed plan of reorganization (the RJ Plan). In broad strokes, the RJ Plan involves (i) a

restructuring of the OEC Group’s existing capital structure both to satisfy the OEC Group’s

existing debt and strengthen its cash flow; (ii) the creation of a new business unit, with a healthy

capital structure and high technical capacity; and (iii) an injection of liquidity to finance future

projects through a minimum $120 million debtor-in-possession financing facility, subject to

certain conditions precedent being met. (Id. at 6.) After two rounds of voting, the ultimate result

was a resounding vote in favor of the RJ Plan by the creditor classes and claimants present to

vote, and after resolving certain objections and finding that the requisite amount of creditor

support and all other legal requirements were met, the Brazilian court issued an order confirming

the RJ Plan (the “Brazilian Confirmation Order”) on March 7, 2025. (Id. at 26–28.)

On March 14, 2025, the Foreign Representative filed in this Court a motion for

recognition and enforcement, along with a proposed order and a copy of the RJ Plan. (ECF Doc.

# 2.) The proposed order was modified before becoming the ultimate Order, but the relevant

provisions, excerpted below, did not change. The United States Trustee objected to portions of

the proposed order, as discussed below.

B. Terms of RJ Plan

The only term of the RJ Plan that matters for the following discussion can be found at

clause 11.5 of the RJ Plan:

11.5. Settlement. The fulfillment of the payment obligations in accordance with the

terms and conditions established in this Plan will entail, automatically and

regardless of any additional, broad, general and unrestricted formality, the

discharge of all Bankruptcy Credits against the Companies under Reorganization

and their officers, directors, agents, employees and representatives.

(Objection at 5 (citing RJ Plan).) All parties agreed during the recognition hearing that this

provision does not constitute a nonconsensual third-party release.

C. UST Objection

The UST objected to portions of the proposed order granting recognition (but not to the

recognition of the Brazilian RJ proceeding or to the enforcement of the RJ Plan as written). The

Court overruled the UST’s objections. However, two of the UST’s objections merit further

discussion, as they have recurred throughout multiple Chapter 15 cases.

First, the UST argued that the following limitation on liability is inappropriate because it

is a “veiled exculpation clause,” it goes beyond the relief granted by the Brazilian court, and

there is no statutory basis for granting the limitation:

The Directed Parties2 and their respective officers, directors, employees,

representatives, advisors, attorneys, professionals and managers, in each case,

solely in their respective capacities as a Directed Party, shall be entitled to a full

limitation of liability from and shall have no liability for any and all claims,

obligations, suits, judgments, damages, rights, causes of action, liabilities from, or

in connection with, any action or inaction taken in furtherance of and/or in

accordance with this Order, these Chapter 15 Cases, the Brazilian RJ Proceeding,

the Brazilian Confirmation Order and the RJ Plan, except for any liability arising

from any action or inaction constituting gross negligence, fraud, willful misconduct

or professional malpractice as determined by this Court.

(Order ¶ 7; Objection at 11.) Assuming arguendo that the limitation on liability is appropriate,

the UST also objected on the grounds that the limitation “lacks the hallmarks of an acceptable

exculpation provision in a chapter 11 proceeding”: there is no temporal limitation, and the clause

creates “prospective immunity by exculpation.” (Objection at 13–14.) Furthermore, the UST

argued, the exculpation applies to too many parties—it applies to anyone in connection with

“any action or inaction taken in furtherance of and/or in accordance with this Order, this Chapter

15 Case, the Brazilian RJ Proceeding, the Brazilian Confirmation Order and the RJ Plan,” so the

exact parties to whom the exculpation applies are not known, and it also covers non-estate

fiduciaries. (Id at 15.) (The UST also objected to the absence of a carveout for bad faith, breach

of fiduciary duty, and legal malpractice, all of which are required by the New York Rules of

2 The “Directed Parties” are: (i) The Bank of New York Mellon, as the indenture trustee (the “Indenture

Trustee”) under the indentures related to the 2024 Notes, the 2026 Notes, the 2027 Notes, the 2029 Notes, the 2033

Notes, the 2046 Notes, and the Perpetual Notes (collectively, the “NY Notes”); (ii) the Depository Trust Company

(“DTC”), Euroclear Bank S.A./N.V., and/or Clearstream Banking, Société Anonyme, as clearing systems, as

applicable; (iii) Epiq Corporate Restructuring LLC; and (iv) the custodians of the NY Notes. (Order ¶ 5 n.3.)

Professional Conduct; the Order was amended to include a carveout for malpractice claims.)

Second, the UST argued that the proposed order created impermissible nonconsensual third-party

releases. As compared to the release of the debtors contemplated by the RJ Plan (cited above,

Section 11.5 of the RJ Plan), the order provides as follows:

Except as provided in paragraph 12 of this Order, all persons and entities are

permanently enjoined and restrained from (i) commencing or taking any action or

asserting any claim, within the territorial jurisdiction of the United States, that is

inconsistent with, in contravention with, or would interfere with or impede the

administration, implementation and/or consummation of the RJ Plan, the Brazilian

Confirmation Order or the terms of this Order; and (ii) taking any action against the

Debtors or their property located in the territorial jurisdiction of the United States

to recover or offset any debt or claims that are extinguished, novated, cancelled,

discharged or released under the RJ Plan and the Brazilian Confirmation Order. No

action may be taken within the territorial jurisdiction of the United States to confirm

or enforce any award or judgment that would otherwise be in violation of this Order

without first obtaining leave of this Court.

(Order ¶ 11.) The UST took the position that (1) this language creates “an expansive third-party

release” because it “enjoins all persons and entities from taking any action.” (Objection at 16–

17.) The UST argued that section 1521(a) of the Code does not provide courts with a statutory

basis for issuing orders which contain third-party releases: applying the canon of ejusdem

generis as the Supreme Court did in Harrington v. Purdue Pharma, 603 U.S. 204 (2024)

(henceforth “Purdue”), the UST claimed that third-party releases are “not similar in nature to the

relief provided in section 1521(a)” because third-party releases are not designed to protect a

debtor (unlike the provisions of section 1521(a)), so cannot fit under that subsection of the Code.

(Objection at 17–18.) The UST also argued that the release supposedly created by the above

section of the Order does not fall within the category of “appropriate relief” under section

1521(a) of the Code because “third-party releases may not be imposed without consent through a

bankruptcy plan under United States law,” citing Purdue. (Id. at 18.)

D. Foreign Representative’s Reply

The Foreign Representative’s reply can be summarized as follows. First, the language of

the order limiting liability is customary and similar to language this Court approved in other

chapter 15 cases. (Reply at 4–5.) Second, the provision in Section 11.5 of the RJ Plan is proper

under both Brazilian and U.S. law, as it does not create a third-party release. (Id. at 5–6.) The

Foreign Representative then argued that the UST misread the language of the proposed

confirmation order, as it does not create a wide-reaching release but rather bars only those

“actions that contravene relief set forth in the RJ Plan and Brazilian Confirmation Order” —i.e.,

the order sought only “enforcement of the relief granted in the Brazilian RJ Proceeding within

the territorial jurisdiction of the United States and nothing more.” (Id. at 6.) Even if Section

11.5 of the RJ Plan did create nonconsensual third-party releases, however, the Foreign

Representative maintained that enforcement of such a provision is acceptable because Purdue

does not apply in Chapter 15 cases. (Id. at 7–9.)

II. LEGAL STANDARD

A. Relief in a Chapter 15 Proceeding

In 2005, Congress adopted Chapter 15 of the Bankruptcy Code based on the Model Law

on Cross-Border Insolvency proposed by the United Nations Commission on International Trade

Law in 1997. Chapter 15 replaced section 304 of the Bankruptcy Code, which originally

provided the statutory framework for cases filed in the United States that are ancillary to

insolvency proceedings filed in foreign countries. Section 304 provided a bankruptcy court with

broad discretion in fashioning an appropriate remedy in a particular case. While Chapter 15

replaced section 304, many of the principles underlying section 304 remain in effect under

chapter 15, including the principles of comity and cooperation with foreign courts in deciding

whether to grant the foreign representative additional post-recognition relief. In re SPhinX, Ltd.,

351 B.R. 103, 112 (Bankr. S.D.N.Y. 2006) (“[C]hapter 15 maintains—and in some respects

enhances—the ‘maximum flexibility,’ that section 304 provided bankruptcy courts . . . in light of

principles of international comity and respect for the laws and judgments of other nations.”

(internal citation omitted)).

Section 1520 outlines the mandatory relief automatically granted upon recognition of a

foreign main proceeding under Chapter 15. The relief available under this provision is not at

issue in this case. Rather, it is the relief available to the foreign representative at the Court’s

discretion under sections 1521 and 1507 of the Code which are relevant.

“Section 1521(a) outlines the discretionary relief a court may order upon recognition of a

foreign proceeding, whether main or non-main . . . . The discretion that is granted is

‘exceedingly broad’ since a court may grant ‘any appropriate relief’ that would further the

purposes of chapter 15 and protect the debtor’s assets and the interests of creditors.” In re Atlas

Shipping A/S, 404 B.R. 726, 739 (Bankr. S.D.N.Y. 2009) (internal citation omitted). Section

1521(a) reads as follows:

(a) Upon recognition of a foreign proceeding, whether main or nonmain, where

necessary to effectuate the purpose of this chapter and to protect the assets of the

debtor or the interests of the creditors, the court may, at the request of the foreign

representative, grant any appropriate relief, including—

(1) staying the commencement or continuation of an individual action or

proceeding concerning the debtor’s assets, rights, obligations or liabilities

to the extent they have not been stayed under section 1520(a);

(2) staying execution against the debtor’s assets to the extent it has not been

stayed under section 1520(a);

(3) suspending the right to transfer, encumber or otherwise dispose of any

assets of the debtor to the extent this right has not been suspended under

section 1520(a);

(4) providing for the examination of witnesses, the taking of evidence or the

delivery of information concerning the debtor’s assets, affairs, rights,

obligations or liabilities;

(5) entrusting the administration or realization of all or part of the debtor’s

assets within the territorial jurisdiction of the United States to the foreign

representative or another person, including an examiner, authorized by the

court;

(6) extending relief granted under section 1519(a); and

(7) granting any additional relief that may be available to a trustee, except

for relief available under sections 522, 544, 545, 547, 548, 550, and 724(a).

11 U.S.C. § 1521(a). To determine what relief could fall under the catch-all at the beginning of

the subsection (“additional relief”), courts look to relief available under the now-deleted section

304 of the Code. Courts give varying weight to section 304 precedent. See In re Vitro S.A.B. de

CV, 701 F.3d 1031, 1057 (5th Cir. 2012) (holding that relief available under section 1521(a) is

“co-extensive” with that available under section 304); compare In re Cozumel Caribe, S.A. de

C.V., 482 B.R. 96, 114 (Bankr. S.D.N.Y. 2012) (viewing section 304 caselaw as providing

“useful precedents”). Relief under section 1521 will be granted only if the interests of the

creditors and other interested entities, including the debtor, are sufficiently protected. 11 U.S.C.

§ 1522(a).

Section 1507 provides additional discretionary grounds for the Court to grant relief to the

foreign representative. Section 1507 reads:

(a) Subject to the specific limitations stated elsewhere in this chapter the court, if

re cognition is granted, may provide additional assistance to a foreign

representative under this title or under other laws of the United States.

(b) In determining whether to provide additional assistance under this title or under

other laws of the United States, the court shall consider whether such additional

assistance, consistent with the principles of comity, will reasonably assure—

(1) just treatment of all holders of claims against or interests in the debtor’s

property;

(2) protection of claim holders in the United States against prejudice and

inconvenience in the processing of claims in such foreign proceeding;

(3) prevention of preferential or fraudulent dispositions of property of the

debtor;

(4) distribution of proceeds of the debtor’s property substantially in

accordance with the order prescribed by this title; and

(5) if appropriate, the provision of an opportunity for a fresh start for the

individual that such foreign proceeding concerns.

11 U.S.C. § 1507.

Section 1506 provides that a bankruptcy court may decline to grant relief requested in a

chapter 15 case if the action would be “manifestly contrary to the public policy of the United

States.” 11 U.S.C. §§ 1506. This public policy exception is narrowly construed. See In re

Ocean Rig UDW Inc., 570 B.R. 687, 707 (Bankr. S.D.N.Y. 2017); see also In re Toft, 453 B.R.

186, 195 (Bankr. S.D.N.Y. 2011) (“[T]hose courts that have considered the public policy

exception codified in [section] 1506 have uniformly read it narrowly and applied it sparingly.”).

B. Exculpations in Chapter 11s

“Exculpation provisions are designed to ‘insulate court-supervised fiduciaries and some

other parties from claims that are based on actions that relate to the restructuring.’” In re

Genesis Glob. HoldCo, LLC, 660 B.R. 439, 527 (Bankr. S.D.N.Y. 2024) (quoting In re Aegean

Marine Petroleum Network Inc., 599 B.R. 717, 720 (Bankr. S.D.N.Y. 2019)). “It is well settled

that an exculpation clause approved at confirmation may exculpate estate fiduciaries like a

committee, its members, and estate professionals for their actions in the bankruptcy case except

where those actions amount to willful misconduct or gross negligence.” In re LATAM Airlines

Grp. S.A., No. 20-11254 (JLG), 2022 WL 2206829, at *50 (Bankr. S.D.N.Y. June 18, 2022)

(citations omitted). Such provisions in chapter 11 plans are “not uncommon” and are generally

permissible “so long as they are properly limited and not overly broad.” Id. at *49 (quoting In re

Nat’l Heritage Found., Inc., 478 B.R. 216, 233 (Bankr. E.D. Va. 2012)).

Generally, it has been recognized that:

[A] proper exculpation provision is a protection not only of court-supervised

fiduciaries, but also of court-supervised and court-approved transactions. If this

Court has approved a transaction as being in the best interests of the estate and has

authorized the transaction to proceed, then the parties to those transactions should

not be subject to claims that effectively seek to undermine or second-guess this

Court’s determinations. In the absence of gross negligence or intentional

wrongdoing, parties should not be liable for doing things that the Court authorized

them to do and that the Court decided were reasonable things to do.

Aegean Marine Petroleum Network, 599 B.R. at 721.

In the Chapter 11 context, “in general, exculpated parties who are not estate fiduciaries

are entitled to benefit from a broad exculpation provision where they have been actively involved

in all aspects of the Chapter 11 Cases and have made significant contributions to the success of

the cases.” In re Wythe Berry Fee Owner LLC, No. 22-11340 (MG), 2024 WL 2767121, at *13

(Bankr. S.D.N.Y. May 29, 2024) (cleaned up). This Court in Wythe Berry exculpated a creditor

group, among others, because its participation “was instrumental to the Debtor formulating a

plan on an expedited basis, and their support was essential to the successful negotiation of the

Plan” and related agreements. Id. (cleaned up). And while the exculpation reached beyond the

set of estate fiduciaries, it still was limited just to “court-supervised and court-approved

transactions.” Aegean Marine Petroleum Network, 599 B.R. at 721. See also In re Residential

Cap. LLC, Case No. 12-12020 (MG), 2013 WL 12161584, at *13 (Bankr. S.D.N.Y. Dec. 11,

2013) (order confirming plan contained exculpations for parties “instrumental to the successful

prosecution of the Chapter 11 Cases or their resolution pursuant to the Plan, and/or provided a

substantial contribution to the Debtors”); KG Winddown, LLC, et al., Case No. 20-11723 (MG)

(Bankr. S.D.N.Y. 2020) (ECF Doc. # 494) (permitting exculpation of purchaser as non-estate

fiduciary); Genco Shipping & Trading Ltd., Case No. 14-11108 (SHL) (Bankr. S.D.N.Y. July 2,

2014) (ECF Doc. # 322) (approving exculpation provision in plan providing exculpation for non-

estate fiduciaries). “In determining whether to approve exculpation provisions, courts also

consider whether the beneficiaries of the exculpation participated in good faith in negotiating the

plan and bringing it to fruition, and whether the provision is integral to the plan . . . . Courts in

this and other districts have approved exculpation provisions . . . for estate fiduciaries and non-

estate fiduciaries.” In re: Klaynberg, No. 22-10165 (MG), 2023 WL 5426748, at *17–18

(Bankr. S.D.N.Y. Aug. 22, 2023). Finally, courts in the Second Circuit allow exculpation

provisions so long as they apply to post-petition conduct and explicitly exclude gross negligence

and willful misconduct. Id. (“Courts in the Second Circuit have held that [exculpation

provisions] . . . are appropriate when confined to postpetition activity and explicitly exclude

gross negligence and willful misconduct.”). But see In re PTL Holdings LLC, No. 11-12676

BLS, 2011 WL 5509031, at *12 (Bankr. D. Del. Nov. 10, 2011) (sustaining UST’s objection to

exculpation of non-estate fiduciaries and limiting exculpation clause to just estate fiduciaries).

Additionally, courts in this district have exculpated behavior that occurred after the

effective date of a plan of reorganization when that behavior was “authorized by bankruptcy

courts to carry out the bankruptcy process.” See In re Ditech Holding Corp., No. 19-10412

(JLG), 2021 WL 3716398, at *9 (Bankr. S.D.N.Y. Aug. 20, 2021) (“It is settled that exculpatory

provisions are proper to protect those authorized by bankruptcy courts to carry out the

bankruptcy process, even after the effective date of a plan . . . . The Exculpation Provision

expressly covers acts falling under the ‘administration of the Plan’—which by definition occurs

post-Effective Date . . . . [T]he Exculpation Provision in Section 10.7 of the Plan applies to

shield the conduct of these Individual Defendants [in implementing the plan] from collateral

attack in a separate lawsuit.”); In re Aegean Marine Petroleum Network Inc., 599 B.R. at 720 (“I

think that a proper exculpation provision is a protection not only of court-supervised fiduciaries,

but also of court supervised and court-approved transactions . . . . In the absence of gross

negligence or intentional wrongdoing, parties should not be liable for doing things that the Court

authorized them to do and that the Court decided were reasonable things to do.”); In re Granite

Broad. Corp., 369 B.R. 120, 139 (Bankr. S.D.N.Y. 2007) (approving exculpation clause “for

actions in connection, related to, or arising out of the Reorganization Cases,” noting that the

language “generally follows the text that has become standard in this district and is sufficiently

narrow to be unexceptional” and that “the Plan provides exculpation only for acts or omissions in

connection with the Plan and the bankruptcy cases. It requires, in effect, that any claims in

connection with the bankruptcy case be raised in the case and not be saved for future

litigation.”); In re Flushing Hosp. & Med. Ctr., 395 B.R. 229, 235 (Bankr. E.D.N.Y. 2008) (“It is

apparent that the exculpation provisions quoted above are not limited to pre-effective date

claims. By their terms, these provisions apply to ‘any act or omission in connection with, or

arising out of . . . the administration of the Plan.’ Adopting [the objector’s] interpretation would

render the ‘administration of the Plan’ clause meaningless, because conduct during the

administration of the Plan necessarily occurs after the effective date of the Plan.”).

Exculpations have been granted by courts in this district in Chapter 15 cases, including

protection of non-fiduciaries. See, e.g., In re Olinda Star Ltd., 614 B.R. 28, 48 (Bankr. S.D.N.Y.

2020) (exculpating, among others, the indenture trustees and record holders of certain debtor-

issued notes, as well as an information agent, because “such relief is necessary and appropriate to

prevent interference with the consummation of” the foreign scheme of arrangement and “because

without such exculpations the ability of [the foreign debtors’ liquidators] and their advisors to

take action to effectuate the restructuring would be limited”); In re Oi S.A., 587 B.R. 253, 269

n.3 (Bankr. S.D.N.Y. 2018) (noting that the court found that the exculpation requested by the

foreign representative was “appropriate under the circumstances”).

C. Purdue in Chapter 15s

Courts in this district have long enforced foreign restructuring plans in Chapter 15 cases

which include nonconsensual third-party releases, most doing so pursuant to sections 1507 and

1521 of the Code. See, e.g., In re Ocean Rig UDW Inc., 570 B.R. 687 (Bankr. S.D.N.Y. 2017)

(recognizing and enforcing scheme of arrangement that released affiliate guarantees); In re

Towergate Fin. plc, Case No. 15–10509–SMB (Bankr. S.D.N.Y. Mar. 27, 2015) (ECF Doc. #

16); In re New World Res. N.V., Case No. 14-12226-SMB (Bankr. S.D.N.Y. Sept. 9, 2014) (ECF

Doc. # 20); In re Sino–Forest Corp., 501 B.R. 655, 665 (Bankr. S.D.N.Y. 2013) (enforcing

foreign order containing third-party releases); In re Magyar Telecom B.V., Case No. 13-13508-

SHL, 2013 WL 10399944 (Bankr. S.D.N.Y. Dec. 11, 2013) (ECF Doc. # 26); In re Metcalfe &

Mansfield Alt. Inv., 421 B.R. 685, 696 (Bankr. S.D.N.Y. 2010) (concluding that “principles of

enforcement of foreign judgments and comity in chapter 15 cases strongly counsel approval of

enforcement in the United States of the third-party non-debtor release and injunction provisions

included in the Canadian Orders, even if those provisions could not be entered in a plenary

chapter 11 case.”).

The Supreme Court held in Purdue that “the Bankruptcy Code does not authorize a

bankruptcy court to approve, as part of a plan of reorganization under Chapter 11, a release and

injunction that extinguishes claims against non-debtor third parties without the consent of

affected claimants.” 603 U.S. 204, 204 (2024). To date, only one written decision has been

issued on the question whether Purdue applies in chapter 15 proceedings: In re: Credito Real,

S.A.B. de C.V., SOFOM, E.N.R., No. 25-10208 (TMH), 2025 WL 977967, at *1 (Bankr. D. Del.

Apr. 1, 2025). The Credito Real case is discussed below.

III. DISCUSSION

For this Court to provide the relief requested by the Foreign Representative, it must be

available to the Foreign Representative under either sections 1507 or 1521 of the Code. The

authority to issue the exculpation and the third-party release contained in the Order must,

therefore, stem from one of these two sections of the Code.

One of the UST’s objections is consistent across both provisions: that the provision

provides relief beyond the scope provided by the Brazilian Confirmation Order and the RJ Plan.

This objection is addressed first, followed by provision-specific objections.

A. Provision of Relief Outside Scope of Foreign Court Orders and Plan

Both the text of Chapter 15 and caselaw building upon it indicate that U.S. courts

operating pursuant to Chapter 15 are not limited in the discretionary relief they grant by that

relief afforded by the foreign court or the plan of reorganization. There are limitations to courts’

discretionary powers under Chapter 15, but they are not obligated to grant only that relief which

is similar or parallel to that granted abroad or specified in the plan at issue.

The text of Chapter 15 of the Code indicates that U.S. courts, despite being ancillaries to

foreign proceedings when operating under Chapter 15, see In re Foreign Econ. Indus. Bank Ltd.,

“Vneshprombank” Ltd., 607 B.R. 160, 168 (Bankr. S.D.N.Y. 2019), are not hamstrung by the

operations of foreign courts and law when determining what relief to grant to the foreign

representative. Section 1521(a) enables courts to grant “any appropriate relief” so long as that

relief is “necessary to effectuate the purpose of [Chapter 15] and to protect the assets of the

debtor or the interests of the creditors” (followed by a non-exclusive list of examples of the type

of relief the court may grant). Section 1507 permits a court to grant “additional assistance”

subject to “specific limitations stated elsewhere in” Chapter 15, so long as the “additional

assistance” is available “under this title or under other laws of the United States.” Under the

“expansive grant of power” in section 1507, “even if a court cannot grant relief under section

1521(a)(7), it may grant relief under section 1507.” Credito Real, 2025 WL 977967, at *11. The

drafters of Chapter 15 referenced principles of comity as limiting factors, rather than foreign

rulings or even the availability of relief under foreign law. See 11 U.S.C. § 1507(b) (requiring

court to consider “the principles of comity” when deciding whether to grant relief); In re Comair

Ltd., No. 21-10298(JLG), 2021 WL 5312988, at *9 (Bankr. S.D.N.Y. Nov. 14, 2021) (“Post-

recognition relief under section 1521 ‘is largely discretionary and turns on subjective factors that

embody the principles of comity.’”) (internal citation omitted).

The relief provided in the Recognition Order puts an enforcement mechanism in the U.S.

order that prevents disgruntled creditors who are bound by the RJ Plan from suing in the U.S.to

recover on claims that are barred by the RJ Plan. Granting this relief to the Foreign

Representative is in furtherance of comity, as it enables the full enforcement of the RJ Plan by

closing the door to potential workarounds to the Plan.

B. Exculpation

The provision in the Order which provides for an exculpation reads as follows:

The Directed Parties and their respective officers, directors, employees,