Brandt, Jr. v. The Hongkong and Shanghai Banking Corporation Limi

NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
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In re: 	Case No. 16-11895 (JLG)
China Fishery Group Limited (Cayman), et al., 	Chapter 11
Debtors. 	(Jointly Administered)
--------------------------------------------------------------X
In re:
CFG Peru Investments Pte. Ltd. (Singapore), 	Case No. 16-11914 (JLG)
Debtor. 	Chapter 11
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William A. Brandt, Jr., as Trustee of
CFG Peru Investments Pte. Ltd. (Singapore) 	Adv. Pro. No. 18-01575-JLG
Plaintiff,
v.
The Hongkong and Shanghai Banking Corporation
Limited,
Defendant.
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MEMORANDUM DECISION AND ORDER DENYING MOTION OF
CHINA FISHERY GROUP LIMITED (CAYMAN) TO INTERVENE IN
THE TRUSTEE’S HSBC ADVERSARY PROCEEDING
APPEARANCES:
Klestadt Winters Jureller
Southard & Stevens, LLP
200 West 41st Street, 17th Fl.
New York, New York 10036
By: 	John E. Jureller, Jr., Esq.
Tracy Klestadt, Esq.
Christopher J. Reilly, Esq.
Conflicts Counsel for China Fishery Group
Limited (Cayman) and its affiliated Debtors
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Davis Polk & Wardell LLP
450 Lexington Avenue
New York, New York 10017
By: 	Elliot Moskowitz, Esq.
Donald S. Bernstein, Esq.
David B. Toscano, Esq.
- and -
Boies Schiller Flexner LLP
1401 New York Avenue, NW
Washington D.C. 20005
By: 	Scott E. Gant, Esq. (admitted pro hac vice)
575 Lexington Avenue
New York, New York 10022
By: 	Damien J. Marshall, Esq.
Counsel to The Hongkong and Shanghai Banking
Corp. Ltd.
Quinn Emanuel Urquhart & Sullivan, LLP
51 Madison Avenue, 22nd Floor
New York, New York 10010
By: 	James C. Tecce, Esq.
Julia M. Beskin, Esq.
Kate Scherling, Esq.
Jordan Harap, Esq.
Counsel for William A. Brandt, Jr.,
As Trustee of CFG Peru Investments Pte. Ltd. (Singapore)
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HON. JAMES L. GARRITY, JR.
UNITED STATES BANKRUPTCY JUDGE
INTRODUCTION
In this adversary proceeding, William A. Brandt, Jr., as the chapter 11 trustee (the
“Trustee”) of CFG Peru Investments Pte. Ltd. (Singapore) (“CFG Peru”), is seeking to recover
damages from The Hongkong and Shanghai Banking Corporation Limited (“HSBC”), that CFG
Peru allegedly suffered by reason of actions taken by HSBC in enforcing its rights against China
Fishery Group Limited (Cayman) (“CFGL”) and China Fisheries International Limited (Samoa)
(“CFIL”), as borrowers and/or guarantors under that certain Club Facility (defined below). The
matter before the Court is CFGL’s motion pursuant to Rule 24 of the Federal Rules of Civil
Procedure (the “Federal Rules”)1 to intervene in this adversary proceeding (the “Motion”) [ECF
No. 7]. 2 The Trustee and HSBC object to the Motion.3 For the reasons set forth herein, the
Motion is DENIED.
JURISDICTION
The Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 1334(a) and 157(a)
and the Amended Standing Order of Referral of Cases to Bankruptcy Judges of the United States
1 	Rule 7024 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) makes Federal Rule 24
applicable herein.
2 	Citations to “ECF No. ___” refer to documents filed on the electronic docket of this adversary proceeding, Adv.
Pro. No. 18-1575. Documents filed in the Debtors’ jointly administered cases, or in the chapter 11 case of CFG
Peru, will be designated with the applicable case number before the ECF No. reference.
3 	See Defendant HSBC-HK’s Opposition to the Motion of China Fishery Group Limited (Cayman) to Intervene in
the Trustee’s Adversary Proceeding [ECF No. 10] (“HSBC Objection”); Objection of William A. Brandt, Jr.,
Chapter 11 Trustee for CFG Peru Investments Pte. Ltd. (Singapore), to Motion of China Fishery Group Limited
(Cayman) to Intervene in Trustee’s HSBC Adversary Proceeding [ECF No. 11] ( “Trustee Objection”). In response
to these objections, CFGL has filed the Reply of China Fishery Group Limited (Cayman) to the Objections of the
Trustee and HSBC to the Motion to Intervene in the Trustee’s Adversary Proceeding [ECF No. 12] (“CFGL
Reply”).
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District Court for the Southern District of New York (M-431), dated January 31, 2012 (Preska,
C.J.). This is a core proceeding under 28 U.S.C. § 157(b)(2)(O).
FACTS 4
Background
The Pacific Andes Group of companies collectively constitutes the world’s twelfth
largest seafood company. See Rule 1007 Declaration ¶ 29. N.S. Hong Investment (BVI)
Limited (“N.S. Hong”) is the ultimate, indirect owner of the entities that comprise the Pacific
Andes Group. See id., Ex. A (corporate structure). On June 30, 2016, N.S. Hong, CFGL, CFG
Peru, CFIL, and various affiliated entities filed voluntary petitions for relief under chapter 11 of
the Bankruptcy Code in this Court. From time to time thereafter, certain of their affiliates
followed suit. In all, 37 members of the Pacific Andes Group are chapter 11 debtors herein
(collectively, the “Debtors”).5 Apart from CFG Peru, the Debtors have remained in possession
and control of their businesses and assets as debtors in possession pursuant to sections 1107 and
4 	The factual background discussed herein is generally not disputed and is based primarily on the Declaration Of
Ng Puay Yee Pursuant To Rule 1007-2 Of The Local Bankruptcy Rules For The Southern District Of New York And
In Support Of Debtors' First Day Motions And Applications [Case No. 16-11895, ECF No. 2] (the “Rule 1007
Declaration”), and the Court’s Memorandum Decision and Order Granting Motion for the Appointment of a
Chapter 11 Trustee [Case No. 16-11895, ECF No. 203].
5 	At this time, the Debtors in these chapter 11 cases are: CFGL, Pacific Andes International Holdings Limited
(Bermuda), N.S. Hong, South Pacific Shipping Agency Limited (BVI), CFIL, CFGL (Singapore) Private Limited,
Chanery Investment Inc. (BVI), Champion Maritime Limited (BVI), Growing Management Limited (BVI), Target
Shipping Limited (HK), Fortress Agents Limited (BVI), Ocean Expert International Limited (BVI), Protein Trading
Limited (Samoa), CFG Peru, Smart Group Limited (Cayman) (“Smart Group”), Super Investment Limited
(Cayman), Pacific Andes Resources Development Limited (Bermuda), Nouvelle Foods International Ltd., Golden
Target Pacific Limited, Pacific Andes International Holdings (BVI) Limited, Zhonggang Fisheries Limited,
Admired Agents Limited, Chiksano Management Limited, Clamford Holding Limited, Excel Concept Limited, Gain
Star Management Limited, Grand Success Investment (Singapore) Private Limited, Hill Cosmos International
Limited, Loyal Mark Holdings Limited, Metro Island International Limited, Mission Excel International Limited,
Natprop Investments Limited, Pioneer Logistics Limited, Sea Capital International Limited, Shine Bright
Management Limited, Superb Choice International Limited, and Toyama Holdings Limited (BVI).
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1108 of the Bankruptcy Code. By order dated November 10, 2016, the Court appointed Mr.
Brandt as the chapter 11 trustee for CFG Peru. See Case No. 16-11895, ECF No. 217.
The China Fishery Group of companies (the “CF Group”) is part of the Pacific Andes
Group. Among other things, the CF Group engages in fishing, fishmeal and fish oil processing,
and production of anchovies in Peru for worldwide distribution (the “Peruvian Business”). See
Rule 1007 Declaration ¶¶ 37-38, 44. CFGL is a public company incorporated under the laws of
the Cayman Islands. See id. ¶ 57. It directly and indirectly controls the CF Group. CFG Peru is
itself an indirectly owned subsidiary of CFGL and, together with 12 other Debtors, is part of the
CF Group. The group includes three non-Debtor entities: Sustainable Fishing Resources S.A.C.,
CFG Investments S.A.C. (“CFGI”), and Corporacion Pesquera Inca S.A.C. (“Copeinca”). See
id. ¶¶ 38, 49. The latter two – CFGI and Copeinca (together, the “Peruvian Opcos”) – are
subsidiaries of CFG Peru and the CF Group’s main operating entities.
The Peruvian Opcos and Debtor CFIL (collectively, the “Club Borrowers”) are parties to
a $650 million Facility Agreement, dated March 20, 2015 (as amended from time to time, the
“Club Facility”). See id. ¶ 96. Debtor CFGL is a joint and several guarantor under the Club
Facility. See id. HSBC is among the lenders (the “Club Lenders”) under that facility. Between
April 30, 2014 and November 11, 2015, the Club Lenders and Club Borrowers entered into eight
extension and waiver agreements relating to the obligations under the Club Facility (collectively,
the “Extension and Waiver Agreements”). See id. ¶¶ 100-102. On November 25, 2015, after the
eighth Extension and Waiver Agreement lapsed, HSBC initiated an action in the High Court of
the Hong Kong Special Administrative Region (the “Hong Kong Court”), seeking: (1) the
winding up of CFGL and CFIL, and (2) the ex parte appointment of joint provisional liquidators.
See id. ¶ 114. Following receipt of the application, the Hong Kong Court appointed Messrs.
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Beighton, Middleton, and Power of KPMG LLP to serve as the joint provisional liquidators for
CFGL and CFIL (the “Hong Kong JPLs”). See id. ¶ 115. Based on the Hong Kong Court’s
appointment of the Hong Kong JPLs, HSBC commenced a winding up petition against CFGL in
the Grand Court of the Cayman Islands (the “Cayman Court”). HSBC sought the appointment of
joint provisional liquidators for CFGL. Following a hearing on December 8, 2015, the Cayman
Court appointed Messrs. Beighton, Power, and Lawson to serve as provisional liquidators over
CFGL (the “Cayman JPLs,” and together with the Hong Kong JPLs, the “JPLs”).
CFGL and CFIL challenged the appointment of the Hong Kong JPLs in the Hong Kong
Court. On January 5, 2016, following a multi-day trial, the court discharged and terminated the
appointment of the Hong Kong JPLs (the “JPL Discharge Order”). See id. ¶ 119. 6 Thereafter,
the parties engaged in settlement discussions and eventually reached a resolution that they
embodied in a Deed of Undertaking, dated January 20, 2016 (the “Deed of Undertaking”).
Pursuant thereto, in consideration for HSBC’s withdrawal of the winding up petitions in Hong
Kong and the Cayman Islands, and its agreement to discontinue its appeal of the JPL Discharge
Order, CFGL and CFIL agreed, among other things, to pursue a sale of the Peruvian Business to
be completed by July 15, 2016, and to the appointment of a Chief Restructuring Officer to
oversee the sales process. See Ng Declaration ¶ 82. CFGL and CFIL also agreed to pay $3.1
million to KPMG for the fees of the Hong Kong JPLs. The parties agreed that if CFGL or CFIL
defaulted under the Deed of Undertaking, HSBC and Bank of America, N.A. (which was not a
signatory to the Deed of Undertaking, but a beneficiary thereunder) were free to apply to the
Cayman Court for the immediate reappointment of the Cayman JPLs. See generally id. ¶ 83.
6 	See also Declaration of Ng Puay Yee in Opposition to the Lenders’ Motion for the Entry of an Order Directing
the Appointment of a Chapter 11 Trustee Pursuant to 11 U.S.C. § 1104(A)(2) [Case No. 16-11895, ECF No. 65] (the
“Ng Declaration”), ¶ 80.
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The commencement of CFGL’s and CFIL’s chapter 11 cases stayed enforcement of the Deed of
Undertaking.
The Adversary Proceeding
On June 29, 2018, the Trustee commenced this adversary proceeding by filing his
complaint (the “Complaint”). See ECF No. 1. In this action, the Trustee seeks to recover
damages from HSBC and to equitably subordinate or disallow the more than $100 million in
claims that HSBC has filed against certain of the Debtors herein. The Trustee’s theory is that the
actions HSBC took to enforce the Club Facility (all of which are detailed in the Complaint but
include, without limitation, commencing the Hong Kong and Cayman winding up proceedings
and causing those courts to appoint the JPLs) “exceeded the bounds of commercial
reasonableness, damaged CFG Peru’s equity interest in the Peruvian OpCos . . . and diminished
recovery prospects for the CF Group’s creditors . . . including CFG Peru.” Complaint ¶ 1. He
contends that HSBC’s conduct gives rise to common law claims for negligence, breach of duty
and tortious interference under Hong Kong law, Peruvian law and/or U.S. law, and that HSBC is
liable to CFG Peru for damages caused to CFG Peru in both its capacity as the owner of the
equity of the Peruvian OpCos and as a creditor of CFGL, N.S. Hong, CFIL and Smart Group. Id.
¶ 9. Specifically, he seeks to recover (a) damages of not less than $45 million resulting from,
among other things, the Peruvian Business’s lost revenue and profits, and (b) damages to the
value of the Peruvian Business in the amount of not less than $200 million. Id. He also asserts
that “given the extent to which HSBC exceeded the confines of permissible conduct and the
damage it caused[,]” HSBC’s claims should be disallowed or equitably subordinated. Id.
(“Equity dictates that HSBC forfeited any entitlement to a recovery from the estates.”).
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The Motion to Intervene
By the Motion, CFGL seeks to intervene in this action, and join in and adopt the claims
asserted by the Trustee in the Complaint. See Motion ¶ 1. It contends that as an indirect 100%
shareholder of CFG Peru, and therefore the Peruvian OpCos, it stands in the same position as the
Trustee. See id. It maintains that since its revenue was derived primarily from the Peruvian
Business, and it is a joint and several obligor under the Club Facility, it was significantly harmed
by the damages inflicted on the Peruvian Business by HSBC. See id. CFGL argues that it can
intervene in the Adversary Proceeding as of right pursuant to Federal Rule 24(a)(1), because it is
a “party in interest” under section 1109(b) of the Bankruptcy Code and, in any event, satisfies the
requirements for mandatory intervention under Federal Rule 24(a)(2). Alternatively, CFGL
asserts that because CFGL’s claims against HSBC arise from the same facts and circumstances
asserted in the Trustee’s Complaint, it should be permitted to intervene pursuant to Federal Rule
24(b)(1)(B). Finally, CFGL requests that the Court dispense with the requirement for the filing
of a separate complaint under Federal Rule 24(c). CFGL asserts that in contrast to a “typical”
motion to intervene in a pending litigation, it is “not looking to assert new claims against
HSBC,” but rather “seeks only to join and adopt the claims asserted in the Trustee’s Complaint
as against HSBC.” Id. ¶ 52. It maintains that given the “unique circumstances” of the adversary
proceeding, it is “unnecessary for [it] to file a separate pleading at this time.” Id.
DISCUSSION
Intervention as of Right: Fed. R. Civ. P. 24(a)(1)
Federal Rule 24(a)(1) states that, “[o]n timely motion, the court must permit anyone to
intervene who . . . is given an unconditional right to intervene by a federal statute.” Fed. R. Civ.
P. 24(a)(1). In Term Loan Holder Comm. v. Ozer Grp., L.L.C. (In re Caldor Corp.), 303 F.3d
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161, 162 (2d Cir. 2002), the Second Circuit held that section 1109(b) of the Bankruptcy Code
creates an unconditional statutory right for “parties in interest” to intervene in adversary
proceedings. That section provides that:
[a] party in interest, including the debtor, the trustee, a creditors’ committee, an
equity security holders’ committee, a creditor, an equity security holder, or any
indenture trustee, may raise and may appear and be heard on any issue in a case
under this chapter.
11 U.S.C. §1109(b). It is undisputed that CFGL is not among the entities identified in the statute
as a “party in interest.”7 Still, it argues that it is a “party in interest” under the statute and, as
such, has an unconditional right to intervene in the adversary proceeding. See Motion ¶ 37. It is
well settled both that the list of “parties in interest” in section 1109(b) is not exhaustive, and that
the term “party in interest” is not defined in the Bankruptcy Code. See Doral Center, Inc. v.
Ionosphere Clubs, Inc. (In re Ionosphere Clubs, Inc.), 208 B.R. 812, 814 (S.D.N.Y. 1997)
(noting that the list in section 1109 is not exhaustive); Roslyn Sav. Bank v. Comcoach Corp. (In
re Comcoach Corp.), 698 F.2d 571, 573 (2d Cir. 1983) (“The term ‘party in interest’ is not
defined in the Code.”). Accordingly, courts interpret the term “on an ad hoc basis . . . to ensure
that anyone who has a legally protected interest that could be affected by a bankruptcy
proceeding is entitled to assert that interest with respect to any issue to which it pertains . . . .” In
re Reyes, No. 14-13233, 2015 WL 4624156, at *3 (Bankr. S.D.N.Y. Aug. 4, 2015) (citations and
internal quotation marks omitted); see also In re Johns-Manville Corp., 36 B.R. 743, 747-748
(Bankr. S.D.N.Y. 1984), aff'd, 52 B.R. 940 (S.D.N.Y. 1985) (explaining that “parties in interest”
7 	An “equity security holder” means a “holder of an equity security of the debtor.” 11 U.S.C. § 101(17). CFGL
is not an “equity holder” of CFG Peru, and it concedes as much. See Motion ¶¶ 28, 37 (stating that it is “the indirect
corporate entity just upstream of CFG Peru in the vertical corporate structure” and “indirect 100% shareholder of
CFG Peru”).
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is an “elastic” concept and that the “listing of examples of parties in interest in Code Section
1109 is not meant to exclude other types of interested parties from the purview of that section.”).
“The general theory behind [section 1109] is that anyone holding a direct financial stake in the
outcome of the case should have an opportunity . . . to participate in the adjudication of any issue
that may ultimately shape the disposition of his or her interest.’” Savage & Assocs., P.C. v. K &
L Gates LLP (In re Teligent, Inc.), 640 F.3d 53, 60 (2d Cir. 2011) (quoting Alan Resnick &
Henry J. Sommer, 7 COLLIER ON BANKRUPTCY ¶ 1109.01 (16th ed. 2011)). Thus, a party will
qualify as a “party in interest” under section 1109 when it has a direct financial stake in the
proceeding in which it seeks to be heard. See, e.g., Church Mut. Ins. Co. v. Am. Home Assurance
Co. (In re Heating Oil Partners, LP), 422 F.App’x 15, 17 (2d Cir. 2011) (finding that debtor’s
insurer was a party-in-interest with standing to seek a declaratory judgment that default judgment
against the debtor and debtor’s successor in interest was obtained in violation of the automatic
stay and void ab initio because the insurer had a “personal stake in whether the default judgment
is void” since it was required to pay out on the judgment under the debtor’s insurance coverage);
In re Johns-Manville Corp., 36 B.R. at 749 (holding that future asbestos claimants were parties
in interest under 11 U.S.C. § 1109 because the debtor’s reorganization had a “direct impact” on
those claimants); In re Stone Barn Manhattan LLC, 405 B.R. 68, 74 (Bankr. S.D.N.Y. 2009)
(concluding that the BH S&B debtors and their creditors committee were parties in interest with
standing to object to a settlement between the Stone Barn debtors and lessor GECC because the
BH S&B estates “have a direct interest in the escrow account from which the Settlement is
proposed to be funded.”).
CFGL contends that it is a party in interest because (i) it was one of the entities over
which the JPLs were directly appointed, (ii) it is an indirect 100% shareholder of CFG Peru, and
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(iii) it was “directly damaged” as a result of the appointment of the JPLs. See CFGL Reply ¶ 1.
The Court is not persuaded. First, as an indirect shareholder, CFGL, in effect, concedes that any
stake it may have in the outcome of the Adversary Proceeding is, as a factual and structural
matter, conditional and indirect. Indeed, the outcome of the litigation may have no impact at all
on CFGL and the other Debtors who are above CFGL in the capital structure if recoveries to
creditors of the Peruvian Opcos do not leave any residual value to be upstreamed to CFG Peru’s
equity holders. Second, that CFGL was one of the entities over which the JPLs were appointed
does not, without more, give rise to a direct pecuniary interest in the claims asserted against
HSBC, and to be sure, CFGL did not and could not articulate any such nexus. Finally, CFGL’s
contention that it was “directly damaged” by HSBC’s actions plainly contradicts its repeated
statements and position that it is “not looking to assert new claims against HSBC” (Motion ¶ 52),
but rather seeks to “join and adopt all claims asserted by the Trustee in the Trustee Complaint.”
(Motion ¶ 2). See also CFGL Reply ¶ 7 (“CFGL does not seek to modify or present any causes
of action that are factually or legally distinct from those asserted in the Trustee’s Complaint.”).
Instead, it is clear from the record of these cases and the parties’ pleadings that CFGL’s interest
in the adversary proceeding is indirect at best, and simply too inchoate to constitute a “sufficient
stake” for purposes of being designated a “party-in-interest” under section 1109(b) of the
Bankruptcy Code. Accordingly, CFGL cannot intervene in this adversary proceeding as of right
under Federal Rule 24(a)(1).
Intervention as of Right: Fed. R. Civ. P. 24(a)(2)
Federal Rule 24(a)(2) provides for intervention as of right by a party who
claims an interest relating to the property or transaction that is the subject of the
action, and is so situated that disposing of the action may as a practical matter
impair or impede the movant’s ability to protect its interest, unless existing parties
adequately represent that interest.
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Fed. R. Civ. P. 24(a)(2). To intervene under this rule, the “applicant must (i) file timely, (ii)
demonstrate an interest in the action, (iii) show an impairment of that interest from an
unfavorable disposition, and (iv) have an interest not otherwise adequately protected. United
States v. State of New York, 820 F.2d 554, 556 (2d Cir. 1984) (citing Restor-A-Dent Dental
Labs., Inc. v. Certified Alloy Prods., Inc., 725 F2d 871, 874 (2d Cir. 1984)). “Failure to satisfy
any one of these requirements is sufficient grounds to deny the application.” Id. at 556 (citation
omitted); accord United States v. Pitney Bowes, Inc., 25 F.3d 66, 70 (2d Cir. 1994) (“The
intervention application will be denied unless all four requirements are met.”). The Trustee and
HSBC contend that CFGL is not entitled to intervene as of right in this adversary proceeding
because its interest in this litigation is adequately protected by the Trustee, and CFGL cannot
establish otherwise. See, e.g., Trustee Objection ¶ 10; HSBC Objection ¶¶ 17-20. The Court
agrees.
In this Circuit, “[w]hile the burden to demonstrate inadequacy of representation is
generally speaking ‘minimal,’ . . . we have demanded a more rigorous showing of inadequacy in
cases where the putative intervenor and a named party have the same ultimate objective[.]”
Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 179 (2d Cir. 2001) (citations omitted).
The Trustee is the Court appointed fiduciary of CFG Peru. As such, he has “the duty to
maximize the value of the estate,” and his fiduciary duty “runs to the shareholders as well as to
creditors.” Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343, 355 (1985). See
also In re Kazis, 257 B.R. 112, 114 (Bankr. D. Mass. 2001) (explaining that chapter 7 trustee
“should . . . take into account the Debtor’s equity within his consideration of the entire case”);
ASARCO Inc. v. Elliott Mgmt. (In re ASARCO, L.L.C.), 650 F.3d 593, 601 (5th Cir. 2011)
(stating, in the context of a section 363 sale, that the debtor or trustee must satisfy its “fiduciary
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duty to the debtor, creditors, and equity holders” in articulating a business justification for the
sale) (citation omitted). Where, as here, there is an identity of interest between the existing
litigant and the party seeking to intervene in the litigation, there is a presumption that the party
already in the action is adequately representing the interests of the putative intervenor. See
Sequa Corp., 250 F.3d at 179-180. To rebut that presumption, the intervening movant must
“provide evidence of collusion, adversity of interest, nonfeasance or incompetence.” Sec. Inv’r
Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC, 550 B.R. 241, 254 (Bankr. S.D.N.Y. 2016)
(citations omitted).
CFGL has not met its burden of overcoming the presumption that the Trustee is
adequately representing the interests of CFGL in pursuing its claims against HSBC. CFGL
asserts that because the Trustee represents only CFG Peru, “he may be less incentivized to
proceed with the Adversary Proceedings” to the extent that he is successful in selling the
Peruvian Business. See Motion ¶ 46; CFGL Reply ¶ 2. There is nothing in the record in support
of that contention and the Trustee has not cited to any support. Nor has the Trustee presented
any evidence of “collusion, adversity of interest, nonfeasance or incompetence” on the part of the
Trustee. Moreover, the Trustee’s actions thus far—for example, pursuing prelitigation discovery
against HSBC under Bankruptcy Rule 2004—demonstrates that he is sufficiently motivated to
“litigate vigorously and to present all colorable contentions” in this adversary proceeding. See
Madoff, 550 B.R. at 254. As such, CFGL has not met its burden of proof. The Court denies
CFGL’s request for relief under Federal Rule 24(a)(2).
Permissive Intervention: Fed. R. Civ. P. 24(b)(1)
As relevant, Federal Rule 24(b) states that “[o]n timely motion, the court may permit
anyone to intervene who . . . has a claim or defense that shares with the main action a common
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question of fact or law.” Fed. R. Civ. P. 24(b)(1)(B). “A court’s application of Rule 24(b) is
discretionary – i.e., the court may use its own discretion in determining whether permissive
intervention is appropriate for a specific party.” Doral Center, Inc. v. Ionosphere Clubs, Inc. (In
re Ionosphere Clubs, Inc.), 101 B.R. 844, 853-54 (Bankr. S.D.N.Y. 1989) (citation omitted). In
exercising that discretion, courts will not permit a party to intervene in an action where “(1) the
intervenor’s interests are already adequately represented and (2) intervention would result in
undue delay or prejudice to the original parties.” Id. at 853 (quotations omitted). As discussed
above, the Court concludes that CFGL’s interests in this action are already adequately
represented by the Trustee in the prosecution of these claims. Therefore, the Court denies
CFGL’s request to intervene in this adversary proceeding pursuant to Federal Rule 24(b)(1)(B).
CONCLUSION
Based upon the foregoing, the Motion is DENIED.
It is SO ORDERED.
Dated: New York, New York
December 27, 2018 	/s/ James L. Garrity, Jr.
Honorable James L. Garrity, Jr.
United States Bankruptcy Judge
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