Lawsuit

Minority bondholders of OGX file suit against Deutsche Bank as indenture trustee

Mon, 02/06/2014 - 10:04

Law firm Brown Rudnick has filed suit in the Supreme Court of the State of New York on behalf of a group of minority bondholders against Deutsche Bank Trust Company Americas for USD3.6 billion in principal amount of notes issued by a Austrian subsidiary of OGX Petroleo e Gas Participacoes.

OGX is a Brazilian oil and gas company that filed for bankruptcy protection in Brazil in October 2013, having defaulted on the USD3.6 billion in notes. This is the largest ever bankruptcy proceeding in Latin America.
 
The plaintiffs allege that Deutsche Bank and affiliates have made or will make grossly disproportionate distributions to some noteholders (the “majority noteholders”) on account of their ownership of the notes, while making substantially reduced distributions to the other noteholders, including plaintiffs.  As a result of Deutsche Bank’s breaches and disproportionate distributions, Plaintiffs allege that majority noteholders will receive recoveries at a rate of 3.5 times over those of minority noteholders, including plaintiffs.
 
William Baldiga, member of the Brown Rudnick team representing the Plaintiffs, says: “Deutsche Bank’s primary function as indenture trustee is to ensure that all holders of the notes are treated equally, and we do believe that it has failed altogether to ensure equal and ratable treatment here."
 
Among other relief, the plaintiffs are asking the court for (1) a declaratory judgment that Deutsche Bank breached its duties under the Indentures and its fiduciary duty to plaintiffs when it participated in the transactions and agreed to make distributions that preferred the majority noteholders over plaintiffs, and (2) an order requiring Deutsche Bank to allocate any further distributions on the notes to ensure that plaintiffs and the majority noteholders receive the same pro rata share of all distributions on account of the notes. The Plaintiffs are also seeking damages against Deutsche Bank AG. 
 
The plaintiffs include the following (acting on their own behalf or as, by or through a manager or investment manager of funds): Capital Ventures International (of the Cayman Islands), GLG Partners (of London), Brennus Asset Management (of the UK), and VR Global Partners.


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