Noteholders File Objection to Vitro's Request for Injunction
July 11, 2012
by Katie O'Mara, firstname.lastname@example.org
The noteholders in Vitro S.A.B.’s bankruptcy case have asked the court to deny Vitro’s request for an injunction that would extend the existing temporary restraining order (TRO) pending appeal. The U.S. Court of Appeals for the Fifth Circuit recently granted Vitro S.A.B. permission to appeal a recent decision by the U.S. Bankruptcy Court for the District of Northern Texas not to enforce the company’s Mexican reorganization plan in the United States.
The TRO prohibits Vitro’s creditors “from taking actions to enforce judgments against Vitro SAB and its non-debtor affiliates.”
“Vitro’s request for an injunction barring ongoing proceedings in the New York state courts must be denied for three fundamental reasons. First, Vitro’s request violates the Anti-Injunction Act because under that act, a federal court may not grant an injunction to stay proceedings in a state court except as expressly authorized by Act of Congress, and Vitro has failed to demonstrate any express authorization,” reads the documents filed by the noteholders.
The noteholders add that Vitro has three independent, adequate remedies at law and therefore cannot obtain equitable relief in the form of an injunction. According to the noteholders, if the court were to consider the injunction, Vitro would have to satisfy a four-part test, which would require that, “(1) it is likely to succeed on the merits, (2) It will suffer irreparable harm, (3) the threatened harm to Vitro outweighs harm the inunction will cause appellees, and (4) granting the injunction will not disserve the public interest.”
Vitro has responded through court documents to the noteholders, defending the company’s request for an injunction.
“The appellees contend that, rather than preserve the status quo pending this appeal by extending the TRO, this court should stand idly by while appellees launch fresh attacks on Vitro, its customers and other parties with whom it does business in direct contravention of the decisions of the Mexican District Court,” reads the documents filed by Vitro. “Having succeeded in getting this court to reject the motion to expedite Vitro SAB’s appeal, the appellees ask that this court permit this barrage to continue for months while the appeal is briefed.”
Vitro requests that the court disregard the noteholders opposition and grant a preliminary injunction to extend the TRO.
The court had issued an order granting the stay of the TRO, but did not provide a specific deadline for when the TRO will expire. It currently is “pending further order of [the court].” Additionally, the court previously denied a motion by Vitro for expedited consideration of its appeal.
The court had not yet responded to the noteholders' objection at press time.
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