Wed 01/26/2022 13:17 PM
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Bankruptcy Legislation: Moby and Morgan Stanley

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Moby SpA late Tuesday, Jan. 25, urged the New York Supreme Court to deny a motion to dismiss filed by two Morgan Stanley entities and Morgan Stanley International employee Massimo Piazzi, arguing that it has adequately pleaded a tortious interference cause of action.

On Sept. 28, 2021, Moby sued dissenting bondholder Antonello Di Meo, the Morgan Stanley entities, Piazzi and fellow Morgan Stanley International employee Dov Hillel Drazin in the Southern District of New York federal court for “attempting to illegally acquire control” of the Italian ferry company and its Italian concordato restructuring proceeding by purchasing a controlling stake in Moby’s bonds at a “substantial discount using inside information.” Moby on Oct. 14, 2021, voluntarily dismissed the federal court action and refiled in a New York state court after U.S. District Judge Gregory Woods granted defendants permission to seek dismissal. The state court motion to dismiss indicated that Di Meo and Drazin did not seek to dismiss the state court case because they have not been served with process outside the United States.

The Morgan Stanley entities and Piazzi filed their state court motion to dismiss on Dec. 18, 2021, arguing that the court lacks jurisdiction to hear the claim and that Moby’s suit is “fundamentally flawed” because “there is nothing improper or tortious about creditors exploring and negotiating their options in connection with a corporate restructuring.”

In its response yesterday, Tuesday, Jan. 25, Moby argues that despite the defendants’ assertion that “the Claim is entirely speculative and dependent on the occurrence of future events,” the dispute is ripe because “[d]efendants’ wrongful actions have already resulted in the exact harm intended, which among other things has included prolonging Moby’s restructuring and dramatically increasing its costs.”

The New York Supreme Court has personal jurisdiction over Piazzi, Moby argues, because the state’s long arm statute confers jurisdiction “due to [Piazzi’s] residence and employment in New York during the conspiracy as well as actions taken by his co-conspirators in New York.” The establishment of personal jurisdiction is consistent with due process, according to Moby, because of Piazzi’s “minimum contacts” in the state, “such that Piazzi cannot reasonably claim that he is being unforeseeably dragged into a New York court.” Moby claims that because it has established such minimum contacts - in part because Piazzi lived in New York during the time the interference with Moby’s creditors occurred - the burden must fall on Piazzi to establish a “compelling case” that would “render jurisdiction unreasonable.” Piazzi has failed to make such a showing, Moby says. To the extent that the court is uncertain whether personal jurisdiction exists, Moby asks the judge to adjourn the motion to dismiss to permit jurisdictional discovery “to prove other contacts and activities of the defendant in New York.”

With respect to the defendants’ arguments under the doctrine of forum non conveniens (which looks to whether another court, in this case in Milan, is a more appropriate venue for the litigation), Moby asserts that even though Piazzi, Drazin and Di Meo all currently reside outside of the United States, it filed the lawsuit in New York because the Morgan Stanley entities are based there, the defendant’s scheme was substantially carried out in New York and that the notes involved are governed by New York law. Moby asserts that “the hardship, if any, imposed on witnesses by litigating the Claim in New York is minimal” and that the “mere existence” of a restructuring proceeding pending in a court in Milan “by no means ‘demonstrates the availability of an alternate, more convenient forum’ to hear the Claim.”

Moby also argues that it has presented a valid cause of action for tortious interference against the defendants because it has pled with “requisite particularity” that Moby has business relationships with the creditors with which “it has been actively negotiating the restructuring of its debts,” and that the defendants “conspired to interfere and interfered with those relationships and hindered Moby’s restructuring efforts.” The efforts by the Morgan Stanley entities and Piazzi “harmed and continue to harm Moby by, among other things, delaying Moby’s restructuring and increasing its costs,” according to the response.

According to a stipulation setting the briefing schedule, the Morgan Stanley defendants shall file their reply by Feb. 14.
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