Maxus Liquidating Trust v. YPF S.A. (In re Maxus Energy Corp.)

641 B.R. 467

IN RE: MAXUS ENERGY CORPORATION, et al., Debtors.

Maxus Liquidating Trust, Plaintiff,

v.YPF S.A., YPF International S.A., YPF Holdings, Inc., CLH Holdings, Inc., Repsol, S.A., Repsol Exploratión, S.A, Repsol E&P USA, Inc., Repsol Offshore E&P USA, Inc., Repsol E&P T&T Limited and Repsol Services Company, Defendants.

Case No. 16-11501 (CSS) Jointly Administered

Adv. Pro. No.: 18-50489 (CSS)

United States Bankruptcy Court, D. Delaware.

Signed June 22, 2022

FARNAN LLP, Brian E Farnan, Michael J. Farnan, 919 North Market Street,

12^th Floor, Wilmington, DE 19801 -and- WHITE & CASE LLP, J. Christopher Shore, 1221 Avenue of the Americas, New York, New York 10020, Counsel for the Liquidating Trust

John J. Kuster, SIDLEY AUSTIN LLP, 787 Seventh Avenue, New York, New York 10019 -and- Matthew McGuire, LANDIS RATH & COBB LLP, 919 N. Market Street, Suite 1800, Wilmington, Delaware 19801 -and- Jeffrey A. Rosenthal, CLEARY GOTTLIEB STEEN & HAMILTON LLP, One Liberty Plaza, New York, NY 10006, Counsel for YPF S.A., YPF International S.A., YPF Holdings, Inc. and CLH Holdings, Inc.

MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Robert J. Dehney, Curtis S. Miller, 1201 North Market Street, Wilmington, Delaware 19899 -and- WEIL, GOTSHAL & MANGES LLP, Corey D. Berman, 1395 Brickell Avenue, Suite 1200, Miami, Florida 33131, Counsel for Defendants Repsol, S.A., Repsol Exploración S.A., Repsol USA Holdings Corp., Repsol E&P USA, Inc., Repsol Offshore E&P USA, Inc., Repsol E&P T&T Limited and Repsol Services Company

Related Adv. D.I. 621, 637 and 645

OPINION

Sontchi, J.

Table of Contents

Introduction...485

Jurisdiction...487

Procedural History and Background...487

A. The Parties...487

B. The History of the Diamond Alkali Superfund Site...488

C. The Diamond Alkali Superfund Site Has Always Been the Primary Driver of Maxus's Environmental Obligations...489

D. Maxus Offers Itself for Sale Knowing It Faces the Potential of Material Future Environmental Expenditures...490

E. YPF Seeks to Acquire Maxus...490

F. Trust's Allegations of a YPF Strategy...491

G. Maxus Transfers Assets to YPFI...493

H. Repsol Acquires YPF (and Maxus)...493

I. The Crescendo Transfers (1999 to 2000)...494

J. The YPFI Transfers (2000 to 2002)...494

K. The NJ Litigation Commences...494

L. The EPA's 2007 Draft FFS Makes Clear that a Large-Scale, Active Remediation at the DASS is Expected...495

M. Settlement Agreements...495

N. The Second YPF Period: Project Jazz and the Run Up to the Chapter 11 Cases...496

O. The Chapter 11 Cases...496

Analysis...496

A. Standard of Review...496

Trust's Motion for Summary Judgment...499

A. Damages...499

i. The Theory That Applies to Alter Ego Damages Is a Matter of Law Suitable for Disposition on Summary Judgment...501

ii. It is Premature to Decide the Quantum of Damages Before Alter Ego Liability...507

B. Fraudulent Transfers...509

i. Actual Fraudulent Transfers...509

ii. "Transfers" of "Interests" of the Debtors in "Property"...509 a. Repsol's Good Faith Defense...510

b. Collapsing Defendants and Transactions...512

c. Imputing Intent...512

iii. Badges of Fraud...513

a. Badge 1: Were the Transfers Made to Insiders?...514

1. Repsol...514

2. YPF...515

b. Badge 2: Did the Debtors Retain Possession or Control of the Property Transferred After the Transfers?...516

1. Repsol...516

2. YPF...517

c. Badge 3: Were the Transfers or Obligations Disclosed or Concealed?...––––

d. Badge 4: Before the Transfers Were Made or Obligations Were Incurred, the Debtors Were Sued or Threatened with Suit...518

1. Repsol...519

2. YPF...519

e. Badge 5: Were the Transfers of Substantially All the Debtor's Assets?...520

1. Repsol...520

2. YPF...520

f. Badge 7: Did the Debtors Remove or Conceal Assets?...520

g. Badge 8: Was the Value of the Consideration Received by the Debtors Not Reasonably Equivalent to the Value of the Assets Transferred or the Amount of the Obligations Incurred?...521

h. Badge 9: Were the Debtors Insolvent or Did the Debtors Become Insolvent Shortly After the Transfers Were Made or the Obligations Were Incurred?...522

i. Badge 10: Did the Transfers Occur Shortly Before or Shortly After a Substantial Debt Was Liquidated?...522

iv. Conclusion...522

C. Defenses...522

Defendants’ Cross Motions for Summary Judgment...526

A. Whether the Actual Fraudulent Transfer Claims Fail Under the Legitimate Supervening Purpose Test as a Matter of Law...526

B. Whether the Collapsing Doctrine Is Inapplicable as a Matter of Law to the Trust's Actual Fraudulent Transfer Claims...530

C. Whether the Constructive Fraudulent Transfer Claims are Time Barred or Extinguished...540

i. Whether the Constructive Fraudulent Transfer Claims Fail Even If Tronox II Collapsing Is Applicable...541

ii. Whether the EPA or the States of Ohio or Wisconsin Can Serve as Triggering Creditors Under 11 U.S.C. § 544(b)...542

iii. Whether the EPA or the States of Ohio or Wisconsin Are Subject to a Statute of Repose...543

a. EPA...545

b. State of Ohio...546

c. State of Wisconsin...547

iv. Whether the EPA's Constructive Fraudulent Transfer Claims Were Tolled Up to and Including the Petition Date...548

D. Whether Repsol is the Alter Ego of Maxus...550

i. Piercing the Corporate Veil...550

a. Dominion and Control...551

b. Fraud and Injustice...555

ii. Sequential Veil Piercing...556 iii. Discrete Transactions vs. Strategy...558

E. Repsol Has Not Rebutted Maxus's Case-in-Chief on Fraudulent Transfers....559

i. Counts II and III Assert the "Strategy" Against All Defendants...559

ii. Counts XIV-XV Regarding the 2001-2002 YPFI Transactions...559

a. Transfers "By a Debtor"...559

b. Extraterritorial...560

iii. Crescendo Transfer and Reasonably Equivalent Value...562

iv. Settlement Agreements...563

F. The Claims for Unjust Enrichment and Civil Conspiracy Must Go To Trial....566

i. Time-Barred...566

ii. Unjust Enrichment Claim...566

iii. Civil Conspiracy...567

Conclusion...569

INTRODUCTION

The Maxus Liquidating Trust (the "Trust" or the "Plaintiff"), which is the successor in interest to Maxus Energy Corporation filed a 23-count complaint against YPF S.A. and numerous of its affiliates and Repsol, S.A. and numerous of its affiliates.¹

Before the Court are three motions (i) Plaintiff's Motion for Partial Summary Judgment on Counts I, IV, VI, VIII, X, XII, and XIV² of the Complaint and Related Affirmative Defenses³ and the responsive documents thereto;⁴ (ii) YPF Defendants’ Cross Motion for Summary Judgment⁵ and the responsive documents thereto;⁶ and (iii) Repsol Defendants’ Motion for Summary Judgment⁷ and the responsive documents thereto⁸ (collectively, the "Motions"). The Court heard oral argument on the Motions on June 13, 2022.⁹

The Trust's Motion seeks partial summary judgment on three issues: (i) the measure of damages (not liability) with regard to the Trust's alter ego claims; (ii) certain elements of the Trust's actual fraudulent transfer claims, i.e., the transfers each involved "transfers" of "interests" of the "Debtors" in "property," as well as certain badges of fraud; and (iii) Defendants’ affirmative and other defenses. As set forth below, the Court finds that it is premature to rule on the damages portion of the alter ego claim, there are genuine issues of material fact as to whether the transfers were "property" of the "Debtors" and as to various badges of fraud; and the Trust has not established an absence of material disputed facts regarding Defendants’ affirmative and other defenses.

YPF's Motion reads like an opposition because many arguments are made in defense to the issues raised by the Trust's Motion.¹⁰ The issues YPF seeks partial summary judgment on are: (i) the applicability of the collapsing doctrine; (ii) statute of limitations for constructive fraudulent transfer claims; (iii) the legitimate supervening purpose test for actual fraudulent transfer claims; and (iv) the damages portion of the Trust's alter ego claim. As set forth below, YPF's Motion will be granted, in part, and denied, in part. More specifically, the Court will grant YPF partial summary judgment on the causation theory of damages. The Court will deny summary judgment on the remainder of YPF's Motion because the Court finds that there are material disputes of fact that prevent summary judgment on the remainder of issues raised by YPF.

Repsol seeks summary judgment on the following: (i) that the alter ego claim against Repsol is legally meritless; (ii) that the Plaintiff cannot rely on the collapsing doctrine to extend the statute of limitations for its Fraudulent Transfer claims; (iii) that the Plaintiff's claims for fraudulent transfer fail as a matter of law; and (iv) that the Plaintiff's unjust enrichment and civil conspiracy claims also fail. As set forth below, the Court finds that there are material disputes of fact that prevent summary judgment on any issue raised by Repsol.

JURISDICTION

This Court has jurisdiction over this matter, pursuant to 28 U.S.C. § 1334. Venue is proper in this District, pursuant to 28 U.S.C. §§ 1408 and 1409.

PROCEDURAL HISTORY AND BACKGROUND¹¹

A. The Parties

Plaintiff, the Trust, was created on July 14, 2017 (the "Effective Date"), upon consummation of the Amended Plan (defined within). At that time, the Trust succeeded to ownership of all of the assets, including claims and causes of action, of Maxus Energy Corporation ("Maxus"), Tierra Solutions, Inc. ("Tierra"), Maxus International Energy Corporation ("MIEC"), Maxus (U.S.) Exploration Company ("MUSE"), and Gateway Coal Company ("Gateway") (collectively, the "Debtors"). Defendant YPF S.A. ("YPF") is an oil and gas company formed under the laws of Argentina and is the sole shareholder of subsidiaries YPF International, S.A. ("YPFI"), YPF Holdings, Inc. ("YPFH"), and CLH Holdings, Inc. ("CLHH") (together with YPF the "YPF Defendants" or "YPF"). Defendant Repsol, S.A. ("Repsol") is an oil and gas company formed under the laws of Spain and is the sole shareholder of subsidiaries Repsol Exploración, S.A., Repsol USA Holdings Corp., Repsol E&P USA, Inc., Repsol Offshore E&P USA, Inc., Repsol E&P T&T Limited, and ...