On April 17, 2018, the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) issued a decision requiring CohnReznick LLP (“CohnReznick”) to produce documents requested by the foreign representatives (the “Foreign Representatives”) in the chapter 15 case of Platinum Partners Venture Arbitrage Fund (International) Limited (in Official Liquidation) (the “International Fund”). In re Platinum Partners Value Arbitrage Fund L.P. (in Official Liquidation), No. 16-12925, 2018 WL 1864931 (Bankr. S.D.N.Y. Apr. 17, 2018). In doing so, the Bankruptcy Court rejected CohnReznick’s arguments that it did not need to comply with the requests because (i) Cayman Islands law precludes the production of the requested documents; and (ii) the underlying subpoena impermissibly sought “pre-suit discovery” regarding potential claims that fell within the scope of the arbitration provision of CohnReznick’s engagement agreement.
Procedural History
In August 2016 the International Fund, Platinum Partners Value Arbitrage Fund L.P. (in Official Liquidation) (the “Master Fund”), and Platinum Partners Value Arbitrage Intermediate Fund L.P. (in Official Liquidation) (the “Intermediate Fund” and, together with the International Fund and the Master Fund, the “Funds”) were placed into liquidation by order of the Grand Court of the Cayman Islands. Platinum Partners, 2018 WL 1864931, at *2. In a Cayman liquidation proceeding, liquidators are appointed to “collect, realise, and distribute” the liquidating entity’s assets and are empowered to investigate the “promotion, business, dealings and affairs” of such entity, including the causes of its failure. Id., at *3. Prior to the liquidators’ appointment, the Funds were managed by Platinum Management (NY) LLC, which is headquartered in New York.
On October 18, 2016, the joint liquidators of the International Fund and the Master Fund filed petitions under chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”) seeking recognition of the Cayman liquidation proceedings as “foreign main proceedings.” Platinum Partners, 2018 WL 1864931, at *3. On November 22, 2016, the Court entered an order (the “Recognition Order”) recognizing the Cayman proceedings as foreign main proceedings. Id. The Recognition Order authorized the Foreign Representatives to conduct discovery “within the territorial jurisdiction of the United States concerning the assets, affairs, rights, obligations or liabilities of the Funds, the Funds affiliates and the Funds,” including “upon written request, obtaining turnover of any and all documents . . . that are property of, concern or were made or issued on behalf of the Funds . . . .” Id. A chapter 15 petition subsequently was filed by the Intermediate Fund, and on October 12, 2017, the Court entered an order recognizing the Intermediate Fund’s liquidation proceeding as a foreign main proceeding. The Funds’ chapter 15 cases are being jointly administered for procedural purposes only. Id.
In connection with their investigation of the Funds, the Foreign Representatives informally sought certain documentation from CohnReznick, which had been retained by the Funds to provide audit services for calendar years 2014 and 2015. Platinum Partners, 2018 WL 1864931, at *4. Although CohnReznick produced copies of certain original documents that it maintained were property of the Funds, it did not provide other documentation in its audit file, including work papers, engagement documents and invoices, on the basis that such documents were not the Funds’ property. Id. As a result, on August 31, 2017, the Foreign Representatives served a subpoena on CohnResnick relating to its “auditing, accounting, or other services for, on behalf of or in relation to any Fund,” to which CohnReznick served written objections. Id. After the parties were unable to consensually resolve the objections, the parties both filed letters with the Court and, ultimately, the Foreign Representatives filed a motion to...
