MatlinPatterson fund case conversion taken under advisement by court

By Sarah Lizee

Olympia, Wash., April 13 – The court overseeing MatlinPatterson Global Opportunities Partners II LP’s Chapter 11 bankruptcy case has taken a motion to convert the case to Chapter 7 under advisement following an April 8 hearing, according to court documents filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

The foreign representative of creditor Varig Logistica SA’s estate, Vanio Cesar Pickler Aguiar, had asked the court to convert the MatlinPatterson fund’s case. Aguiar had said the debtor’s negative cash flow is depleting the estate.

“The debtors are defunct and incapable of emerging as operating entities,” Aguilar said.

The foreign representative for Varig also claims the debtors have a conflict of interest in investigating their insider transactions completed in the run up to the filing for bankruptcy or in investigating the significant fees incurred in connection with the filing of the cases.

Aguiar also said that there are no relevant activities the debtors can take that a Chapter 7 trustee can’t undertake.

“The ongoing administrative costs of the estate would be much lessened by conversion,” Aguilar added.

The MatlinPatterson fund said Aguiar’s motion seeks to replace the Chapter 11 case with “an as-yet unfiled Cayman liquidation proceeding, where VRG hopes to obtain a recovery advantage over debtors’ stakeholders and other contingent creditors.”

MatlinPatterson is a New York-based distressed debt and credit opportunities fund. The company filed bankruptcy on July 6, 2021 under Chapter 11 case number 21-11255.

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