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1 FILED: NEW YORK COUNTY CLERK 07/11/2013 INDEX NO /2011 NYSCEF DOC. NO. 174 RECEIVED NYSCEF: 07/11/ SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY : CIVIL TERM : PART X CORTLANDT STREET RECOVERY CORP., 4 Plaintiff 5 - against - Index No /10 6 HELLAS TELECOMMUNICATIONS, S.a.r.l., HELLAS TELECOMMUNICATIONS FINANCE, S.C.A. 7 HELLAS TELECOMMUNICATIONS I, S.a.r.l., APAX PARTNERS, LLP and TPG CAPITAL, L.P., 8 Defendants x 9 CORTLAND STREET RECOVERY CORP., Plaintiff, 10 - against - Ind. No /11 HELLAS TELECOMMUNICATIONS II, S.C.A.; HELLAS 12 TELECOMMUNICATIONS I, S.a.r.l; HELLAS TELECOMMUNICATIONS, S.a.r.l; APAX PARTNERS, LLP 13 TPG CAPITAL, L.P.; DAVID BONDERMAN; JAMES COULTER; MARTIN HALUSA; JOHN MEGRUE; GIANCARLO ALIBERTI; 14 MATTHIAS CALICE; TPG CAPITAL-N.Y., LLP., APAX PARTNERS, L.P. d/b/a APAX PARTNERS OF NEW YORK; 15 TPG PARTNERS IV, L.P.; TPG ADVISORS IV, INC., TPG GENPAR IV, L.P.; TPG ADVISORS, II, INC.; T3 16 GENPAR II, L.P.; T3 PARTNERS II, L.P.; T3 PARALLEL II, L.P.; APAX PARTNERS EUROPE MANAGERS LIMITED; 17 APAX EUROPE VI GP CO. LIMITED; APAX EUROPE VI GP, L.P.; APAX EUROPE VI-A, L.P.; APAX EUROPE VI-I, 18 L.P.; TROY, LP, INC.; APAX WW NOMINEES LTD.; TPG TROY, LLC; T3 TROY, LLC; HELLAS TELECOMMUNICATIONS 19 CO-INVEST LTD., HELLAS TELECOMMUNICATIONS EMPLOYEES LTD.; TWC HT-CO-INVEST I L.P.; TCW HT CO-INVEST II 20 L.P., Defendants, 21 - and - 22 MARGARET ELIZABETH MILLS; ALAN MICHAEL HUDSON; and 23 ERNST & YOUNG, LLP, Administrators of Hellas Telecommunications II, S.C.A. 24 BANK OF NEW YORK MELLON, Common Depository for the -~ 25 Global Subordinated Notes of Hellas Telecommunications, II, S.C.A. 26 Additional Defendants x

2 2 -, x CORTLANDT STREET RECOVERY CORP, and WILMINGTON TRUST COMPANY, as Trustee Plaintiffs, - against - Ind. No /11 DAVID BONDERMAN; JAMES COULTIER, MARTIN HALUSA; JOHN MEGRUE; GIANCARLO ALIBERTI; MATTHIAS CALICE; TPG CAPITAL-N.Y., LLP; APAX PARTNERS, L.P. d/b/a APAX PARTNERS OF NEW YORK; HELLAS TELECOMMUNICATIONS II, S.C.A.; TPG PARTNERS IV, L.P.; TPG ADVISORS IV, INC., TPG GENPAR IV, L.P.; TPG ADVISORS II, INC., T3 GENPAR II, L.P.; T3 PARTNERS II, L.P.; T3 PARALLEL II, L.P.; APAX PARTNERS EUROPE MANAGERS LIMITED; APAX EUROPE VI GP CO. LIMITED; APAX EUROPE VI GP, L.P.; APAX EUROPE VI-A, L.P.; APAX EUROPE VI-I, L.P.; TPG TROY, LLP; T3 TROY LLC; HELLAS TELECOMMUNICATIONS CO-INVEST LTD.; HELLAS TELECOMMUNICATIONS EMPLOYEES LTD.; TCW HT-CO-INVEST I L.P.; TCW HT CO-INVEST II, L.P., Defendants X WILMINGTON TRUST COMPANY, as Trustee CORTLANDT STREET RECOVERY CORP., Plaintiffs - against - Index No /11 HELLAS TELECOMMUNICATIONS FINANCE, S.C.A, HELLAS TELECOMMUNICATIONS I, S.a.r.l. Defendants. 60 Centre Street New York, New York May 31, 2013 PROCEEDINGS - - X BEFORE: HONORABLE MARCY S. FRIEDMAN, Justice

3 3 1 2 APPEARANCES: STAMELL & SCHAGER, LLP Attorneys for Cortlandt Wilmington One Liberty Plaza, 35th Floor New York, NY BY: JARED B. STAMELL, ESQ. ANDREW R. GOLDENBERG, ESQ. FOLEY & LARDNER LLP Attorneys for Wilmington Trust 90 Park Avenue New York, NY BY: DOUGLAS E. SPELFOGEL, ESQ..~ WHITE & CASE LLP Attorneys for Defendant Hellas 1155 Avenue of the Americas New York, NY BY: DWIGHT A. HEALY, ESQ. ADAM E. WACTLAR, ESQ ROPES & GRAY LLP Attorneys for Defendants Apax Partners 1121 Avenue of the Americas New York, NY BY: ROBERT S. FISCHLER, ESQ. EVAN P. LESTELLE, ESQ. KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Attorneys for Defendants TPG Capital 1633 Broadway New York, NY BY: PAUL M. O'CONNOR III, ESQ. MICHELE GENET, ESQ. Toni Ann Figueroa, RMR, CRR, CSR Official Court Reporter

4 4 1 2 THE COURT; Proceedings On the record. 3 Good morning. May I have counsel's appearances, 4 please. 5 MR. SPELFOGEL: Good morning, your Honor. Doug 6 Spelfogel on behalf of Wilmington Trust, the movant. 7 MR. STAMELL: Stamell & Schager, Jared Stamell, 8 for the plaintiffs with Andrew Goldenberg. 9 Thank you. 10 MR. HEALY: Good morning, your Honor. Dwight 11 Healy for the two Hellas defendants that are named as 12 defendants in the 3101 (d) motion. 13 MR. O'CONNOR: Good morning, your Honor. Paul 14 O'Connor from Kasowitz Benson on behalf of the 15 TPG- related defendant and I'm joined by Michelle Genet 16 from our office as well. 17 MR. FISCHLER; Good morning, your Honor. Robert 18 Fishcler from Ropes & Gray on behalf of the Apax-related 19 defendant. With me today is Evan Lestelle. Thank you. 20 THE COURT; Thank you. 21 We are going to hear the motion for summary 22 judgment in lieu of complaint this morning. When you 23 divided up the time, you advised me that you would take 24 ten minutes per side. So let's see how that works. The 25 last time we ran over a bit. But I've just reread the 26 transcript of the oral argument. So you can assume this

5 5 1 Proceedings 2 morning that I am up to speed. 3 MR. SPELFOGEL: Thank you, your Honor. 4 Would you like me over here or over there 5 (indicating)? 6 Whatever you prefer is fine. 7 MR. SPELFOGEL: Your Honor, good morning. 8 Again, Douglas Spelfogel from Foley & Lardner on behalf 9 of Wilmington Trust. 10 Your Honor, Wilmington Trust is the indenture 11 trustee and fiduciary for over $300,000,000 in 12 bondholders. This is a motion for summary judgment in 13 lieu of complaint under CPLR 3213 against both Hellas 14 Finance, the borrower, and Hellas I, the guarantor, under 15 certain PIK notes. There are a number of undisputed 16 facts which I just want to outline for your Honor and 17 give you a reference place in the -- on the docket. 18 Number one, Hellas -- it's undisputed that 19 Hellas Finance borrowed 200 million euros and that 20 borrowing was guaranteed by Hellas I PIK notes that are 21 dated December 21st, That's Exhibit A to the Healy 22 affidavit which is document No.3 on the docket. 23 In addition, it's undisputed that under those 24 notes they provide for quarterly interest payments 25 beginning April 15th, 2007 at Euribor plus eight percent, 26 and upon default - and I'll get to that in a moment - the

6 proceedings rate goes up one percent Euribor plus nine percent. that's in the Exhibit A in the note listed at Page 6. Spells out the terms. And Additionally, your Honor, it's undisputed that the notes that were issued were also issued pursuant to an indenture dated of that same date, December 21st, 2006, and that's Exhibit C to the Healy affidavit. Furthermore, it's undisputed that there was a default and an acceleration which was done by notice by Bank of New York who was the predecessor trustee to Wilmington Trust dated November 27th, Counselor, I really am familiar with the facts. We have some serious issues here. Some threshold issues such as standing. MR. SPELFOGEL: So let me get to that, your Honor. With respect to the facts, we submit that the defendants have not submitted any affidavit from any business people, submitted any evidence to contradict the undisputed facts. We submit that under the rules -- But also -- I'm sorry. I don't mean 23 to interrupt you. But I am really concerned about the 24 fact that it appears that this is the very claim that was -----, 25 raised in the 2010 action. You are 26 MR. SPELFOGEL: Your Honor

7 not? Proceedings You were conceding that, are you 4 MR. SPELFOGEL: No. Let me - 5 No? 6 MR. SPELFOGEL: Let me speak to that, your 7 Honor. And there were three defenses which are raised by 8 defendants. One is with respect to the pending 9 proceeding, one is with respect to affirmative defenses, 10 and one is the argument that this is not instrument for 11 payment of money. 12 With respect to the prior suits I'm sorry, Mr. Spelfogel. You are 14 speaking so fast that I can't follow you. 15 MR. SPELFOGEL: I will slow down, your Honor. 16 Let me hit each of their defenses, your Honor, 17 and I think I will be responsive to your questions and I 18 know the time is limited. So if I could proceed. 19 With respect to the argument that this is not an 20 instrument for payment of money only, we submit and we 21 lay that out in our papers that the -- this is a payment 22 under the PIK notes, which is clearly a note which is 23 clearly an instrument for payment of money. What they,----, 24 argue is severalfold. 25 First, they argue that because the -- it's 26 notes --

8 address my question Proceedings Can you please -- can you please 4 5 MR. SPELFOGEL: Yes. as to whether this is the same 6 7 claim as the claim raised in the 2010 lawsuit? MR. SPELFOGEL: Yes. Yes, your Honor. 8 And then once you answer my , question, you can go back to your own agenda. MR. SPELFOGEL: Yes, your Honor. The lawsuit which you are referring to, Cortlandt, Wilmington Trust was not a party to that lawsuit originally. There is a motion to amend to include them in that suit. So that initial lawsuit did not include Wilmington Trust as plaintiff. The action here and also that action included many other fraud 17 claims in addition to this claim. The motion to amend 18 that's pending, if that's granted, that would bring 19 Wilmington Trust into that action. If it is not granted, your Honor, then there is no action that overlaps. What we say to the defendants's arguments regarding the pending action, first of all, we believe the law is clear in this department that where there is a motion to dismiss the first action, then the defendant cannot use the argument that there's a pending action to try to defeat a pend -- second pending action that may

9 9 1 Proceedings 2 overlap and relate to it. 3 In addition to that, the proper response to an 4 argument that there is a related action is not a 5 dismissal, your Honor, but rather a consolidation. We 6 believe that the law is clear in this circuit in this 7 district that in the event that there is a pending 8 proceeding - and, again, this is -- assumes that the 9 actions are not dismissed - then the better procedure 10 would be to consolidate the actions. If, in fact, the 11 actions are dismissed, there would be no avenue for 12 Wilmington Trust to get redress. If, in fact, the 13 actions will continue so they're in existence, then we 14 believe it's prejudicial to require Wilmington Trust to 15 bring, in effect, a new summary judgment motion where 16 we've already waited a year and a half where the debts 17 are undisputed and are existing for -- and unpaid on 18 default for some three years. 19 We also submit, your Honor, that there's no 20 prejudice at all to the defendants who concede that they 21 borrowed the money, that they didn't pay back the money. 22 And, frankly, our argument on the one side that the other 23 actions should be thrown out. They're no good. And then 24 on the other side of the mountain they're saying, Judge, because you have those other actions pending, this action should be thrown out.

10 .~ Proceedings So we submit that the fact that there ls this other action pending, even if your Honor keeps it before you, which we think is appropriate, the motion they made shouldn't and can't be considered while that's up for consideration before your Honor, what's going to happen 7 on that first action. And even if it was considered, it's not grounds to dismiss. With respect to standing otherwise, there's nothing we believe credible in the defendant's papers to attack the standing of Wilmington Trust Indenture 12 Trustee. There is a letter which is attached as Exhibit ~ D. It's a tripartite agreement which was signed by both the insurer, which is the borrower, and the guarantor which appoints Wilmington Trust as successor trustee for Bank of New York and also acknowledges the debt. We also, while -- we think it's irrelevant to this mortgage whether Cortlandt has standing because if you have two plaintiffs or one plaintiff, it wouldn't matter to this particular motion. We also submit that the argument on Cortlandt's 22 standing is frankly baseless. There was a procedure where - and this is in the Healy affidavit - there was a vote of a majority of the holders that appointed Cortlandt and gave them standing, and that's uncontested by any submission of any documents, either affidavit or

11 11 1 Proceedings 2 evidence 3 What do you mean by that, a vote of 4 the majority of the holders? 5 MR. SPELFOGEL: Your Honor, there's a procedure 6 where there would be a proxy done through an indenture 7 trustee process out to all of the holders here and a 8 majority of the holders cast their proxies, their votes, 9 which is in the Healy affidavit, the results of that. 10 And they, a majority of those holders, appointed 11 Cortlandt as representative on behalf of the majority 12 holders, which is covered in the indenture, one of the 13 rights under the indenture that the majority of the 14 holders' vote can appoint a party, here Cortlandt, 15 withstanding to pursue the claims, and that was done in 16 the Healy affidavit. And Mr. Healy, who is a 17 representative of Wilmington Trust, and the bank attests 18 that procedure was done and that we, the majority, was 19 attained. 20 And separately, though, we submit it's 21 irrelevant to this motion because Wilmington Trust 22 standing is uncontrovertible. And even if you needed to 23 look at outside documents, the case law in this district 24 is clear that you may resort to extrinsic evidence to 25 look at other things such as standing. And if you look 26 at the plain face, as I said, of that Exhibit D to the

12 12 1 Proceedings 2 Healy affidavit, which is the tripartite agreement - I'm 3 sorry. I'll slow down - which is the tripartite 4 agreement, that provides that the borrower defendant and 5 the guarantor defendant appointed Wilmington Trust as 6 Successor Indenture Trustee. 7 And what do you say about the 8 argument that you don't have standing to pursue 9 fraudulent conveyance claims? Is that irrelevant to this 10 motion? MR. SPELFOGEL: Yes, your Honor. It's 12 irrelevant to this motion. We don't believe that that's 13 a fair rendition of the law. And I believe in the 14 responsive papers to that other motion there's a very 15 detailed discussion of it. But it's interesting, and I 16 note, that money was lent; money wasn't paid back. But 17 nobody has standing to pursue these claims. 18 You have an indenture trustee, who's a 19 fiduciary, bondless. You have a representative who has 20 been, by a majority vote of the holders, given authority 21 to pursue this, but nobody can proceed. You are -- this 22 is a situation where you have really an abuse here by a 23 party who's borrowed money and the money is unaccounted 24 for. And on this particular motion, the fraud issue 25 doesn't come up because this is simply a motion on the 26 note. It's a very discrete issue.

13 13 1 Proceedings 2 We don't believe -- your Honor shouldn't wait. 3 It's our position, address the other issues which we 4 believe on a particular fraud type of argument have fact 5 issues and fact disputes. This is a very straight 6 forward, very discrete issue. You have a note. They 7 don't say they didn't sign a note. They don't say they 8 didn't borrow the money. Didn't say it wasn't paid. 9 Didn't say there was a note. In fact, in the audited 10 financial statements of both the borrower and guarantee 11 by KPMG, which is a public filing, and that's attached to 12 Exhibits F and G of the papers, acknowledged both the event of the default, acknowledged the amounts owed at that time and the interest. They acknowledged the 15 amounts owed at that time, simply put. There's no 16 evidence to contest the obligation due whatsoever and the 17 law is well settled that you can't simply have a general 18 denial here than a filing. 19 Your Honor, as I know we have a limited time, 20 with respect to the argument that somehow this is not an 21 instrument for payment of money, a few things I'd like to 22 point your Honor to. Let me 23 Before I get to one other comment, also on the 24 affirmative defenses, they also argue because the there might be attorney fees due or because the interest 26 rate is continuing, that somehow that takes that out of

14 14 1 Proceedings 2 an instrument for payment of money. Your Honor, that's 3 not an issue of liability. That's an issue of damages 4 which is uniformly done by inquest. The amounts due on 5 interest can be readily calculated from the details of 6 the note. The attorney fees can be calculated by 7 submission of affidavits, which is readily done, and the 8 case law is well settled that that does not create a 9 dispute certainly over calculation of damages. 10 And then, finally, with respect to the 11 instrument itself, we submit, and they don't contest 12 this, that the note contains the keys payment terms and 13 on its face is sufficient to award judgment. However, 14 even if you were to resort to the indenture, we submit, 15 and the case law bares that does not take the note out of 16 being an instrument for payment of money, A. The note 17 incorporates the indenture and the note is an instrument 18 for payment of money only. 19 Number two, and there's case law right on point 20 here we cite in our papers, including from Judge Fried 21 who used to sit in this courtroom, where the note -- I'm 22 sorry -- where the indenture contains other terms that 23 doesn't matter as long as you could figure out how to 24 calculate the damages from the face of the agreement. 25 And the cases that the defendants cite to are cases where 26 the amounts due under the note are set by profits

15 15.~ 1 2 Proceedings generated by a company or something that is unknown. Not 3 a readily calculated formula. And there's the case, for 4 5 instance, if you bear with me for one moment. (pause in the proceedings.) 6 MR. SPELFOGEL: Couple of Judge Fried's cases 7 note one case, Boland, versus Indah Kiat, which we cite in our papers, 291 A.D.2d 342 (1st Dept.) where the Court specifically provided that where a note requires reference to an indenture, that would not affect the availability of 3213 because it doesn't alter the obligation for payment of money only. 13 Right on point. An exact situation where you have an indenture and a note which contained additional terms and the Court found it did not take it out of the category of payment of money only. There's also a Judge Fried's case we cite to in our papers, JPS Capital v. Silo - and I'll wrap it up WL , Judge Fried. The Court found that the mere presence of additional provisions and indenture does 21 not constitute a bar to relief under And here you 22 have a situation where the liabilities admitted the 23 default is admitted. And to raise these technical smoke and mirrors type of defenses we believe is inappropriate. We're here as a fiduciary for the indenture trustee, your Honor, and we submit that this is a

16 16 1 Proceedings 2 straight forward issue. This is a situation where the 3 suit has been pending for 18 months. The default has 4 been pending for three years. We would submit that this 5 is a discrete issue that should be introduced in a 6 summary fashion. And for those reasons we would ask your 7 Honor render judgment on this particular issue. 8 Thank you. 9 MR. HEALY: Good morning, your Honor. I failed 10 to note that -- Adam Wactler, who's accompanied me this 11 morning. I apologize for that omission. So I do note it 12 now. 13 We heard the other day and we heard again this 14 morning, familiar now, familiar refrain, which is that 15 because money was borrowed and allegedly owed, the Court 16 should dispense with the technical and procedural 17 requirements of both the parties' contractual relations 18 and the relevant procedural laws contained in the CPLR. 19 I would respectfully submit that that is not either a 20 legally correct or a terribly persuasive position. 21 Let me start with the question that your Honor 22 asked, which is whether there was a prior action pending 23 that asserts the same claims. I think that my colleague 24 overlooked that -- the actual details of the prior 25 action. 26 The prior action on the PIK notes were commenced

17 17 1 Proceedings 2 in October of We briefed motions to dismiss over 3 the course of a year. And five days before the oral 4 argument on those motions, counsel for Cortlandt decided 5 that he wanted to amend. 6 Now, the -- certain of the defendants, Apax and 7 TPG, had filed an answer. My clients, the three Hellas 8 defendants, had moved to dismiss. Subsequently, the 9 plaintiff was in a position to amend as a right as to my 10 clients, but was not in a position to amend as of right 11 as to TPG and Apax. In fact, Cortlandt's counsel elected 12 to file an amended complaint with respect to my 13 clients 14 I don't understand that point. Are 15 you saying that the filing of a motion to dismiss gave 16 them the right to amend as of right? 17 MR. HEALY: No, that they have a right to amend 18 unilaterally until a responsive pleading MR. HEALY: Yes, okay. -- responsive pleading had been 21 served. No responsive pleading had been served. And, 22 subsequently, we addressed this with Justice Fried at the 23 time when we appeared for argument which was converted 24 into a conference. And plaintiff was -- the Apax and TPG 25 defendants were not prepared to stipulate to the filing 26 of an amended complaint. So as to them, a motion was

18 18 1 Proceedings 2 required. But a motion was not required as to my 3 defendants. In fact, an amended complaint was filed. 4 It's Item 76 in the docket. It was filed on January 27, And that amended complaint is brought on behalf of 6 Cortlandt and Wilmington Trust. It names each of my 7 three clients as defendants. It adds some additional 8 defendants and it asserts, I would suggest in hyperbole, 9 the claims that are set forth in the 3213 motion. 10 And what was the filing date of that 11 amendment complaint? 12 MR. HEALY: January 27, And when was the motion for summary 14 judgment in lieu of complaint served? 15 MR. SPELFOGEL: It was filed December 15th, MR. HEALY: Of course the amendment relates back to the 19 original pleading, which is or arguably relates back 20 which goes back to I'm sure the plaintiffs will 21 take the position that it relates back. 22 In any event, that action had been pending by 23 that point for well over a year. There are, it's true, 24 other claims asserted there. Of course that may be a 25 compelling reason why it should be all heard together. 26 In any event, it seems to us that the Prior

19 Proceedings Action Pending Doctrine applies in full force here. fact that plaintiffs elected to switch horses in midstream of a pending action and to bring a separate The discrete action as to apportion of the original complaint doesn't alter it. Now, the first substantive point I'd like to 8 address relates to standing. We argued, and I think 9 without any meaningful response, that Cortlandt is not 10 itself a holder of notes. It is, at best, an assignee of claims by a party that was also not a holder of notes. And there's a significant distinction drawn in the ~ indenture between a party that is a holder and a party that is called an indirect participant. An indirect participant is a party that has a beneficial interest in it. And it may be useful for me 17 to digress for just a moment. Because this is something I didn't appreciate until relatively late in my professional life. That when notes like this are sold, 20 they are not sold in broken-down denominations. They're 21 not sold in ten million dollars or one million dollar 22 increments. What's called a global note is issued to 23 either one or one of two or three depositories. So 24 there's a note for $200,000,000 or some substantial 25 increment. Two notes for a hundred million dollars. And 26 everybody who buys gets a participant interest. They get

20 20 1 Proceedings 2 a beneficial interest in that note. They don't have a 3 right to get a note of which they're the registered owner 4 until certain things occur, such as a default. And in 5 that case they can seek to have what are referred to as 6 definitive notes issued. 7 Once the definitive notes are issued in the name 8 of a specific participant, then the participant becomes a 9 holder as defined under the indenture. And it is only 10 when the person becomes a holder, that is a registered 11 owner of a note, that it has the authority to take 12 certain types of actions; including, or specifically pertinent here, the right to vote to direct the trustee 14 to take action. And there is -- other than a conclusory 15 assertion in a footnote in the Patrick Healy affidavit, 16 there is no evidence, none, that any definitive notes 17 were issued to anybody or anybody who is a registered 18 holder of a note voted to do anything with respect to 19 Wilmington Trust or Cortlandt. And you heard Mr. Stamell 20 the last time argue that they shouldn't be required to be 21 holders, that it was sufficient that they were beneficial 22 holders because, after all, it's the beneficial holders 23 who are the real people who are injured and the Court 24 should just overlook the fact they're not holders. 25 I would suggest to you, at the very least, 26 Wilmington Trust should be required to come forward with

21 Proceedings proof that definitive notes were issued to individual beneficial owners and that a majority of those beneficial 4 owners actually cast or those holders, rather, actually cast a vote to appoint Cortlandt with authority to instruct the trustee. Because their suggestion has been made we didn't come forward with contravening proof. 8 We don't have contravening proof. It's exclusively 9 within the hands, if it exists, of Wilmington Trust or 10 Cortlandt. But there -- what has been presented to the Court, I would suggest, is manifestly insufficient for the Court to conclude that Cortlandt was, in fact, appointed by the election of a majority of the holders of 14 notes. And, therefore, we think there is no evidence that Cortlandt has authority to act. Now, that, we believe, demonstrates that 17 Cortlandt does not have standing. But that problem 18 affects the trustee's standing as well. Because the trustee, although it asserts that it has the right to bring the action in the same breath, says that it has 21 been instructed to do so. It's the first paragraph in Mr. Healy's affidavit. It's on the it's the third paragraph on the preliminary statement in the memorandum in support. The trustee is clearly relying on the fact that it has received an instruction from Cortlandt,

22 Proceedings purportedly authorized by a majority of the holders of 3 the notes. And as long as Wilmington Trust is relying on 4 that, and we believe that is not the case, they cannot 5 proceed. We ought to at least determine factually whether there are holders of definitive notes, whether there's -- a majority of those holders appointed Cortlandt and whether Cortlandt has given the relevant instruction before we proceed. Now, that's what I have to say about standing. I'd like to address the instrument for the payment of 12 money only. And I would -- I'd like to actually talk.,", about the terms of some of the instruments here. The first prong problem that exists on this point for the plaintiffs is that the notes do not tell you whether an event of default has occurred without 17 having to refer to the indenture. And I'd also note 18 that the default in question was not a payment of 19 default. These notes called for interest payments in 20 kind. That is, the issuance of additional notes as payment of interest. There is no suggestion that at the time an event of default was declared that the issuer had failed to meet the interest payment obligations. 24 The default is an insolvency default. It's 25 contained on Page 10 of the PIK notes and it is in 26 subparagraph IX. And what it provides is that an event

23 23 1 Proceedings 2 of default occurs when the Parent Guarantor - and these 3 are all capitalized terms - the Parent Guarantor, the 4 Insurer, any Guarantor or any Significant Subsidiary has 5 been placed into a bankruptcy proceeding or other form of 6 insolvency proceeding. None of those terms that I just 7 referred to are defined in this note. You cannot tell 8 from the face of this whether there has been an event of 9 default in that clause by reason of an event of 10 insolvency without going to the indenture to find out 11 what a Significant Subsidiary is. And the event of 12 default that is declared here relates to the filing by 13 Hellas II, who you heard a lot about the other day, of an 14 insolvency proceeding. 15 In order to find out whether Hellas II is a 16 Significant Subsidiary, you have to go to the indenture. 17 Excuse me just a moment (Pause in the proceedings.) Excuse me, Mr. Healy. please 20 continue. 21 MR. HEALY: Yes. 22 And it's not just me who thinks it's important 23 to go to the indenture to determine whether there was an 24 event of default here. Because when Bank of America 25 declared an event of default, they didn't refer to the 26 event of default in the note. They referred to the

24 indenture. Proceedings That is -- this document is attached to the Patrick's Healy affidavit and it starts by saying that the trustee has been informed that Hellas II, which is a Significant subsidiary, has filed a petition for the 6 commencement of an English administration proceeding. It goes on to say that pursuant to section 6.02(a) (9) of the indenture - not the note, the indenture - there has been an event of default and we're accelerated. Now, the First Department has spoken specifically to this fact pattern and has made clear that an instrument, like the note here, is not an initial issue of payment of money only where you have to go to another instrument to determine whether an event of 15 default occurred. This is the Manufacturers Hanover case. It's at 124 A.D.2d 488. And in that case, the Court referring to the earlier decision at Seaman-Andwall says that the -- "Seaman-Andwall established the rule that a note qualifies for CPLR 3213 in treatment as an instrument for payment of money only if the plaintiff can establish the prima facie case via proof of the note and a failure to make the payment called for by its terms. "Here, proof of the note and the failure to make payments do not establish plaintiff's prima facie to accelerate the note and demand full payment since the note specifically states that reference be made to the

25 25 1 Proceedings 2 mortgage to define default. Thus, resort to the mortgage 3 is necessary to establish a prima facie case." 4 And was it such a simple issue in 5 that case to determine from the face of the mortgage 6 whether there was a default? 7 MR. HEALY: Well, what we have is the language 8 that I read. But I would note, your Honor, that in 9 addition to the sections of the note that I mentioned, on 10 Page 7 of the note, it specifically talks about the._, 11 indenture and it points out that the notes are subject to 12 all terms and provisions of the indenture and the terms 13 of the TIA referred to therein. 14 In terms of the -- I think you are 15 really speeding up now and it's very hard for me and the 16 Reporter. 17 MR. HEALY: Sorry. My apologies. 18 What I was going to say was that the notes 19 specifically state that -- refer to the indenture for 20 terms and provisions. And in the event of a conflict, 21 the terms of the indenture control. I think that, as I 22 pointed out, reference has to be made to the indenture to 23 determine if there's an event of default. Manufacturers 24 Hanover, I would submit, says that in those 25 circumstances, the instrument on which you're suing is 26 not an instrument for the payment of money only. And,

26 26 1 Proceedings 2 subsequently, the note isn't an instrument for the 3 payment of money only. 4 Now, that takes us to the indenture. And the 5 indenture -- which is referenced in the event of default. 6 And I would submit to your Honor, this is a hundred-page 7 document of single-spaced text. Literally. It runs 8 to -- it runs to 98 or 99 pages of single-spaced text. 9 Oh, that's nothing for the likes of 10 us. 11 MR. HEALY: Well, I compliment your Honor on your ability to deal with these things. couple But I think a 14 I refer to counsel on these cases as 15 well when I said "us". 16 MR. HEALY: First of all, I don't think this 17 contains an obligation to pay money only with respect 18 to -- with respect to the notes. But it contains a host 19 of other provisions. It deals with the issuance of notes 20 that these are the trustees, the priority of payments, 21 restrictions on the insurer's ability to sell shares of 22 its subsidiaries, security arrangements. And it also 23 describes the guarantee. But this has -- this document, 24 it cannot fairly be considered to be an instrument for the payment of money only. I would refer the Court to the Dresdner

27 27 1 Proceedings 2 (phonetic) decision of Justice Sullivan's decision we 3 cite in our papers where the Court distinguishes 4 situations where you have a transaction where there are 5 multiple independent agreements. And the Court says that 6 that fact by itself doesn't mean that one of those 7 instruments is not an instrument for payment of the money 8 only. But where the instrument that you're suing on 9 contains multiple obligations, that does take it out of 10 the instrument for the payment of money only category. 11 That is what we have here. This indenture does not 12 really -- does not call for payment of money only as to 13 the notes and as to the guarantees. It's the only place 14 that the guarantee appears or reference to the guarantee 15 appears. And given the multiple other provisions and 16 obligations that it deals with, it cannot fairly be 17 considered to be an instrument of the payment of money 18 only as to the guarantee either. 19 I just want to touch on one or two cases that 20 were cited. There were one of the cases that was 21 cited was the Boland case. The Boland case really rests 22 on the premises that the defendant conceded that the 23 notes and the bond were an insurance for the payment of 24 money only. We haven't made that concession. 25 Secondly, that was a case where it was 26 undisputed that an event of default had occurred and the

28 ~, Proceedings only question was whether reference had to be made to the 3 indenture to determine an amount. That's not what we 4 have here. The question we have here is whether an event of default can be determined from the face of the note and it can't. The other case that I wanted to make note of was 8 a case by Justice Fried that was cited. I believe it's 9 the Bank of America case. And the -- that was a case where, like the Dresdner Bank case, the argument was that because there were multiple agreements entered into as part of one transaction, that that precluded a standalone note from being considered an instrument for payment of money only. We're not making that argument. Our argument is that you cannot determine the amount from the face of the note and that the indenture, which you have to turn to, is not itself an instrument for the payment of money only because it has multiple provisions dealing with multiple rights. Thank you, your Honor. 21 Thank you to respond to. MR. SPELFOGEL: Your Honor, four items I'd like Number one, Wilmington Trust, as Trustee, has the power and exercised the power to act without 26 direction, without consent of any holder. The indenture

29 29 "'-' Proceedings is clear as to the powers of the trustee and it's well settled under both New York State law and Federal law that a duly appointed indenture trustee may act to enforce the rights of its bondholders as a fiduciary, which is what we're doing. The standing arguments as to Cortlandt aren't 8 really relevant to this proceeding. To the extent 9 there's any dispute to that, that may go to the other 10 proceeding. But it's certainly irrelevant to what we have before your Honor. The reference to the note not containing a default provision is also erroneous. The note on Page 9 provides specifically that an event of default includes an insolvency proceeding, voluntary bankruptcy, et cetera, that may be filed against the parent by or against the parent or the guarantor. Moreover, they admit it in their financial statements which are pubically filed audited financial 20 statements. And, your Honor, I think it's worth quoting to say that the fact that Hellas Telecommunications has entered into a prepack administration procedure on November 26th, 2009 has triggered a default event for the unsecured PIK notes having a nominal amount equal to Euro 200 million held by the company. Then it goes on, "As a consequence of such default, the unsecured PIK notes

30 30 1 Proceedings 2 equal to Euro 268 million are classified under current 3 financial liabilities and the financial assets have been 4 fully impaired." They have the same reference in their 5 6 other financial statements which are attached to the Healy affidavit. They don't contest that the money is 7 owed, that the money was borrowed. The face of the note 8 is a $200 million note. It has provisions for quarterly 9 10 payments that can be readily calculated. The reference to the indenture, again, is smoke 11 and mirrors. While I believe the law allows reference to 12 an indenture, you don't need to refer to the indenture to 13 see this is owed and they admit it. There's not a single 14 affidavit, a single statement provided on the record that 15 any of these funds are not due. They don't challenge in 16 their papers and they admit in their financial statements 17 that the amounts were duly defaulted and accelerated and 18 due. They simply come here, your Honor, with, as I say, 19 smoke and mirrors that there's procedural hurtles. 20 The reality here, your Honor, is that, if not in 21 this proceeding, we're entitled to the same relief in the 22 other proceeding. We've waited a year and a half now. 23 We've had a lot of delay with the changeover in the 24 courts and to make these holders wait longer, we believe, 25 would be abusive. So we submit, your Honor, they have 26 nothing to overcome their burden once we've laid out what

31 31 1 Proceedings 2 it really is admitted, uncontestable facts. So we submit 3 that, respectfully, the judgment should be entered. 4 MR. SPELFOGEL: Thank you. 5 Thank you. 6 We're going to address some of the other issues 7 in this case off the record while I arrange for my notes 8 to be brought out. 9 (Whereupon, an off the record discussion was 10 held at the bench.) 11 Back on the record. 12 We have four actions. I'm going to refer to 13 Cortlandt against Hellas, Index No of 2010, as 14 Action 1; Cortlandt against Hellas, of 2011, as 15 Action No.2; Cortlandt against Bonderman, of , as Action No.3, and Wilmington Trust against 17 Hellas, of 2011, as Action No I have heard motions to dismiss in Actions 2 and That was the last oral argument. And I have now 20 heard the motion for summary judgment in lieu of 21 complaint in Action No.4. I have a few questions about 22 remaining motions. 23 First, there is a motion to amend the caption in 24 Action NO.1. My question is does that motion seek to 25 add the same parties as the parties who have now been 26 named in Actions No.2 and 3? So why don't I hear first

32 32 1 Proceedings 2 from the plaintiffs on that. 3 (Pause in the proceedings.) 4 Counsel, I don't mean to blind-side 5 you. If you weren't prepared to deal with this, we can 6 take a little break. I'll layout my questions for you 7 and then you can confer and we can resume. Would that be 8 better? I think I'm seeing that it would. So that's my 9 first question. 10 My next question is going to be whether the four 11 foreign dissolved defendants have been the subject of 12 proceedings in the British Virgin Islands or the Cayman 13 Islands to reinstitute those entities? And that's a 14 question I'm asking in connection with the motion in 15 Action No. 2 and the motion in Action No. 3 for 16 extensions of time to serve. 17 And I believe the last question is whether Judge 18 Glenn has issued a decision in the bankruptcy decision? 19 If so, I'd like to have it summarized very briefly. 20 Although it's very dangerous to ask counsel and so -- in 21 such a heavily contested matter to summarize it, but I 22 would want a copy of that if that has been issued. 23 (Pause in the proceedings.) 24 I think that's everything. 25 Why don't we take about ten minutes. If you 26 need a little longer, just let the clerk know and then

33 33.--., 1 Proceedings we'll resume. Thank you. MR. O'CONNOR: Thank you, your Honor. 5 6 MR. HEALY: Thank you, Judge. (Whereupon, a brief recess was taken.) 7 8 Mr. Stamell. Back on the record MR. STAMELL: Your Honor -- your Honor, your first question, the original action. When the amended complaint was opposed and the motion to amend was made, the intention was that the caption would be amended to include all of the additional 14 defendants. And that -- and since that has been in the air for a period of time and an order to -- in order to be sure that you sued the additional defendants on a timely basis, that is a reason for the additional defendant action which is your -- which is Action 3. So Action 1 has an amended complaint, which, if the amendment was granted, would be for the additional defendants the same as Action 3. Not Action 2, just Action 3? MR. STAMELL: That's correct. Because Action 2 is a -- subordinated notes issued by Hellas II. And there you have different questions of standing, for example, because there is no trustee action on behalf of

34 all policy holders. Proceedings It is an action for individual 3 investors. So the -- and it's a different tranche notes 4 although it's related. 5 So that answers question number one. 6 Do the defendants agree that there is a complete 7 overlap between the parties sought to be added to Action 8 No. 1 as set forth in the motion to amend and the parties 9 in Action No.3? 10 MR. O'CONNOR: Your Honor, as we understand it, 11 I think what Mr. Stamell was stating was as amend No would be the same as NO.3? Is that 13 MR. STAMELL: Plus the original plaintiffs in 1 14 and the additional plaintiffs in 3. If you put that all 15 together in the amended complaint in 1, that would be 16 what you would have. 17 MR. O'CONNOR: Right. But you're stating that 18 they are all -- number one Excuse me. I'm sorry. I can't hear 20 you. 21 MR. O'CONNOR: I believe what Mr. Stamell is 22 stating, that Action No. 1 as amended would be the same 23 as Action NO Yes. He's saying that the parties 25 that he seeks to add by virtue of the motion to amend to 26 Action No.1 are the same as the parties in Action NO.3.

35 35 1 Proceedings 2 MR. O'CONNOR: That's our understanding, yes. 3 Have you agreed on something? 4 MR. STAMELL: Your Honor, I'm going to sit down 5 for five minutes. 6 While things are going well. 7 MR. HEALY: I'm sorry. Could I just drop a 8 footnote on that one? 9 The -- Action No. 3 does not name my three 10 clients; Hellas, Hellas I and Hellas Financing. 11 I don't think that that bears on 12 the -- what I needed to know, which is whether there was 13 an overlap of the parties sought to be added to Action 14 No Now, let's move on to the second question. 16 MR. STAMELL: In the -- with the four foreign 17 dissolved companies MR. STAMELL: I'm sorry? The question about service 20 restoration of -- of service of the four foreign 21 dissolved companies, we did not pursue that course. So 22 we never obtained service under CPLR rules and so the 23 motion for an extension is moot. And we can withdraw or 24 dismiss those dissolved defendants for failure to serve 25 them. We filed a case in Federal Court because -- to 26 serve them because Federal Court recognizes mail service

36 Proceedings under the Hague Convention, which the First Department 3 does not recognize. So that offers us a vehicle to bring the dissolved companies into Federal Court right over there (indicating). MR. FISCHLER: Your Honor, may I ask if that motion is also withdrawn as to the fifth defendant, Mr. Aliberti, who has also been sued in Federal Court? MR. STAMELL: No. No. Mr. Aliberti, we are 10 pursued he claims he was not served in this action in this court and we made a motion for default judgment. And as a backup because the statute of limitations, we.'"', 13 named him in the Federal Court case. However, I do request Mr. Fischlar not to argue this in front of your Honor, that we certainly should discuss this more, Mr. Aliberti if at all possible. I want to get this resolved today, So perhaps you can -- we'll take 19 another break for you to confer on that issue. I'd like to figure out today what to do with the motion for an extension of time to serve Mr. Aliberti. And with the cross-motion for a default judgment. 23 Okay. Judge Glenn? MR. STAMELL: Judge Glenn dismissed the petition for Chapter 7 proceeding with respect to two dissolved Delaware companies, which are named in cases before your

37 Honor. Proceedings And issued a decision that -- although the decision we are appealing that decision on behalf of our creditors, the Judge dismissed it and wrote a decision did not make findings of fact, but concluded in strong terms that those defendants belonged in this court, being in these cases before your Honor. 8 Would you provide me with a copy of 9 10 Judge Glenn's decision? MR. STAMELL: I would be glad to do that. 11 Thank you Do any of the defense counsel want to weigh in on any of Mr. Stamell's statements about anything? (Pause in the proceedings.) I'm not hearing anything. So let's take another 5 or 10 minutes and then I will put a disposition on the record of the motions for an extension of time or related motions. 19 MR. HEALY: Could I address one housekeeping 20 matter? MR. HEALY: Sure. We had some correspondence yesterday about the list of citations that your Honor had requested. And we indicated in our letter that if the Court were going to accept highlighted copies of the relevant pages, that we would be happy to hand up to your

38 38 1 Proceedings 2 Honor a copy -- copies of what we think are the relevant 3 citations. I didn't know whether -- how your Honor 4 wanted to proceed. But we do have those materials with 5 us if your Honor would like them. 6 So then I will have the highlighted 7 copies from both sides? 8 MR. HEALY: Yes, your Honor. 9 I will accept those on behalf of my 10 very hard-working court attorney, Ms. Bahr. 11 MR. HEALY: Thank you, your Honor. 12 Let's take 5 or 10 minutes. Thank 13 you. 14 (Whereupon, a brief recess was taken.) 15 Back on the record. 16 At this time I am going to put a decision on the 17 record on some of the outstanding motions that involve 18 procedural issues. 19 In Action No.1, Index No of 2010, the 20 motion to amend the caption, that is Sequence No.3, is 21 denied as moot based on the service of Action No.3, 22 Index No of 2011, on the parties who are the 23 subject of the motion to amend. 24 In Action No.2, of 2011, the branch of 25 the motion to extend the time to serve the four foreign 26 dissolved defendants, that is Sequence No.5, is denied

39 39 1 Proceedings 2 as moot. The branch of this motion for an extension of 3 time to serve defendant Aliberti is the subject of 4 discussions between the parties. Counsel are requested 5 to advise this Court by midweek next week whether they 6 are able to resolve this branch of the motion as well as 7 branch of defendant Aliberti's motion to dismiss, that is 8 Sequence No.6, based on untimeliness of service pursuant 9 to CPLR 306-B. All other branches of defendant 10 Aliberti's motion to dismiss will be submitted along with 11 the other motions to dismiss, which the Court has 12 previously heard. 13 In addition, the parties are requested to inform 14 the Court by midweek next week whether they have resolved 15 the cross-motion to Sequence No. 6 for a default judgment 16 against defendant Aliberti. If those motions are not 17 resolved by the parties, I will mark them submitted. 18 In Action No.3, of 2011, the same order 19 is made with respect to Sequence No.3, which seeks an 20 extension of time to serve the four foreign dissolved 21 defendants and defendant Aliberti and Sequence No.4, 22 which is a motion by defendant Aliberti to dismiss the 23 action. 24 The parties are directed to obtain transcript of 25 today's proceedings, to e-file it and to file a hard 26 copy -- rather, two hard copies with the clerk of Part

40 40 1 Proceedings The Court may correct errors in the transcript. Therefore, if it is needed for any further purpose, they should be sure they have a copy as so ordered by the Court and not merely as signed by the Court Reporter. When I receive the hard copies of today's transcript, I will mark the motions to dismiss in Action No.1, that is Sequence No.1 and Sequence No.2, submitted. The motions to dismiss in Action No.2, that is Sequence No.3, Sequence No.4 and the branch of defendant Aliberti's motion to dismiss on grounds other than failure to timely serve pursuant to CPLR 306-B 15 submitted. I will also mark those same motions in Action No. 3 submitted, that is Sequence No.2, the motion to dismiss, and Sequence No.4, the branch of the Aliberti motion or the branches of the Aliberti motion other than 19 the branches relating to CPLR 306-B. And, finally, the motion in Action No. 4 for summary judgment in lieu of complaint. Is there anything else for the record before we close the record for today's proceedings? MR. HEALY: Your Honor, I just have a point of clarification. In Action No.1, we filed a motion to dismiss