In re: Banco Master, S.A., Banco LetsBank, S.A., Banco Master de Investimentos, S.A., and Master S/A Corretora de Cambio, Titulos e Valores Mobiliarios, Debtors in a Foreign Proceeding

Summary

The United States Bankruptcy Court for the Southern District of Florida granted in part and denied in part Daniel Vorcaro’s motions for protective orders challenging Rule 2004 examination subpoenas issued by the foreign representative of the Banco Master debtors. The court held that most of the subpoenas fell within the broad scope of Rule 2004 and the relief authorized under chapter 15, but applied the pending proceeding rule to four subpoenas concerning related adversary litigation. The court also quashed, without prejudice, the Bank of New York Mellon subpoena to the extent it violated Rule 45’s 100-mile geographic limit.

Holdings

1. The foreign representative met its initial burden to show that the 28 subpoenas sought information within the broad scope of Rule 2004 because the requests concerned the debtors' assets, affairs, financial condition, transactions, and matters potentially affecting administration of the estates. Rule 2004 does not require a preliminary showing of misconduct or asset dissipation before discovery may begin.
2. When Rule 2004 discovery concerns the same subject matter as a pending adversary proceeding, the discovery must proceed under the more restrictive discovery rules applicable to that proceeding rather than under Rule 2004. The rule applies based on the existence of related litigation when the court is asked to enforce or limit the discovery, not merely on whether the subpoena was served before the litigation commenced.
3. A subpoena that commands production of documents, electronically stored information, or tangible things at a location more than 100 miles from the subpoenaed party's residence or regular place of business violates Federal Rule of Civil Procedure 45(c)(2)(A) and must be quashed to that extent.

Questions Presented

1. Whether the foreign representative established that the requested discovery fell within the permissible scope of Federal Rule of Bankruptcy Procedure 2004.
2. Whether the pending proceeding rule required discovery concerning the subject matter of a later-filed adversary proceeding to proceed under Federal Rules of Civil Procedure 26 through 37 rather than Rule 2004, even though the subpoenas were issued before the adversary proceeding was filed.
3. Whether a subpoena seeking production more than 100 miles from the subpoenaed party's residence or regular place of business violated Federal Rule of Civil Procedure 45(c)(2)(A).
4. Whether Vorcaro's privacy, burden, or other asserted interests warranted a protective order as to the remaining subpoenas.

Disposition

other