Argentinian Recovery Group battles Multicanal's contempt motion

By Jeff Pines

Washington, Feb. 17 - A group including Argentinian Recovery Group and the law firm of Proskauer Rose LLP argue they should not be held in contempt over trying to force Multicanal SA involuntarily into Chapter 11.

Argentinian Recovery and related investors hold $157 million of the company's bonds.

In Feb. 16 filings with the U.S. Bankruptcy Court for the Southern District of New York, the group said there is no "clear and convincing evidence" that it violated a temporary restraining order.

Multicanal, a Buenos Aires-based company is trying to reorganize itself out of court. Its attorneys obtained a temporary restraining order protecting the company from actions filed in U.S. courts. Multicanal believes there is nothing ambiguous about the restraining order and the group should be held in contempt.

Rather, the group argued Multicanals' motion is filled with personal attacks and that the company has not at all been hurt by the involuntary Chapter 11 petition the group filed.

It also argued that Multicanal's attorneys drafted the restraining order and that the order lacks a precise prohibition against filing an involuntary bankruptcy petition.

A member of the group, William Connors, vice president of Argentinian Recovery, said he has been in contact with other Multicanal creditors since Jan. 28 and no one told him that Multicanal's reputation had been "tarnished by the involuntary filing."

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