Alto Maipo in Dismissal of Adversary Proceeding Raising Post-Petition Tort Claims

December 21, 2022

Cleary Gottlieb successfully represented Alto Maipo SpA (Alto Maipo) in obtaining the dismissal of an adversary proceeding commenced by a group of purported environmental claimants, paving the way for final closure of Alto Maipo’s Chapter 11 case.

On June 27, 2022, Comunidad de Aguas Canal El Manzano, a community neighboring Alto Maipo’s hydroelectric energy project in Chile’s Maipo Valley, and several of the community’s individual members (collectively, Manzano), filed administrative expense claims against Alto Maipo’s estate, incorporating an adversary proceeding complaint that raised claims for: breach of a contract between Alto Maipo and Manzano that is governed by Chilean law, cure of the alleged contract breach in connection with Alto Maipo’s assumption of the contract, violations of the Chilean Constitution and Water Code, and violations of Chilean environmental laws.

On July 27, 2022, Alto Maipo moved to dismiss the complaint and adversary proceeding on the grounds that: Manzano lacks standing to bring their Chilean constitutional and environmental law claims; the contract between Alto Maipo and Manzano contains a valid and enforceable arbitration clause designating Chile as the forum for dispute resolution; the doctrine of forum non conveniens warrants dismissal because Chile is a more convenient forum; and the court should exercise its discretion to abstain from adjudicating this case because Chile is a more appropriate forum.

After full briefing, on October 27, 2022, the Bankruptcy Court for the District of Delaware (the Bankruptcy Court) granted Alto Maipo’s motion to dismiss without hearing oral argument and over the objection of Manzano, dismissing Manzano’s complaint on the ground of forum non conveniens in favor of adjudication in Chile and holding the administrative expense claims in abeyance pending resolution of the underlying Chilean law claims. Manzano moved for reconsideration of the Bankruptcy Court’s order dismissing their complaint, but on December 20, 2022, after full briefing and oral argument, the Bankruptcy Court denied Manzano’s motion for reconsideration and affirmed its dismissal of their complaint.

Following its dismissal of the Manzano adversary proceeding, the only remaining active dispute in Alto Maipo’s restructuring proceedings, the Bankruptcy Court entered a final decree closing Alto Maipo’s Chapter 11 case on December 21, 2022.