Morgan Stanley Avoids U.S. Legal Action by Italian Ferry Company
(Bloomberg) -- Beleaguered Italian ferry operator Moby SpA dropped its request for an order blocking Morgan Stanley from trading in the company’s debt or interfering in its restructuring.
Moby told a federal court in New York late Sunday that it was withdrawing its application for a temporary restraining order against the bank, which it accused in a Sept. 27 lawsuit of participating in a secret plan to foil its restructuring in Italy and seize control from other creditors.
The company, which operates ferries between the Italian mainland and islands like Sardinia, said it would now be seeking Italian court permission to pursue its claims through a Chapter 15 U.S. bankruptcy filing.
Morgan Stanley on Friday filed court papers deriding the U.S. lawsuit as a meritless attempt to dictate the outcome of Moby’s Italian restructuring proceedings. The bank said Moby failed to show that Morgan Stanley interfered in Moby’s relationship with its creditors or that it had done anything wrong in purchasing the company’s bonds.
“Moby attempts to characterize entirely normal and appropriate discussions and behavior among creditors as something sinister,” Morgan Stanley’s lawyers said in their filing. The bank also said that any legal claims pertaining to the restructuring belonged in Italian court, not the U.S.
The bank didn’t immediately respond to a request for comment on Moby’s withdrawal of its application.
Moby, which has been under pressure from increasing regulation, tougher competition and weak freight traffic volumes, claimed in its suit that Morgan Stanley traders Massimo Piazzi and Hillel Drazin illegally conspired with investor Antonello Di Meo, a former employee of Sound Point Capital Management.
The Italian company said it recently reached a deal with other creditors on a restructuring plan that would let it avoid liquidation, but Di Meo and Morgan Stanley were trying to defeat that plan. Moby cited in its suit a recording of Di Meo that it obtained in which the investor claims to have the bank’s support.
“They are a market maker, they cannot be seen by hedge fund clients as siding with one,” Di Meo said, according to the complaint. “I’m being very thoughtful and careful when it comes to the involvement of Morgan Stanley because they cannot, at this point in time, publicly say, ‘We are supporting him.”’
Morgan Stanley on Friday said Moby’s suit “describes exactly the sort of behind the scenes negotiating and consensus building that occurs in virtually all complex corporate restructurings.” The bank said the company was asking the court to “declare creditor democracy illegal” unless it did “anything other than supporting Moby’s preferred outcome.”
It’s not clear how its U.S. claims might affect the timing of Moby’s proceedings in Italy. The ferry operator’s restructuring plan had been scheduled for a vote at a creditor meeting scheduled on Dec. 13.
The case is Moby SpA v. Morgan Stanley, 21-cv-8031, U.S. District Court, Southern District of New York (Manhattan).
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