Lyondell Chemical Co. v. CenterPoint Energy Gas Services Inc. (In Re Lyondell Chemical Co.)

BENCH DECISION 1 ON MOTIONS FOR PRELIMINARY INJUNCTIONS

In this adversary proceeding under the umbrella of the chapter 11 cases of Lyon-dell Chemical Co. (“Lyondell”) and its affiliates, the Debtors seek preliminary injunctions, of two types:

(1) enjoining creditors of the Debtors in this case, until confirmation, from pursuing remedies — including, and perhaps especially, the commencement of involuntary insolvency proceedings in foreign countries — against the Debtor’s nondebtor parent LyondellBasell Industries AF S.C.A. (“LBIAF”) arising from guaranties of debt incurred by various of the Debtors in their dealings with those creditors; and

(2) enjoining creditors of LBIAF, once more until confirmation, from doing such by reason of covenant and payment defaults on notes issued by LBIAF’s predecessor in the principal amount of € 500 million and U.S. $615 million, due in *576 2015, which have been referred to as the “2015 Notes.”

The two motions are granted, but for a period of 60 days only, and subject to some carveouts and conditions that I will require.

Some, but not all, of the damage the Debtors fear is a matter of serious concern. But injunctions of the breadth and duration that the Debtors request raise material public interest concerns, potentially prejudicing some creditors vis-a-vis other creditors and impairing the value of guaranties in major commercial transactions — with the result that an injunction of the breadth and duration requested here would represent an excessive exercise of the power that I undoubtedly have to interfere with creditors’ rights against non-debtor parties. An injunction for 60 days should be sufficient to permit the filing of voluntary insolvency proceedings in the U.S. or abroad, to protect the Debtors from the disruption of their integrated European operations and a default on their DIP financing facility — each of which is a very major concern, and would otherwise be serious risks if I failed to act. At the same time, an injunction of 60-day duration, with the added safeguards I will impose, will result in little, if any, material prejudice to the enjoined parties.

The following are my Findings of Fact, Conclusions of Law, and bases for the exercise of my discretion in connection with these determinations.

Facts

After an evidentiary hearing, I find the facts to be as follows:

1. Corporate Structure

The Debtors’ corporate family is a complex one, but the corporate relationships relevant here can be more briefly stated. The Debtors, all but one of which do business in the United States, are indirect subsidiaries of a holding company, LBIAF. LBIAF is organized under the laws of Luxembourg, and has its principal place of business in the Netherlands.

LBIAF has a single subsidiary, Basell Funding S.a.r.l. (“Basell Funding”), which has many direct and indirect subsidiaries, all or most of which are in Europe. Of those, only one of them — a German company called Basell Germany Holdings G.m.b.H. (the “German Company”) — is a debtor in the chapter 11 cases here. All of LBIAF’s other subsidiaries, direct and non-direet, are nondebtors in this case, and so far as the record reflects, are not debtors anywhere else. There are no ongoing foreign insolvency proceedings in progress elsewhere in the world to which to grant comity or to consider doing so.

From time to time, I’ll refer to LBIAF, Basell Funding, and their other nondebtor affiliates as the “LBIAF Nondebtors.”

2. LBIAF’s Obligations

a. The Guaranties

Various of the Debtors in this case— including at least Debtors Lyondell, Equis-tar Chemicals, LP (“Equistar”), Houston Refining, LP (“Houston Refining”), and Basell USA, Inc. (“Basell USA”) entered into commercial transactions with contract counterparties, and failed to pay the coun-terparties all that was due. Thus the unpaid counterparties have claims (for the most part, unsecured) against those Debtors in these chapter 11 cases. Additionally, however — and critical to the issues here — those counterparties (the “Guaranty Creditors”) sought and obtained, prior to the filing of the Debtors’ chapter 11 cases, guaranties of those Debtors’ obli *577 gations by LBIAF. 2

The Guaranty Creditors have satisfied me for the purposes of this decision (especially given the absence of any proof to the contrary) that the guaranties from LBIAF that the Guaranty Creditors sought and obtained were material to their decisions to extend credit to their Debtor obligors. Similarly, the Guaranty Creditors have satisfied me that they relied upon the LBIAF guaranties when extending credit to the various Debtors. Whether they reasonably relied on those guaranties, given what they knew or should have known about LBIAF’s corporate structure and debt, is more debatable, but it ultimately is not critical to the determinations I make here.

Collectively, the guaranty claims against LBIAF now total approximately $131 million, and may total $200 million.

One of the Guaranty Creditors, Conoco-Phillips Co. (“ConocoPhillips”) commenced proceedings in Luxembourg and the Netherlands in the nature of a request for an attachment under U.S. law. With some simplification, the procedures in each country called for securing an order of attachment from the foreign court, and then taking further steps in the foreign jurisdiction (e.g. serving it on various parties, and engaging in further proceedings in the foreign court), with the latter steps necessary to complete the perfection of the resulting lien and rights.

ConocoPhillips secured the initial orders from the Luxembourg and Netherlands courts that were necessary to initiate the process, but when ConocoPhillips learned of the TRO I entered at the outset of this controversy (described below), ConocoPhil-lips refrained from completing the further steps. ConocoPhillips argues that I should not grant the requested preliminary injunction, but that if I do, I should nevertheless allow it to complete the steps necessary to perfect its attachment lien.

b. The 2015 Notes

In August 2005, LBIAF’s predecessor issued the 2015 Notes. 3 LBIAF is now the principal obligor on the 2015 Notes, though the Notes are guarantied by certain of LBIAF’s subsidiaries (in both Europe and the United States), including a number of the Debtors. The 2015 Notes are secured by a pledge of the shares of Basell Funding (which, as noted above, is LBIAF’s only direct subsidiary), and certain other collateral.

The Debtors’ bankruptcy filings triggered an event of default under the indenture under which the 2015 Notes were issued (the “2015 Notes Indenture”). As a consequence, the 2015 Notes’ indenture trustee (the “Indenture Trustee”) or the holders of 25% in principal amount of the outstanding 2015 Notes may declare the 2015 Notes due. To date, there has been no such declaration, and such a declaration was one of the things prohibited under the TRO.

Many of the objecting parties in this adversary proceeding are holders of the 2015 Notes (“2015 Noteholders”), though some are also parties to credit default swaps that protect such holders from the *578 risk of nonpayment — and whose interests are materially different from those who simply hold the 2015 Notes. Expressing a concern that is increasingly common in the large chapter 11 cases in this Court, some of the 2015 Noteholders argue that they would be affected much more dramatically by an inability to recover on the 2015 Notes than a 2015 Noteholder with a credit default swap would.

And apart from the covenant default under the 2015 Notes Indenture that resulted from the Debtors’ chapter 11 filings, there has now also been a payment default under the 2015 Notes Indenture, although it is potentially subject to cure. On February 17, 2009 (after the TRO was issued and the hearing on this preliminary injunction motion began, but before the preliminary injunction hearing was completed), LBIAF failed to make the interest payment that was due on the 2015 Notes at that time. There is a 30-day grace period for such payment, but in the absence of cure that would be an additional, and more significant, default.

Under an intercreditor agreement to which the Indenture Trustee is a party, 4 the 2015 Noteholders are prohibited from taking action to enforce their rights against their collateral or the LBIAF subsidiary guaranties until after the senior secured debt has been fully discharged— or, more significantly as a practical matter, after the expiration of a 179-day standstill period.

However — and this is a matter of major concern — in light of LBIAF’s inability to pay the principal and interest that would be due under the 2015 Notes upon acceleration, the Indenture Trustee or 2015 Note-holders could attempt to commence involuntary insolvency proceedings against LBIAF in Luxembourg, the Netherlands, or (less likely) elsewhere.

3. LBIAF’s Assets

LBIAF has assets of five types, three of which are material to this matter. LBIAF’s balance sheet as of December 31, 2008 shows € 545 million for shares in “affiliated undertakings,” which represents LBIAF’s stock in its subsidiaries. 5 (As noted above, LBIAF has one direct subsidiary, Basell Funding). The Basell Funding stock is pledged to secure the prepetition senior secured and prepetition bridge loans.

The second type of asset listed in the balance sheet of that date is approximately € 939 million for “loans to affiliated undertakings.” This amount represents the proceeds of the 2015 Notes which were raised by LBIAF and then in turn lent by LBIAF to its subsidiaries. When the funds were lent to the subsidiaries, that created intercompany obligations — pay-ables from the subsidiaries’ perspective and receivables from LBIAF’s point of view — running from the subsidiaries to LBIAF. However, these receivables too are pledged to the prepetition senior secured and bridge loan lenders.

The third type of asset listed in LBIAF’s balance sheet of that date is approximately € 56 million for “amounts owed by affiliated undertakings due and payable within a year.” Of this, approximately € 30 million represents interest that has accrued on the subsidiaries’ obligations to LBIAF with respect to their receipt of the proceeds of the 2015 Notes. The re *579 mainder, approximately € 27 million, is the amount currently owed to LBIAF by Ba-sell Finance Company BV (“Basell Finance B.V.”), an indirect subsidiary of LBIAF and Basell Funding.

The fourth type of asset listed in the balance sheet as of that date is approximately € 123 thousand for “Other debts becoming due and payable within one year,” representing an accrual for a Luxembourg value added tax receivable. I don’t consider it material for purposes of this analysis.

The fifth type of asset listed in the balance sheet as of that date is approximately € 1.4 million, for “Cash at bank and in hand.” It too is pledged to secure the prepetition senior secured and bridge loans. The cash on hand changed after the end of the year. The € 1.4 million was transferred after December 31 to Basell Finance B.V., with a corresponding receivable from Basell Finance B.V. owing to LBIAF. As of February 19, LBIAF had approximately € 26 million held on account by Basell Finance B.V., of which approximately € 12 million will be used to pay an income tax obligation to the Luxembourg authorities and €9 million is owed to a subsidiary for auditing, accounting and related services. After those amounts (which LBIAF’s CFO describes as ordinary course payments) are paid, there will be approximately €5.5 million left as a receivable from Basell Finance B.V. LBIAF intends to use this in the ordinary course of its business to pay for audit services and other professional fees. That €5.5 million is plainly insufficient to pay any significant portion of the Guaranty claims (much less the 2015 Note obligations), but the payments described in this paragraph may be regarded as having had a de facto priority over payment on the Guaranty Claims and obligations on the 2015 Notes.

Similarly, LBIAF lacks the liquid assets to defend itself against any Guaranty Claims. Because of that, and because the claims against LBIAF arise from transactions as to which the underlying Debtors, rather than LBIAF, would have the relevant knowledge, I agree with the Debtors’ assertion that the burden of any defense of claims against LBIAF on the guaranties would fall on the Debtors. However, other than contesting the exact amount due, I now see little that LBIAF could say in the way of any substantive defense to the Guaranty Claims, and little in the way of costs or burdens associated with that defense.

k- Risks and Consequences of Involuntary Proceedings in Europe

If the 2015 Noteholders were able to commence involuntary insolvency proceedings against LBIAF, a court-appointed judge and court-appointed liquidator would take control of LBIAF’s operations. It is also reasonable to infer that if any of the Guaranty Creditors commenced involuntary insolvency proceedings against LBIAF, like consequences would follow. Additionally (and as a matter of greater concern), if LBIAF has intercompany claims (as a creditor) against any of the European nondebtor subsidiaries (which LBIAF at least seemingly does, by reason of the downstreaming of the proceeds of the 2015 Notes, with corresponding inter-company payables on the part of the European subsidiaries with respect to sums received), these intercompany claims could be used as a basis for commencing insolvency proceedings against other European nondebtor entities in their respective jurisdictions.

In that connection, the Debtors sought to introduce evidence at the preliminary injunction hearing, through LBIAF CFO Alan Bigman, that Guaranty Creditor Wa- *580 ehovia had threatened the filing of an involuntary insolvency proceeding in Europe (the “Wachovia Threat”). Counsel for Wachovia objected on hearsay grounds, and it turned out that Mr. Bigman heard of the Wachovia Threat not directly from Wachovia, but from another Lyondell officer. While testimony of that substance would have been admissible, for several purposes, if presented by the other officer (who did not testify), it was double-hearsay as presented by Mr. Bigman. Thus I sustained Wachovia’s objection, and excluded evidence of the Wachovia Threat to the extent it was offered for the truth of the matter asserted — ie., that the threat was actually made; that it came from Wacho-via; and that Wachovia intended to act in accordance with its alleged threat. However, I allowed the evidence, and now consider it, for purposes other than the truth of the matter asserted, and find that the Debtors’ belief that they need to protect themselves from the risk of an involuntary filing is very reasonable.

The Debtors have submitted a declaration of Marc Mehlen, their Luxembourg counsel, stating that it is “entirely possible,” under Luxembourg law, that as a result of the attachment order obtained by ConocoPhillips in the Netherlands, and various guaranty claims asserted against LBIAF, insolvency proceedings against LBIAF could be opened in Luxembourg (unless a court determines that LBIAF’s center of main interests (“COMI”) is elsewhere), either as a result of an involuntary proceeding commenced by an LBIAF creditor or as a result of a filing made by the general manager of LBIAF — which the manager is obligated to do, no later than 30 days after the date on which LBIAF is in cessation of payments. 6 Under those circumstances, LBIAF’s management would be divested of all powers to represent LBIAF and a bankruptcy receiver would be appointed, who would be in control of all assets of LBIAF — subject to certain exceptions, notably those assets subject to perfected security interests. 7 I take those statements as true.

Similarly, the Debtors have submitted a declaration of their Dutch counsel, Jelle Holland, stating that as a result of the attachment order ConocoPhillips obtained in the Netherlands, an involuntary proceeding against LBIAF could shortly be commenced in the Netherlands. 8 While the Netherlands has an insolvency regime called “suspension of payments,” under which a debtor can manage and dispose of its assets only with the cooperation or authorization of a court appointed administrator, it is available only at the request of a debtor. The Netherlands’ alternative regime, “bankruptcy,” which results in liquidation, can be made by one or more creditors of the debtor. 9 The main effect of a bankruptcy proceeding in the Netherlands is that LBIAF’s management would be divested of all powers to manage and dispose of LBIAF’s assets and a bankruptcy receiver would be appointed, who would be the only person entitled to take any acts regarding the assets of LBIAF (other than certain assets subject to perfected security interests). I take those statements as true as well.

Wachovia submitted a declaration by Luxembourg avocat Alain Rukavina, purporting to advise me whether the laws of Luxembourg provide a procedure for reorganization or restructuring, as distinguished from liquidation. Though the dec *581 laration’s English is a bit awkward, it seems to suggest that there is some kind of mechanism or regime (“regime de la gestión contrólée”) by which a company unable either to raise credit or to perform its commitments can “file a request to the court” to act under supervision of the court with the purpose either to reorganize or to secure a better sale of its assets. 10 But while the declaration reveals the possibility of a voluntary proceeding for reorganization, the declaration is silent on whether reorganization is available in an involuntary proceeding. The declaration provides no basis for a conclusion on the latter question.

But the declaration of John Houghton, an English solicitor with expertise as to European insolvency matters, submitted by defendant Columbus Hill Partners, one of the 2015 Noteholders, is instructive. Mr. Houghton acknowledges differences between the insolvency laws of Luxembourg and the Netherlands and chapter 11 as implemented in the U.S. And he notes, in that connection, that “these differences include,” among others:

the possibility of mandatory duties to file upon insolvency, the displacement of some or all of management’s powers following the opening of an insolvency case and the appointment of an external administrator or liquidator. 11

Mr. Houghton notes further that “[t]hese differences are by no means unique to Luxembourg or the Netherlands among the insolvency laws of the various European states.” 12 And he goes on to say that, as a result, “the challenges presented by the legal framework in many European countries means that European restructuring tends to be practiced very differently than in the United States” and that “[l]arge and complex financial restructurings tend to be conducted almost exclusively out of court by a consensual process of negotiation among the debtor and each class of creditors.” 13 I take these statements as true as well.

Mr. Houghton’s observations are significant in at least two respects. They validate the Debtors’ fears with respect to the consequences of an uncontrolled filing of an involuntary petition in Europe, and suggest the desirability of limiting any injunction that I might issue to permit consensual processes of negotiation to take place.

5. Prejudice and Injury to the Debtors

Though under the facts presented here, I don’t regard matters related to the defense of the Guaranty claims (either by reason of cost or risks of res judicata or collateral estoppel) to constitute serious or irreparable injury, for the reasons discussed above and below, I find that there would be serious and irreparable injury to the Debtors if some relief, for some period of time, weren’t granted here. Satisfactory showings have been made to me that:

(a) If the Guaranty Creditors were allowed to assert claims on the Guaranties, LBIAF could be forced into involuntary insolvency proceedings in Luxembourg, the Netherlands, or (though less likely) elsewhere;

(b) A European involuntary insolvency proceeding would be unlikely to involve a process of reorganization or restructuring as in the United States, and could cause a fast liquidation of LBIAF;

(c) That, in turn, could have the effect of triggering fiduciary (or other legal) *582 obligations of directors of nondebtor affiliates of the Debtors and LBIAF located in Europe, which, in turn, could force all the European debtors into their own liquidation proceedings in as many as 8 countries;

(d) It would not be possible to coordinate each of those disparate proceedings. 14

Additionally, a satisfactory showing has been made to me, and I so find, that each of the entities owned directly and indirectly by LBIAF (with the exception of certain legacy entities that have no ongoing operations) is an important part of the integrated operations of the Debtors and nondebtors. The Debtors and their non-debtor affiliates operate as an integrated enterprise through the worldwide coordination of their businesses and their operation as a vertically integrated group of companies. 15 These entities’ operations— and the Debtors’ restructuring and reorganization efforts — benefit substantially from maintaining coordinated control and management over all of the worldwide operations. 16 Operating together, the U.S. and European entities achieve substantial synergies (estimated at the time of the merger between Lyondell Chemical Company and Basell Polyolefins to increase EBITDA by approximately $420 million through 2010); benefit from access to credit (which is very important in the present economic environment); and by their coordinated operations receive other benefits, such as operational improvement. 17 Because the Debtors and their European affiliates operate as an integrated global enterprise, the cessation of European operations would require the Debtors to expend substantial resources in order to replace the goods, services, and systems formerly provided by the European nondebtors. 18

I believe that a voluntary, properly planned and organized, restructuring of the affairs of LBIAF would not result in irreparable injury, or at least that an insufficient showing has been made to me that irreparable injury in that event would result. 19 But I believe than an involuntary proceeding against any of the European nondebtor entities would be a disaster, and the resulting injury would indeed be irreparable. I’m satisfied that the synergies associated with the coordinated operations of the entities, in both the U.S. and Europe, that form the integrated whole in the worldwide enterprise are real. *583 And the recoveries of the creditors in the chapter 11 cases before me — particularly those in the unsecured creditor community, who are of course junior to secured debt, but whose needs and concerns I very much care about — depend upon maximizing the value of the Debtors here. It also is reasonable to assume, at least for now, that the interests of all creditors in this case, secured and unsecured, would be well served by finding as many ways as possible for the secured creditors in these chapter 11 cases to look to value to realize upon their claims — being mindful that a significant component of the secured creditors’ collateral is in Europe, and that the value of this collateral could be materially impaired if financial affairs in Europe go into a freefall.

Additionally, for either those reasons or others (including an understandable reluctance on the part of secured lenders to put control of the chapter 11 cases here in the hands of a European liquidator), an involuntary filing against LBIAF would be an event of default under the Debtors’ DIP. I can find no assurance, either way, that the Debtors’ DIP lenders would or would not waive the resulting default. It is clear, however, that if the Debtors’ DIP lenders exercised their rights upon a default, the Debtors would have a resulting loss of liquidity that would force them to liquidate their business, lay off thousands of employees, and shut down their facilities. 20 The DIP financing provides the Debtors and European nondebtor affiliates with funding that is essential to their survival, and ultimately, the Debtors’ ability to successfully reorganize. Loss of the DIP financing would doom their reorganization, resulting in the loss of billions of dollars of value essential to satisfying creditor claims and a loss of thousands of rank and file employee jobs. 21

Moreover, a default under the DIP would in turn trigger a default under the forbearance agreement currently in place that prohibits the parties to the Debtors’ prepetition senior secured and interim credit facilities from pursuing remedies against European nondebtors that were guarantors under those credit facilities. A default under the forbearance agreement would allow those secured parties to assert remedies against the assets of many of the nondebtors — including insolvency proceedings and liquidation under applicable European law. 22 Thus, while in such event the damage (described above) would be done by secured, rather than unsecured, creditors of the European nondebtors, the resulting injury, which I find to be irreparable, would be the same.

All of those matters, in my view, would constitute irreparable injury, to the extent a finding of such is required, and equally plainly are relevant to any balancing of relative hardships.

6. Prejudice and Injury to the Guaranty Creditors and 2015 Notehold-ers

By reason of the foregoing, LBIAF does not have sufficient liquid assets to pay the *584 2015 Notes (approximately $1.3 billion), and the Guaranty Claims (approximately $130 million). Also, to the extent LBIAF has liquid assets, they are pledged to the prepetition senior secured and bridge lenders, and are therefore unavailable to pay more junior claims.

Thus the 2015 Noteholders and Guaranty Creditors could recover only after all of the creditors of LBIAF’s subsidiaries were satisfied, including claims related to over $20 billion of debt owed to the Senior Secured Lenders. Allowing the 2015 Noteholders and Guaranty Creditors to proceed against LBIAF would as a practical matter get them very little, other than an opportunity to complicate the Debtors’ affairs (and thus to exercise leverage) and perhaps get a possible leg up against other LBIAF junior creditors in the ultimate event of an LBIAF insolvency in which secured lenders have been paid in full.

To the extent Guaranty Creditors have valid claims against LBIAF (and I assume, for purposes of this analysis, that they do, subject only to fine tuning of the exact amounts owed), they also have valid claims against one or another of the Debtors. Yet by bringing claims against LBIAF, they risk damaging the very Debtors against whom they have their claims and diminishing the value of their own claims as well as those of all of the other creditors of those entities. 23

Moreover, because LBIAF has virtually no liquid assets to satisfy the Guaranty Claims and its only meaningful assets are indirect equity interests in, and receivables from, European subsidiaries, Guaranty Creditors will recover only after all of the creditors of LBIAF’s subsidiaries are satisfied, and are thus very unlikely to have their Guaranty Claims satisfied in any event.

The situation of the 2015 Noteholders is slightly different in detail, but ultimately with the same result. Under their inter-creditor agreement with senior secured creditors, the 2015 Noteholders are subject to certain limitations on receiving payment of the 2015 Notes and enforcing remedies against collateral of the guarantors of the 2015 Notes, though not against LBIAF. 24 But importantly, the 2015 Noteholders would gain very little from pursuing such claims. Under the terms of the 2015 Notes Indenture and the intercreditor agreement, the claims of the 2015 Note-holders are expressly subordinated to the Debtors’ senior debt. Upon notification of a default under the 2015 Notes, the 2015 Noteholders and their Indenture Trustee may take enforcement action against the 2015 Guarantors or any collateral supporting their claims (those being their only realistic sources of repayment) only after the passage of 179 days. 25 Moreover, any payments they would receive would seemingly be subject to turnover for the benefit of the senior lenders; except where we shortcut the process to prevent money from going in a circle (as we often do to deal with sub debt issues in plans), that’s what subordination means. And once more, because LBIAF has no meaningful assets other than its Basell Funding stock and intercompany receivables, the 2015 Noteholders will only recover after all of the creditors of LBIAF’s subsidiaries are satisfied. Accordingly (with only one ex *585 ception, which I do not regard as my duty to facilitate), 26 accelerating and filing an involuntary bankruptcy case will not, in any reasonably foreseeable way, afford the 2015 Noteholders any meaningful recovery.

Thus, once more, 2015 Noteholders can do nothing for their genuine economic benefit anyway.

However, both Guaranty Creditors and 2015 Noteholders would have at least one potential source of recovery not subject to senior creditor claims, if an insolvency proceeding for LBIAF were filed, at least under U.S. law. On cross examination of Alan S. Bigman, the CFO of certain Debt- or entities and LBIAF, it was established that LBIAF made a number of payments in 2007 and 2008 to its shareholder in amounts aggregating over $500 million. These payments were of a character that (depending on facts not now before me, including, inter alia, solvency, the nature of any consideration, and the payments’ purpose and effect) 27 might be subject to recovery in an avoidance action if an LBIAF chapter 11 case were filed in the U.S., or an LBIAF insolvency proceeding were commenced in Europe. Mr. Bigman denied that reducing the potential for recovery of these sums was a factor in the Debtors’ decision to seek section 105(a) relief as contrasted to LBIAF’s simply filing a chapter 11 case here, and I take him at his word. But I do note that the need to protect creditors of LBIAF from the forfeiture of the rights, if any, that they or LBIAF might have in connection with the payments is a matter of significant “Public Interest” concern.

7. Procedural History

On February 6, the Debtors came before me seeking a TRO with respect to a stay of enforcement proceedings by the Guaranty Creditors. They sought it on an ex parte basis, for all practical purposes (with notice only to the Creditors’ Committee), asserting that notice would vitiate the purpose of the request — as involuntary pro *586 ceedings might be initiated if notice were given before the TRO was put into effect.

The Debtors’ request was then supplemented, initially orally (and with testimony) and then by supplemental papers, to additionally seek to enjoin the enforcement of remedies with respect to the 2015 Notes. Pending further consideration at a preliminary injunction hearing, I granted a TRO in each of the respects for which preliminary injunctions are now sought. That TRO provided, in substance, that the Guaranty Creditors and the 2015 Note-holders were enjoined from taking action against the Nondebtor affiliates.

As the TRO would expire, unless extended, on the 10th day after issuance (and the 10th day was a Monday holiday), the preliminary injunction hearing was set for the prior Friday — a time that would give defendants a very modest time to respond on a matter of this complexity. Nevertheless, extensive opposing papers were filed, though some defendants — especially the Indenture Trustee — advocated proceeding at a slower pace. It soon became apparent, after the first several hours of hearing on the preliminary injunction, that the preliminary injunction hearing could not be completed on that day in any event, and the TRO was then extended for another 10 days, for cause.

The 10-day extension provided better notice, and I find that it resolved any “due process” concerns as to issuance of any preliminary injunction. The preliminary injunction hearing then continued, after the passage of the 10 days (and the completion of discovery and supplemental briefing during that time), and this decision presents my determination upon the conclusion of that hearing.

Discussion

I.

Jurisdiction

Some of the defendants question my jurisdiction to issue the relief requested here. While the propriety of exercising my jurisdiction here might legitimately be debated, subject matter jurisdiction and personal jurisdiction cannot be. The relevant subject matter jurisdiction statute, Judicial Code section 1334(b), provides, in relevant part:

Except as provided in subsection (e)(2), and notwithstanding any Act of Congress that confers exclusive jurisdiction on a court or courts other than the district courts, the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title ll. 28

Here the Debtors assert claims under Bankruptcy Code section 105(a) (thereby invoking my “arising under” jurisdiction), to protect their ability to reorganize in their existing chapter 11 cases (thereby invoking my “arising in” jurisdiction). Moreover, the Debtors have easily shown by declaration how the actions sought to be enjoined would also affect their ability to reorganize, and the value of their estates. The Second Circuit, though hardly alone in this regard, follows the Third Circuit’s “Pacor” test. 29 As the Circuit stated in Cuyahoga Equipment:

[T]he test for determining whether litigation has a significant connection with a pending bankruptcy proceeding is whether its outcome might have any “conceivable effect” on the bankrupt es *587 tate. If that question is answered affirmatively, the litigation falls within the “related to” jurisdiction of the bankruptcy court. 30

As the issues here plainly pass muster under that standard, I have “related to” jurisdiction as well.

Nor, to the extent it matters, do I have any doubt that the matters here present a core matter, in which I as an Article I judge can issue final orders without sending the matter up to a district judge. 31 This is not an action under which the estate is asserting contract claims under state law. It is, rather, an effort to invoke rights under the Bankruptcy Code, section 105(a) and (to a lesser extent) section 362, to protect existing property of the estate, and to protect the estate’s ability to reorganize. It is a core matter, including under the nonexclusive subsection 157(b)(2)(A).

Nor, to the extent a lack of personal jurisdiction has been argued, do I have any doubts as to my ability to enforce my jurisdiction against anyone with notice of the proposed injunction, including anyone abroad. The Guaranty Creditors entered into contracts here in the United States, and the 2015 Indenture provided for submission to jurisdiction in the United States. Moreover, to the extent I grant relief, it will be to protect property of the estate here in the United States, and to protect an ongoing reorganization here in the United States. To the extent anyone, even abroad, takes steps abroad to cause injury here to the reorganization before me, it is analytically no different than shooting a bullet across a state line.

II.

Standards for Issuance of a Section 105(a) Injunction

Section 105 of the Code provides that “the court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” No one considering this matter objectively disputes the power of a bankruptcy court, under section 105(a) of the Code, to enjoin acts against third parties when they impair a debtor’s ability to reorganize in a chapter 11 case — even though such acts are not proscribed by the automatic stay of section 362 of the Code. 32 The issue, once more, is the appropriate exercise of the court’s power.

Thus I look to the standards for invocation of section 105(a) in instances where parties seek to protect their reorganizations by enjoining acts against non-debtor entities that are not entitled to section 362 protection. 33

*588 The applicable law relating to the exercise of the 105(a) power was restated in the recent Calpine decisions, 34 which understandably are cited, and analyzed, by parties on all sides in this case. 35 As noted in Calpine-District, courts have applied the “traditional preliminary injunction standard as modified to fit the bankruptcy context.” 36 The Calpine-District court engaged in its analysis using the following factors:

(1) whether there is a likelihood of successful reorganization;

(2) whether there is an imminent irreparable harm to the estate in the absence of an injunction; 37

(3) whether the balance of harms tips in favor of the moving party; and

*589 (4) whether the public interest weighs in favor of an injunction. 38

I consider those in turn.

III.

Application of Those Standards

A. Likelihood of Successful Reorganization

Parties in this case have differed over whether there needs to be a “likelihood” of a successful reorganization, or a “reasonable likelihood” of such (since the addition of “reasonable” materially changes the clause’s meaning), and even whether I need to find prospects for a 100% distribution on unsecured creditor claims. They also differ over the extent to which the Debtors need be denied relief because a determination of this type requires, in material part, a prediction as to matters that are largely unknowable in the early days of practically every large chapter 11 case, and as to which there can be little assurance, on the part of either side.

The Calpine-District court, in applying the “likelihood of successful reorganization” factor, did not articulate the standards that would be applicable if people were in disagreement as to its application. The Calpine-District court simply referred to a finding in Calpine-Bankruptcy that it was there undisputed that there was a “strong likelihood” that the Debtors could successfully reorganize, 39 and found it sufficient to rely on a factual finding in this regard in Judge Castel’s earlier Hawaii Structural decision, on an appeal from a similar order in another adversary proceeding in the Calpine cases.

But in considering this factor, Judge Castel in Hawaii Structural articulated the requirement as a “reasonable likelihood of a successful reorganization,” 40 and he was plainly right in that respect. Other authority supports his approach. 41 Especially since emergency requests to protect an estate’s ability to reorganize often come up in a chapter 11 case’s earliest stages, there is no way to predict what will ultimately happen in a large chapter 11 case as new issues arise.

It was also argued to me, somewhat surprisingly, that the “probability of success” requirement would require the Debtors to show a probability of confirming a plan that would provide for a 100% repayment to unsecured creditors. In support of that notion, they cited In re Larmar Estates, Inc., 42 a brief decision in an early case under the then-new Bankruptcy Code, issued about a year after the Code’s enactment, involving an effort to enjoin the enforcement of a principal’s guaranty of the debtor’s mortgage in a single asset real estate case. The Larmar Estates court denied relief for a number of reasons, one of which was the fact that the debtors had been in chapter 11 for over four months, and the court had received no indications that the debtors were “close to having their reorganization plans, if any ha[d] been proposed, confirmed.” 43 While the Larmar Estates court did indeed eval *590 uate the request for protection on the guaranty by looking to see whether the need to proceed on the guaranty could be obviated by a 100% plan, there is no indication that I can discern that Larmar Estates has ever been relied upon to impose a 100% distributions requirement in any large, complex commercial case — especially one with billions of debt and thousands of employees, in its earliest weeks. Whatever the propriety of the Larmar Estates approach may be in cases involving efforts to protect principals in single asset real estate cases, the considerations are quite different when analyzing the effect on reorganization in cases involving larger commercial enterprises.

Here the Debtors have so far been successful in doing everything they’ve needed to do to date. Whether they will be able to address later issues cannot be determined in the earliest weeks of a case, and it would be silly for a court to impose any standard other than the one Judge Castel articulated. That is especially so where thousands of jobs are on the line, which would otherwise be jeopardized by an arbitrary and restrictive placement of burdens on the debtor to meet standards that require proof of the uncertain. Application of a higher standard would make it essentially impossible to protect the debtors’ ability to reorganize in all but the simplest or most predictable chapter 11 cases.

Here I can say with great comfort, and find, that the Debtors are proceeding on track, and there is no reason to believe or suspect that their reorganization will fail— unless, of course, the acts sought to be enjoined cause it to fail.

While if there are reasons to conclude that the debtor(s) could not reorganize, that plainly should affect debtors’ ability to invoke this factor, where debtors are proceeding “on track” and have met the challenges they have faced so far, that is sufficient. 44 The “Likelihood of Successful Reorganization” factor has been satisfied here.

B. Irreparable Harm

Courts in the Second Circuit have recognized a limited exception to the irreparable harm requirement for issuance of a preliminary injunction in the bankruptcy context where the action to be enjoined is one that threatens the reorganization process or which would impair the court’s jurisdiction with respect to the case before it. 45 Thus, where the movant shows “that the action sought to be enjoined would embarrass, burden, delay or otherwise impede the reorganization proceedings or if the stay is necessary to preserve or pr