                            COURT OF CHANCERY
                                  OF THE
                            STATE OF DELAWARE

                                                                  417 S. State Street
JOSEPH R. SLIGHTS III                                          Dover, Delaware 19901
 VICE CHANCELLOR                                              Telephone: (302) 739-4397
                                                              Facsimile: (302) 739-6179



                        Date Submitted: September 27, 2017
                         Date Decided: October 10, 2017



C. Barr Flinn, Esquire                       Garrett B. Moritz, Esquire
Young Conaway Stargatt & Taylor, LLP         Ross Aronstam & Moritz LLP
1000 North King Street                       100 South West Street, Suite 400
Wilmington, DE 19801                         Wilmington, DE 19801

       Re:    Pine River Master Fund Ltd. v. Amur Finance Company, Inc.
              C.A. No. 2017-0145-JRS

Dear Counsel:

       I have your correspondence regarding confusion over the scope of the

September 13, 2017, Memorandum Opinion and Order (“the Opinion”) in which the

Court addressed, inter alia, the breach of Section 6.04 of the Credit Agreement

relating to the payment of indemnities. The confusion arises out of the Court’s less

than precise definition of the parties, especially its use of “Amur” to refer

collectively to Defendants, Amur Finance Company, Inc. (“AFC”), Amur

Finance IV LLC (“Amur IV”), Amur Aviation LLC, PMC Aviation 2012-1 LLC,

and Mostafiz ShahMohammed. This has created uncertainty as to which of the
Pine River Master Fund Ltd. v. Amur Finance Company, Inc.
C.A. No. 2017-0145-JRS
October 10, 2017
Page 2



Defendants the Court found to have breached the Credit Agreement. Plaintiffs, Pine

River Master Fund Ltd. and Pine River Fixed Income Master Fund Ltd. (collectively,

“Pine River”), argue that the Court must have intended to find both Amur IV and

AFC in breach; Defendants argue that the finding of breach should extend only to

AFC.1




1
  I confess that the Court did not focus in the Opinion on the distinction between AFC and
Amur IV, as it did not appear in the briefs that the parties were focusing on that distinction,
at least as to Section 6.04. See, e.g., Pls.’ Br. in Supp. of Mot. for Summ. J. at 4
(“[D]efendants still breached Section 6.04 by taking distributions from the Collections
Account in February 2017.”); Defs.’ Br. in Opp’n of Mot. for Summ. J. at 29 (“Amur was
left with no choice but to calculate the monthly distributions itself, using the calculation
methodologies negotiated with Pine River and used by Amur consistently over the prior
three-plus years.”); id. at 29 (“Amur determined the monthly distribution itself, and Amur
IV made the necessary February 2017 payments . . .”); id. at 34 (“Indemnification of
Amur’s legal expenses related to the Operative Agreements and the Loans is clear on the
face of the Credit Agreement.”); id. at 44 (Pine River also argues that the February 2017
payment made by Amur IV to satisfy AFC’s indemnities was in breach of the Credit
Agreement because it was made pursuant to an alleged ‘Administrator Report’ that Amur
prepared when it was no longer serving as Administrative Agent.”); id. at 47 (“Amur’s
failure to pay Pine River PIK Accrual would only constitute a breach . . . if PIK was ‘due
and payable,’ which it was not . . .”); Pls.’ Reply Br. at 7 (“Amur nevertheless violated the
Credit Agreement by making the February 2017 Improper Distributions . . .”); id. at 34
(“Pine River respectfully requests that the Court enter summary judgment . . . declaring
that Amur breached Section 6.04 . . .”).
Pine River Master Fund Ltd. v. Amur Finance Company, Inc.
C.A. No. 2017-0145-JRS
October 10, 2017
Page 3



         Count II of the original Complaint (upon which Pine River sought partial

summary judgment) refers only to the conduct of AFC.2 Nevertheless, Pine River

argued in its motion for summary judgment as to Counts II and VI that both AFC

and Amur IV breached Section 6.04.3 In the Introduction of their Corrected Brief in

Opposition to Plaintiffs’ Motion for Summary Judgment and Opening Brief in

Support of Defendants’ Cross-Motion for Summary Judgment, Defendants appear

to acquiesce in the notion that the Court could find Amur IV in breach of

Section 6.04. Specifically, they state “there was no breach of section 6.04 of the

Credit Agreement (or any other section) when Amur IV satisfied AFC’s indemnities

for legal expenses.”4 They reiterate this point later in that brief when they argue



2
  Original Compl. ¶¶ 85–87 (“A current and actual controversy exists between Pine River
and AFC regarding their respective rights under the Credit Agreement . . . By taking for
itself and its affiliates funds from the Collections Account that did not constitute expenses
of the Administrative Agent ‘payable under the Operative Agreements,’ AFC repeatedly
breached Section 6.04 of the Credit Agreement . . . By taking for itself and its affiliates
funds from the Collections Account when it was not Administrative Agent, AFC also
breached Section 6.04 of the Credit Agreement.”).
3
    See, e.g., Pls.’ Br. in Supp. of Mot. for Summ. J. on Counts II and VI at 1–3.
4
 Defs.’ Corrected Br. in Opp’n to Pls.’ Mot. for Summ. J. and Opening Br. in Supp. of
Defs.’ Cross-Mot. for Summ. J. at 3.
Pine River Master Fund Ltd. v. Amur Finance Company, Inc.
C.A. No. 2017-0145-JRS
October 10, 2017
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“[t]he contract was not breached when Amur IV satisfied AFC’s indemnities related

to legal fees incurred in connection with the lawsuits.”5

        Despite the confusion in the briefing and Opinion, it is clear to me that the

claim in Count II, as to which Pine River sought summary judgment, was a claim of

breach directed against AFC, not AFC and Amur IV. 6 Pine River’s Amended

Complaint added allegations against Amur IV with respect to Section 6.04,7 but the

Court was advised in clear terms by the parties, in response to the Court’s inquiry,

that the Amended Complaint did not affect the claims or arguments to be addressed

in the pending motion for summary judgment.8 Based on the foregoing, I can clarify


5
  Id. at 4. See also Defs.’ Reply Br. in Supp. of Defs.’ Cross-Mot. for Summ. J. at 4 (stating
that “[t]he payments made by Amur IV satisfied AFC’s indemnities related to the
Operating Company Lawsuits, brought by AFC in its capacity as Administrative Agent”
and that “[t]he payments Amur IV made to satisfy indemnities for the legal expenses
incurred enforcing Amur IV’s rights in connection with the Operative Agreements were
proper.”).
6
 I note that Count V of the Original Complaint is directed against Amur IV and does make
a passing reference to Section 6.04 in connection with the allegation that Amur IV was in
breach of Section 5.07(d). Original Compl. ¶ 107. Pine River, however, did not seek
summary judgment on Count V.
7
    Am. Compl. ¶¶ 201–06.
8
  See DI 118, August 30, 2017, Letter from Emily V. Burton, Esquire to The Honorable
Joseph R. Slights, III (“Plaintiffs’ Verified Supplemental and Amended Complaint, filed
Pine River Master Fund Ltd. v. Amur Finance Company, Inc.
C.A. No. 2017-0145-JRS
October 10, 2017
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that the Court’s finding of breach of Section 6.04, and its grant of partial summary

judgment in favor of Pine River, was directed at AFC only.

       In any event, even if the Court were to determine that Count II did or should

have included a claim of breach of Section 6.04 against Amur IV,9 the Court’s

determination that no Event of Default occurred, at least as argued in the motion for

summary judgment, would not be affected. Regardless of which of the Amur parties

were (or could be) found to have breached Section 6.04, the fact would remain, at

least in the Court’s view, that the improper payment of expenses or indemnities did




on August 18, 2017 (the ‘Amended Complaint’), does not affect the submitted cross-
motions for summary judgment on Counts II and VI of Plaintiffs’ original complaint,
which were argued on July 10, 2017 (the ‘Cross Motions,’ Dkt. Nos. 44, 76). Because the
amendments to the Amended Complaint are not relevant to the Cross Motions, and the
allegations upon which the Cross Motions were based remain in the Amended Complaint,
the Court need not address the Amended Complaint when deciding the Cross Motions.”).
9
  It is not clear to me how that claim could be justified given the clear terms of Section 6.04
that impose obligations on the Administrative Agent, not the Borrower. See Credit
Agreement at § 6.04 (“on every Payment Date, the Available Collections will be distributed
by the Administrative Agent according to the following . . .”). The payments made by
Amur IV both before, and more likely after, AFC was removed as Administrative Agent
might well have violated other provisions of the Credit Agreement. That claim, however,
is not pled in Count II or Count VI of the Original Complaint.
Pine River Master Fund Ltd. v. Amur Finance Company, Inc.
C.A. No. 2017-0145-JRS
October 10, 2017
Page 6



not constitute a diversion of Borrower funds from paying Interest in violation of

Sections 7.01(a) or (b).

      Based on the foregoing, the Court will enter the proposed implementing order

submitted by Amur.10

                                         Very truly yours,

                                         /s/ Joseph R. Slights III




10
   DI 139, [Proposed] Order Granting Amur’s Implementing Order on Proceedings at 2–3
(“AFC breached Section 6.04 of the Credit Agreement through the payment of indemnities
for the Operating Company Lawsuits in the amounts of $1,173,473.88, $246,651.57,
$246,586.20, and $1,451,298.32, in November 2016, December 2016, January 2017, and
February 2017, respectively. Such breaches did not constitute an Event of Default pursuant
to Sections 7.01(a) and (b) of the Credit Agreement.”).
