Case 1:17-cv-07857-JMF Document 69 Filed 11/21/17 Page 1 of 19

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

U.S. BANK NATIONAL ASSOCIATION,

Case No.: 17-cv-7857 (JMF)
Plaintiff and Counterclaim-
Defendant,

Hon. Jesse M. Furman

WINDSTREAM SERVICES, LLC,

Defendant, Counterclaim- ORAL ARGUMENT REQUESTED

Plaintiff and Counterclaim-
Defendant,

AURELIUS CAPITAL MASTER, LTD.

Counterclaim-Defendant
and Counterclaim Plaintiff.

WINDSTREAM SERVICES. LLCS MEMORANDUM OF LAW IN SUPPORT OF ITS

MOTION FOR JUDGMENT ON THE PLEADINGS
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TABLE OF CONTENTS

PRELIMINARY STATEMENT....................................................................................................... 1

FACTUAL BACKGROUND............................................................................................................2

I. WINDSTREAM SERVICES, LLC.......................................................................... 2

II. THE INDENTURE....................................................................................................2

III. THE 2015 SPIN-OFF................................................................................................3

IV. THE PURPORTED NOTICE OF DEFAULT........................................................ 4

V. THE DEBT EXCHANGES AND CONSENT SOLICITATIONS.........................5

VI. US BANK REFUSES TO DISMISS ITS CLAIMS................................................ 8

ARGUMENT......................................................................................................................................8

I. US BANKS CLAIMS NO LONGER PRESENT A JUSTICIABLE CASE

OR CONTROVERSY................................................................................................9

A. US Bank Does Not Have Standing To Bring Suit Under The Plain
Language Of The Indenture.........................................................................10

B, US Banks Claims For Relief Are Moot Due To The Supplemental

Indenture.......................................................................................................12

II. US BANK HAS FAILED TO STATE A CLAIM FOR WHICH RELIEF

CAN BE GRANTED............................................................................................... 12

CONCLUSION.................................................................................................................................14

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TABLE OF AUTHORITIES

Page(s)

Cases

Ashcroft v. Iqbal,
556 U.S. 662 (2009)...................................................................................................................12

Beck v. Mfr. Hanover Trust Co.,

218 A.D.2d 1 (1st Dept. 1995).................................................................................................. 10

Cleveland v. Caplaw Enters.,

448 F.3d 518 (2d Cir. 2006).............................................. ..8

Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.r.l.,

41 Misc. 3d 544 (Sup. Ct. N.Y. Cty. 2014)..................... 11

Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.r.l.,

790 F.3d 411 (2d. Cir. 2015)............................................. ..9

Cruz v. AAA Carting & Rubbish Removal, Inc.,

116 F. Supp. 3d 232 (S.D.N.Y. 2015)........................................................................................ 9

Fleet Nat. Bankv. Trans World Airlines, Inc.,

767 F. Supp. 510 (S.D.N.Y. 1991)............................................................................................ 10

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,

528 U.S. 167 (2000)..................................................................................................................... 9

In San Antonio Fire & Police Pension Fund v. Amylin Pharm., Inc.,
983 A.2d 304 (Del. Ch. 2009), affd, 981 A.2d 1173 (Del. 2009)...........................................12

Johnson v. Rowley,
569 F.3d 40 (2d Cir. 2009).........................................................................................................12

L-7 Designs, Inc. v. Old Navy, EEC,

647 F.3d 419 (2d Cir. 2011)...................................................................................................... 13

Labajo v. Best Buy Stories, L.P.,

478 F. Supp. 2d 523 (S.D.N.Y. 2007)....................................................................................... 12

Lau v. Metro. Life Ins. Co.,

No. 15-CV-09469 (PKC), 2016 WL 5957687 (S.D.N.Y. Aug. 22, 2016)..............................12

Lindner v. Am. Exp. Co.,

No. 10 Civ. 2228 (JSR) (JLC), 2011 WL 2581745, (S.D.N.Y. June 27, 2011),
report and recommendation adopted,
No. 10 Civ. 2228 (JSR) (JLC), 2011 WL 3664356 (S.D.N.Y. Aug. 19, 2011)...................... 11

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Meckel v. Contl Res. Co.,

758 F.2d 811 (2d Cir. 1985)...................................................................................................... 10

Morrison v. Natl Austl. Bank Ltd.,

547 F.3d 167 (2d Cir. 2008)........................................................................................................ 9

Norton v. Town of Islip,

678 Fed. Appx. 17 (2d Cir. 2017)............................................................................................... 8

Poinsett v. Comm V of Soc. Sec.,

No. l:16-CV-08247-KHP, 2017 WL 4220468 (S.D.N.Y. Sept. 22, 2017)...............................9

Raines v. Byrd,
521 U.S. 811 (1997)...................................................................................................................10

Sira v. Morton,
380 F.3d 57 (2d Cir. 2004).........................................................................................................13

Vill. ofIlion, N.Y. v. F.E.R.C.,

790 F.2d 212 (2d Cir. 1986).......................................................................................................11

VoiceAge Corp. v. RealNetworks, Inc.,

926 F. Supp. 2d 524 (S.D.N.Y. 2013)......................................................................................... 9

W.R. HuffAsset Mgmt. Co. v. Deloitte & Touche LLP,

549 F.3d 100 (2d Cir. 2008)...................................................................................................... 10

Warth v. Seldin,
422 U.S. 490 (1975)..................................................................................................................... 9

Rules

Fed. R. Civ. P. 7..................................................................................................................................9

Fed. R. Civ. P. 12............................................................................................................... .1,8, 9, 12

Other Authorities

U.S. Const. Art. Ill..............................................................................................................................9

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Windstream Services, LLC (Services) respectfully submits this memorandum of law in

support of its motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure

12(c), in accordance with the Courts November 7, 2017 Order (Dkt. No. 58).1

PRELIMINARY STATEMENT

By this motion, Services seeks dismissal of US Bank National Associations (US Bank)

claims, asserted as Trustee, that allege that defaults have occurred with respect to Services 6 3/8%

senior notes due 2023 (the 6 3/8% Notes or the Notes). On November 6,2017, after substantial

completion of consent solicitations and exchange offers, Services and US Bank executed a

Supplemental Indenture binding on all noteholders, amending certain provisions of the Indenture

and explicitly waiving any supposed defaults alleged in this action. As a result of these waivers

and the Supplemental Indenture, US Bank no longer has authority under the Indenture to maintain

the claims it has asserted here. Further, US Banks claims are now moot and its complaint fails to

state a claim upon which relief can be granted. Accordingly, pursuant to Federal Rules of Civil

Procedure 12(c), US Banks claims must be dismissed for lack of standing, mootness and for

failure to state a claim.

US Bank originally brought this action at the direction of noteholder Aurelius Capital

Master, LTD. (Aurelius). With the advent of the waivers and execution of the Supplemental

Indenture, Aureliuss direction is now void (and the purported defaults are deemed to be non

existent). Nevertheless, US Bank refuses to dismiss its claims for which it has no contractual

1 In connection with making this motion, Services contemporaneously seeks leave to amend its
answer in order to account for the successful completion on November 6, 2017 of certain
consent solicitations and exchange offers, which resulted in waivers of the defaults alleged in
this Action and execution of a supplemental indenture. Services amended counterclaims and
proposed amended answer is hereafter referred to as Am. Counterclaims.

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authority to maintain. As such, it is necessary that this motion be granted to dismiss US Banks

unauthorized and mooted claims.

FACTUAL BACKGROUND

I. WINDSTREAM SERVICES, LLC

Services is a leading provider of advanced network communications and technology

solutions across a range of services including cloud computing, integrated voice and data services,

internet security services, and consumer video services headquartered in Little Rock, Arkansas.

(Answer and Counterclaims, Dkt. No. 10Jf28.) Services also provides broadband, voice and

video services to consumers primarily in rural markets. (Id.) Services was formed in 2004, and

previously operated as a corporation called Windstream Corporation. (Id.) In August 2013,

Windstream Corporation created a holding company organization structure whereby Windstream

Corporation became a wholly-owned subsidiary of Windstream Holdings (Holdings). (Id. If 29.)

II. THE INDENTURE

On January 23, 2013, Windstream Corporation entered into the Indenture with US Bank as

Trustee. (Id. f| 46; Marks Deel.2 Ex. 1 (Indenture).) Pursuant to the Indenture, Services issued

senior unsecured notes due August 1, 2023 (the Notes) in an original aggregate principal amount

of $700 million (since reduced to $585.7 million outstanding by repurchases). (Dkt. No. 1, If 22;

Marks Deel. Ex. 1 (Indenture).) The Notes bear interest at 6 3/8% per annum, payable

semiannually. (Dkt. No. 1 If 22.)

The Indenture contains several restrictive covenants, including Section 4.19, which

prohibits Services or any of its Restricted Subsidiaries from entering into a Sale and Leaseback

2 Marks Deck refers to the Declaration of Aaron H. Marks, dated November 21, 2017 and
submitted herewith.

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Transaction. (Dkt. No. 1 ]f 24.) In the several years since the Indenture was entered, prior to

Aurelius acquiring Notes, no Noteholder had ever suggested a default by Services under the

Indenture. (Dkt. No. 10 If 3.)

III. THE 2015 SPIN-OFF

In March 2015, Holdings and Services entered into a Separation and Distribution

Agreement with Uniti Group Inc. (Uniti)3, pursuant to which, among other things, Services and

certain of its Restricted Subsidiaries contributed to Uniti certain assets consisting of approximately

66,000 route miles of fiber optic cable lines, 235,000 route miles of copper cable lines, central

office land and buildings, beneficial rights to permits, pole agreements and easements, and a small

consumer competitive local exchange carrier business owned by Services. (Dkt. No. 10 (f 34.)
Those assets were exchanged for (i) the issuance of Uniti common stock to Services, (ii) the

transfer of approximately $1,035 billion in cash from Uniti to Services, and (iii) the transfer from

Uniti to Services of approximately $2.5 billion of Uniti debt, consisting of term loans and secured

and unsecured notes. {Id. f 35.) Services then distributed no less than 80.4% of the outstanding

shares in Uniti common stock to its sole equity owner and parent company, Holdings, and Services

retained the remaining shares of Uniti common stock. {Id. jf 36.) Holdings, in turn, distributed the

shares of Uniti common stock pro rata to holders of Holdings common stock. {Id. If 37.) This

distribution (along with the Services distribution to Holdings) constituted the Spin-Off. {Id)

Holdings and Uniti entered into multiple further agreements to implement portions of the

Spin-Off and govern the relationship after the Spin-Off. (Dkt. No. 10 ]f 37.) One such agreement

was the Master Lease by and among subsidiaries of Uniti on the one hand, and Holdings on the

3 Communications Sales & Leasing, Inc. changed its name to Uniti Group Inc. in 2016 and is
referred to in this Complaint for convenience as Uniti. Uniti is a publicly-traded REIT.

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other hand. (Id. ]f 39.) Pursuant to the Master Lease, Holdings leased (and still leases) certain

telecommunication network assets, including fiber and cooper networks and other real estate, from

the Uniti subsidiaries that are party to the Master Lease. (Id.) Services is not a signatory to the

Master Lease and has no obligation to make any payments or perform any obligations under the

Master Lease. For example, Services has no obligation to fund Holdings lease payments under

the Master Lease. (Id. ]f 40.) The Master Lease and other Spin-Off transactional documents were

made publicly available and the details of the Spin-Off were disclosed in the Current Report on

Form 8-K filed with the Securities and Exchange Commission (the SEC) on April 27, 2015, as

well as in Services and Holdings other periodic filings under the Securities Exchange Act of

1934, as amended, since then. (Id. ]f 4L)

IV. THE PURPORTED NOTICE OF DEFAULT

On September 21, 2017, Aurelius Capital Master Ltd. (Aurelius) sent a letter (the

September 21 Letter) indicating that it was the beneficial holder of more than 25% in aggregate

principal amount of the Notes outstanding and claiming that the September 21 Letter constituted

a notice of default under the Indenture. (Dkt. No. 10 f 58.) The September 21 Letter primarily

focused on an alleged default of the Sale and Leaseback Transaction covenant (Section 4.19) of

the Indenture. (Id. jf 59.) Aurelius claimed that the notice of default was given under Indenture

Section 6.01(a)(v), which contemplates a 60-day grace period before an Event of Default would

occur. (Id. If 61.) On September 28, Windstream initiated an action in Delaware seeking

declaratory and injunctive relief on the basis that there was no Sale and Leaseback Transaction.

US Bank, National Association (US Bank) then brought this action, at the direction of Aurelius,

seeking a declaration that a default had occurred under the Indenture.

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V. THE DEBT EXCHANGES AND CONSENT SOLICITATIONS

On October 18, 2017, Services launched two separate but related transactions debt

exchanges (the Exchange Offer) and consent solicitations (the Consent Solicitations) with

respect to Services senior notes, including the Notes.4 (Marks Deck Ex. 2 (Offering

Memorandum) at 1; Marks Deck Ex. 3 (10/31/17 8-K) at 6; Am. Counterclaims 71, 75.) The

Exchange Offers and the Consent Solicitations were designed and implemented with the goal of

providing significant benefits to Services and all of its stakeholders, and to address Aureliuss

meritless allegations of a default under the Indenture. (Marks Deck Ex. 3 (10/31/17 8-K) at 9;

Am. Counterclaims | 72.)

4 The preamble to the Supplemental Indenture succinctly describes the Consent Solicitation
process:

WHEREAS, pursuant to Section 6.04 of the Indenture, the Company solicited

and received consents ... upon the terms and subject to the conditions set forth
in the Companys Consent Solicitation Statement dated October 18, 2017 . . .
of Holders representing a majority in aggregate principal amount of the
outstanding Notes to certain waivers of Defaults and Events of Default that are
alleged to have, have or may have arisen under the Indenture;

WHEREAS, pursuant to Section 9.02 of the Indenture, the Company also

solicited and received consents in the Consent Solicitation from the Holders of
a majority in aggregate principal amount of the outstanding Notes, for the
Issuers, the Guarantors and the Trustee to enter into a supplemental indenture
for the purpose of amending or supplementing the Indenture or the Notes;

WHEREAS, Pursuant to the Consent Solicitation and Sections 6.04 and 9.02 of
the Indenture, Holders representing a majority in aggregate principal amount of
the outstanding Notes (the Requisite Percentage) have agreed (subject to the
occurrence of certain conditions as further set forth herein) to waive any Default
or Event of Default that is alleged to have, has or may have arisen under the
Indenture in connection with the Transactions (as defined below) (the
Waivers) and to amend the Indenture, including amendments to give effect
to such Waivers ....

Marks Deck Ex. 6 (Third Supplemental Indenture) at 1.

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If there is sufficient support from noteholders, the Consent Solicitations, once effective,

unequivocally waive the purported defaults alleged in the September 21 Letter.5 (Marks Deck Ex.

2 (Offering Memorandum) at 21-22; Marks Deck Ex. 3(10/31/17 8-K) at 9-10; Am. Counterclaims

f 76.) Each Consent Solicitation with respect to a series of notes required consent from holders

representing at least a majority of the outstanding principal amount of that series. (Marks Deck

Ex. 2 (Offering Memorandum) at 22; Marks Deck Ex. 3 (10/31/17 8-K) at 9.) And, the Exchange

Offers allowed holders of the Companys existing senior notes to exchange those notes for new 6

3/8% notes due 2023 (the New Notes) to be issued by the Company.6 (Marks Deck Ex. 2

(Offering Memorandum) at 1; Marks Deck Ex. 3 (10/31/17 8-K) at 6; Am. Counterclaims | 73.)

On October 31,2017, the Company learned that based on tenders of notes in the Exchange

Offers and consents delivered in the Consent Solicitation for the Notes, upon early settlement of

the Exchange Offers, holders representing the requisite percentage of the Notes needed to waive

the defaults alleged in the purported Notice of Default would deliver consents. (Marks Deck Ex. 5

(11/3/17 Press Release) at 1; Am. Counterclaims ^ 77.) In fact, holders of approximately 61.35%

of the Notes (including New Notes issued in the Exchange Offers) delivered consents in the

Consent Solicitation relating to such Notes. (Marks Deck Ex. 7 (GBS Certification); Am.

Counterclaims K 77.)

On November 6, 2017, US Bank, as Trustee, authenticated and issued the New Notes.

(Marks Deck Ex. 9 (11/13/17 8-K) at 4; Am. Counterclaims 82.) That same day, Services and

5 Section 6.04 of the Indenture expressly provides that Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Notes waive any existing Default or Event of Default and its consequences
hereunder .. ..

6 The New Notes issued in the Exchange Offers are the same series as the Notes at issue in this
case and are issued under the same Indenture.

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US Bank executed the third supplemental indenture (the Supplemental Indenture), which gave

effect to the waivers and consents for the 6 3/8% Notes and is binding on all noteholders. (Marks

Deck Ex. 9 (11/13/17 8-K) at 4; Marks Deck Ex. 6 (Third Supplemental Indenture) at 1; Am.

Counterclaims 182.) The Supplemental Indenture contains various provisions that make clear that

the default alleged by Aurelius is deemed to be non-existent. The Supplemental Indenture states,

in relevant part:

(i) Transactions means the transactions described on Schedule I hereto, including

the Distribution, the Note Redemptions, the Spin-Off, the Debt-for-Debt Exchange,
the First Debt-for-Equity Exchange, the Second Debt-for-Equity Exchange, the
entry into and performance of the obligations under the Master Lease, the Spin-Off
and Subsequent Restricted Payments. (Marks Deck Ex. 6 (Third Supplemental
Indenture) at 3 (emphasis in original).)

(ii) The definition of Attributable Debt in the Indenture shall be amended by adding
the following underlined text:.... for the avoidance of doubt, any payment or other
obligations with respect to the Master Lease shall not constitute Attributable Debt
or Indebtedness. (Id.)

(iii) The definition of Sale and Leaseback Transaction in the Indenture shall be
amended by adding the following underlined text: .... for the avoidance of doubt-
each Transaction, any series of Transactions or the Transactions as a whole,
including the entry into and performance of the Master Lease, shall not constitute
a Sale and Leaseback Transaction. (Id. (emphasis in original).)

(iv) The following paragraph shall be added to the end of Section 4.07(d) of the
Indenture: For the avoidance of doubt and notwithstanding any other provision of
this Indenture, each of the Distribution and the Spin-Off and Subsequent Restricted
Payments, individually and as a whole, constitute Restricted Payments permitted
by Section 4.07 of the Indenture and shall not constitute Asset Sales. (Id. at 4.)

(v) The following paragraph shall be added to the end of Section 6.01 of the Indenture:
Notwithstanding any other provision of this Indenture, each Transaction, any series
of Transactions and the Transactions as a whole are permitted under and not
prohibited by this Indenture and shall be deemed not to have resulted in any Default
or Event of Default under this Indenture. (Id.)

(vi) The Trustee acknowledges that it has received an Officers Certificate delivered
to it by the Issuers, pursuant to Section 6.04 of the Indenture, stating that the
Holders representing a majority in aggregate principal amount of the outstanding
Notes have waived (1) any Default or Event of Default under the Indenture that is
alleged to have, has or may have arisen under the Indenture in connection with,

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related to or as a result of the consummation or performance of the Transactions,

and (2) any Default or Event of Default under the Indenture that is alleged to have,
has or may have arisen under the Indenture as a result of a Default or Event of
Default described in clause (1), and attaching evidence of such Waivers. (Id.)

(vii) This Supplemental Indenture is executed as and shall constitute an indenture

supplemental to and in implementation of the Indenture, and said Indenture and this
Supplemental Indenture shall henceforth be read together. (Id.)

Thus, the Supplemental Indenture executed by the Plaintiff, US Bank explicitly waives

any supposed default related to the allegations in the September 21 Letter and amends the

definition of Sale and Leaseback Transaction to make clear that the Spin-Off was not a Sale and

Leaseback Transaction. The waivers became effective on November 6, 2017.

VI. US BANK REFUSES TO DISMISS ITS CLAIMS

US Bank originally brought this Action at the direction of Aurelius. Aurelius became

aware of the Consent Solicitations and Exchange Offers when they were first announced on

October 18. Aurelius had ample time if it believed that the Consent Solicitations and Exchange

Offers caused it harm ~ to apply to the Court for interim or injunctive relief. Rather than seek

injunctive relief, Aurelius instead disseminated false letters to other noteholders in an effort to

dissuade them from consenting to the default waivers. (Marks Deck Ex. 4 (11/1/17 Aurelius

Letter).) This effort failed, and on November 6, the waivers became effective and the

Supplemental Indenture was executed by US Bank and Services.

In light of the waivers becoming effective and the execution of the Supplemental Indenture,

on November 9, Windstream sent a letter to US Bank requesting that its claims be dismissed.

(Marks Deck Ex. 8 (11/09/17 Windstream Letter).) US Bank has refused this request.

ARGUMENT

The standard of review for a motion for judgment on the pleadings pursuant to Rule 12(c)

is the same as that applied to a motion to dismiss pursuant to Rule 12(b)(6). Cleveland v. Caplaw

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Enters., 448 F.3d 518, 521 (2d Cir. 2006); Norton v. Town of Islip, 678 Fed. Appx. 17, 19

(2d Cir. 2017) (same). Similarly, a Rule 12(c) motion that asserts lack of subject matter

jurisdiction based on no case or controversy is governed by the same standard that applies to a

Rule 12(b)(1) motion. Cruz v. AAA Carting & Rubbish Removal, Inc., 116 F. Supp. 3d 232, 239

(S.D.N.Y. 2015) (internal citations omitted);Poinsettv. CommrofSoc. Sec.,No. l:16-CV-08247-

KHP, 2017 WL 4220468, at *3 (S.D.N.Y. Sept. 22, 2017) (same).

Under Federal Rule of Civil Procedure 12(c), a party may move for judgment on the

pleadings after the pleadings are closed. See Fed. R. Civ. P. 12(c); VoiceAge Corp. v.

RealNetworks, Inc., 926 F. Supp. 2d 524, 529 (S.D.N.Y. 2013). The pleadings are closed after an

answer to the complaint or counterclaims, if any, has been filed. See Fed. R. Civ. P. 7(a).

Judgments on the pleadings can be particularly appropriate in breach of contract cases involving

legal interpretations of the obligations of the parties. VoiceAge Corp., 926 F. Supp. 2d at 529.

I. US BANKS CLAIMS NO LONGER PRESENT A JUSTICIABLE CASE OR

CONTROVERSY.

[A] court must dismiss a claim if it Tacks the statutory or constitutional power to

adjudicate it. Cruz, 116 F. Supp. 3d at 239 (quoting Morrison v. NatlAustl. Bank Ltd., 547 F.3d

167, 170 (2d Cir. 2008)) (adjudicating Rule 12(c) motion). Under Article III of the U.S.

Constitution, the jurisdiction of federal courts is limited to the resolution of cases and

controversies, U.S. Const. Art. Ill, 2, which underpins both our standing and our mootness

jurisprudence. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180

(2000). To have Article III standing, the plaintiff [must have] alleged such a personal stake in

the outcome of the controversy as to warrant [its] invocation of federal-court jurisdiction and to

justify exercise of the courts remedial powers on [its] behalf. Cortlandt St. Recovery Corp. v.

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Hellas Telecomms., S.A.r.L, 790 F.3d 411, 417 (2d. Cir. 2015) (quoting Warth v. Seidln, 422 U.S.

490, 498-99(1975)).

US Banks claims must be dismissed for lack of subject matter jurisdiction because

(1) US Bank no longer has standing to maintain its claims, and (2) US Banks claims are moot.

A. US Bank Does Not Have Standing To Bring Suit Under The Plain Language
Of The Indenture.

It is axiomatic that a plaintiff must establish its standing as the proper party to bring a suit.

See W.R. HuffAsset Mgmt. Co. v. Deloitte & Touche LLP, 549 F.3d 100, 106 (2d Cir. 2008) (In

order to ensure that [the Constitutional] bedrock case-or-controversy requirement is met, courts

require that plaintiffs establish their standing as the proper part[ies] to bring suit.) (alteration

in original) (quoting Raines v. Byrd, 521 U.S. 811, 818 (1997)). An indenture trustee is a proper

plaintiff only where the trustee acts in accordance with the specifically articulated powers and

duties in the parties governing indentures. Fleet Nat. Bankv. Trans World Airlines, Inc., 767 F.

Supp. 510, 513 (S.D.N.Y. 1991); see also Meckel v. Contl Res. Co., 758 F.2d 811, 816

(2d Cir. 1985) ([A]n indenture trustee is more like a stakeholder whose duties and obligations are

exclusively defined by the terms of the indenture agreement.); Beck v. Mfr. Hanover Trust Co.,

218 A.D.2d 1, 13 (1st Dept. 1995) (holding indenture trustee must act prudently in the exercise

of those rights and powers granted in the indenture).

Here, US Bank, solely in its capacity as indenture trustee, brought this action under the

terms of the [the Indenture] . . . [because] two defaults relating to [the Spin-Off] . . . occurred and

are continuing. (Compl. If 1.) Section 7.01(a) of the Indenture confers authority on the Trustee

to initiate actions necessary to cure an Event of Default. (Marks Deel. Ex. 1 (Indenture) at 77 (If

an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights

and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise,

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as a prudent person would exercise or use under the circumstances in the conduct of such persons

own affairs.) (emphasis added).) However, 7.01(a) is no longer implicated in this action

because the Supplemental Indenture waives any default related to the allegations in the

September 21 Letter. (Marks Deck Ex. 6 (Third Supplemental Indenture) at 4.) Since Services

has not defaulted under the Indenture, US Banks duties and authority to remedy an Event of

Default under 7.01(a) are not triggered, and US Bank no longer has standing to prosecute this

action. See Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.r.l., 47 Misc. 3d 544, 566-69

(Sup. Ct. N.Y. Cty. 2014) (dismissing trustees claims on standing grounds where indenture limits

the authority of trustee to commence actions in the event of default) (emphasis added).

To the extent that US Bank initiated this action at the direction of Aurelius, that direction

is now void. Section 6.05 of the Indenture permits Holders of a majority in principal amount of

the the then outstanding Notes ... to direct the time, method and place of conducting any

proceeding for exercising any remedy available to the Trustee with respect to the Notes, or

exercising any trust or power conferred upon the Trustee with respect to the Notes. (Marks Deck

Ex. 1 (Indenture) at 74.) Aurelius is no longer a holder of a majority in principal amount of the

outstanding Notes, because US Banks authentication of the New Notes diluted Aureliuss

position. (Am. Counterclaims 88.) Therefore, US Bank can no longer act at Aureliuss behest

pursuant to Section 6.05.

This action must be dismissed for lack of standing because US Bank has executed the

Supplemental Indenture which waives any alleged default, and Aureliuss position is diluted, so

US Bank no longer has authority as Trustee under the Indenture to maintain the causes of action

pled in the Complaint.

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B* US Banks Claims For Relief Are Moot Due To The Supplemental Indenture.

A case is moot and not subject to adjudication when the issues presented are no longer

live or the parties lack a legally cognizable interest in the outcome. Vill. of Ilion, N.Y. v.

F.E.R.C., 790 F.2d 212,217 (2d Cir. 1986). A case may become moot because intervening events

or judicial decisions have granted the relief sought, or rendered it irrelevant. Id/, see also Lindner

v. Am. Exp. Co., No. 10 Civ. 2228 (JSR) (JLC), 2011 WL 2581745, at *4 (S.D.N.Y. June 27,

2011), report and recommendation adopted, No. 10 Civ. 2228 (JSR) (JLC), 2011 WL 3664356

(S.D.N.Y. Aug. 19, 2011) (A case becomes moot... where an intervening event while the action

is pending renders it impossible to grant any form of relief to the plaintiff). The execution of the

Supplemental Indenture was an intervening event that rendered moot US Banks claims for

declaratory judgment. See In San Antonio Fire & Police Pension Fund v. Amylin Pharm., Inc.,

983 A.2d 304, 312 (Del. Ch. 2009), affd, 981 A.2d 1173 (Del. 2009) (finding that contract claims

were mooted through the execution of a consent and waiver agreement in which lenders agreed to

waive event of default under credit agreement).

Since the Supplemental Indenture has removed any controversy regarding all of the

declarations that US Bank seeks, the Complaint is moot and should be dismissed.

II. US BANK HAS FAILED TO STATE A CLAIM FOR WHICH RELIEF CAN BE
GRANTED.

Even if the Court finds US Bank has the authority to bring this action, the Court should

grant judgment in favor of Services because the Complaint fails to state a claim for which relief

can be granted.

In order to survive a Rule 12(c) motion, a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on its face. Johnson v. Rowley, 569

F.3d 40, 44 (2d Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009)). When deciding a

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motion under Rule 12(c), a court is not required to accept a plaintiffs allegations as true where

they are contradicted by the documentary evidence that is properly considered for such a motion.

Labajo v. Best Buy Stores, L.P., 478 F. Supp. 2d 523, 528 (S.D.N.Y. 2007); Lau v. Metro. Life Ins.

Co., No. 15-CV-09469 (PKC), 2016 WL 5957687, at *1 (S.D.N.Y. Aug. 22, 2016). When

deciding a motion under Rule 12(c), a Court may consider the pleadings, exhibits to the pleadings,

documents incorporated by reference in the pleadings, matters subject to judicial notice, and

documents that are integral to the pleadings but that are not incorporated by reference. Sira v.

Morton, 380 F.3d 57, 67 (2d Cir. 2004); L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422

(2d Cir. 2011). Here, the Court may consider the Supplemental Indenture when deciding whether

to grant judgment in favor of Services because the Supplemental Indenture is incorporated by

reference into Services proposed Amended Answer and Counterclaim.

In its Complaint, US Bank seeks four declaratory judgments regarding the Indenture and

Default Notice. The factual predicates underlying all four of these declaratory judgments are now

directly contradicted by the Supplemental Indenture, thereby rendering the declaratory judgments

moot. The Supplemental Indenture moots the factual allegations underlying the first declaration

by amending the definition of Sale and Leaseback Transaction to make it clear that the Spin-Off

was not a Sale and Leaseback Transaction. (Marks Deck Ex. 6 (Third Supplemental Indenture) at

3.) The Supplemental Indenture moots the factual allegations underlying the second declaration

by amending Section 6.01 of the Indenture to permit the Spin-Off. (Id.) The Supplemental

Indenture moots the factual allegations underlying the third declaration by amending Section 4.07

to classify certain transactions as permissible Restricted Payments, not as Asset Sales. (Id.) The

Supplemental Indenture moots the factual allegations underlying the fourth declaration sought by

waiving any Default related to the Spin-Off. (Id.)

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Since the Supplemental Indenture contradicts the factual predicates for each declaration

that US Bank seeks from the Court, the Complaint does not set forth sufficient factual allegations

to state a plausible claim for relief. Thus, US Bank has failed to state a claim for which relief

could be granted.

CONCLUSION

For the reasons set forth above, the Court should grant judgment on the pleadings in favor

of Services on all counts.

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Dated: November 21, 2017

New York, New York
Is/ Aaron H. Marks___________________________
AARON H. MARKS
JOSHUA M. GREENBLATT
STEPHEN E. HESSLER, P.C.

KIRKLAND & ELLIS LLP

601 Lexington Avenue

New York, New York 10022
Telephone: (212)446-4800
Facsimile: (212) 446-4900
Email: aaron.marks@kirkland.com
j oshua.greenblatt@kirkl and. com
stephen.hessler@kirkland.com
- and -
James H.M. Sprayregen, P.C.
300 North LaSalle Street
Chicago, Illinois 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: j ames. sprayregen@kirkland .com

Counsel to Defendant, Counterclaim-Plaintiff and

Counterclaim-Defendant Windstream Services, LLC

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