Is Greenpeace Heading for Bankruptcy?

[Updated 3/26/25:  I jumped the gun here; it's an occupational hazard of blogging.

 

It turns out that the North Dakota Rules of Civil Procedure are not the only North Dakota law on supersedeas bond requirements. Tucked away among the Century Code's provisions about the technical mechanics of execution and levy by sheriffs is a provision in the North Dakota Century Code that places a dollar limit on the supersedeas bond requirement. It limit the aggregate supersedes bond requirement for all defendants in a case to $25 million. That seems like a much more achievable figure for Greenpeace. as far as I can tell, the bonding limit came out of tort reform efforts. Who would have expected it to benefit an environmental group?

 

Assuming that the North Dakota courts follow the $25 million bond limit, I would expect Greenpeace to be able to post the bond, in which case bankruptcy would not be needed.]

 

It appears that the terminus of the Dakota Access pipeline is...Chapter 11. That's where I believe Energy Transfer's $660 million trespass and defamation verdict against Greenpeace in North Dakota state court is going to end up. Although Greenpeace is vowing to appeal the verdict, that's just a brave face. Greenpeace won't be able to post the supersedeas bond, and its US entities, at least, will likely end up filing for bankruptcy.  

 

To recall, Greenpeace was involved in the Standing Rock protests against the construction of the Dakota Access pipeline. Energy Transfer Partners, the company that built the pipeline, sued Greenpeace for trespass and defamation (plus a RICO claim). I have no idea about the merits of the suit, but a Morton County, North Dakota, jury handed down a $660 million verdict against three Greenpeace entities:  Greenpeace USA (technically Greenpeace, Inc. 😂, a California corporation, which seems to be the US operating arm), the Greenpeace Fund (another California corporation, which seems to be the domestic fundraising arm), and Greenpeace International (a Dutch stichting, a uniquely Dutch form of corporate organization, which is the international umbrella organization).  I haven’t seen all the details of the verdict, but I believe only Greenpeace USA is liable for trespass. I do not know if the verdict is joint, meaning that each entity is liable to the full amount, or several, meaning each entity is liable only for its pro rated share of the judgment. 

 

Greenpeace has vowed to appeal, but the problem is that unless Greenpeace can post a supersedeas bond, the judgement is only stayed for 30 days, after which point Energy Transfer can start grabbing Greenpeace's assets. 30 days is not enough time to take an appeal, and there's no way that Greenpeace can find a surety company that will put a supersedeas bond for over $660 million. (The bond would probably be for the full verdict amount plus post-judgment interest, which at 11% annually in North Dakota.)  No surety is going to write the bond because the Greenpeace defendants don't have anywhere close to the assets necessary to satisfy the judgment according to their 2023 financial reports (there's tens of millions, not hundreds of millions of liquid assets). That means that it simply does not matter whether Greenpeace has good legal arguments on appeal. 

 

If Greenpeace cannot get the judgment stayed, Energy Transfer will be able to start seizing its assets—probably starting with the cash that it needs to keep operating—while an appeal is pending. Energy Transfer can easily get at many of the assets of the two US entity defendants—Greenpeace USA and the Greenpeace Fund. Those defendants have bank accounts and physical assets in the US. The only way to stop Energy Transfer from levying on those assets is a bankruptcy filing. Has Greenpeace started talking with bankruptcy counsel? If not, it should...

 

Here's how a Greenpeace bankruptcy probably plays out. First, a bankruptcy filing will substitute for the appellate bond in terms of staying Energy Transfer's efforts to execute on the judgment. Greenpeace will be able to proceed with the appeal without posting a bond, as the bond is not a requirement of the appeal, only a requirement for a stay of the judgment. But an appeal will not be heard and decided immediately. If I had to guess, it's going to take 9-18 months to have an appeal resolved, and Greenpeace will need bankruptcy protection in the meanwhile. 

 

Greenpeace is sitting on enough cash (about $51 million for the domestic entities) that even if its fundraising dries up entirely while in bankruptcy, it should be able to keep operating. So Greenpeace probably files and just sits in bankruptcy, seeking to extend plan exclusivity "for cause" out to 18 months. If Greenpeace prevails on the appeal, it can dismiss the bankruptcy case, but it will have paid several million in professionals fees by that point.  

 

If Greenpeace losses the appeal, then my best guess is that Greenpeace USA and the Greenpeace Fund would basically liquidate in Chapter 11: non-defendant Greenpeace entities set up a new 501(c)(3) entity that purchases all of the US defendants' assets in a 363 sale followed by a liquidation that tracks Chapter 7 priorities. What are those assets?  At the end of 2023, there was a surprising amount of cash around—$48 million for the Greenpeace Fund and another $3 million for Greenpeace USA—but a bankruptcy can burn through cash at remarkable speed. Beyond the cash, it's probably things like office leases, IP licenses, employment contracts, office equipment, and a donor list. It's hard to imagine anyone other than Greenpeace being particularly interested in purchasing those, including Energy Transfer, which would be paying in real dollars because it cannot credit bid because it lacks a lien, and would be getting only an unsecured creditor's cut. If the non-defendant Greenpeace entities can put together a few million for a bid (as well as assumption of lease and contract liabilities), I think they get it for a pittance, although there is always the risk of Energy Transfer putting in a much higher spite bid (smart bidding procedures can reduce that risk....) So for the US entities, the only "winners" will be the bankruptcy professionals, who will get paid off the top. After they've been paid, Energy Transfer, as the largest unsecured creditor, will get the lion's share of what's left, but I'd be surprised if Energy Transfer ends up collecting more than low tens of millions and perhaps less.

 

Collecting from Greenpeace International, the Dutch stichting, is more complicated. First, there’s the matter of domesticating an American judgment in the Netherlands. Greenpeace International will have an opportunity to argue that the judgment is contrary to Dutch public policy. They might win on that. Second, even if the judgment is domesticated, it isn't entirely clear what assets are really in Greenpeace International vs. in other Greenpeace entities. Greenpeace International has consolidated accounting with some other entities, and it might be that the IP and the ships, etc. are all in separate non-defendant, and generally non-subsidiary entities. And on top of that, Greenpeace International can file for bankruptcy. It could always be a bankruptcy tourist in the US or perhaps it could file in the Netherlands for a WHOA (sort of a scheme of arrangement, rather than a liquidation). My non-expert sense is that a WHOA does not work here—even if a stichting is eligible and is able to do a cross-class cramdown (there's no equity interest with a stichting, so absolute priority rule isn't a problem), the composition will probably flunk a best interests test. If that's correct, then the best move would be file in the US and do the same dance as the US entities:  a 363 sale followed by a liquidation tracking Chapter 7 priorities. If that's where things are heading, then Greenpeace International might as well file for Chapter 11 together with the US entities.

 

If I'm right about this, Greenpeace International's best move is to fight domestication of the judgment, but if that isn't successful, it can then try use Chapter 11 to move its operating assets to a new Greenpeace buyer (assuming one can be funded). It will, however, lose its cash and investments, either to the bankruptcy professionals or to Energy Transfer, so unless it can crank-up the post-bankruptcy fund-raising, it's going to have some trouble. I'm not sure if a bankruptcy in these circumstances helps or hurts on the fundraising. Most of the Energy Transfer judgment will get discharged, but the loss of tens of millions of cash and investments will be a hard blow to Greenpeace.

 

It'll be interesting to watch how this plays out, but at least for now, I think there are two lessons.

 

The first is one that the bankruptcy bar gets thanks to Texaco, but that isn't as well understood among lawyers more broadly:  it's often impossible to appeal a large verdict because of bonding requirements. That's something that drives defendants toward settlement. I'd urge my civil procedure colleagues to spend a day on appeals and collections...

 

The second lesson is that given the change in the political environment, environmental activist organizations should be thinking proactively about limiting their litigation exposure. Greenpeace is tactically different and more aggressive than most organizations, but if you're going to be engaged in activities that have litigation risk, you should be thinking about judgment proofing yourself, which means taking some pages out of the oil and gas company playbook....

Comments

[David Yen]

Greenpeace could remove the case to the bankruptcy court, file post-trial motions, if those are denied, appeal to the District Court, and then to the Court of Appeals. The plaintiffs would probably ask to remand the case to state court, and they would probably prevail, the bankruptcy court probably doesn't want to get involved in a case like this, but what if the case isn't removed?

Then, what if some court along the way orders a new trial, could the retrial be in the bankruptcy court with a jury chosen from the district in which the bankruptcy is filed?

I don't see what Greenpeace would have to lose by trying this gambit. Of course, if they think that they would win on appeal to the North Dakota Supreme Court, then they would still file bankruptcy for the reasons already stated, they just wouldn't try to remove the case.

[Adam Levitin]

The removal idea is interesting. I think you're right that it probably gets remanded, in which case you have to ask who delay benefits. I don't think Greenpeace benefits from an extended stay in the chapter.

Another move would be subchapter V, if Greenpeace could get under the debt limit, but it would raise a question of whether the judgment is dischargeable under 523.

My sense is the best move is to file, see what happens with the appeal, and then either do an asset sale or do a cramdown plan in which the judgment creditor gets its best interests, and nothing more. Any which way, I don't see a way to avoid paying best interests, but what assets are actually left around for that liquidation analysis is another matter.