International

Granting Comity to a Foreign Court Sequestration Order

By: Kristen Barone

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

 

Legitimizing a COMI Shift Under Chapter 15

By: Taylor Anderson

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

Maybe the U.K. was the Proper Forum After All

By: Tyler Levine

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In In re Hellas[1] the United States Bankruptcy Court for the Southern District of New York stayed an adversary proceeding on the ground of forum non-conveniens.[2] Plaintiffs, the [liquidators of] Hellas Telecommunications (Luxembourg) II SCA (“Hellas II”), filed a complaint in the Bankruptcy Court following recognition of the foreign liquidators of Hellas II under Chapter 15 of the Bankruptcy Code. The plaintiffs sought to avoid and recover an initial transfer from Hellas II to its parent’s entity of approximately $1.57 billion and also to avoid and recover $973.7 million that was later transferred to several named defendants and an unmanned class of transferees.[3] Initially, the court denied the forum non-conveniens motion because it had the jurisdiction to adjudicate the claims under Sections 213 and 423 of the U.K. Insolvency Act.[4] Thereafter, plaintiffs commenced a similar action under U.K. law, in the U.K., against nine dismissed defendants.[5] In response to this new avoidance action filed in the U.K., the defendants filed another forum non-conveniens motion on January 19, 2016, and the court concluded that in light of this new U.K. action it is now best to litigate all the claims in one forum.

Bankruptcy Plan Record Date Trumps FINRA Ex-Date

By: Derek Piersiak

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In In re: Arctic Glacier International, Inc v. Arctic Glacier Income Fund, the United States Bankruptcy Court for the District of Delaware ruled that distributions would be made to unitholders as of the bankruptcy plan’s “Unitholder Distribution Record Date,” and not to the persons who held the units as of FINRA’s ex-date, which fell after the record date.[1] The ex-date is the date on and after which a security is traded without a specific dividend or distribution.[2] Under Arctic Glacier’s reorganization plan, “any distribution, no matter its size, must be made to those who [held] units as of the Unitholder Distribution Record Date, which must be at least 21 days prior to the date on which the distribution is actually paid out, i.e., the payable date.”[3] The plaintiffs purchased units after the plan’s record date.[4] When Arctic Glacier made distributions to those who held units as of the record date, the plaintiffs sued Arctic Glacier, alleging that under U.S. securities laws, Arctic Glacier should have made distributions to the plaintiffs.[5]

Notice to Employees May be Satisfied by Publication

By: Naffie Lamin

St John’s University Law Student

American Bankruptcy Institute Law Review Staff

In In re Nortel Inc. , the Bankruptcy Court denied a motion filed by former Canadian employees of the debtor Nortel Networks’ Canadian affiliates (the “Canadian Employees”) seeking leave to file proofs of claim after the expiration of the final date to file a proof of claim in the United States (the “Bar Date”).[1] On January 14, 2009, the United States Nortel affiliates (the “U.S. Debtors”) filed voluntary petitions of relief under chapter 11 of the Bankruptcy Code.[2] On the same day, the Canada affiliates (the “Canadian Debtors”) filed insolvency proceedings under Canada's Companies' Creditors Arrangement Act (“CCCAA”).[3] Pursuant to the rules of the CCCAA, the Ontario Superior Court appointed Ernst & Young Inc. (the “Monitor”) as monitor and Koskie Minsky, LLP (“Koskie Minsky”) as the law firm to represent the interests of all former employees of the Canadian Debtors, including the Canadian Employees.[4]

U.S. Bankruptcy Court Dismisses Bahamian Hotel’s Chapter 11 Case

By: Micaela Manley

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In In re Northshore Mainland Services, Inc. , the Bankruptcy Court for the District of Delaware dismissed Bahamian companies’ chapter 11 cases, relating to the construction of the Baha Mar Resort, under the abstention provision of the United States Bankruptcy Code (the “Code”), and refrained from dismissal of the Delaware companies’ chapter 11 case.[1] Construction of the Baha Mar Resort, which included four new hotels, a Las Vegas style casino, and a premier Jack Nicklaus Signature 18-hole golf course, broke ground in February 2011 with completion estimated by November 20, 2014.[2] By 2013 it was clear that the contractors were not going to meet the planned schedule.[3] Almost two years later, the Baha Mar Resort remained incomplete.[4] Subsequently, the debtors filed chapter 11 petitions under the Code with the Delaware bankruptcy court.[5] In addition, the debtors requested recognition of the chapter 11 cases in the Bahamas.[6] The Bahamian Attorney General opposed the debtors’ request for recognition and asked the Bahamian court to issue an order winding up of all the Bahamian debtors’ business.[7] The Bahamian court concluded that subordinating the local proceedings to the Delaware proceedings where the locale had little connection to the debtors would not be equitable.[8] The Bahamian Court thereafter dismissed the winding up proceedings for certain debtors and appointed joint provisional liquidators to seven others.[9] In the meantime, two of the debtors filed motions in the bankruptcy court to dismiss their chapter 11 cases.[10] According to the debtors, the best interests of the debtors and creditors would be served by dismissal of the chapter 11 cases and the continuation of proceedings in the Bahamas.[11] Ultimately, the United States bankruptcy court dismissed the cases of the Bahamian debtors under Section 305(a) of the Code.[12] The bankruptcy court, however, refused to dismiss the chapter 11 case filed by Northshore Mainland Services, Inc., a Delaware corporation.[13]

The Great Euro Siphoning Stratagem: In re Hellas Telecommunications (Luxembourg) II SCA

By: Peter Collorafi

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In August 2015, the United States Bankruptcy Court for the Southern District of New York determined, inter alia, that the Joint Compulsory Liquidators for Hellas Telecommunications (Luxembourg) II SCA (“Hellas II”) could amend their original complaint to include a foreign fraudulent transfer claim under Section 423 of the United Kingdom Insolvency Act of 1986 (“Section 423”) against certain United States defendants. The plaintiffs filed their initial complaint seeking to avoid and recover an initial transfer of approximately €1.57 billion made by Hellas II to its parent entity and a subsequent series of transfers totaling €973.7 million made to several named defendants and an unnamed class of transferees. The plaintiffs’ initial complaint contained actual and constructive fraudulent transfer claims under New York law in addition to an unjust enrichment claim under unspecified law. The court dismissed the plaintiffs’ New York law fraudulent transfer claims for lack of standing and, consequently, the plaintiffs sought to amend their complaint.

Section 550(a)(2) and a Lesson in the Presumption Against Extraterritorially

Michael Vandermark

St. John’s Law Student

American Bankruptcy Institute Law Review Staff

In In re Madoff Securities, the United States District Court for the Southern District of New York recently held that section 550(a)(2) of the Bankruptcy Code does not apply extraterritorially.[1] There, the SIPA trustee sought to recover both funds transferred from Madoff Securities in New York to several Madoff-related foreign feeder funds[2] and, more specifically, subsequent transfers made by those feeder funds to their foreign investors.[3] The trustee argued that because the defendants had allegedly received several million dollars in fraudulent subsequent transfers from the feeder funds, he was entitled to reclaim those funds under section 550(a)(2) of the Bankruptcy Code.[4] In response, Defendants’ argued that section 550(a)(2) does not apply extraterritorially and therefore does not reach those subsequent transfers made from one foreign entity to another.[5] Ultimately, the Madoff Securities court held that section 550(a)(2) cannot be applied against the foreign defendants on an extraterritorial basis.[6]

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