FEATURE: Like a Rolling Stone: SDNY Tackles Its First Individual Chapter 15 (citation: Edward E. Neiger and Marianna Udem, Like a Rolling Stone: SDNY Tackles Its First Individual Chapter 15, XXXIII ABI Journal 1, 36-37, January 2014) - Edward E. Neiger and Marianna Udem

THE INTERNATIONAL SCENE: Purchasers of Canadian Businesses: Beware of Successor Employer Laws (citation: Robert A. Stelzer and Adam C. Maerov, Purchasers of Canadian Businesses: Beware of Successor Employer Laws, XXXIII ABI Journal 1, 24-25, January 2014) - Robert A. Stelzer and Adam C. Maerov

On December 11, 2013, the U.S. Court of Appeals for the Second Circuit in Drawbridge Special Opportunities Fund LP v. Barnet, No. 13-612, 2013 WL 6482499 (2d Cir. Dec. 11, 2013) held that in order for a foreign company to obtain recognition of its foreign insolvency proceeding in the United States under Chapter 15 of the Bankruptcy Code, such foreign company must have a domicile, place of business or property in the United States.

A recent decision of the Second Circuit Court of Appeals has added an additional eligibility requirement for the filing of Chapter 15 cases. In Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), ___ F.3d ___, 2013 WL 6482499 (2d Cir. 12/11/2013), the Court applied the section 109 requirement that the residence, domicile, place of business, or assets of the debtor be in the United States in order for its foreign representative to obtain recognition of proceedings instituted under Chapter 15.

Among the many legalese-heavy paragraphs appearing under the “Miscellaneous” heading at the back of transaction agreements is a section that stipulates the laws of the state that will govern the purchase agreement as well as disputes relating to the deal. Often, it is coupled with a section that dictates which courts have jurisdiction over these disputes. While the state of incorporation or headquarters of one or both parties is sometimes selected, anecdotal as well as empirical evidence suggests that a healthy majority of larger transactions choose Delaware or New York law.

If the effectiveness of any dispute-settlement process is to be measured by the existence of impartial and well-defined rules, finality of the outcome and enforceability of the decision, Canada’s ratification on November 1, 2013, of the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) and its coming into effect on December 1, 2013, should be widely recognized as a watershed event for Canadian businesses investing overseas.

In a case of importance to foreign representatives of foreign debtors seeking the assistance of US courts pursuant to chapter 15 of the Bankruptcy Code, the US Court of Appeals for the Second Circuit has held that the debtor eligibility requirements of section 109(a) of the US Bankruptcy Code apply in cases under chapter 15 as they would in cases under other chapters of the Bankruptcy Code.

Welcome to issue 8 of Global Insight, bringing you reports on breaking legal developments in restructuring law across borders and in jurisdictions around the world. http://viewer.zmags.com/publication/3cb77927#/3cb77927/1

IN THIS ISSUE:CASE LAW · Statutory trust over PAYE deductions continues to operate upon and during liquidation · Setting aside transactions: The good faith defence · Personal liability to liquidators for failure to account for GST refund after default on property purchase · Creditor's resolution to appoint alternative liquidator set aside for prejudice · Liquidators obtain summary judgment for breach of director's duty · Liquidator's disclaimer of lease upheld by Australian High Court · Australian Court holds priority insurance payments

One of the effects of commercial globalization is that the bankruptcy filing of a debtor with transnational business relationships will sometimes result in a clash between the substantive bankruptcy laws of different countries. A frequent question is whether the bankruptcy laws of a foreign country should be brought to bear upon creditors located in the United States, even where foreign bankruptcy law is at odds with the laws of the United States.