For more than a century, courts in England and Wales have refused to recognize or enforce foreign court judgments or proceedings that discharge or compromise debts governed by English law. In accordance with a rule (the "Gibbs Rule") stated in an 1890 decision by the English Court of Appeal, creditors holding debt governed by English law may still sue to recover the full amount of their debts in England even if such debts have been discharged or modified in connection with a non-U.K.
U.S. courts have a long-standing tradition of recognizing or enforcing the laws and court rulings of other nations as an exercise of international "comity." Prior to the enactment of chapter 15 of the Bankruptcy Code in 2005, the procedure for obtaining comity from a U.S. court in cases involving a foreign bankruptcy or insolvency case was haphazard and unpredictable. A ruling recently handed down by the U.S. District Court for the Northern District of Illinois indicates that the enactment of chapter 15 was a game changer in this context. In Halo Creative & Design Ltd. v.
In In re Avanti Commc'ns Grp. PLC, 582 B.R. 603 (Bankr. S.D.N.Y. 2018), Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York entered an order under chapter 15 of the Bankruptcy Code enforcing a scheme of arrangement sanctioned by a court in England that included nonconsensual third-party releases. Judge Glenn determined that such releases should be recognized and enforced consistent with principles of "comity" and cooperation with foreign courts inherent under chapter 15.
Even if a U.S. court has jurisdiction over a lawsuit involving foreign litigants, the court may conclude that a foreign court is better suited to adjudicate the dispute because either: (i) it would be more convenient, fair, or efficient for the foreign court to do so (a doctrine referred to as "forum non conveniens"); or (ii) the U.S. court concludes that it should defer to the foreign court as a matter of international comity. Both of these doctrines were addressed in a ruling recently handed down by the U.S.
Even if a U.S. court has jurisdiction over a lawsuit involving foreign litigants, the court may conclude that a foreign court is better suited to adjudicate the dispute because either: (i) it would be more convenient, fair, or efficient for the foreign court to do so (a doctrine referred to as "forum non conveniens"); or (ii) the U.S. court concludes that it should defer to the foreign court as a matter of international comity. Both of these doctrines were addressed in a ruling recently handed down by the U.S.
New York Bankruptcy Judge Sean H. Lane determined that the Australian debtors in a Chapter 15 foreign recognition proceeding satisfied the U.S. property requirements of Section 109(a) of the Bankruptcy Code on the basis of attorney retainers and claims against insiders located in the U.S.
On February 27, 2018, the U.S. Supreme Court resolved a circuit split under the Bankruptcy Code and determined that where funds passed through financial institutions acting as payment conduits, where the ultimate transfer sought to be avoided was not the type of transaction protected by the safe harbor provisions of the Bankruptcy Code, the safe harbor provisions of Bankruptcy Code Section 546(e), shielding transfers through financial institutions from avoidance actions by bankruptcy trustees, was inapplicable.
In January 2018 the English High Court considered whether it had jurisdiction under the Cross-Border Insolvency Regulations 2006 (CBIR) to extend a temporary stay on the commencement of enforcement action in respect of English law debt obligations owed by a foreign debtor so that in effect the stay became permanent, or whether such a permanent stay would breach the long established rule in Gibbs[1](whic
With the significant increase in cross-border bankruptcy and insolvency filings in the 43 nations or territories that have adopted the UNCITRAL Model Law on Cross-Border Insolvency (the "Model Law"), including the U.S., the incidence of "COMI migration"—the shifting of a debtor’s "center of main interests" ("COMI") to a country with more favorable insolvency laws—has also increased. As demonstrated by a ruling handed down by the U.S.
The bankruptcy court in In re Ocean Rig UDW Inc., 17-10736 (Bankr. S.D.N.Y. Aug. 24, 2017) determined that a decision by an offshore drilling company from the Republic of the Marshall Islands (RMI) to shift its Center of Main Interest (COMI) to the Cayman Islands prior to defaulting on bonds and initiating reorganization proceedings there and in the U.S., was “prudent.” The Court held that the change offered the debtors the best opportunity for successful restructuring and survival under difficult financial conditions and did not preclude U.S.