Key Points
- Court cannot grant relief under the UK Cross Border Insolvency Regulations 2006 (CBIR) where it could not provide such relief in a domestic insolvency.
- Even if such option were possible, court would not do so where a contract is governed by English law.
- Possibility of effectively applying provisions of foreign law under the CBIR restricted.
The Facts
Dealing a major blow to the trustee’s efforts to recover fraudulent transfers on behalf of the bankruptcy estate of the company run by Bernard Madoff, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York held in SIPC v. Bernard L. Madoff Investment Securities LLC1 that the Bankruptcy Code cannot be used to recover fraudulent transfers of funds that occur entirely outside the United States.
Key Points
Where a sole director and shareholder of a company had breached fiduciary duties he could not ratify the breach if the company was insolvent;
Claims against the company in liquidation by dishonest assisting parties could not be set off under rule 4.90 Insolvency Rules against any liability they had in damages for that assistance.
The Facts