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Sovereign Debt Restructuring. Stay of Proceedings. District court grants stay of proceedings for breach of contract claim against Sri Lanka pending restructuring negotiations with bilateral and private commercial creditors.

Hamilton Reserve Bank Ltd. v. Sri Lanka, No. 22-cv-5199 (S.D.N.Y. Nov. 1, 2023) [click for opinion]

USA, Insolvency & Restructuring, Litigation, Baker McKenzie
BlockFi Unsecured Creditors Seek to Liquidate the Company and End the “Extortion”

On June 27, 2023, the Official Committee of Unsecured Creditors (the “Committee”) in the BlockFi Chapter 11 bankruptcy reorganization case filed an Objection to the company’s Plan and essentially requested that the company be liquidated. The Official Committee is made up largely of 600,000 individual customers of BlockFi.

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, FTX
SEC Agrees to Let Company Investors be Paid First in BlockFi Bankruptcy

BlockFi is a wealth management and trading firm for cryptocurrency holders that first commenced operations in 2017. In July 2021, we wrote about BlockFi’s bumpy road to going public, even though its valuation had just hit $5 billion.

USA, Capital Markets, Insolvency & Restructuring, Litigation, Baker McKenzie, Blockchain, Cryptocurrency, FTX
Interest Rates. Currency of Judgment. New York state court holds that interest rate set in bankruptcy proceeding controls over contractual interest rate and that New York law requires a New York judgment be rendered in U.S. dollars.

Lehman Bros. Int'l (Europe) (In Admin.) v. AG Fin. Prod., Inc., No. 653284/2011 (Sup. Ct. N.Y. County May 17, 2023) [click for opinion]

USA, Derivatives, Insolvency & Restructuring, Litigation, Baker McKenzie, International Swaps and Derivatives Association
US NAIC Summer 2022 National Meeting Key Takeaways: Restructuring Mechanisms, Insurance Business Transfers, and Corporate Divisions

On August 11, 2022, the US National Association of Insurance Commissioners’ (“NAIC”) Executive (EX) Committee adopted a request from the Restructuring Mechanisms (E) Working Group (“RM Working Group”) to reopen the Property & Casualty Insurance Guaranty Association Model Act (#540) (“Model Act #540”) for amendment to ensure that policyholders will retain guaranty fund coverage following an insurance business transfer (“IBT”) or corporate division (“CD”).

USA, Insolvency & Restructuring, Insurance, Mayer Brown, National Association of Insurance Commissioners
Arbitration. Confirmation of Award. District court confirms arbitration award of $2 million in fees and costs to prevailing party and refuses sanctions against petitioner who sought to vacate the award.

Cognac Ferrand S.A.S. v. Mystique Brands LLC, No. 20 Civ. 5933 (S.D.N.Y. Jan. 31, 2021) [click for opinion]

USA, Arbitration & ADR, Insolvency & Restructuring, Litigation, Baker McKenzie, US District Court for the Southern District of New York
Bankruptcy. Discovery. Sanctions. Bankruptcy court sanctions attorney for failing to make reasonable efforts to obtain discovery materials held outside the U.S. by incarcerated debtor's agents and attorneys.

In re Markus, 607 B.R. 379 (Bankr. S.D.N.Y. 2019) [click for opinion]  

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Bankruptcy, Debtor, Title 11 of the US Code, United States bankruptcy court
Personal jurisdiction

Tenth Circuit holds that Canadian nationals who conspire to commit a breach of fiduciary duty against a Delaware corporation operating exclusively in Oklahoma are subject to personal jurisdiction in Oklahoma despite their lack of physical contact with the state.  Canadian law firm alleged to have assisted the conspirators is not, however, subject to personal jurisdiction.

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Fiduciary, Personal jurisdiction, Delaware General Corporation Law, Tenth Circuit
Federal Home Loan Bank Legislation (E) Subgroup

The NAIC’s Federal Home Loan Bank Legislation (E) Subgroup (the “FHLB Subgroup”) is considering, among other things, proposed amendments to the Insurer Receivership Model Act (“IRMA”) to provide certain exemptions for security agreements between insurance companies and Federal Home Loan Banks (“FHLBs”).

USA, Insolvency & Restructuring, Insurance, Mayer Brown, National Association of Insurance Commissioners
District court holds that a bankruptcy action’s automatic stay, and the bankruptcy's court's power to enjoin violations of the stay, applied extraterritorially

Sec. Investor Prot. Corp. v. Bernard L. Madoff Inv. Secs., 474 B.R. 76 (2012)

The trustee for the Securities Investor Protection Act ("SIPA") liquidation of Bernard L. Madoff Investment Securities LLC ("BLMIS") filed a complaint in the bankruptcy court against Maxam Absolute Return Fund Ltd. ("Maxam"), seeking the return of about $100 million distributed to Maxam by BLMIS.  Maxam answered the complaint and then sued the trustee in the Cayman Islands seeking a declaration that it was not required to return the money. 

USA, Insolvency & Restructuring, Litigation, Baker McKenzie, Bankruptcy, Debtor, Injunction, Extraterritoriality