This update discusses an issue that may arise in relation to the recognition of foreign bankruptcies where the law of the receiving state does not provide for admittance proceedings. This issue recently arose in the Yukos proceedings.

Facts

Investor group “Save the Queen” purchased the historic Queen Mary ship and surrounding land and development rights for $43 million from the previous operator, Queen’s Seaport Development, which filed for Chapter 11 bankruptcy in 2005.

On October 3, 2007, legislation was introduced in the U.S. Senate to amend provisions of the U.S. Bankruptcy Code that currently prevent homeowners from using bankruptcy to modify mortgage loans secured by their primary residence. Proponents of the legislation believe that permitting homeowners to modify mortgage loans in bankruptcy will encourage lenders to engage in voluntary modifications prior to bankruptcy.