Introduction

Puerto Rico v. Franklin CA Tax-Free Trust, No. 15-233
Acosta-Febo v. Franklin CA Tax-Free Trust, No. 15-255

It is said that muddy water is best cleared by leaving it be.  The Supreme Court’s December 4 decision to review the legality of Puerto Rico’s local bankruptcy law, the Recovery Act, despite a well-reasoned First Circuit Court of Appeals opinion affirming the U.S. District Court in San Juan’s decision voiding the Recovery Act on the grounds that it conflicts with Section 903 of the U.S. Bankruptcy Code, suggests, at a minimum, that at least four of the Justices deemed the questions raised too interesting to let the First Circuit have the last word.

Yesterday, the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico closed Westernbank Puerto Rico, headquartered in Mayaguez, Puerto Rico, and the FDIC was appointed receiver.

Yesterday, the Office of the Commissioner of Financial Institutions of the Commonwealth of Puerto Rico closed R-G Premier Bank of Puerto Rico, headquartered in Hato Rey, Puerto Rico, and the FDIC was appointed receiver.

Last Tuesday, Puerto Rico sold its much-ballyhooed $3.5 billion in non-investment grade general obligation bonds. Two days later, two legislators in Puerto Rico’s Senate filed a bill which, if enacted, would permit insolvency filings by Puerto Rico’s public corporations in Puerto Rico’s territorial trial court. The juxtaposition of the two events has some bond investors crying foul.

Deposit Ins. Agency v. Leontiev, No. 17-MC-00414 (S.D.N.Y. July 23, 2018) [click for opinion]

On July 31, 2017, the Bankruptcy Court for the Southern District of New York recognized a Russian insolvency proceeding as a foreign main proceeding under chapter 15 of the U.S. Bankruptcy Code (“Code”), concluding that (i) a retainer deposited with the debtor’s attorneys in the U.S. was sufficient property within the United States to establish jurisdiction over a debtor under section 109(a) of the Code and (ii) the Russian insolvency proceeding was not “manifestly contrary to public policy of the United States.”

In a previous article, The Eagle and the Bear: Russian Proceedings Recognized Under Chapter 15, we discussed In re Poymanov, in which the Bankruptcy Court (SDNY) recognized a Russian foreign proceeding under chapter 15 of the Bankruptcy Code even though the debtor had only nominal assets in the United States (the “Recognition Order”). The Bankruptcy Court had declined to rule upon recognition whether the automatic stay under 11 U.S.C.

The Singapore High Court recently issued the first-ever super-priority order for debts arising from rescue financing under Section 211E(1)(b) of the amended insolvency laws in the Companies Act. The decision shows that the court is open to adopting relatively unique deal structures, and could be a benefit for more business-centric solutions.