Chapter 15 of the Bankruptcy Code offers an effective mechanism for U.S. courts to provide assistance to non-U.S. courts presiding over the insolvency proceedings of foreign debtors with assets located in the U.S. An important feature of chapter 15 is "comity," the deference that U.S. courts give to the decisions of foreign courts under appropriate circumstances. A ruling recently handed down by the U.S. Court of Appeals for the Second Circuit illustrates that, although comity is an integral part of chapter 15, this chapter is far from the only context in which it applies.

Editor’s Note: On June 16, 2016, The Bankruptcy Cave gave you our previous summary of the controversial Sabine decision.

In Czyzewski v. Jevic Holding, 580 U.S. __(2017), decided on March 22, the U.S. Supreme Court held that, without the consent of impaired creditors, a bankruptcy court cannot approve a "structured dismissal" that provides for distributions deviating from the ordinary priority scheme of the Bankruptcy Code. The ruling reverses the decisions of the U.S. Bankruptcy Court for the District of Delaware, the U.S. District Court for the District of Delaware, and the U.S.

The U.S. Court of Appeals for the Fifth Circuit recently held that the collection of garnished wages earned during the 90 days prior to the filing of a bankruptcy petition is an avoidable transfer, even if the garnishment was served before the 90-day preference period.

The ruling creates a potential split with the Second, Seventh, and Eleventh Circuits, with the Fifth Circuit joining with the Sixth Circuit on the issue.

On March 23, 2017, the U.S. Bankruptcy Court for the Southern District of Florida (the “Court”) issued an opinion in the chapter 15 case of Banco Cruzeiro do Sul, S.A., a Brazilian bank (“BCSUL” or the “Debtor”), holding, among other things, that section 1521(a)(7) of the Bankruptcy Code does not prevent foreign representatives from commencing state law fraudulent conveyance actions. See Laspro Consultores LTDA v. Alinia Corp. (In re Massa Falida Do Banco Cruzeiro Do Sul S.A.), No. 14-22974-BKC-LMI, Adv. Pro. No. 16-01315-LMI, 2017 WL 1102814 (Bankr. S.D. Fla.

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In Asarco, LLC v. Noranda Mining, Inc., the Tenth Circuit Court of Appeals held that representations made to the bankruptcy court that the Debtor’s settlement of environmental claims reflected only the Debtor’s share of the cleanup costs did not judicially estop the Debtor from brining a contribution claim against another potentially responsible party for those same costs.

Can a bankruptcy court order the “structured dismissal” of a Chapter 11 case if such dismissal would alter the ordinary priority rules for creditor distributions under the Bankruptcy Code? In Czyzewski v. Jevic Holding Corp., 580 U.S. (March 22, 2017) (Jevic), the Supreme Court recently determined that such an order cannot issue without consent from all affected creditors even in “rare cases in which courts could find sufficient reasons to disregard priority.”

The U.S. Court of Appeals for the Ninth Circuit recently reversed the dismissal of a Fair Debt Collection Practices Act claim arising out of a non-judicial foreclosure. The Ninth Circuit ruled that section 1692f(6) of the FDCPA applies to non-judicial foreclosure activity.

A copy of the opinion in Dale Dowers v. Nationstar Mortgage, LLC is available at: Link to Opinion.

Traditional DIP Order Carve Outs Do Not Cap the Administrative Claims of Committee Professionals