Presenting a live 90-minute webinar with interactive Q&A Cross-Border Insolvencies: Representing Foreign and U.S. Debtors, Creditors, Trustees and Liquidators Navigating COMI, Concurrent Proceedings, Winding Down Offshore U.S. Funds, Discovery for Foreign Proceedings and More WEDNESDAY, JANUARY 21, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Warren E. Gluck, Holland & Knight , New York Matthew Wright, Director, Head of Restructuring & Insolvency, RHSW Caribbean, Rawlinson & Hunter , Cayman Island The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-328-9525 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.
FOR LIVE EVENT ONLY For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps: In the chat box, type (1) your company name and (2) the number of • attendees at your location Click the word balloon button to send •
Cross-Border Insolvencies: Representing Foreign and U.S. Debtors, Creditors, Trustees and Liquidators New York and Cayman Islands – Jan. 21, 2014 Presented to: Strafford Warren E. Gluck Matthew Wright Holland & Knight RHSW New York Cayman Islands
Topics For Today • Summary of Chapter 15 and the Model Law • Overview Foreign Insolvency Proceedings and Liquidators • The Center of Main Interests Issue (And Offshore Companies) • When Foreign and US Insolvency Proceedings Collide • Cross border insolvency, tax disputes and other unprovable foreign debts — the case of William and Patricia Millard • Winding down offshore-incorporated, U.S. operated funds • Recovering US-located assets of the debtor that have been seized or improperly transferred. • Chapter 15 discovery in aid of foreign insolvency proceedings and intermediary bank discovery 5
Chapter 15 – The Cross-Border Insolvency Statute • Formalized Successor to 11 U.S.C. 304. Overriding Philosophy of Deference to Foreign Insolvency Proceeding and Avoidance of Piecemeal Distribution of the (Foreign) Debtor’s Estate. • Provides Powerful Mechanisms to: • (1) Protect the Estate’s U.S. Assets and direct turnover to foreign proceeding. • (2) Stay United States Litigation/Asset Seizures; • (3) Permit the Enforcement of Debtor’s Claims Against Third Parties, Affiliates and Insiders; • (4) Apply Foreign Insolvency (i.e. Preference and Avoidance) Laws against receivers of preferential and avoidable payments subject to U.S. jurisdiction. • (5) Permit broad reaching discovery of debtor and third party assets. 6
Chapter 15 At a Glance • 2005: U.S. adoption of the U.N. Commission • “ A collective judicial or administrative on International Trade Law (UNCITRAL) proceeding in a foreign country, Model Law of Cross-Border Insolvency. including an interim proceeding, under a law relating to insolvency or adjustment • Action brought by “Foreign Representative” of debt in which proceeding the assets (typically, but not always, appointed by and affairs of the debtor are subject to foreign court). control or supervision by a foreign court, for the purpose of reorganization or • Key: foreign proceeding to be at “center of liquidation.” 11 U.S.C. 101(23) main interest” (COMI) of debtors. See In re – Formal “bankruptcy” is not required, Fairfield Sentry Limited, 714 F.3d 127 (2d nor is direct court supervision; Cir. 2013) (recognizing “COMI - Shifting” and administrative orders, third-party permitting recognition of offshore administrations and receiverships can liquidations and bankruptcies, including suffice. shipping companies. Non-main recognition also possible – “Collective” means that there must be some creditor involvement in the proceedings, such as the right to submit claims – a crucial component. 7
Foreign Insolvency Proceedings and Foreign Liquidators • Background to Cayman Islands and British Virgin Islands insolvency law • Requirements and qualifications of an insolvency practitioner • Court process in “Caribbean” insolvencies • Tool kit available to offshore liquidators • Pros and cons of foreign insolvency proceedings 8
Foreign Proceeding or Chapter 11? • Pros and cons of foreign insolvency proceedings: – Cost – Ability to recover assets – Enforceable judgments – Subordination of insider claims – Global stay versus US Stay 9
Center of Main Interests (and Offshore) – A proceeding pending in a country which is the center of the debtor’s main interests (“COMI” analysis) • 11 U.S.C. 1516(c): in the absence of evidence to the contrary the debtor’s registered office is presumed to be the center of the debtor’s main interests. • Relevant Factors: the location of the debtor’s headquarters; the location of those who actually managed the debtor (which, conceivably could the be headquarters of a holding company); the location of the debtor’s primary assets; the location of the majority of the debtor’s creditors; the jurisdiction whose laws would apply to most disputes. • In re Fairfield Sentry Limited, 714 F.3d 127 (2d Cir. 2013) (recognizing BVI Liquidation of Connecticut- based, “ Madoff ” feeder fund as foreign main proceeding) 10
The Current State of COMI - Fairfield and the Future • The Second Circuit upheld and agreed with the so-called “post - insolvency activity” theory of COMI. The question is whether, as of the date of the chapter 15 filing, the foreign debtor is being managed by a liquidator or court-appointed professional from the place of incorporation, the assets of the company are under the control of the foreign proceeding and preferably located in the foreign-incorporation jurisdiction, and whether the creditors have looked to the foreign proceeding and place of incorporation to submit their claims. • But, UNCITRAL Has clarified the definition of COMI – and where does this leave us? 11
When US and Foreign Proceedings Collide • Impact of collision of proceedings – In re Soundview – Ch11 stay vs. Cayman stay – Action by a regulator(s) – Agreement of an International Protocol and Avoidance of Delay – Fairfield, Farnum and US Court approval of US “ Situs ” Property Sales, Even when the foreign court has approved the sale. In re Fairfield Sentry Ltd.) , 2014 WL 4783370 (2d Cir. Sept. 26, 2014) – Adjudication of claims (insiders and unprovable/tax debts) 12
Unprovable Debts and the Case of the Millards • In re William H. Millard and Patricia H. Millard, 501 B.R. 644 (Bankr. S.D.N.Y. 2013) (a foreign insolvency can be recognized even where the largest (United States) creditor’s claim is not provable in the foreign proceeding; obtaining chapter 15 protection to avoid asset-grabbing during two-party dispute is a permissible purpose, does not constitute bad faith, and does not violate fundamental U.S. public policy). • Unique Chapter 15 decision – substantial policy implications. • The United States will recognize a foreign insolvency proceeding even where the principal debts of the debtor, in this case, tax claims of a U.S. Territory, are not provable or admissible in the foreign proceeding. The United States takes the same approach, and it is commonly called the “revenue rule.” See In re BearingPoint Inc., 2010 WL 4622458 (Bankr. S.D.N.Y. 2010). • The United States will not “look behind” the definition of insolvency set forth by a foreign nation or court. • Enforcement of default judgments is not a fundamental public policy of the United States; default judgments are disfavored. Utilizing the bankruptcy process to obtain a stay of enforcement proceedings, in a two party dispute, for the purpose of challenging default judgments or appealing judgments is not bad faith. • Court authorized taking deposition of sitting governor. 13
Winding Down Offshore Incorporated, US Operated Funds: Practical Considerations • Cost vs. expected recovery • Location of assets • Location of litigation targets • Local knowledge • Allegations of fraud and actions available to insolvency practitioners 14
Recovering US Assets • In re Condor Ins. Ltd., 601 F.3d 319, 329 (5 th Cir. 2010) (Fraud and preference claims based on foreign law may be brought within US Chapter 15’s); – CSL Australia Pty Ltd v. Britannia Bulkers Plc, No. 08-cv-8290, 2009 WL 2876250 (PKL) (S.D.N.Y. Sept. 8, 2009) (turnover of property attached before foreign filing pursuant to foreign law). – In Re TIBC, 439 B.R. 614 (notwithstanding pre-existing lien by United States creditor, holding that property would be released if supported by foreign law). • Asset seizures in the “Gap” period between a foreign filing and a chapter 15 filing will almost always be vacated. Sanctions on the horizon? 15
Recommend
More recommend
