requirements of 1515. 14 The bankruptcy noted that Judge Lifland in - PDF document

J OURNAL A M E R I C A N B A N K R U P T C Y I N S T I T U T E Issues and Information for Today’s Busy Insolvency Professional Cross-Border Bankruptcy Update: Do U.S. Bankruptcy Courts Have the Final Say? Written by: Caymans, the Caymans is presumed to be Francis G. Conrad the center of main interests (COMI) under About the Author Weiser LLP; Long Beach, N.Y. §1516 of the Code. 8 fconrad@vermontel.net The court began its analysis by reviewing the structure of chapter 15 of Francis Conrad is a former U.S. Richard J. Corbi the Code and explaining that it is bankruptcy judge and is currently a Lowenstein Sandler, P.C.; New York procedural in nature. 9 Chapter 15 does not partner at Weiser LLP. Richard Corbi is rcorbi@lowenstein.com constitute a change in the basis approach an associate in the Financial T his article provides an update on of U.S. law, which has been one of Restructuring group of the New York some of the latest international recognizing comity. 10 City office of Lowenstein Sandler, P.C. bankruptcy cases decided by U.S. Recognition under §1509 of the Code bankruptcy courts. This article focuses on including facts not presented. 3 Basis Yield provides that when a foreign two recent cases from the Southern representative petitions the bankruptcy was incorporated in the Cayman Islands District of New York Bankruptcy Court: court for a recognition decision, the in September 2005 as an exempted limited In re Basis Yield Alpha Fund and In re specified consequences under the statute liability company pursuant to §193 of the Monitor Single Lift I Ltd . The trend are that the representative obtains the Companies Law of the Cayman Islands and maintains a registered office there. 4 In among the bankruptcy courts indicates capacity to sue and be sued in U.S. courts that the U.S. bankruptcy judges invoke the and may apply directly to a U.S. court for August 2007, the shareholders of Basis principles of comity and territoriality. the appropriate relief, and that all courts Yield authorized the filing of a petition Comity allows the court to efficiently and in the United States must grant comity to to liquidate the fund pursuant to Cayman the foreign representative. 11 “[C]ongress Islands law. 5 Basis Yield is registered in equitably distribute the assets of a debtor in a foreign insolvency proceeding while provided that control of these questions the Cayman Islands and has a registered territoriality allows the court to maintain would be concentrated in the bankruptcy office and has two feeder funds domiciled the integrity of the local laws. Recently, the Bankruptcy Court for the Feature Southern District of New York in In re Basis Yield Alpha Fund (Basis Yield) held that a bankruptcy court can examine all court.” 12 Section 1517 of the Code relevant facts in determining whether to there, and the financial books and records grant recognition of a proceeding as a provides the requirements for an order of the company are located in the foreign main or nonmain proceeding. 1 In granting recognition and sets forth the Caymans. 6 Basis Yield , the petitioners, the Joint statutory directive that when the The court explained, however, that the Provisional Liquidators (JPLs) of Basis requirements are met, the court shall enter petition contained several deficiencies, a recognition order. 13 Therefore, in order Yield Alpha Fund in a proceeding in the including the nature and extent of any Cayman Islands, sought recognition in the to prevail, all three elements of business activity conducted by Basis Yield U.S. bankruptcy court of Basis Yield’s §1517(a)(1)-(3) must be met which, in the Cayman Islands, whether Basis liquidation in the Cayman Islands as a include: (1) such foreign recognition is Yield staffed any employees in the “foreign main proceeding” pursuant to sought is for foreign main or nonmain Caymans, whether Basis Yield had any §1517(b)(1) of the Bankruptcy Code. 2 The proceeding; (2) the foreign representative assets in the Caymans and the location court held that when a court engages in a applying for recognition is a person or from which Basis Yield’s funds were in fact managed. 7 The JPLs argued since recognition determination under §1517 body; and (3) the petition meets the of the Code, the court is not bound by the Basis Yield’s office is registered in the parties’ failures to object and may 8 Id. at 10. 9 consider any and all relevant facts, Id. at 12. 3 Id. at *2-3. 10 Id. at 12. 4 Id. at 3. 11 Id. at 13-14 ( citing 11 U.S.C. §1509 (2008)). 1 No. 07-12762, 2008 Bankr. LEXIS 67, at *2-3 (Bankr. S.D.N.Y. Jan 5 Id. at 4. 12 Id. at 15. 16, 2008). 6 Id. at 5. 13 Id. at 16-17 ( citing 11 U.S.C. §1517 (2008)). 2 Id. at *2. 7 Id. at 6-7. 44 Canal Center Plaza, Suite 404 • Alexandria, VA 22314 • (703) 739-0800 • Fax (703) 739-1060 • www.abiworld.org