T he U.S. Bankruptcy Court for the Southern Subsequently, on Sept. - PDF document

44฀Canal฀Center฀Plaza,฀Suite฀400฀฀•฀฀Alexandria,฀VA฀22314฀฀•฀฀(703)฀739-0800฀฀•฀฀Fax฀(703)฀739-1060฀฀•฀฀www.abiworld.org and฀serves฀as฀a฀ Richard฀Corbi฀is฀ an฀associate฀with฀ Lowenstein฀Sandler฀ PC฀in฀New฀York฀ coordinating฀editor฀ The Essential Resource for Today’s Busy Insolvency Professional The International Scene B Y R ICHARD J. C ORBI 1 Chapter 15 Limits Tested T he U.S. Bankruptcy Court for the Southern Subsequently, on Sept. 30, 2009, the external District of New York in Awal Bank, BSC 2 administrator applied for recognition of the admin- held, among other things, that the foreign rep- istration proceeding in Bahrain as a foreign main resentative debtor was relieved of including creditor proceeding, which the bankruptcy court granted claim amount information in bankruptcy schedules, on Oct. 27, 2009. 8 On Oct. 21, 2010, the external statements and monthly operating reports and that administrator commenced a chapter 11 case for the set-off actions pursuant to § 553 of the Bankruptcy purpose of avoiding a set-off that HSBC had taken. 9 Code are permitted in chapter 15 cases. This article The external administrator then fjled a motion for only addresses the bankruptcy court’s discussion of relief from the requirements of § 521, which pro- the issues relating to § 521 of the Code and whether vides that a debtor must fjle a list of creditors and § 553 is applicable in chapter 15 cases. certain statements and schedules unless the “court orders otherwise.” 10 The external administrator even- tually fjled amended schedules but also concurrently Factual and Legal Analysis Relating fjled a motion to omit the amount of the claims of to Disclosure Requirements individual creditors. 11 HSBC objected to the debtor’s Charles Russell LLP in London, as external request for relief from the requirements of § 521 and administrator of Awal Bank BSC (the “debtor”), to fjle the creditor claim information under seal. 12 commenced a bank insolvency proceeding in The bankruptcy court was confronted with Bahrain. 3 HSBC Bank USA, National Association whether the purposes of chapter 15 justify relief was one of the debtor’s largest creditors. On July from the usual requirements of a plenary case, for฀the฀ ABI Journal . 30, 2009, the Central Bank of Bahrain (CBB) specifjcally the requirements of § 521. The exter - placed the debtor into an administration proceed- nal administrator asserted that limited disclosure ing by Resolution No. 38 of 2009 and appoint- was appropriate in the chapter 11 case because the ed Charles Russell LLP to serve as the external effects of the chapter 11 case are more restricted administrator of Awal Bank. 4 During the course because (1) Awal Bank’s sole U.S. asset was the of the administration proceedings in Bahrain, the potential recovery arising from the set-off action external administrator adopted a protocol for shar- against HSBC, (2) there was a need to coordi- ing information with creditors. 5 Upon executing nate the chapter 11 and 15 proceedings with the a confidentiality agreement, creditors that filed Bahrain proceedings, (3) comity and deference to proofs of claim against the debtor were invited to the Bahrain administration confjdentiality protocol attend quarterly meetings with the external admin- was needed and (4) unnecessary expenses in light of istrator and CBB for status updates on the admin- the available information to creditors in the admin- istration of Awal Bank’s assets. 6 HSBC asserted a istration in Bahrain needed to be avoided. 13 HSBC $75 million claim against the debtor and had been asserted that no basis existed for the debtor to omit an active participant in the case by attending meet- the creditor claim information. ings in Bahrain. 7 The bankruptcy court began its analysis by examining § 521(a)(1), which provides that a “debt- 1 The views expressed in this article are those of the author and do not reflect the views of the firm or any of its clients. 8 Id . at 77. 2 In฀re฀Awal฀Bank,฀BSC , 455 B.R. 73 (Bankr. S.D.N.Y. 2011). 9 Id . at 77. 3 Id . at 76. 10 Id . at 77 (citing 11 U.S.C. § 521). 4 Id . at 76. 11 Id . at 78. 5 Id . at 77. 12 Id . at 78. 6 Id . at 77. 13 Id . at 80. 7 Id . at 77.