Blogs
On May 27, 2008, the District Court of the Southern District of New York issued its opinion upholding Judge Lifland’s decision in the Bankruptcy Court denying recognition of certain Bear Stearns hedge funds' Cayman Island foreign liquidation proceedings either as “foreign main proceedings” or as “foreign nonmain proceedings” under Chapter 15. In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 2008 WL 2198272 (S.D.N.Y. May 27, 2008)(Sweet, J.). The appeal was opposed only by the Amici Curiae. The court noted the issue involved appeared to be of “transcendent importance to the investment community and perhaps to society at large.”
The Bear Stearns hedge funds’ winding–up petitions in the Cayman Islands were precipitated by the funds’ losses in May, 2007 due to the U.S. sub-prime mortgage crisis. The Cayman Court appointed provisional liquidators who acted as the ”foreign representatives.“ The foreign representatives filed petitions in the Bankruptcy Court of the Southern District of New York under Chapter 15 of the Bankruptcy Code seeking recognition of the Cayman Island proceedings as “foreign main proceedings” or as “foreign nonmain proceedings.” Pursuant to section 1519 of the Bankruptcy Code, the foreign representatives sought to a of stay execution and litigation against the funds’ assets as well to the authority to adminster the funds’ assets. In September, 2007, the Bankruptcy Court issued its decision denying the foreign representatives’ petition for recognition as “foreign main proceedings” finding that the funds’ center of main interests (“COMI”) as defined in Chapter 15 was actually in the United States as the funds’ investment manager, back-offices, and book and records were located in the United States. The Bankruptcy Court also denied recognition as “foreign nonmain proceedings” as the funds did not establish that they had an “establishment” in the Cayman Islands as defined in Chapter 15.
The foreign representatives argued on appeal that the Bankruptcy Court failed to “accede to the principals of comity and cooperation.” They also argued that the lower court erroneously interpreted the COMI presumption and that the facts failed to support the court’s denial of main and nonmain recognition. The District Court affirmed the Bankruptcy Court's decision. The District Court held that the Bankruptcy Court correctly held that principles of comity do not figure in the recognition analysis. The Court stated that arguments based on comity and cooperation cannot overcome the plain language of Chapter 15. The Court noted that the legislative intent of Congress was to deny the recognition of foreign proceedings unless the debtor has a COMI or at least an establishment in the country of the foreign proceedings. The District Court also upheld the lower court’s interpretation of the COMI presumption and its findings of fact denying main and nonmain recognition.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
On May 16, 2007, the court issued its decision in the case of In re Thermoview Industries, Inc., ___ B.R. ___, 2007 WL 1447855 (Bkrtcy.W.D.Ky.)(Lloyd, J.), in which the Chapter 11 Trustee brought a preference action against a Canadian corporation. The court held that it lacked specific personal jurisdiction over the the Canadian creditor and dismissed the adversary proceeding.
The Canadian corporation had it principal place of business in Canada. It did not do business in the U.S. and it was not registered to do business in the U.S. The Debtors purchased items from the Creditor FOB the plant in Canada. The Trustee attempted to serve the Canadian Creditor by mail and further measures in compliance with the Hague Convention's requirements. The Trustee contended that the fact that the Debtor's purchased products FOB the creditor's Canadian plan was sufficient to confer specific personal jurisdiction. The Trustee did not contend that there was "continuous and systemmatic" contacts with the forum as is required for general personal jurisdiction.
The court noted that in order to establish the existence of specific jurisdiction, a three part test must be met: 1. the defendant must purposely avail himself of the privilege of acting in the forum state or cause a consequence in the forum state, 2. the cause of action must arise from the defendant's activities there, and 3. the acts of the defendant or consequences must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable. Southern Machines Co., Inc. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968). All three elements must be met to invoke personal jurisdiction. LAK, Inc. v. Deercreek Enterprices, 885 F.2d, 1293, 1303 (6th Cir.1989).
As to meeting element number one, the court noted the Sixth Circuit Court of Appeal's preference for the "stream of commerce plus" approach in analyzing whether a defendant purposely avails itself of the privilege of acting in the forum state. Under this theory, the placement of a product into the stream of commerce, without more, is not an act of the defendant purposely directed toward the forum State.
The creditor sought dismissal of the complain based on lack of personal jurisdiction and insufficient service of process. The court noted that the record before the court showed that creditor was not registered to do business in the U.S. and that it in fact did not do business in the U.S. The court found merit in the creditor's arguments and dismissed the preference adversary proceeding.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
On May 16, 2007, the court issued its decision in the case of In re Thermoview Industries, Inc., ___ B.R. ___, 2007 WL 1447855 (Bkrtcy.W.D.Ky.)(Lloyd, J.), in which the Chapter 11 Trustee brought a preference action against a Canadian corporation. The court held that it lacked specific personal jurisdiction over the the Canadian creditor and dismissed the adversary proceeding.
The Canadian corporation had it principal place of business in Canada. It did not do business in the U.S. and it was not registered to do business in the U.S. The Debtors purchased items from the Creditor FOB the plant in Canada. The Trustee attempted to serve the Canadian Creditor by mail and further measures in compliance with the Hague Convention's requirements. The Trustee contended that the fact that the Debtor's purchased products FOB the creditor's Canadian plan was sufficient to confer specific personal jurisdiction. The Trustee did not contend that there was "continuous and systemmatic" contacts with the forum as is required for general personal jurisdiction.
The court noted that in order to establish the existence of specific jurisdiction, a three part test must be met: 1. the defendant must purposely avail himself of the privilege of acting in the forum state or cause a consequence in the forum state, 2. the cause of action must arise from the defendant's activities there, and 3. the acts of the defendant or consequences must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable. Southern Machines Co., Inc. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968). All three elements must be met to invoke personal jurisdiction. LAK, Inc. v. Deercreek Enterprices, 885 F.2d, 1293, 1303 (6th Cir.1989).
As to meeting element number one, the court noted the Sixth Circuit Court of Appeal's preference for the "stream of commerce plus" approach in analyzing whether a defendant purposely avails itself of the privilege of acting in the forum state. Under this theory, the placement of a product into the stream of commerce, without more, is not an act of the defendant purposely directed toward the forum State.
The creditor sought dismissal of the complain based on lack of personal jurisdiction and insufficient service of process. The court noted that the record before the court showed that creditor was not registered to do business in the U.S. and that it in fact did not do business in the U.S. The court found merit in the creditor's arguments and dismissed the preference adversary proceeding.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
The Bankruptcy Court in the case of In re Grand Prix Associates, Inc., et al., 2009 WL 1410519 (Bankr. D.N.J. 2009) recognized the British Virgin Islands insolvency proceedings as "foreign main proceedings" under chapter 15. The foreign insolvency proceedings were pending in the Eastern Caribbean Supreme Court, High Court of Justice, BVI. The principal debtors invested in private equity limited partnership and partially funded the investments in exchange for a registered floating charge under BVI law against the assets of the principal debtors.
The Court looked to the following factors listed in In re Sphinx, Ltd., 351 B.R. 103, 117 (Bankr. S.D.N.Y. 2006) in making it recognition determination: the location of the debtor's headquarters, the location of those who actually manage the debtor (which may be the headquarters of a holding company), the location of the debtor's primary assets, the location of the majority of the debtor's creditors or of a majority of the creditors who would be affected, and the jurisdiction whose law would apply to most disputes.
Based on the application of these factors, the Court found that BVI is where the foreign debtors have their CoMI. The Court found that the foreign debtors have there only place of business in the BVI, the books and records are located in the BVI, the foreign debtors were organized in the BVI, etc. In addition the Court found that previously objecting parties were in support of recognition as a foreign main proceeding.
The Court noted that the Guide to Enactment of the UNICITRAL Model Law on Cross-Border Insolvency, upon which chapter 15 was based, allows the courts to expedite the evidentiary process but neither prevent the court nor an interested party from questioning the presumption that the foreign debtor's registered office is presumed to be the CoMI. The Court suggested that the court's decision in In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 374 B.R. 122 (Bankr. S.D.N.Y.2007) was a departure from In re Sphinx where the court enumerated useful factors in making the CoMI determination but also found that the court should defer to the creditors' acquiescence in or support of a proposed CoMI. The Bear Stearns court stated that the chapter 15 petition process should not become a "rubber stamp exercise" even when no objection is filed.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
The Bankruptcy Court in the case of In re Grand Prix Associates, Inc., et al., 2009 WL 1410519 (Bankr. D.N.J. 2009) recognized the British Virgin Islands insolvency proceedings as "foreign main proceedings" under chapter 15. The foreign insolvency proceedings were pending in the Eastern Caribbean Supreme Court, High Court of Justice, BVI. The principal debtors invested in private equity limited partnership and partially funded the investments in exchange for a registered floating charge under BVI law against the assets of the principal debtors.
The Court looked to the following factors listed in In re Sphinx, Ltd., 351 B.R. 103, 117 (Bankr. S.D.N.Y. 2006) in making it recognition determination: the location of the debtor's headquarters, the location of those who actually manage the debtor (which may be the headquarters of a holding company), the location of the debtor's primary assets, the location of the majority of the debtor's creditors or of a majority of the creditors who would be affected, and the jurisdiction whose law would apply to most disputes.
Based on the application of these factors, the Court found that BVI is where the foreign debtors have their CoMI. The Court found that the foreign debtors have there only place of business in the BVI, the books and records are located in the BVI, the foreign debtors were organized in the BVI, etc. In addition the Court found that previously objecting parties were in support of recognition as a foreign main proceeding.
The Court noted that the Guide to Enactment of the UNICITRAL Model Law on Cross-Border Insolvency, upon which chapter 15 was based, allows the courts to expedite the evidentiary process but neither prevent the court nor an interested party from questioning the presumption that the foreign debtor's registered office is presumed to be the CoMI. The Court suggested that the court's decision in In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 374 B.R. 122 (Bankr. S.D.N.Y.2007) was a departure from In re Sphinx where the court enumerated useful factors in making the CoMI determination but also found that the court should defer to the creditors' acquiescence in or support of a proposed CoMI. The Bear Stearns court stated that the chapter 15 petition process should not become a "rubber stamp exercise" even when no objection is filed.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Alternatives to bankruptcy–disappear One alternative to bankruptcy is to just disappear. Why am I bringing this up, now? This week somebody asked Quora (a website I follow) how to legally disappear. The answer, sign up for a Caribbean cruise. Get off at the Virgin Islands. Don’t get back on. For most people, bankruptcy works. But when […]
The post Alternatives to Bankruptcy–Disappear by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
Alternatives to bankruptcy–disappear One alternative to bankruptcy is to just disappear. Why am I bringing this up, now? This week somebody asked Quora (a website I follow) how to legally disappear. The answer, sign up for a Caribbean cruise. Get off at the Virgin Islands. Don’t get back on. For most people, bankruptcy works. But when […]
The post Alternatives to Bankruptcy–Disappear by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.
In a Chapter 7 or Chapter 13 bankruptcy case, a "creditors' meeting" (or "341 meeting") is held about six weeks after the bankruptcy case is filed. Although called a "creditors' meeting," in most cases, no creditors take the opportunity to attend.
A Chapter 7 creditors' meeting is usually presided over by the Chapter 7 trustee and a Chapter 13 creditors' meeting by the standing Chapter 13 trustee. The debtor is required to attend to creditors' meeting unless there are special circumstances to excuse attendance.
At the creditors' meeting the person who filed for bankruptcy - the debtor - is placed under oath and the case and filed bankruptcy schedules are reviewed.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
In a Chapter 7 or Chapter 13 bankruptcy case, a "creditors' meeting" (or "341 meeting") is held about six weeks after the bankruptcy case is filed. Although called a "creditors' meeting," in most cases, no creditors take the opportunity to attend.
A Chapter 7 creditors' meeting is usually presided over by the Chapter 7 trustee and a Chapter 13 creditors' meeting by the standing Chapter 13 trustee. The debtor is required to attend to creditors' meeting unless there are special circumstances to excuse attendance.
At the creditors' meeting the person who filed for bankruptcy - the debtor - is placed under oath and the case and filed bankruptcy schedules are reviewed.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
"The recent Middle District of Florida decision in In re Nabavi, 2014 WL 3939595 (D.C. M.D. Florida, August 12, 2014) made reference to the 11th Circuit Court of Appeal’s longtime adoption of the "civil plain error rule" - an exception to the general rule that an appellate court will not consider an issue not raised in the lower court. In the Nabavi appeal to the District Court from the Bankruptcy Court, the creditor raised arguments which it had failed to bring before the Bankruptcy Court. The District Court held that the creditor waived its right to bring his arguments on appeal as the “civil plain error rule” exception did not apply.
But the Supreme Court in Hormel held that its general principle is not unyielding and “[t]here may always be exceptional cases or particular circumstances which will prompt a reviewing or appellate court, where injustice might otherwise result, to consider questions of law which were neither pressed nor passed upon by the court or administrative agency below.” Justice Black added that Rules of practice and procedure are devised to promote the ends of justice, not to defeat them. A rigid and undeviating judicially declared practice under which courts of review would invariably and under all circumstances decline to consider all questions which had not previously been specifically urged would be out of harmony with this policy. Orderly rules of procedure do not require sacrifice of the rules of fundamental justice11th Circuit
In the case of In re Lett, 632 F. 3d 1216 (11th Cir. 2011), the 11th Circuit reviewed its prior adoption of Hormel's “civil plain error rule” and its exceptions. The 11th Circuit explained that the rule's exception permits consideration of a pure question of law not raised below, if the failure to consider that issue on appeal would result in a "miscarriage of justice." The In Re Lett Court explained that a “miscarriage of justice” is a decision or outcome of a legal proceeding that is prejudicial or inconsistent with the substantial rights of a party. Another 11th Circuit case explained that “[a]ny wrong result resting on the erroneous application of legal principles is a miscarriage of justice in some degree.”
The recent case of In re Biscayne Park, LLC, 540 Fed. Appx. 952 (11th Cir. 2013) cited In Re Lett and further explicated the circumstances in which the "plain error rule" will apply. The Court explained that it will consider an issue not raised in the lower courts under five circumstances:
- it involves a pure question of law and if refusal to consider it would result in a clear miscarriage of justice
- where the appellant raises an objection to an order which he had no opportunity to raise at the lower court level
- where the interest of substantial justice is at stake
- where the proper resolution is beyond doubt
- if the issue presents significant questions of general impact or of great public concern
Bankruptcy ContextThe In re Lett Court explained that the “civil plain error rule” is particularly true in the bankruptcy context. The Court stated that “[o]rdinarily an appellate court does not give consideration to issues not raised below” because “bankruptcy cases are to be tried in front of bankruptcy court.” The Court cited a prior decision that related that it is within the court’s discretion to resolve an issue decided in the bankruptcy court “if the record thoroughly presents the issue” but “if the record reflects an issue that was presented in a cursory manner and never properly presented to the Bankruptcy Court, the issue is not preserved for appeal.” This decision further explained that “it is not enough that the record provides facts which may permit the resolution of an issue; rather the record must be adequately developed, to the point that the Bankruptcy Court could have passed on the issue …”
Certain Bankruptcy Code Provisions Never Waived?The author of a 2011 post on Weil Gotshal's "Bankruptcy Blog", wrote that the In re Lett decision suggested that certain provisions of the Bankruptcy Code may never be waived, such as in the context of a chapter 11 confirmation order, even if the party could have raised - but did not raise the argument before the bankruptcy court. The blog post points out that the In re Lett Court "ultimately concluded that the district court had actually erred in relying on the civil plain error rule in declining to address whether the plain complied with the absolute priority rule" as that the involved confirmation related issue had been preserved for appeal because the requirement of section 1129(b) of the Bankruptcy Code had "sufficiently present[ed] the absolute priority rule in the bankruptcy court as to preserve the issue for review..." and that the debtor himself had placed the absolute priority rule squarely before the court when he proffered compliance with section 1129(b) and sought confirmation of the chapter 11 plan.
ReferencesAs related in this short video, preservation of the record can make the difference between life and death in a criminal proceeding.
Jones Day blog post on In re Lett.
Rogers Towers blog post. (implications of substantial consummation as barrier to appeal)Attached: Untitled document
Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.