Blogs

1 week 4 days ago

Get Ready for a Recession Michelle Singletary in Wednesday’s Washington Post writes about getting ready for a recession.  Two pieces of her advice: clear your credit card debt; and start saving. Suppose the recession hits hard ten months from now–April 2023.  Will your credit cards be paid off?  If there’s a lot of slack in […]
The post One Way to Get Ready for Recession: Bankruptcy by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.


1 week 4 days ago

Get Ready for a Recession Michelle Singletary in Wednesday’s Washington Post writes about getting ready for a recession.  Two pieces of her advice: clear your credit card debt; and start saving. Suppose the recession hits hard ten months from now–April 2023.  Will your credit cards be paid off?  If there’s a lot of slack in […]
The post One Way to Get Ready for Recession: Bankruptcy by Robert Weed appeared first on Northern VA Bankruptcy Lawyer Robert Weed.


5 days 10 hours ago

In the case of In re Rajapakse, 346 B.R. 233 (Bkrtcy.N.D.Gla.2005)(Massey, J.), the Chapter 7 Trustee sought an order directing the pro se chapter 7 Debtor to turn over certain property located outside of the U.S. The Debtor claimed that the property was not property of the estate and was outside the Court's jurisdiction. The Court granted the Trustee's motion and directed the Debtor to turn over and account for all the foreign assets.

Section 541 provides that the commencement of a case creates an estate comprised of property listed in Section 541(a) with certain exceptions, "wherever located and by whomever held." 11 USC 541 (a). The court noted that the phrase "wherever located and by whomever held" is extremely broad and could be interpreted to cover property owned outside of the U.S. The court pointed out though that Section 541 does not expressly state that it applies outside of the U.S.

The court discussed that Congress has the power to enact a statute that applies beyond the territorial borders of the U.S, but that there is a presumption that Acts of Congress do not ordinarily apply outside the borders of the U.S. If a statute does not expressly state that is applies outside of the U.S., a court must determine whether Congress intended the statue to have extraterritorial effect. E.E.O.C. v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991).

The court concluded that while Section 541 is ambiguous regarding its possible extraterritorial effect, its legislative history is not. The court noted that the House Report accompanying a 1952 amendment to Section 541 makes its clear that a trustee in bankruptcy is vested with the title of the bankrupt in property within or without the U.S. The court noted that Collier on Bankruptcy confirms this interpretation that Section 70a of the Act was amended in 1952 to make it clear that a trustee in bankruptcy is vested with the title to property within or without the U.S. by the addition of the words "wherever located." Collier on Bankruptcy, Vol. $A, para 70.03, p. 35 (14th Ed. 1978). The court noted that other courts addressing this issue have reached the same conclusion. See, e.g. H.K. and Shanghai Banking Corp. v. Simon, 153 F.3d 991, 996 (9th Cir.1998), GMAM Investment Funds Trust I v. Blobo Comunicacoes E. Participacoes S.S, 317 B.R. 235 (S.DN.Y.2004), Deak & Co. v. Soedjono, 63 B.R. 422, 427 (Bankr.S.D.N.Y.1986), Nakash v. Zur, 190 B.R. 763, 768 (Bankr.S.D.N.Y.1996), In re Yukos Oil Co. 321 B.R. 396, 406 (Bankr.S.D.Tex.2005).Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com


5 days 10 hours ago

In the case of In re Rajapakse, 346 B.R. 233 (Bkrtcy.N.D.Gla.2005)(Massey, J.), the Chapter 7 Trustee sought an order directing the pro se chapter 7 Debtor to turn over certain property located outside of the U.S. The Debtor claimed that the property was not property of the estate and was outside the Court's jurisdiction. The Court granted the Trustee's motion and directed the Debtor to turn over and account for all the foreign assets.

Section 541 provides that the commencement of a case creates an estate comprised of property listed in Section 541(a) with certain exceptions, "wherever located and by whomever held." 11 USC 541 (a). The court noted that the phrase "wherever located and by whomever held" is extremely broad and could be interpreted to cover property owned outside of the U.S. The court pointed out though that Section 541 does not expressly state that it applies outside of the U.S.

The court discussed that Congress has the power to enact a statute that applies beyond the territorial borders of the U.S, but that there is a presumption that Acts of Congress do not ordinarily apply outside the borders of the U.S. If a statute does not expressly state that is applies outside of the U.S., a court must determine whether Congress intended the statue to have extraterritorial effect. E.E.O.C. v. Arabian Am. Oil Co., 499 U.S. 244, 248 (1991).

The court concluded that while Section 541 is ambiguous regarding its possible extraterritorial effect, its legislative history is not. The court noted that the House Report accompanying a 1952 amendment to Section 541 makes its clear that a trustee in bankruptcy is vested with the title of the bankrupt in property within or without the U.S. The court noted that Collier on Bankruptcy confirms this interpretation that Section 70a of the Act was amended in 1952 to make it clear that a trustee in bankruptcy is vested with the title to property within or without the U.S. by the addition of the words "wherever located." Collier on Bankruptcy, Vol. $A, para 70.03, p. 35 (14th Ed. 1978). The court noted that other courts addressing this issue have reached the same conclusion. See, e.g. H.K. and Shanghai Banking Corp. v. Simon, 153 F.3d 991, 996 (9th Cir.1998), GMAM Investment Funds Trust I v. Blobo Comunicacoes E. Participacoes S.S, 317 B.R. 235 (S.DN.Y.2004), Deak & Co. v. Soedjono, 63 B.R. 422, 427 (Bankr.S.D.N.Y.1986), Nakash v. Zur, 190 B.R. 763, 768 (Bankr.S.D.N.Y.1996), In re Yukos Oil Co. 321 B.R. 396, 406 (Bankr.S.D.Tex.2005).Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com


1 week 6 days ago

 The Taxman Cometh: The IRS wants in on your Venmo, see the article at https://nypost.com/2022/06/09/the-taxman-cometh-the-irs-wants-in-on-your...As the article provides, any income you earn over $600 is now being reported to the Internal Revenue Service by payment apps including eBay, Venmo and AirbnbForewarned, is forearmed! Jim Shenwick Esq 212 541 6224 [email protected]


2 weeks 8 hours ago

 Forbes Advisor has very interesting and informative article about Chapter 13 Bankruptcy, it can be found at Forbes Advisor Chapter 13Those people with questions about personal bankruptcy should contact Jim Shenwick, Esq. 212 541 6224 [email protected]


2 weeks 20 hours ago

bible on layoff notice
Does God Want You to Be Bankrupt?
By RON LIEBER, New York Times, Published: May 1, 2009 (provided here solely for educational purposes).
This week, yet another Washington debate over who deserves a break on their debts drew to a close. On Thursday, the Senate voted against allowing judges to adjust the terms of the mortgages of people filing for personal bankruptcy.
Skip to the next paragraph and scratch the surface of the opposition in these sorts of debates, and it tends to ooze moral righteousness. “People who get themselves in over their heads,” the upstanding declare, “need to bear some responsibility for their foolishness.” Maybe so. But if we can’t pass legislation that gives us new tools to determine who should be eligible for debt forgiveness, we need to look elsewhere for written instruction. Given that large numbers of Americans take many of their moral cues from their spiritual beliefs, I decided to turn to the good books of some of the world’s great religions for guidance on the subject.
Just about every doctrinal expert I spoke with, no matter the background, began by mentioning slavery.
In ancient times, when interest accrued and compounded, it was common for the indebted to simply work it off. Often, this took the rest of their lives. Many of the teachings that grew up around debt forgiveness aimed to avoid that sort of outcome.
Still, the notion of enslavement, albeit of the psychological sort, survived to modern times.

N. Eldon Tanner, a leader of the Church of Jesus Christ of Latter-day Saints, wrote: “Those who structure their standard of living to allow a little surplus control their circumstances. Those who spend a little more than they earn are controlled by their circumstances. They are in bondage.”

This will be a familiar idea to people who have considered the idea of paying only the minimum amount on a large credit card debt, only to realize that if they do that, the debt may actually outlive them. “Binding oneself financially is not something that trumps every other need,” added the Rev. Brian Daley, a Jesuit priest and professor of theology at the University of Notre Dame. Scripture suggests that the redistribution of property is also a reasonable thing to do. “You just can’t mention it in public in the United States,” he said. “Our notion of capitalism is so absolutized that we give it a quasi-religious value.”
However strongly we believe in free markets (not, perhaps, as fervently as we did a year or two ago), the theme of forgiveness does run strongly through religious writings of all sorts.
Book of Deuteronomy - 15In the Old Testament, for instance, Chapter 15 of the book of Deuteronomy calls for the forgiveness of debts once every seven years. Religious leaders were aware, however, of the chilling effect that could have on lending (particularly in the sixth year). “The Torah says don’t think that way, don’t be stingy” in that sixth year, said Rabbi Mark Washofsky, a professor of Jewish law at Hebrew Union College-Jewish Institute of Religion in Cincinnati. He added that later on, the Talmud introduced the idea of a Prosbul. This was a sort of workaround court that was not covered by the religious law. The Prosbul could administer debts during or right before the seventh year.
When the court confiscated property outright, sometimes this worked to the benefit of the debtor and sometimes to the benefit of the creditor.
“In other words, the ultimate power resides with the community,” Rabbi Washofsky said. “It can intervene in what was a private transaction, in a situation of great need. The power is there. The real question is, do you use it and when?” The answer depends on who you are ultimately reporting to, your immediate supervisor, your shareholders or the Entity that will ultimately render judgment on you.

Picture of Father Daley, Notre Dame
Father Daley

Father Daley, of Notre Dame, said that the New Testament talked about debts to God resulting from sin. Another idea popular with rabbis and early Christians, he said, was the notion that doing good deeds turned God into a debtor. “God is a kind of referee or bookkeeper, noticing things that people do,” he said. “And if they do good deeds without obligation, God will repay them in judgment. I think being able to dismiss debts or forgive them is something that is seen as a generous and gracious act.”
Bankers that cater to Muslims, who are not allowed to charge interest
This is because of some of the tenets of Islamic law, claim to foreclose on homeowners less frequently than regular creditors, according to Mahmoud Amin El-Gamal, an expert on Islamic finance and an economics professor at Rice University. He added, however, that any leniency was probably priced into the financing in the first place, making it a bit more expensive. The Koran, meanwhile, offers one of the more useful ideas on debt. “If the debtor is in a difficulty, grant him time till it is easy for him to repay,” the passage in the second chapter, verse 280, reads. “But if ye remit by way of charity, that is best for you if ye only knew.” Charity is not required here, according to Mr. El-Gamal. But during that granting of time, he added, the creditor is not allowed to charge interest.
This offers a possible compromise.
If lenders and senators are unwilling to allow judges to permanently alter the terms of a mortgage loan, perhaps they would agree to allow qualified borrowers who have lost their jobs or fallen ill to take a two- to six-month break from making payments. During this time, the lenders would stop the interest clock from ticking, not levy any fees and not tack on missed payments to the end of the loan. Then, once the borrowers were back on their feet, they could start regular payments again. If they weren’t able to make them by then, then foreclosure proceedings could begin.
Or, if this proves unpalatable or too expensive, how about selling an insurance policy that would pay for a six-month period of payments? That could satisfy both God and the gods of capitalism.
Perhaps if the Democrats want to enact bankruptcy reform, they ought to bring an imam to address their opponents.

.fusion-body .fusion-builder-column-0{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-0 > .fusion-column-wrapper {padding-top : 20 !important;padding-right : 20 !important;margin-right : 1.92%;padding-bottom : 20 !important;padding-left : 20 !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-0{width:100% !important;order : 0;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-0{width:100% !important;order : 0;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-1{ padding-top : 10px;margin-top : 20px;padding-right : 10px;padding-bottom : 0px;margin-bottom : 15px;padding-left : 10px;}
How could anyone believe that it is a sin to file for bankruptcy?

bible on layoff noticeIn Ancient Greece, bankruptcy did not exist. If a man owed and he could not pay, he and his wife, children or servants were forced into “debt slavery”, until the creditor was paid via their physical labor.  Later a debtor could get a fresh start, but only after giving to his creditors everything he owned except some bare necessities.  Then the English established debtor’s prison, the bankrupt was seen as being bonded to his creditors and would be released from jail only if he had assets that did not exceed £20, but if any of their creditors objected, they had to stay inside. Voluntary bankruptcy did not become law in Britain until 1849.  But 60 years earlier, in 1789 the United States Constitution gave the power to Congress to legislate “uniform laws on the subject of Bankruptcies”. Congress’ first law was the Bankruptcy Act of 1800, which was involuntarily and only limited to traders.  The Bankruptcy Act of 1938 expanded voluntary access to the bankruptcy system, and voluntary petitions were made more attractive to debtors.
The point is that people require help in resolving burdensome debts, many of which were not their fault.  Why do I say that ? Because the four most common causes of bankruptcy are medical, unemployment, divorce, or death. None of these were choices for the debtor. Life happened, as it does to all of us. Some of us are more fortunate than others.
When you hear that someone is thinking about filing for bankruptcy, don’t jump to conclusions. The alternative may be a lifetime of buying high-interest vehicles, having wages garnished, and having to borrow high-interest payday loans in order to feed the family. It’s a never-ending cycle.

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.fusion-body .fusion-builder-column-3{width:75% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-3 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 15px !important;margin-right : 10px;padding-bottom : 0px !important;padding-left : 15px !important;margin-left : 10px;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-3{width:100% !important;order : 0;}.fusion-builder-column-3 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-3{width:100% !important;order : 0;}.fusion-builder-column-3 > .fusion-column-wrapper {margin-right : 10px;margin-left : 10px;}}.fusion-body .fusion-flex-container.fusion-builder-row-3{ padding-top : 10px;margin-top : 20px;padding-right : 10px;padding-bottom : 0px;margin-bottom : 15px;padding-left : 10px;}.fusion-body .fusion-button.button-1.button-3d,.fusion-body .fusion-button.button-1.button-3d:hover{box-shadow:inset 0 1px 0 #fff, 0 0.15em 0 #003d00, 0.1em 0.2em 0.2em 0.15em rgba(0, 0, 0, 0.3);}.fusion-body .fusion-button.button-1.button-3d:active,.fusion-body .fusion-button.button-1.button-3d:hover:active{box-shadow:inset 0 1px 0 #fff, 0 1px 0 #003d00, 0.05em 0.1em 0.1em 0.07em rgba(0, 0, 0, 0.3);}.fusion-body .fusion-button.button-1{border-radius:10px 10px 10px 10px;}BANKRUPTCY HELP.fusion-body .fusion-builder-column-4{width:100% !important;margin-top : 27px;margin-bottom : 0px;}.fusion-builder-column-4 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:980px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}.fusion-body .fusion-flex-container.fusion-builder-row-4{ padding-top : 0px;margin-top : 0px;padding-right : 30px;padding-bottom : 20px;margin-bottom : 0px;padding-left : 30px;}

The post Is Bankruptcy a Sin? appeared first on Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer.


2 weeks 20 hours ago

Diane Drain received the 2022 Preeminent Award and Gold Client Champion Award from Martindale-Hubbell.
The 2022 AV Preeminent award is given to an “elite group of attorneys who have been rated highly by their peers as having Very High Ethical Standards and an A grade.  Lawyers.com
Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.
Diane L. Drain | Arizona Bankruptcy Lawyer
Gold Client Champion for 2022 is awarded to attorney who has received at least 6 clients reviews, and has an average score of 4.2 or higher (Diane’s score is 5.0).
If you have a legal question, our office can be reached at 602-246-7106. You can also visit our website at www.DianeDrain.com.
The following is a brief video on why I offer free legal advice.
There are several articles or videos on our site. Please feel free to visit anytime.
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The post Diane received 2022 Preeminent Award and Gold Client Champion Award appeared first on Law Office of D.L. Drain, P.A., Arizona Bankruptcy Lawyer.


5 days 10 hours ago

On June 29, 2007, the 11th Circuit Court of Appeal in an unpublished decision in In re Rosacometta, S.R.L., 244 Fed.Appx. 286 (11th Cir. 2007) upheld the decision of the Bankruptcy Court of the Southern District of Florida. The bankruptcy court had allowed an ancillary petition under section 304 (pre-BAPCPA) and enjoined the creditor from collecting on a writ of garnishment in the state court against the Italian company that had filed for bankruptcy relief in Italy. The 11th Circuit rejected the creditor's arguments that the bankruptcy court had acted outside of its jurisdiction, that it had erred in granting comity to a foreign proceeding, and that it had failed to give full faith and credit to a state court decision refusing to dissolve the writ of garnishment. The 11th Circuit held that the bankruptcy court did not abuse its discretion in weighing the section 304(c) factors and granting section 304(b) relief. The 11th Circuit held that prejudice to the creditor was just one of the five factors for the court to consider per section 304(c) and is not even the "ultimate" factor. The 11th Circuit found that the other factors set forth in section 304(c), including comity, weighed in favor of granting the relief. The 11th Circuit further held that the bankruptcy court is granted broad powers under section 304(b) to grant relief to a foreign debtor.

The bankruptcy court had previously issued its decision dated December 19, 2005 in In re Rosacometta, SrL, 336 B.R. 557 (Bankr.S.D.Fla.2005)(Mark C.J.). In this case, the Italian trustee of an Italian corporation that was a debtor in a bankruptcy case in Italy filed an ancillary case under section 304 (pre-BAPCPA) seeking to enjoin all creditor collection activity in the United States nunc pro tunc to the date of the filing of the bankruptcy in Italy. At issue were certain funds owed to the the debtor in the U.S. that a U.S. creditor was attempting to garnish. The court recognized the effect of the Italian automatic stay and found the creditor action in violation of the stay was void, including the attempted garnishment.

This case came before the court under section 304 as a case ancillary to a foreign bankruptcy proceeding. The case was allowed to proceed under 304 as there was a foreign proceeding and the petitioner was the foreign representative. 11 U.S.C. 304(a). The court explained that section 304 enables United States courts to aid foreign bankruptcy proceedings and to accommodate the extraterritorial effect of these proceeding within the U.S. The primary purpose of section 304 is to prevent piecemeal distribution of a foreign debtor's assets in the U.S. by means of legal proceedings in U.S. courts and to afford the foreign court an opportunity to assess where and when claims should be liquidated in order to conserve resources and to maximize distributions to creditors.

The court found that the creditor was not a secured creditor as the writ of garnishment was served after the commencement of the Italian bankruptcy and was therefore void as in violation of the Italian automatic stay. The court found that recognition of the Italian automatic stay was "other appropriate relief" under section 304(b)(3) and consistent with the overall purpose of section 304 and the specific criteria of 304(c). The court held that the claimed funds should be returned to Italy where the creditor may pursue its claim.

The bankruptcy court found the reasoning of Artimm , 278 B.R. 832, 840 (Bankr.C.D.Cal.2002) as persuasive and found that the Italian automatic stay applied extra territorially. The Artimm court concluded that the Italian automatic stay has worldwide effect as Italian law provides for a stay of all creditor collection activities and claims worldwide jurisdiction over the property of the debtor. Id. at 840. The Artimm court also found that provisions of Italian law indicate movement in Itlian law towards handling international insolvencies under the "universal" approach, which advocates treating an international bankruptcy as a single case in which assets and creditor are treated equally wherever they may be located. Id. at 841.

The bankruptcy court stated that many courts have noted that comity is the ultimate factor in determining whether section 304 relief is appropriate. The Supreme Court described comity as "the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of tis own citizens..." Hilton v. Guyot, 159 U.S. 113 (1895). Comity is extended to a foreign court if that court is a court of competent jurisdiction and if the laws and public policy of the forum state and the rights of its residents will not be violated. Cunard S.S. Co., Ltd. v. Salen Reefer Services AB, 773 F.2d at 452 (2d Cir.1985). Comity should not be withheld unless its extension would be inimical to the interest of the United States. Cunard, 773 F.2d at 457. The interest of the United States in granting comity is to ensure that “the assets of a debtor are dispersed in an equitable, orderly, and systematic manner, rather than in a haphazard, erratic, or piecemeal fashion.” Cunard, 773 F.2d at 458. United States courts, therefore, have “consistently recognized the interest of foreign courts in liquidating or winding up the affairs of their own domestic business entities.” Id. at 458. Moreover, “every person who deals with a foreign corporation impliedly subjects himself to such laws of the foreign government, affecting the powers and obligations of the corporation with which he voluntarily contracts, as the known and established policy of that government authorizes.” Id. Therefore, U.S. creditors of a bankrupt foreign corporation may be required to assert their claims against the foreign debtor before a foreign court. Cunard, 773 F.2d at 458-59.

The Florida bankruptcy court found that extending comity to the Italian bankruptcy case and the laws of Italy was appropriate as the bankruptcy in Italy was proceeding under the aegis of a court of competent jurisdiction in accordance with the laws and policies of Italy. It further found that extending comity would result n an orderly and fair distribution to all creditors on a worldwide basis. Furthermore, the laws governing the Italian bankruptcy case comported with U.S. standards of procedural fairness and are not inimical to the law or policy of the U.S. The court noted that at least two U.S. court have previously extended comity to Italian bankruptcy proceedings.

Furthermore, the bankruptcy court found that the statutory factors of 304(c) were met, including the just treatment of all holders of claims against or interest in the estate, protection of claim holders in the U.S. against prejudice and inconvenience in processing of claim in the foreign proceeding, prevention of preferential or fraudulent dispositions of property of the estate, and distribution of proceeds of the estate are substantially in accordance with the order prescribed in the bankruptcy code.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com


5 days 10 hours ago

On June 29, 2007, the 11th Circuit Court of Appeal in an unpublished decision in In re Rosacometta, S.R.L., 244 Fed.Appx. 286 (11th Cir. 2007) upheld the decision of the Bankruptcy Court of the Southern District of Florida. The bankruptcy court had allowed an ancillary petition under section 304 (pre-BAPCPA) and enjoined the creditor from collecting on a writ of garnishment in the state court against the Italian company that had filed for bankruptcy relief in Italy. The 11th Circuit rejected the creditor's arguments that the bankruptcy court had acted outside of its jurisdiction, that it had erred in granting comity to a foreign proceeding, and that it had failed to give full faith and credit to a state court decision refusing to dissolve the writ of garnishment. The 11th Circuit held that the bankruptcy court did not abuse its discretion in weighing the section 304(c) factors and granting section 304(b) relief. The 11th Circuit held that prejudice to the creditor was just one of the five factors for the court to consider per section 304(c) and is not even the "ultimate" factor. The 11th Circuit found that the other factors set forth in section 304(c), including comity, weighed in favor of granting the relief. The 11th Circuit further held that the bankruptcy court is granted broad powers under section 304(b) to grant relief to a foreign debtor.

The bankruptcy court had previously issued its decision dated December 19, 2005 in In re Rosacometta, SrL, 336 B.R. 557 (Bankr.S.D.Fla.2005)(Mark C.J.). In this case, the Italian trustee of an Italian corporation that was a debtor in a bankruptcy case in Italy filed an ancillary case under section 304 (pre-BAPCPA) seeking to enjoin all creditor collection activity in the United States nunc pro tunc to the date of the filing of the bankruptcy in Italy. At issue were certain funds owed to the the debtor in the U.S. that a U.S. creditor was attempting to garnish. The court recognized the effect of the Italian automatic stay and found the creditor action in violation of the stay was void, including the attempted garnishment.

This case came before the court under section 304 as a case ancillary to a foreign bankruptcy proceeding. The case was allowed to proceed under 304 as there was a foreign proceeding and the petitioner was the foreign representative. 11 U.S.C. 304(a). The court explained that section 304 enables United States courts to aid foreign bankruptcy proceedings and to accommodate the extraterritorial effect of these proceeding within the U.S. The primary purpose of section 304 is to prevent piecemeal distribution of a foreign debtor's assets in the U.S. by means of legal proceedings in U.S. courts and to afford the foreign court an opportunity to assess where and when claims should be liquidated in order to conserve resources and to maximize distributions to creditors.

The court found that the creditor was not a secured creditor as the writ of garnishment was served after the commencement of the Italian bankruptcy and was therefore void as in violation of the Italian automatic stay. The court found that recognition of the Italian automatic stay was "other appropriate relief" under section 304(b)(3) and consistent with the overall purpose of section 304 and the specific criteria of 304(c). The court held that the claimed funds should be returned to Italy where the creditor may pursue its claim.

The bankruptcy court found the reasoning of Artimm , 278 B.R. 832, 840 (Bankr.C.D.Cal.2002) as persuasive and found that the Italian automatic stay applied extra territorially. The Artimm court concluded that the Italian automatic stay has worldwide effect as Italian law provides for a stay of all creditor collection activities and claims worldwide jurisdiction over the property of the debtor. Id. at 840. The Artimm court also found that provisions of Italian law indicate movement in Itlian law towards handling international insolvencies under the "universal" approach, which advocates treating an international bankruptcy as a single case in which assets and creditor are treated equally wherever they may be located. Id. at 841.

The bankruptcy court stated that many courts have noted that comity is the ultimate factor in determining whether section 304 relief is appropriate. The Supreme Court described comity as "the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of tis own citizens..." Hilton v. Guyot, 159 U.S. 113 (1895). Comity is extended to a foreign court if that court is a court of competent jurisdiction and if the laws and public policy of the forum state and the rights of its residents will not be violated. Cunard S.S. Co., Ltd. v. Salen Reefer Services AB, 773 F.2d at 452 (2d Cir.1985). Comity should not be withheld unless its extension would be inimical to the interest of the United States. Cunard, 773 F.2d at 457. The interest of the United States in granting comity is to ensure that “the assets of a debtor are dispersed in an equitable, orderly, and systematic manner, rather than in a haphazard, erratic, or piecemeal fashion.” Cunard, 773 F.2d at 458. United States courts, therefore, have “consistently recognized the interest of foreign courts in liquidating or winding up the affairs of their own domestic business entities.” Id. at 458. Moreover, “every person who deals with a foreign corporation impliedly subjects himself to such laws of the foreign government, affecting the powers and obligations of the corporation with which he voluntarily contracts, as the known and established policy of that government authorizes.” Id. Therefore, U.S. creditors of a bankrupt foreign corporation may be required to assert their claims against the foreign debtor before a foreign court. Cunard, 773 F.2d at 458-59.

The Florida bankruptcy court found that extending comity to the Italian bankruptcy case and the laws of Italy was appropriate as the bankruptcy in Italy was proceeding under the aegis of a court of competent jurisdiction in accordance with the laws and policies of Italy. It further found that extending comity would result n an orderly and fair distribution to all creditors on a worldwide basis. Furthermore, the laws governing the Italian bankruptcy case comported with U.S. standards of procedural fairness and are not inimical to the law or policy of the U.S. The court noted that at least two U.S. court have previously extended comity to Italian bankruptcy proceedings.

Furthermore, the bankruptcy court found that the statutory factors of 304(c) were met, including the just treatment of all holders of claims against or interest in the estate, protection of claim holders in the U.S. against prejudice and inconvenience in processing of claim in the foreign proceeding, prevention of preferential or fraudulent dispositions of property of the estate, and distribution of proceeds of the estate are substantially in accordance with the order prescribed in the bankruptcy code.Jordan E. Bublick - Miami Bankruptcy Lawyer - North Miami & Kendall Offices - (305) 891-4055 - www.bublicklaw.com


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