Justia International Law Opinion Summaries

Articles Posted in Bankruptcy
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Morning Mist appealed from the judgment of the district court affirming the order of the bankruptcy court, which determined that the debtor had its "center of main interests" (COMI) in the British Virgin Islands (BVI), and therefore recognized debtor's liquidation in the BVI as a "foreign main proceeding" under 11 U.S.C. 1517. To determine the proper COMI, the court considered the relevant time period for weighing the interests, and the principles and factors for determining which jurisdiction predominated. The court concluded that the relevant time period was the time of the Chapter 15 petition, subject to an inquiry into whether the process had been manipulated. The relevant principle was that the COMI lies where the debtor conducts its regular business, so that the place was ascertainable by third parties. The statute included a presumption that the COMI was where the debtor's registered office was found. Among other factors that could be considered were the location of headquarters, decision-makers, assets, creditors, and the law applicable to most disputes. Applying these principles, the court affirmed the decision of the district court recognizing the BVI liquidation as a foreign main proceeding.View "Morning Mist Holdings Ltd. v. Krys" on Justia Law

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Three cases related to the Mexican reorganization of Vitro S.A.B. de C.V., a corporation organized under the laws of Mexico, were consolidated before the court. The Ad Hoc Group of Vitro Noteholders, a group of creditors holding a substantial amount of Vitro's debt, appealed from the district court's decision affirming the bankruptcy court's recognition of the Mexican reorganization proceeding and Vitro's appointed foreign representatives under Chapter 15 of the Bankruptcy Code. Vitro and one of its largest third-party creditors each appealed directly to the court the bankruptcy court's decision denying enforcement of the Mexican reorganization plan because the plan would extinguish the obligations of non-debtor guarantors. The court affirmed in all respects the judgment of the district court affirming the order of the bankruptcy court in No. 12-10542, and the court affirmed the order of the bankruptcy court in Nos. 12-0689 and 12-10750. The temporary restraining order originally entered by the bankruptcy court, the expiration of which was stayed by the court, was vacated, effective with the issuance of the court's mandate in Nos. 12-10689 and 12-10750. View "Ad Hoc Group of Vitro Noteholders v. Vitro S.A.B. de C.V." on Justia Law

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Nortel employed about 24,000 people worldwide when it filed Chapter 11 petitions. Its affiliates entered insolvency proceedings in Canada and the U.K. The Bankruptcy Court recognized the foreign proceedings as triggering the automatic stay of 11 U.S.C. 362(a). Nortel entities from several countries entered into an Interim Funding and Settlement Agreement, approved by the Bankruptcy Court, providing for cooperation in sales of business units and that proceeds of any sale will be held in escrow. Claims filed in the U.S. asserted that U.S. debtors might be required to provide financial support for U.K. pension obligations under the U.K. Pensions Act 2004. The claims were contingent and unliquidated, based on the outcome of the U.K. proceedings. U.S. debtors sought to enforce the stay, to prevent participation in U.K. proceedings concerning their liability. The court granted the motion, holding that the police power exception to the automatic stay did not apply because neither the Trustee nor the U.K. agency is a governmental unit under 11 U.S.C. 101(27) and that U.K. proceedings do not pass the public policy or pecuniary purpose tests because the focus is a benefit for a private party, the Trustee. Canadian courts reached the same conclusion. The district court affirmed the stay. In U.K. proceedings, the debtors were ordered to secure financial support for the plan. The Third Circuit affirmed the stay.View "In Re: Nortel Network" on Justia Law