We have just sent you an email so you can verify your account. Please check your spam or junk folder just in case it's been delivered there. You should only be asked to sign in once. Not the case?
|Published (Last):||27 May 2004|
|PDF File Size:||19.61 Mb|
|ePub File Size:||3.93 Mb|
|Price:||Free* [*Free Regsitration Required]|
Lane of the United States Bankruptcy Court for the Southern District of New York issued an opinion addressing the presumption against extraterritoriality of US law as well as the limits of the doctrine of international comity. The opinion, issued in an adversary proceeding pending in the Arcapita Bank Chapter 11 bankruptcy case, is certain to have a dramatic impact in adversary proceedings involving foreign defendants.
Unfortunately for those foreign defendants, it may now be much more difficult to escape from those proceedings.
Arcapita is licensed as an Islamic wholesale bank by the Central Bank of Bahrain. On March 19, , Arcapita filed a Chapter 11 petition. When the Placement investments matured, the Defendants refused to deliver the Placement Proceeds to Arcapita as required by the Placement Agreements. Instead, the Defendants informed Arcapita that, pursuant to Bahraini law, they were setting off the Placement Proceeds against prepetition debt owed to them by Arcapita.
The Defendants each filed a motion to dismiss arguing in part that given the foreign aspects of the transactions at issue in the complaints, the claims should be dismissed based on the presumption against extraterritoriality and the principle of international comity.
With this prior ruling in mind, Judge Lane turned his attention to the issues of international comity and extraterritoriality. Under the doctrine of international comity, nation states normally refrain from prescribing laws that govern activities connected with another state when the exercise of such jurisdiction is unreasonable. Essentially, the doctrine is concerned with maintaining amicable working relationships between nations.
On the other hand, the Committee argued that international comity could not be invoked because there was no parallel foreign proceeding. Nonetheless, referring to the Restatement Third of Foreign Relations, the Court found that the factors set out in the Restatement weighed in favor of asserting jurisdiction and against abstention based on international comity. In support of its conclusion, the Court noted the following:. With regard to the avoidance claim under section and the recovery claim under section , the Court focused on the initial transfers into the US bank accounts and concluded that the conduct touched and concerned the US in a sufficient manner to rebut the presumption against extraterritoriality of the Bankruptcy Code sections.
The opinion underscores just how difficult it is to argue that claims should be dismissed on international comity grounds or that sections of the Bankruptcy Code should not apply extraterritorially. So, while the Supreme Court may have made it more difficult for US courts to exercise personal jurisdiction over foreign defendants Daimler AG v. Bauman , U. Fiore , U. It will now be more difficult for those defendants to argue that the courts should abstain under principles of international comity, or that the courts should not apply key provisions of the Bankruptcy Code extraterritorially.
In other words, these foreign defendants may now have to litigate in the US courts. In support of its conclusion, the Court noted the following: The use by the Defendants of the correspondent bank accounts in the US and the prior ruling by the District Court that the receipt of the transferred funds using the New York correspondent bank accounts was at the heart of the causes of action asserted by the Committee. Given the use of the US correspondent bank accounts, the Defendants could not reasonably be surprised to be litigating in the US.
The potential application of Bahraini law did not mandate abstention since the Court is competent to apply foreign law. All Rights Reserved.
Arcapita emerges from Chapter 11
A copy of the Confirmation Order is available by clicking here. The Notice of Effective Date occurred on September 17, On February 21, , the Debtors filed a notice the "Notice of Effective Date" establishing March 21, , at p. Eastern Time as the deadline to file administrative expense proofs of claim, the "Administrative Expense Claims Bar Date". The Notice of Effective Date, also, established March 21, as the deadline to file a request for payment of Professional Compensation Claims; and the deadline to file a proof of claim arising from the rejection of an Executory Contract or Unexpired Lease. On March 19, , Arcapita Bank B.
Arcapita Bank: The Bankruptcy Court Closes an Escape Valve for Foreign Defendants
Remember Me. One of our representatives will be in touch soon to help get you started with your demo. The U. Jill — its plan will allow Arcapita to keep its management team in place as they wind down various investments over the next few years. Trustee the bankruptcy said this afternoon. Arcapita initially attempted to raise equity to fund a reorganization, but toggled to a liquidation effort last November when it failed to raise enough cash.
Bahrain's Arcapita exits chapter 11, plans asset sales
Expert insights, analysis and smart data help you cut through the noise to spot trends, risks and opportunities. New customers only Cancel anytime during your trial. Sign in. Accessibility help Skip to navigation Skip to content Skip to footer. Join over , Finance professionals who already subscribe to the FT. Choose your subscription. Not sure which package to choose?