Cross-Border Insolvencies: Representing Foreign and U.S. Debtors, Creditors, Trustees and Liquidators Navigating COMI, Concurrent Proceedings, Winding Down Offshore U.S. Funds, Discovery for Foreign Proceedings and More Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. WEDNESDAY, JANUARY 21, 2015 Presenting a live 90-minute webinar with interactive Q&A Warren E. Gluck, Holland & Knight, New York Matthew Wright, Director, Head of Restructuring & Insolvency, RHSW Caribbean, Rawlinson & Hunter, Cayman Island
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Cross-Border Insolvencies: Representing Foreign and U.S. Debtors, Creditors, Trustees and Liquidators Navigating COMI, Concurrent Proceedings, Winding Down Offshore U.S. Funds, Discovery for Foreign Proceedings and More
• The United States will recognize a foreign insolvency proceeding even where the principal debts of the
debtor, in this case, tax claims of a U.S. Territory, are not provable or admissible in the foreign
proceeding. The United States takes the same approach, and it is commonly called the “revenue rule.”
See In re BearingPoint Inc., 2010 WL 4622458 (Bankr. S.D.N.Y. 2010).
• The United States will not “look behind” the definition of insolvency set forth by a foreign nation or
court.
• Enforcement of default judgments is not a fundamental public policy of the United States; default
judgments are disfavored. Utilizing the bankruptcy process to obtain a stay of enforcement
proceedings, in a two party dispute, for the purpose of challenging default judgments or appealing
judgments is not bad faith.
• Court authorized taking deposition of sitting governor.
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Winding Down Offshore Incorporated, US
Operated Funds: Practical Considerations
• Cost vs. expected recovery
• Location of assets
• Location of litigation targets
• Local knowledge
• Allegations of fraud and actions available to insolvency
practitioners
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Recovering US Assets
• In re Condor Ins. Ltd., 601 F.3d 319, 329 (5th Cir. 2010)
(Fraud and preference claims based on foreign law may be
brought within US Chapter 15’s);
– CSL Australia Pty Ltd v. Britannia Bulkers Plc, No. 08-cv-8290, 2009 WL 2876250 (PKL) (S.D.N.Y. Sept. 8, 2009) (turnover of property attached before foreign filing pursuant to foreign law).
– In Re TIBC, 439 B.R. 614 (notwithstanding pre-existing lien by United States creditor, holding that property would be released if supported by foreign law).
• Asset seizures in the “Gap” period between a foreign filing
and a chapter 15 filing will almost always be vacated.
Sanctions on the horizon?
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Tracing Assets and Business Using Intermediary
Bank Discovery
• All U.S. dollar-denominated wire transfers from anyone or any company in the
world to anyone or any company in the world “clear” (are processed by)
intermediary banks in New York.
• Intermediary banks are obligated to and do maintain records of wire transfers they
process.
• It is possible to recreate the financial history of any person or company in the
world that does business in U.S. dollars.
• The Records are clearly relevant in debt enforcement and cross-border insolvency
cases and are available via properly issued subpoena any time a subpoena can be
issued.
• AQ Asset Management v. Levine, 974 N.Y.S.2d 332 (1st Dep’t 2013) (financial
records are the banks’ records; customers have no standing to object to subpoenas
for financial records).
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When Can Intermediary Bank Discovery Be
Utilized?
• Any Foreign Court proceeding where the information will be of assistance (via 28
U.S.C. 1782).
• Chapter 15: Discovery is, by itself, sufficient reason to file a Chapter 15 - In re
Fairfield Sentry Ltd., 2010 WL 4455879 (Bankr. S.D.N.Y. July 22, 2010). But, now
must meet 11 U.S.C. § 109 requirements. In re Barnet, 737 F.3d 238 (2d Cir. 2013)
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Most Significant Uses
• A Lawful Way Around Foreign Bank Secrecy Laws
– Discover every one of a target’s bank accounts that originates or receives U.S.
dollar wire transfers, worldwide.
• “Trace” Money from Transferee to Transferee
– The technique allows for multiple rounds and follow-up, so it is possible to
“follow” the money.
– Cost and time effective method for piecing together financial history
• Identify Fraudulent and Preferential Transfers in the context of International
Insolvency.
• Discover Intra-Corporate or Related-Party Transfers and Secret Shell Entities to
Pierce the Corporate Veil.
• Reveal Counterparties and Business Contacts List / Seize Receivables and