598 B.R. 784
Bankr. W.D. Pa.2019Background
- Debtor Anthony J. O’Reilly (former Heinz CEO) is subject to a 2015 bankruptcy liquidation in the Bahamas; Alastair Beveridge (AlixPartners) was appointed Bahamian Trustee.
- Vidunas sued O’Reilly in U.S. federal court (2013) for breach of contract; her claim remains unliquidated and she did not file a proof of claim or participate in the Bahamian proceeding despite receiving notice.
- Bahamian Trustee filed a Chapter 15 petition in U.S. bankruptcy court (Nov. 26, 2018) seeking recognition of the Bahamian proceeding as a foreign ‘‘main’’ (or alternatively ‘‘nonmain’’) proceeding to obtain relief including the automatic stay.
- Vidunas opposed recognition, arguing (1) the Bahamian proceeding is not a ‘‘foreign proceeding’’ because it is not sufficiently collective, and (2) alternatively it is only a ‘‘nonmain’’ proceeding so automatic relief is not warranted absent a discretionary injunction.
- The court found the Bahamian liquidation meets the statutory definition of a ‘‘foreign proceeding’’ and is collective, but held the Trustee failed to prove the Bahamas is the Debtor’s center of main interests (COMI) as of the Chapter 15 petition date and also failed to prove the existence of a qualifying ‘‘establishment’’ for nonmain recognition.
- Result: Motion for recognition denied with prejudice as to ‘‘main’’ recognition and without prejudice to refile a properly supported request for ‘‘nonmain’’ recognition within 14 days.
Issues
| Issue | Plaintiff's Argument (Vidunas) | Defendant's Argument (Bahamian Trustee) | Held |
|---|---|---|---|
| Whether the Bahamian liquidation is a "foreign proceeding" under 11 U.S.C. § 101(23) | Bahamian law/procedure differs from U.S. law and allegedly denies creditors meaningful participation, so it is not a collective foreign proceeding | The Bahamian liquidation is a judicial insolvency under Bahamian Bankruptcy Act and is collective; Chapter 15 does not require identity to U.S. Code | Held: Proceeding is a "foreign proceeding" and is collective; Vidunas’ participation objections rejected |
| Whether the Bahamian proceeding is a foreign "main" proceeding (COMI location) | COMI should be evaluated at the time of the foreign proceeding or otherwise Bahamas is main forum | COMI in Bahamas because Trustee was appointed and assets have been administered there | Held: Denied — Debtor’s habitual residence/COMI was France as of Chapter 15 petition date; Bahamas is not COMI; "main" recognition denied with prejudice |
| Whether the Bahamian proceeding is a foreign "nonmain" proceeding (existence of an "establishment") | If not main, Trustee must show an "establishment" to obtain nonmain recognition and discretionary relief | Trustee asserts liquidation activity in Bahamas suffices to show an establishment | Held: Denied without prejudice — Trustee failed to plead or prove nontransitory local operations or economic activity; allowed to refile with evidence |
| Whether differences in Bahamian procedure trigger public policy exception or bar recognition | Bahamian process allegedly denies due process and appellate review, so recognition would be manifestly contrary to U.S. public policy | Bahamian statute and Court of Appeal Act provide notice, remedies, and appellate review; no manifestly contrary policies | Held: Overruled — public policy exception not triggered; Bahamian remedies and review adequate |
Key Cases Cited
- In re ABC Learning Ctrs. Ltd., 728 F.3d 301 (3d Cir. 2013) (collectivity requirement focuses on whether a proceeding considers rights of all creditors)
- In re Fairfield Sentry Ltd., 714 F.3d 127 (2d Cir. 2013) (COMI analysis anchored to Chapter 15 petition date)
- Lavie v. Ran (In re Ran), 607 F.3d 1017 (5th Cir. 2010) (present-tense statutory language requires COMI/establishment analysis as of petition date)
- The Bank of N.Y. v. Treco (In re Treco), 240 F.3d 148 (2d Cir. 2001) (refusal of comity where foreign law treated secured creditors unfairly)
- In re Creative Fin. Ltd., 543 B.R. 498 (Bankr. S.D.N.Y. 2016) (establishment requires local effect and nontransitory economic activity)
- In re Spanish Cay Co., Ltd., 161 B.R. 715 (Bankr. S.D. Fla. 1993) (differences in Bahamian law are not per se reasons to deny comity/recognition)
- In re Betcorp Ltd., 400 B.R. 266 (Bankr. D. Nev. 2009) (only insolvency matters meeting §101(23) qualify for Chapter 15 recognition)
- In re Pirogova, 593 B.R. 402 (Bankr. S.D.N.Y. 2018) (summarizes foreign-main and habitual-residence/COMI factors)