488 B.R. 205
Bankr. S.D. Florida2013Background
- BAICO filed Chapter 15 proceeding in this district; Glasgow, as BAICO’s foreign representative, sought recognition in SVG as a foreign nonmain proceeding.
- This adversary proceeding targets breaches of fiduciary duty by BAICO’s former directors, including Duprey and Ramlogan, relating to the Green Island transaction.
- Green Island involved Isle of Venice’s purchases and related entities acquiring interests in Florida real estate; BAICO allegedly funded large cash outlays and encumbered assets.
- Defendants moved to dismiss Count I for lack of jurisdiction under 1334(b) or to abstain under 1334(c)(1); argued 1521(a)(5) limits U.S. jurisdiction.
- Court held Count I has related-to jurisdiction under 1334(b); (a) §1521(a)(5) does not limit subject matter jurisdiction; (b) §1521(a)(5) limits in rem but not this action; (c) §1334(c)(1) does not mandate abstention; thus motion denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Count I fall under related-to jurisdiction (1334(b))? | Count I affects the SVG chapter 15 proceedings and debtor’s estate. | No related-to nexus because no U.S. estate; assets located abroad prevent jurisdiction. | Yes; Count I is related to Chapter 15 under 1334(b). |
| Does 11 U.S.C. § 1521(a)(5) limit subject matter in this Chapter 15 case? | §1521(a)(5) limits in rem jurisdiction only; does not bar Count I. | §1521(a)(5) constrains the court from recognizing a claim outside the U.S. assets. | No; §1521(a)(5) does not limit subject matter jurisdiction over Count I. |
| Does Glasgow have standing to pursue Count I? | Glasgow has standing under §1509 to pursue claims for BAICO’s assets. | Glasgow, as SVG nonmain proceeding representative, lacks standing to sue in this court. | Plaintiff, via Glasgow, has standing. |
| Should the court abstain under 28 U.S.C. § 1334(c)(1) or § 1334(c)(2)? | Abstention would be inappropriate given related-to jurisdiction and comity goals after recognition. | Permissive abstention should apply; forum concerns and non-core nature justify abstention. | §1334(c)(1) abstention not permitted; §1334(c)(2) not mandatory; abstention denied. |
Key Cases Cited
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (test for related-to jurisdiction under 1334(b))
- In re Lemco Gypsum, Inc., 910 F.2d 784 (11th Cir. 1990) (Pacor test applied to determine related-to jurisdiction)
- In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 374 B.R. 122 (S.D.N.Y. 2007) (recognition framework for chapter 15; considerations of foreign proceedings)
- Parmalat Capital Finance Ltd. v. Bank of America Corp., 639 F.3d 572 (2d Cir. 2011) (related-to jurisdiction in chapter 15 context; estate focus from Parmalat doctrine)
- In re Condor Ins. Ltd., 601 F.3d 319 (5th Cir. 2010) (chapter 15 and §1521 reach of foreign-representative actions; whether avoidance actions permitted)
- Fairfield Sentry Ltd. v. Theodoor GGC Amsterdam, 452 B.R. 64 (S.D.N.Y. 2011) (discussion of core vs non-core and section 1521 limits in Fairfield Sentry context)
- Fairfield Sentry Ltd. Litig. (Fairfield II), 458 B.R. 665 (S.D.N.Y. 2011) (critique of Fairfield II; jurisdictional analysis in chapter 15 proceedings)
- In re Fairfield Sentry Ltd. Litig. (Fairfield I), 452 B.R. 64 (S.D.N.Y. 2011) (core vs non-core; abstention analysis in chapter 15 context)
- In re Virtio S.A.B. de CV (Ad Hoc Group of Vitro Noteholders v. Vitro S.A.B. de CV), 701 F.3d 1031 (5th Cir. 2012) (comity and post-recognition considerations in chapter 15)