540 B.R. 80
Bankr. S.D.N.Y.2015Background
- Debtor seeks recognition of a Singapore proceeding as a foreign main proceeding under Chapter 15; Barnet governs eligibility by requiring property in the United States under §109(a).
- Berau Capital Resources Pte Ltd has no place of business in the United States but is obligated on over $450 million of USD debt; the indenture selects New York law and forum and designates a NY-based agent for service of process.
- Arguable eligibility was initially pegged to the NY attorney retainer, but the court finds an alternate substantial basis for eligibility through the debt indenture.
- New York law and forum-selection clauses in the Berau indenture give the notes a New York situs for purposes of §109(a) property in the United States.
- Intangible contract rights are property of the debtor; the location of such property is governed by applicable nonbankruptcy law under §1502(8).
- Recognition granted on Oct. 16, 2015; venue is established in SDNY; the opinion addresses only the §109(a) property issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Berau have property in the United States to satisfy §109(a)? | Berau's debt is NY-governed and NY-forum; property arises from the indenture. | Property must be physical presence; otherwise retainer alone suffices. | Yes; NY-law/forum clauses fix the indenture’s situs in New York. |
| Can NY governing law and forum clauses alone establish §109(a) property in the United States? | Contract situs can be fixed by NY choice of law/forum under NY statutes. | Property must be located in the US beyond ordinary contractual rights. | Yes; NY choice-of-law and forum provisions satisfy §109(a) property. |
| Are there other §109(a) properties supporting eligibility beyond the indenture? | Retainer in NY could provide a sufficient basis. | Retainer is insufficient without other property interests. | The indenture alone suffices; no further showing required for eligibility here. |
| Do the other Chapter 15 requirements for recognition remain satisfied? | All requirements except property are undisputed. | Not applicable; focus is on property eligibility. | Yes; recognition proper because §109(a) property and other criteria are met. |
Key Cases Cited
- Drawbridge Special Opportunities Fund LP v. Barnet, 737 F.3d 238 (2d Cir. 2013) (establishes §109(a) presence requirement for chapter 15)
- In re Octaviar Admin. Pty Ltd, 511 B.R. 361 (Bankr.S.D.N.Y. 2014) (identifies NY-situs property concepts for eligibility)
- In re Fairfield Sentry Ltd., 484 B.R. 615 (Bankr.S.D.N.Y. 2013) (nonbankruptcy law governs location of intangible property rights)
- U.S. Bank N.A. v. American Airlines, Inc., 485 B.R. 279 (Bankr.S.D.N.Y. 2013) (contract rights are property of the debtor)
- Severnoe Sec. Corp. v. London & Lancashire Ins. Co., 255 N.Y.120 (1931) (situs of intangibles depends on justice and convenience)