In Re Daewoo Logistics Corp.
461 B.R. 175
Bankr. S.D.N.Y.2011Background
- Daewoo sought recognition of its foreign main proceeding under Chapter 15 (ROK Rehabilitation).
- The Recognition Order granted Daewoo stays under 361/362 and extended relief to assets in the United States.
- ROK Rehabilitation closed on June 8, 2011; Coastal arrested the Vessel in June 2011 for prepetition stevedoring services.
- Daewoo moved for an order to compel Coastal to release $225,000 posted as substitute security; Coastal agreed to substitute security in exchange for Vessel release.
- Court questioned whether the Recognition Order Stays remained in effect after the foreign proceeding’s close and ultimately denied Daewoo’s motion, noting stays terminated with the Korean proceeding.
- The court indicated Coastal’s lien issues may be resolved in Korean proceedings and/or later actions; not decided here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Recognition Order Stays persist after foreign proceeding closes | Daewoo asserts stays extend to protect post-recognition assets. | Coastal contends stays terminate with close of Korean proceeding. | Stays terminated; not in effect at Vessel arrest. |
| Whether Vessel arrest violated the Recognition Order Stays | Arrest violated the stays intended to aid rehabilitation. | Arrest did not violate stays after their expiration. | Arrest did not violate still-applicable stays; stays were coterminous with Korean proceeding. |
| Whether Daewoo is entitled to release of $225,000 and sanctions | Daewoo seeks release and sanctions for stay violation. | No stay violation; proceeds not released under post-close status. | Motion denied; not deciding lien merits. |
| Which forum should determine in-rem lien impact of Korean rehabilitation | Korean rehabilitation plan may extinguish in-rem lien. | lien issues should be addressed by the Korean court. | ROK Court deemed appropriate for in-rem lien effects; Texas/SDNY issues deferred. |
Key Cases Cited
- In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 389 B.R. 325 (S.D.N.Y. 2008) (post-recognition relief is discretionary; comity considerations)
- In re Oversight & Control Comm'n of Avanzit, S.A., 385 B.R. 525 (S.D.N.Y. 2008) (enforcement of stay violations and recognition after foreign plan approval)
- In re Atlas Shipping A/S, 404 B.R. 726 (S.D.N.Y. 2009) (ancillary Chapter 15; comity and cross-border cooperation)
- In re SPhinX, Ltd., 351 B.R. 103 (S.D.N.Y. 2006) (court may modify/terminate recognition as grounds cease to exist)
- Millenium Seacarriers, Inc., 419 F.3d 83 (2d Cir. 2005) (in rem lien considerations and forum for adjudication)