594 B.R. 631
Bankr. S.D.N.Y.2018Background
- R.M. Hermans (Foreign Representative) filed Chapter 15 petitions to recognize a Curaçao insurance rehabilitation proceeding (Emergency Regulations under the LTV) as a foreign main proceeding on behalf of ENNIA Caribe Holding N.V. and six related entities (three regulated insurers and three unregulated affiliates).
- The Curaçao Central Bank (CBCS) revoked the insurers’ licenses, obtained court authorization to impose Emergency Regulations, replaced most management, and appointed Hermans to pursue recovery of ~ $240 million held at Merrill Lynch in New York.
- Non‑debtor Parman (majority owner) objected in this Court, arguing the Curaçao proceeding is not a "collective" foreign proceeding, that assets were not under a foreign court’s control/supervision, and that the Emergency Regulations violated due process (manifestly contrary to U.S. public policy).
- Curaçao law (LTV) authorizes Emergency Regulations for insurers when joint‑creditor interests require special measures, vests CBCS with exclusive management powers while requiring Curaçao court oversight for certain actions, and contemplates restructuring or, if unsuccessful, bankruptcy.
- The Curaçao court held a prompt hearing (scheduled/reshuffled within a day) and pronounced Emergency Regulations; appeals are limited under the LTV, though Dutch/Curaçao law provides some avenues to challenge lower court decisions in narrow circumstances.
- The U.S. Bankruptcy Court overruled Parman’s objection, recognized the Curaçao proceeding as a foreign main proceeding and Hermans as foreign representative, leaving discretionary relief (e.g., turnover under §1521) for subsequent motion.
Issues
| Issue | Plaintiff's Argument (Hermans/CBCS) | Defendant's Argument (Parman) | Held |
|---|---|---|---|
| Whether the Curaçao proceeding is a "foreign proceeding" (11 U.S.C. §101(23)) | LTV Emergency Regulations constitute a collective judicial/administrative insolvency proceeding; CBCS and Curaçao court supervise/control assets for reorganization | Not collective; assets not subject to foreign court control/supervision | Held: Yes. Proceeding is a foreign proceeding; CBCS and Curaçao court qualify as "foreign court" and the proceeding is collective in nature |
| Whether the proceeding is a "foreign main proceeding" (center of main interests) | Debtors’ COMI is Curaçao; proceeding pending there | Dispute but conceded COMI is Curaçao | Held: Yes, recognized as foreign main proceeding |
| Whether recognition should be denied under the public‑policy exception (§1506) based on alleged inadequate notice/due process | Curaçao procedure and urgency are consistent with due process; comparable U.S. regulatory seizures occur with minimal notice; alternative remedies available under Curaçao/Dutch law | Emergency Regulations were imposed with only hours’ notice, violating due process and U.S. public policy | Held: No. Public‑policy exception not triggered; notice and available remedies are adequate and comparable to U.S. practice |
| Whether U.S. court should re‑decide Curaçao law issues (e.g., authority over unregulated affiliates) | Respect foreign court determinations; LTV permits extension to affiliates in appropriate circumstances | Curaçao court lacked statutory authority over unregulated entities | Held: Court will not relitigate Curaçao court’s determinations; argument amounts to impermissible collateral attack |
Key Cases Cited
- In re Ashapura Minechem Ltd., 480 B.R. 129 (S.D.N.Y. 2012) (framework for §101(23) foreign proceeding elements and collective‑nature analysis)
- In re Tradex Swiss AG, 384 B.R. 34 (Bankr. D. Mass. 2008) (administrative regulator may qualify as foreign court)
- In re Betcorp Ltd., 400 B.R. 266 (Bankr. D. Nev. 2009) (either regulatory agency supervision or judicial oversight can satisfy §101(23))
- In re Cozumel Caribe, S.A. de C.V., 482 B.R. 96 (Bankr. S.D.N.Y. 2012) (ex parte orders and prompt post‑seizure process do not necessarily violate due process)
- In re Toft, 453 B.R. 186 (Bankr. S.D.N.Y. 2011) (narrow application of §1506 public‑policy exception; focus on fundamental fairness)
- Metcalfe & Mansfield Alternative Investments, 421 B.R. 685 (Bankr. S.D.N.Y. 2010) (standards for assessing foreign procedure fairness)
- Fogerty v. Petroquest Resources, Inc. (In re Condor Ins. Ltd.), 601 F.3d 319 (5th Cir. 2010) (insurance companies can be foreign debtors in Chapter 15)
- SNP Boat Serv. S.A. v. Hotel Le St. James (In re SNP Boat Serv. S.A.), 483 B.R. 776 (S.D. Fla. 2012) (discouraging U.S. courts from functioning as appellate bodies for foreign proceedings)