482 B.R. 86
Bankr. S.D.N.Y.2012Background
- Liquidators of Gerova seek recognition of Bermuda proceedings as foreign main proceedings under 11 U.S.C. § 1517 to obtain discovery and locate assets in the United States.
- Bermuda Supreme Court winding-up petitions for Gerova entities were filed October 2011 and later substituted, with the Bermuda Court issuing July 20, 2012 and August 20, 2012 orders appointing the Liquidators as wind-up officials for GFG and GHL.
- Gerova’s assets at liquidation included interests in Amal-phis Group, Allied Provident in Barbados, Stillwater and Wimbledon-related assets, and various investment funds; corporate records were kept in Bermuda.
- Gerova maintained a Bermuda office, personnel, board activity, and banking arrangements in Bermuda, and its Bermuda address appeared in SEC filings during the private-placement phase.
- The Bermuda Court’s orders authorize the Liquidators to secure assets worldwide and seek recognition in foreign courts to assist in administration; Maxim Group’s debt was substituted as petitioner and later addressed in Bermuda.
- The Liquidators petitioned for recognition on August 24, 2012; three creditors/objectors oppose main recognition but not nonmain recognition, arguing public policy and other concerns.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bermuda is COMI for main recognition | Liquidators contend Bermuda COMI is correct. | Objectors dispute Bermuda COMI and urge possible nonmain recognition or policy concerns. | Yes; Bermuda is Gerova's COMI and supports foreign main recognition. |
| Whether recognition would be manifestly contrary to U.S. public policy | Recognition promotes international cooperation and is not contrary to policy. | Recognition would undermine U.S. public policy by unnecessary interference and policy deviations. | No; public policy concerns are not shown to be fundamental. |
| Whether the appeal status of the Bermuda winding-up order prevents recognition | Order being appealable does not bar recognition under 11 U.S.C. § 1517. | A non-final order could undermine recognition or timing. | No; order's appealability does not defeat recognition. |
Key Cases Cited
- In re Fairfield Sentry Ltd., 440 B.R. 60 (S.D.N.Y. 2010) (COMI analysis and standards for chapter 15 recognition)
- In re Betcorp Ltd., 400 B.R. 266 (Bankr. D. Nev. 2009) (comity and recognition under chapter 15)
- In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 389 B.R. 325 (S.D.N.Y. 2008) (COMI factors and main/foreign nonmain distinctions)
- Millennium Global Emerging Credit Master Fund Ltd., 458 B.R. 63 (S.D.N.Y. 2011) (COMI determination tied to commencement date; Model Law alignment)
- Ephedra Prods. Liab. Litig., 349 B.R. 333 (S.D.N.Y. 2006) (public policy exception narrowly construed; due process considerations)