In re Suntech Power Holdings Co., 520 B.R. 399

Background

Suntech Power Holdings Co. Ltd. (Cayman-incorporated holding company) entered provisional liquidation in the Cayman Islands on Nov. 5, 2013; Joint Provisional Liquidators (JPLs) Walker and Stokoe were appointed.
Debtor’s principal operating U.S. subsidiary is Suntech America (San Francisco); the parent had minimal U.S. presence and owed $575M in Notes and other obligations; significant intercompany receivables were largely from insolvent affiliates.
JPLs (acting under a Cayman Appointment Order) centralized restructuring and administration in the Cayman Islands, opened Cayman and U.S. bank accounts, obtained a loan to fund restructuring, recovered stock certificates and corporate records, and signed a Restructuring Support Agreement (RSA) that required filing a Chapter 15 petition by Feb. 21, 2014.
To satisfy U.S. eligibility (11 U.S.C. § 109(a)) and the RSA deadline, JPLs caused funds to be placed in a Bank of New York Mellon account titled in Computershare’s name but held for Suntech (FBO), and filed the Chapter 15 petition in the Southern District of New York on Feb. 21, 2014.
Solyndra Residual Trust opposed recognition and cross-moved to transfer venue to the Northern District of California, alleging JPLs manipulated eligibility, venue (by creating the NY account), and COMI (center of main interests).

Issues

Issue	Solyndra's Argument	JPLs/Suntech's Argument	Held
Eligibility under 11 U.S.C. § 109(a)	Debtor not eligible because it had no U.S. residence, place of business, or property; NY account was manufactured to create eligibility.	The BONY (Computershare FBO) account was Debtor property and satisfied § 109(a); account was created to meet RSA deadline and was not improper.	Held: Account was the Debtor’s property (agent relationship) and satisfied § 109(a); filing was permitted.
Venue under 28 U.S.C. § 1410	Venue should be Northern District of California because Debtor’s U.S. operations (Suntech America) and certain personnel were in San Francisco; NY account was a venue-manufacturing device.	Debtor had no U.S. place of business or assets other than the BONY account; subsidiary assets do not constitute parent’s assets; New York venue proper.	Held: Venue in SDNY proper based on the BONY account as Debtor’s principal U.S. asset; no improper manipulation of venue.
COMI (foreign main proceeding)	COMI was China (Wuxi) or otherwise not Cayman; JPLs shifted COMI to Cayman in bad faith (transferring records, appointing Cayman director, opening Cayman account).	Cayman presumptive COMI by incorporation; JPLs’ post-appointment centralization of administration in Cayman was consistent with their duties and not bad-faith manipulation.	Held: Debtor’s COMI at time of Chapter 15 filing was the Cayman Islands; JPLs did not manipulate COMI in bad faith.
Motion to transfer venue under 28 U.S.C. § 1412	Transfer to N.D. Cal. is warranted in interests of justice/convenience (major litigation and contacts in California).	SDNY is more efficient: related involuntary case is pending here, parties already litigating in SDNY, and little U.S. property exists to require California forum.	Held: Cross-motion denied; SDNY retained venue because interests of justice and convenience do not favor transfer.

Key Cases Cited

Drawbridge Special Opportunities Fund LP v. Barnet, 737 F.3d 238 (2d Cir. 2013) (foreign debtor eligibility and Chapter 15 principles)
Karaha Bodas Co., LLC v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (2d Cir. 2002) (presumption that possessor of bank account is owner; rebuttable by agency evidence)
In re Octaviar Admin. Pty Ltd., 511 B.R. 361 (Bankr. S.D.N.Y. 2014) (establishing U.S. bank account can satisfy § 109(a) eligibility for foreign debtors)
In re Yukos Oil Co., 321 B.R. 396 (Bankr. S.D. Tex. 2005) (foreign debtor eligibility principles)
Morning Mist Holdings Ltd. v. Krys (In re Fairfield Sentry Ltd.), 714 F.3d 127 (2d Cir. 2013) (COMI analysis and limits on manipulative transfers)
Hertz Corp. v. Friend, 559 U.S. 77 (2010) (definition of corporation’s principal place of business/nerve center)
Dole Food Co. v. Patrickson, 538 U.S. 468 (2003) (subsidiary assets are not parent’s assets)
In re Patriot Coal Corp., 482 B.R. 718 (Bankr. S.D.N.Y. 2012) (venue-manufacturing/manipulation analysis)