In Re Toft
453 B.R. 186
| Bankr. S.D.N.Y. | 2011Background
- Prager, the German insolvency administrator for Dr. Jürgen Toft, seeks Chapter 15 recognition to access Toft's emails stored by US ISPs.
- German Mail Interception Order authorized interception of Toft's mail; English Order later recognized this order.
- Toft allegedly relocated and concealed assets; petition seeks ex parte relief to compel ISPs to disclose past and future emails.
- Relief would amount to a wiretap and store emails in a manner prohibited by US privacy laws; notice to Toft is disputed.
- Court recognizes Chapter 15 framework but denies relief as manifestly contrary to US public policy under §1506; allows potential recognition with proper notice and compliance with law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has jurisdiction to grant relief under Chapter 15 in aid of a foreign proceeding | Prager argues §1507/§1521 authorize relief | Toft (debtor) not present; relief should be limited by public policy | Court has jurisdiction but relief denied on public policy grounds |
| Whether recognizing the German Mail Interception Order would be manifestly contrary to US public policy | Prager seeks broad comity-based enforcement | German procedure conflicts with US privacy and constitutional rights | Yes; relief would be manifestly contrary to US public policy and denied |
| Whether the relief violates Electronic Communications Privacy Act and Stored Communications Act | Relief would obtain past and future emails without proper warrants/subpoenas | German/English orders justify recognition | Yes; relief would violate Wiretap Act and Privacy Act; denied |
| Whether relief could be granted as a permissible Bankruptcy Rule 2004-type examination or mail redirection | Ex parte, emergency 2004-like relief possible | Trustee cannot conduct a criminal investigation or secret mail interception | No; cannot circumvent US privacy laws and procedural safeguards |
| Whether notice to the Debtor is required for recognition and relief | Ex parte relief is warranted given debtor obstruction | Debtor must receive notice under Rule 2002(q) | Notice required; ex parte relief denied; recognition may be pursued with notice |
Key Cases Cited
- Ephedra Prods. Liability Litig., 349 B.R. 333 (S.D.N.Y. 2006) (public policy narrowly interpreted; Article 6 manifestly contrarily invoked exceptional circumstances)
- In re Metcalfe & Mansfield Alt. Invs., 421 B.R. 685 (Bankr.S.D.N.Y. 2010) (public policy analysis for Canadian plan; fairness standard met)
- In re Gold & Honey, Ltd., 410 B.R. 357 (Bankr.E.D.N.Y. 2009) (public policy not invoked to deny recognition in Israel receivership context)
- In re Qimonda AG Bankr. Litig., 433 B.R. 547 (E.D. Va. 2010) (three-point test for §1506; balance conflict and fairness factors)
- In re Treco, 240 F.3d 148 (2d Cir. 2001) (comity limited when public policy rights would be violated)