Parmalat Capital Finance Ltd. v. Bank of America Corp.
639 F.3d 572
| 2d Cir. | 2011Background
- Parmalat collapse leads to Italian bankruptcy proceedings overseen by Extraordinary Commissioner Bondi and foreign liquidations in the Cayman Islands for Parmalat Capital Finance Limited (PCFL).
- Bondi filed § 304 proceedings in SDNY; PCFL separately pursued U.S. bankruptcy-related actions in Illinois; both seeks to enjoin or turnover foreign assets.
- Grant Thornton removed Bondi’s Illinois state suit and PCFL’s suit to federal court under 28 U.S.C. § 1334(b) as related to the § 304 cases.
- District courts held removal proper but denied abstention under § 1334(c)(2); Bondi and PCFL appealed challenging jurisdiction and abstention.
- District court decisions were consolidated in the SDNY MDL; ultimately judgments for defendants were entered on merits, with these appeals focusing on jurisdiction and abstention.
- This Court holds removal proper but remands on abstention timing, needing current record to decide whether abstention is mandatory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was removal jurisdiction proper under § 1334(b)? | Bondi/PCFL contend no federal relate-to basis. | Grant Thornton contends actions are related to § 304 proceedings and removable. | Removal proper; actions related to foreign § 304 cases. |
| Is abstention mandatory under § 1334(c)(2)? | Abstention required; state court timely adjudication available. | Abstention not mandatory due to complexity and coordination with international proceedings. | Not resolved; vacate and remand to assess timeliness; abstention may be mandatory depending on current record. |
| What constitutes timely adjudication for § 1334(c)(2)? | Timeliness should reflect domestic forum efficiency and estate needs. | Timeliness depends on forum with better capacity given complexity. | Court adopts standard requiring assessment of multiple factors and remands for current record. |
| What record is required on remand to decide timeliness? | Record should show current status of foreign and domestic estates. | Record should reflect present tense to determine timeliness. | Remand instructed to allow supplementation and current-status review. |
| Who bears the burden to show lack of timely adjudication on remand? | Either party may bear burden; depends on approach to abstention. | Movant should bear burden to show lack of timeliness. | Court leaves burden issue open on remand; notes comity considerations. |
Key Cases Cited
- In re Cuyahoga Equip. Corp., 980 F.2d 110 (2d Cir.1992) (test for 'related to' bankruptcy jurisdiction: conceivable effect on estate)
- In re Boston Reg'l Med. Ctr., Inc., 410 F.3d 100 (1st Cir.2005) (estate impact of recovery on creditors)
- In re Leco Enters., 144 B.R. 244 (S.D.N.Y.1992) (timeliness considerations in Chapter 11 context)
- In re WorldCom, Inc. Sec. Litig., 293 B.R. 308 (S.D.N.Y.2003) (considerations of remand impact on estate administration)
- In re City of New York, 607 F.3d 923 (2d Cir.2010) (timeliness and abstention considerations in complex litigation)