Before the Court are motions to dismiss filed by defendants Bahrain Islamic Bank (“BisB”) and Tadhamon Capital B.S.C. (“Tadhamon”) (together, the “Defendants”) in these adversary proceedings brought by the official committee of unsecured creditors in the above-captioned Chapter 11 cases (the “Committee” or the “Plaintiff’).
BACKGROUND
Arcapita is licensed as an Islamic wholesale bank by the Central Bank of Bahrain. BisB Compl. ¶ 12 [Adv. No. 13-01434, ECF No. 1]; Tadhamon Compl. ¶ 12 [Adv. No. 13-01435, ECF No. 1]. Headquartered in Bahrain, Arcapita is operated as an investment bank and is a global manager of Shari’ah compliant alternative investments. BisB Compl. ¶ 12; Tadhamon Compl. ¶ 12. Defendant BisB is an Islamic commercial bank headquartered in Bahrain. BisB Compl. ¶ 13. Defendant Tadha-mon is a Bahraini corporation and a subsidiary of Tadhamon International Islamic Bank (“TUB”), a Yemeni bank that offers Islamic banking and investment services to
A. The Placements
Prior to its bankruptcy filing, Arcapita made several discrete short-term investments through the Defendants (the “Placements”). BisB Compl. ¶¶27, 30; Tadha-mon Compl. ¶¶27, 31. The Placements were made under two separate investment agreements between Arcapita and each of the respective Defendants (the “Placement Agreements”). BisB Compl. ¶¶ 27; Tadha-mon Compl. ¶¶ 27. Both of the Placement Agreements were negotiated and signed in Bahrain and provided that the laws of the Kingdom of Bahrain govern, except to the extent that such laws conflicted with the principles of Islamic Shari’ah, in which case Shari’ah law would prevail. Rashdan Deck ¶ 13 & Ex. A § 7.1 [Adv. No. 13-01435, ECF No. 8]; Mohammed Deck ¶ 5 & Ex. A § 12 [Adv. No. 13-01434, ECF No. 8].
Under the Placement Agreements, Ar-capita appointed the Defendants to serve as its agent in the purchase of the Placement investments on Arcapita’s behalf. BisB Compl. ¶¶ 23-24; Tadhamon Compl. ¶¶ 22, 24. The Defendants were obligated to repurchase the Placements from Arcapi-ta on a deferred payment basis for an amount equal to the original investment, plus an agreed-upon return (the “Placement Proceeds”). BisB Compl. ¶¶2, 24; Tadhamon Compl. ¶ 2, 24. The Defendants were to transfer the Placement Proceeds to Arcapita on the designated maturity date of the Placements. BisB Compl. ¶¶ 2, 24; Tadhamon Compl. ¶ 2, 24,
Consistent with these Placement Agreements, Arcapita entered into a Placement with BisB in the amount of $10 million on March 14, 2012 (the “BisB Placement”). BisB Compl. ¶27. To execute the BisB Placement, Arcapita transferred funds from its account at JP Morgan Chase Bank in New York to a correspondent bank account maintained by BisB at JP Morgan Chase Bank in New York. BisB Compl. ¶ 15. On the same day as the transfer, BisB purchased the commodities for Arcapita through a London broker. Mohammed Deck ¶ 10.
Arcapita entered into two Placements with Tadhamon on March 15, 2012, each for $10 million -(the “Tadhamon Placements”). Tadhamon Compl. ¶27. To execute the Tadhamon Placements, Arcapita transferred funds from its account at JP Morgan Chase Bank in New York to an account at HSBC Bank in New York. Ta-dhamon Compl. ¶28. The HSBC account was a correspondent bank account maintained by Khaleeji Commercial Bank B.S.C., Tadhamon’s bank in Bahrain. Rashdan Deck ¶7. The funds were then immediately transferred from the HSBC account to an account held by Tadhamon at Khaleeji Commercial Bank in Bahrain. Tadhamon Compl. IT 28; Rashdan Deck ¶ 7.
B. The Bankruptcy Case and Prior Proceedings in These Adversary Proceedings
Less than a month after entering into the Placements, Arcapita filed for protection under Chapter 11 of the Bankruptcy Code. Although the Placements matured within a month after Arcapita’s bankruptcy filing, the Defendants failed to deliver the Placement Proceeds to Arcapita. BisB Compl, ¶¶31, 32, 34; Tadhamon Compl. ¶¶ 27, 35, 36, 38. Instead, the Defendants informed Arcapita that, pursuant to Bah-raini law, they were setting off the Placement Proceeds against prepetition debt owed to them by Arcapita. BisB Compl.
The Defendants’ current motions do not take place in a vacuum. The parties have already litigated the issue of personal jurisdiction in this case. On that issue, the United States District Court for the Southern District of New York held that the . Defendants’ use of New York correspondent bank accounts to receive funds from Arcapita met the threshold of minimum contacts necessary to assert personal jurisdiction over the Defendants. See Official Comm. of Unsecured Creditors of Arcapita Bank B.S.C.(c) v. Bahrain Islamic Bank (In re Arcapita Bank B.S.C.(c)),
The District Court first held that the Defendants’ use of the correspondent accounts in New York was purposeful, constituted a “transaction of business” in New
Importantly for the present motions, the District Court also held that the Committee’s avoidance claim under Section 547 of the Bankruptcy Code arose from the Defendants’ use of the New York correspondent accounts. See id. at 69-70. The District Court stated that the Defendants’ “New York contacts—i.e., the receipt of the transferred funds in New York correspondent bank accounts—are at the heart of this cause of action. The receipt of the funds in New York is precisely the conduct targeted by the Committee, and the activity that the cause of action seeks to have voided.” Id. at 69. In coming to this conclusion, the District Court observed that “when a defendant purposely selects and uses a correspondent bank account to effectuate a particular transaction, and a plaintiff later files a lawsuit asserting a cause of action arising out of that transaction, the defendant can hardly claim that it could not have foreseen being haled into court in the forum in which the correspondent bank account it had selected is located.” Id. at 68; see id. at 71.
The District Court also concluded that “the United States has a strong interest in adjudicating claims that arise under its Bankruptcy Code so that both creditors and debtors can obtain the remedies and relief that the United States Congress has determined are fair and equitable.... Indeed, it does not seem prudential to allow foreign creditors to potentially obtain priority over domestic creditors based simply on their foreign status.” Id. at 71-72. The District Court observed that the Committee had “a strong interest in obtaining convenient and effective relief, and it is unclear whether it would be able to bring [ ] similar causes of action to those grounded in the United States bankruptcy code in a non-U.S. forum.” Id. at 72.
Against this backdrop, the Defendants now request dismissal based on the doctrines of international comity and the presumption against extraterritorial application of federal statutes. The parties each provided supplemental briefing on those issues. See Adv. No. 13-01434, ECF Nos. 43-45, 47-53; Adv. No. 13-01435, ECF Nos. 39-41, 43-49. With respect to international comity, the Defendants argue that these cases should be dismissed because there is a conflict between U.S. bankruptcy law and the laws of Bahrain, and that it would be unreasonable to apply U.S. law in these circumstances. The Committee responds by arguing that the doctrine of international comity is inapplicable in this case due to the lack of a parallel foreign legal proceeding to which this Court should defer. As to the presumption against extraterritoriality, the Defendants argue that the transfers at issue took place overseas and that there is no clear indication
DISCUSSION
A. International Comity
International comity is “the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens, or of other persons who are under the protection of its laws.” Hilton v. Guyot,
“ ‘The decision to grant comity is a matter within a court’s discretion and the burden of proof to establish its appropriateness is on the moving party.’ ” Duff & Phelps, LLC v. Vitro S.A.B. de C.V.,
The Committee argues that international comity may not be invoked here given the lack of a parallel foreign proceeding. Stated another way, there is no foreign proceeding to which this Court should defer. But while the Court agrees with the Defendants that the doctrine may apply in such instances, it nonetheless concludes that comity does not preclude this lawsuit from proceeding.
When addressing this issue, it is necessary to assess the contours of the doctrine of international comity itself, which are not well-defined. Indeed, the doctrine has been described as having “borders [that] are marked by fuzzy lines of politics, courtesy, and good faith.” JP
As there is no parallel foreign proceeding in the case before the Court, adjudicatory comity is inapplicable. See Madoff II,
(a) the link of the activity to the territory of the regulating state, i.e., the extent to which the activity takes place within the territory, or has substantial, direct, and foreseeable effect upon or in the territory;
(b) the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, or be- ■ tween that state and those whom the regulation is designed to protect;
(c) the character of the activity to be regulated, the importance of regulation to the regulating state, the extent to which other states regulate such activities, and the degree to which the desirability of such regulation is generally accepted;
(d) the existence of justified expectations that might be protected or hurt by the regulation;
(e) the importance of the regulation to the international political, legal, or economic system;
(f) the extent to which the regulation is consistent with the traditions of the international system;
(g) the extent to which another state may have an interest in regulating the activity; and
(h) the likelihood of conflict with regulation by another state.
Restatement (Third) of Foreign Relations Law of the U.S. § 403(2). These factors “correspond to familiar choice-of-law principles,” Maxwell II,
The Court finds that these factors weigh in favor of asserting jurisdiction in this case and against abstention based on international comity. The Defendants argue that the parties expected Bahraini law to apply as provided for under the Placement Agreements and that the United States has no interest in regulating these transactions involving Bahraini parties for investments made outside of the U.S. But the link between the U.S., as the regulating state, and the regulated activity in question is sufficiently strong here given that the transfers took place through use of correspondent bank accounts in the United States. As noted by the District Court, the Defendants’ “New York contacts—ie., the receipt of the transferred funds in New York correspondent bank accounts—are at the heart of this cause of action. The receipt of the funds in New York is precisely the conduct targeted by the Committee, and the activity that the cause of action seeks to have voided.” In re Arcapita,
As to the existence of justified expectations of the parties, the parties cannot be surprised to be litigating in this forum. As the District Court observed, “when a defendant purposely selects and uses a correspondent bank account to effectuate a particular transaction, and a plaintiff later flies a lawsuit asserting a cause of action arising out of that transaction, the defendant can hardly claim that it could not have foreseen being haled into court in the forum in which the correspondent bank account it had selected is located.” In re Arcapita,
With regard to the nature of the regulated activity and its importance to this jurisdiction as compared to the international system, the composition of a debtor’s estate is clearly central to a U.S. bankruptcy case. The laws at issue in this case—Sections 362, 542, 547 and 550 of the Bankruptcy Code—are designed to protect and pool the assets of the Debtor’s estate for the equitable benefit of all its creditors. These provisions are the bedrock of the protections afforded to creditors under the Bankruptcy Code. As the District Court noted,
the United States has a strong interest in adjudicating claims that arise under its Bankruptcy Code so that both creditors and debtors can obtain the remedies and relief that the United States Congress has determined are fair and equitable.... Indeed, it does not seem prudential to allow foreign creditors to potentially obtain priority over domestic creditors based simply on their foreign status.
In re Arcapita,
The existence of the Committee’s claim of turnover and violation of the automatic stay also does not support a dismissal based on international comity. See BisB Comp. ¶¶ 58-65; Tadhamon Compl. ¶¶ 63-70 (asserting a violation of the automatic stay based on Defendants’ setoff of antecedent debt against the Placement Proceeds). A claim for turnover “invokes the court’s most basic equitable powers to gather and manage property of the estate.” Braunstein v. McCabe,
The Defendants rely on the Second Circuit’s statement that international comity is particularly “important in the context of the Bankruptcy Code.” Madoff II,
Given the lack of foreign insolvency proceeding, it is questionable whether the Committee would be able to obtain relief under Bahraini law. The District Court itself observed that “it is unclear whether [the Committee] would be able to bring [ ] similar causes of action to those grounded in the United States bankruptcy code in a non-U.S. forum.” In re Arcapita,
The Defendants’ reliance on Sec. Inv’r Prót. Corp. v. Bernard L, Madoff Inv. Sec. LLC (In re Madoff Sec.),
For all these reasons and keeping in mind the “‘virtually unflagging obligation” of the federal courts “to exercise the jurisdiction given them,” the Court rejects the Defendants’ request to abstain from making a determination in this case based on international comity. Royal & Sun Alliance Ins. Co. of Can. v. Century
Int’l Arms, Inc.,
B. The Presumption Against Extraterritoriality
The presumption against extraterritoriality “is a longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States,’ ” Morrison v. Nat’l Austl. Bank Ltd.,
To determine whether the presumption against extraterritoriality applies, the Court addresses two questions that can be examined in either order. See Madoff II,
Under the first inquiry, the Court examines whether Congress intended for the relevant statute to apply extra-territorially. See Spizz v. Goldfarb Seligman & Co. (In re Ampal-American Israel Corp.),
The second inquiry examines whether the litigation at issue involves an extraterritorial application- of the statute in question. Id. at 605. This is done by “ ‘identifying the conduct proscribed or regulated by the particular legislation in question,’ and [then] considering whether that conduct ‘occurred outside of the borders of the U.S.’ ” In re Lyondell,
For the reasons explained below, the Plaintiffs claims are either based on domestic conduct or based on statutes that apply extraterritorially and, therefore, the Defendants’ extraterritoriality defense is rejected.
1. The Avoidance Claim
Count III of the complaints asserts a cause of action for avoidance of the Placements as preferential transfers under Section 547(b) of the Bankruptcy Code and recovery of the Placement Proceeds from the Defendants pursuant to Section 550(a) of the Bankruptcy Code. BisB Compl. ¶¶ 49-57; Tadhamon Compl. ¶¶ 54-62.
Focusing on the transfers here among correspondent bank accounts in the United States, the Plaintiffs argue that the challenged conduct in this case is domestic, not foreign. The Plaintiffs argue that this is so notwithstanding the Defendants’ contention that all other aspects of the transactions occurred overseas. See Plaintiffs’ Letter, dated May 23, 2017 [Adv. No. 13-01434, ECF No. 51; Adv. No. 13-01435, ECF No. 47] (citing United States v. Pre-vezon Holdings, Ltd.,
To decide between the parties’ competing positions, the Court must assess whether “the relevant conduct ... ‘sufficiently toueh[ed] and concerned] the territory of the United States.’” Prevezon,
Applying these principles here, the Court concludes that the conduct here touched and concerned the United States in a manner sufficient to displace the presumption against extraterritoriality. As the District Court observed, the Defendants’ “receipt of the transferred funds in New York correspondent bank accounts” is at “the heart of this cause of action.” Arcapi-ta,
The Second Circuit has reached a similar conclusion in Mastafa v. Chevron Corp.,
The Defendants cite to a number of cases that reach the opposite result in purportedly similar situations. This is not surprising given that the question of extraterritoriality depends very heavily on the specific facts of each case. But importantly, some of these cases did not involve instances where, as here, both sides of the challenged transfer used a U.S. bank to complete the transfer.
Some of the cases cited by the Defendants appear to place a greater focus on the component events of a transaction while others appear to minimize the significance of correspondent bank accounts. See, e.g., Defendants’ Supp. Brief at 6-7 [Adv. No. 13-01434, ECF No. 43; Adv. No. 13-01435, ECF No. 39], citing Madoff I,
The Defendants also argue that Preve-zon and the eases it cites should be distinguished factually because they involve defendants engaging in “years-long criminal activity.” See Defendants’ Letter, dated May 30, 2017, at 3. With respect to Preve-zon, the Defendants note that the case involved four money transfers between foreign accounts that passed- through U.S. correspondent bank accounts and note that the Defendants here were “the one-time recipients” of funds. Id. at 2-3. But this focus on the number of transactions and the extent of the U.S. activity appears to conflate the personal jurisdiction inquiry, which focuses on the foreseeability of being subject to jurisdiction within the United States. The question for purposes of the extraterritoriality analysis is the focus of the statute, which in this case looks to the “transfer of an interest of the debtor in property.” 11 U.S.C. § 547(b). The Defendants cite to nothing in Prevezon that suggests a numerosity requirement for activity to be considered sufficiently domestic for purposes of extraterritoriality. Indeed, no part of the criminal scheme in Preve-zon, other than the use of the correspondent account, was located in the United States. See Prevezon,
2. Claims Under Other Sections of the Bankruptcy Code
The Defendants contend that Counts II and IV must also be dismissed based on the presumption against extraterritoriality. Count II asserts a cause of action pursuant to Sections 541, 542 and 550 of the Bankruptcy Code for turnover of the Placement Proceeds as estate assets wrongfully held by the Defendants. BisB Compl. ¶¶ 43-48; Tadhamon Compl. ¶¶ 48-53. Count IV asserts a cause of action under Sections 362(a)(3) and 362(a)(7) of the Bankruptcy Code for violation of the automatic stay based on Defendants’ exercise of control over the Placement Proceeds and the set-off of antecedent debt against the Placement Proceeds. BisB Compl. ¶¶ 58-65; Ta-dhamon Compl. ¶¶ 63-70. The Defendants argue that the Committee’s request for turnover—upon which both Counts II and IV rest—depends on whether Arcapita’s transfer of funds to the Defendants has first been avoided under Section 547 and that funds from such an avoidance action are not property of the estate under the Second Circuit’s decision in In re Colonial Realty Co.,
First, the Court finds fault with Defendants’ characterization of the Committee’s claims. Contrary to the Defendants’ assertion, the Committee’s claims under Sections 542(b) and 362(a) are independent of the avoidance claims. Counts II and IV allege that the Defendants owe Arcapita debt in the form of matured Placement Proceeds and that, rather than pay this matured debt to Arcapita, the Defendants instead chose to retain that property of the Debtor by virtue of a setoff. See BISB Compl. ¶¶ 6, 32-33; Tadhamon Compl. ¶¶6, 36-37; see also Securities Investor Protection Corp. vs. Rossi (In re Cambridge Capital, LLC),
The Committee’s complaints are drafted in a manner consistent with these legal principles. Unlike the Committee’s avoidance claim under Section 547, the Committee alleges that the monies in question in Counts II and IV are already “property of the estate” under Section 541. See BisB Compl. ¶ 46 (stating in Court II that “[bjy virtue of the Placement, after accounting for amounts previously remitted, BIB is wrongfully in possession of property of the Arcapita Estate in the amount of $10,002,292, plus accrued interest thereon from the Placement’s maturity date.”), ¶ 61 (stating in Count IV that “BIB has and continues to exercise control over the Placement Proceeds, which are property of the Arcapita Estate.”); Tadhamon Compl. ¶ 51 (stating in Court II that “[b]y virtue of the Placement, after accounting for amounts previously remitted, Tadhamon is wrongfully in possession of property of the Arcapita Estate in the amount of $18,480,269, plus accrued interest thereon from the Placement maturity dates.”), ¶ 66 (stating in Count IV that “Tadhamon has and continues to exercise control over the Placement Proceeds, which are property of the Arcapita Estate.”).
Second, the Court rejects the Defendants’ contention that Sections 542(b) and 362 do not apply extraterritoriality. Section 542(b) of the Bankruptcy Code provides that a trustee may recover “a debt that'is property of the estate and that is matured, payable on demand, or payable on order....” 11 U.S.C. § 542(b). Unlike Section 547, Section 542(b) explicitly references property of the estate. Section 541 defines “property of the estate” as including all “interests of the debtor in property.” 11 U.S.C. § 541(a)(1). Section 541 gives the trustee title over the debtor’s
The same is true for Section 362. That section incorporates the definition of property of the estate provided in Section 541, which includes property “wherever located.” See 11 U.S.C. § 362; 11 U.S.C. § 541; see also Sec. Inv’r Prot. Corp. v. Bernard L. Madoff Inv. Sec, LLC .(Picard v, Maxam Absolute Return Fund, L.P.),
CONCLUSION
For the reasons stated above, the Court denies the Defendants’ motions to dismiss based on the doctrines of international
Notes
. Because the motions in the two cases raise the same issues, the Court will address them together.
. Based on Arcapita’s pre-existing relationship with the Defendants, Arcapita already owed millions in unmatured debt to each of the Defendants at the time of the Placements. Arcapita owed $9,774,096.15 to BisB as a result of investments that BisB made with Arcapita on December 1, 2011. BisB Compl. ¶¶3, 16-20. Arcapita owed $18,497,734.48 to Tadhamon as a result of multiple investments that Tadhamon made with Arcapita between September 2009 and January 2012. Tadha-mon Compl. ¶¶ 17-19.
. In December 2012, Tadhamon returned to Arcapita the portion of the Plácement Proceeds that exceeded its purported setoff. Ta-dhamon Compl. ¶ 40.
. There are five counts in the complaint. Count I of the Committee’s complaints asserts breach of contract of the Placement Agreements for failure to transfer the Placement Proceeds as required under the agreements. BisB Compl. ¶¶ 38-42; Tadhamon Compl, ¶¶ 42-47. Count II asserts a cause of action pursuant to Sections 541, 542 and 550 of the Bankruptcy Code for turnover of the Placement Proceeds as estate assets wrongfully held by the Defendants. BisB Compl. ¶¶ 43-48; Tadhamon Compl. ¶¶ 48-53. Count III asserts a cause of action for avoidance of the Placements as preferential transfers under Section 547(b) of the Bankruptcy Code and recovery of the Placement Proceeds from the Defendants pursuant to Section 550(a) of the Bankruptcy Code. BisB Compl. ¶¶ 49-57; Ta-dhamon Compl. ¶¶ 54r62. Count IV asserts a cause of action under Sections 362(a)(3) and 362(a)(7) of the Bankruptcy Code for violation of the automatic stay due to the exercise of control over the Placement Proceeds and the setoff of antecedent debt against the Placement Proceeds. BisB Compl. ¶¶ 58-65; Ta-dhamon Compl. ¶¶ 63-70. Count V seeks a judgment pursuant to Section 502(d) of the Bankruptcy Code disallowing the Defendants’ claims in the Debtors’ bankruptcy cases. BisB Compl. ¶¶ 66-69; Tadhamon Compl. ¶¶ 71— 74.
. Congress has recognized the importance of the preference provisions of the Bankruptcy Code:
First, by permitting the trustee to avoid prebankruptcy transfers that occur within a short period before bankruptcy, creditors are discouraged from racing to the courthouse to dismember the debtor during his slide into bankruptcy.... Second, and more important, the preference provisions facilitate the prime bankruptcy policy of equality of distribution among creditors of the debtor. Any creditor that received a greater payment than others of his class is required to disgorge so that all may share equally.
H.R. Rep. No. 95-595, at 177-78 (1977), reprinted in 1978 U.S.C.C.A.N. 5787, 5963, 6138.
. The cases on extraterritoriality do not distinguish between Sections 547 and 548 of the Bankruptcy Code for purposes of the extraterritoriality analysis because the relevant language is the same in both. See Ampal,
. The complaints characterize the transfer of funds as the operative fact upon which the Committee’s preference claims are based. See BISB Compl, ¶ 50 (“Arcapita transferred the placed funds to [BISB] under the Placement (the "Placement Transfer”) on March 14, 2012.”); Tadhamon Compl. ¶ 55 ("Arcapita transferred $20 million to Tadhamon under the Placements (the "Placement Transfers”) on March 15, 2012.”). The complaints then set forth facts to demonstrate how the Placement Transfers meet the elements of Section 547 of the Bankruptcy Code. BISB Compl. ¶¶ 51-55; Tadhamon Compl. ¶¶ 56-60. Count III of each of the complaints then concludes with the statement that "[t]he Placement Transfer constitutes a preferential transfer avoidable pursuant to [S]ection 547(b) of the Bankruptcy Code and recoverable from [the Defendants] pursuant to [S]ection 550(a).” BISB Compl. ¶ 56; Tadhamon Compl. ¶61.
. The Defendants note that the District Court decision was on personal jurisdiction, not extraterritoriality. Of course, "the [legal] tests for personal jurisdiction and extraterritoriality are not the same.” Madoff II,
. The Defendants are correct that there was more conduct at issue in Mastafa than simply payment into an account in the United States. See Mastafa,
. For example, two cases cited by the Defendants involve a U.S. bank on only one side of the challenged transfer. See Maxwell I,
. Moreover, the court in Maxwell I expressed a concern that does not appear implicated here. In Maxwell I, the court observed that looking only at the location where an entity "parted with the transferred funds” for purposes of extraterritoriality
[W]ould have potentially dangerous implications for the future application of [Section] 547: a creditor-—be it foreign or domestic—-who wished to characterize a transfer as extraterritorial could simply arrange to have the transfer made overseas, a result made all too easy in the age of the multinational company and the information superhighway.
Maxwell I,
. Having concluded that the transfers here were domestic rather than foreign, the Court need not resolve whether the avoidance provisions of the Bankruptcy Code apply extrater-ritorially. There is a split of authority on that question. See French v. Liebmann (In re French),
. Given that the Defendants do not dispute the validity of their matured debt to Arcapita arising out of the Placement Agreements, the cases relied upon by Defendants are distinguishable. See Savage & Assoc., P.C. v. Mandl (In re Teligent, Inc.),
. Indeed, the Committee’s complaints assert its preference claim in the alternative, to the extent that the Court holds that the Placement was actually a disguised payment of antecedent debt. BISB Compl. ¶¶ 6, 32-34; Tadha-mon Compl. ¶¶ 6, 36-37.
. The parties focused their briefing almost exclusively on Counts II, III and IV of these Complaints. They say very little about the two remaining counts: Count I for breach of contract and Count V based on Section 502(d) of the Bankruptcy Code. As to Count I, Defendants argue simply that this Court has no constitutional authority to enter a judgment on such a contract claim under Stem v. Marshall,
Given the Court’s ruling today that rejects the Defendants’ arguments on extraterritoriality for Counts II, III, and IV, the obvious overlap between all five Counts of the complaints, and the lack of briefing by the parties explicitly addressing Counts I and V, the Court declines to dismiss Counts I and V based on the presumption against extraterritoriality.