Welcome to the Special Edition of the International Committee Newsletter!
The Editors of the International Committee Newsletter are pleased to present this month’s Special Edition – Topics in European Insolvency Law and Procedure. The Special Edition includes contributions from several committee members on subjects particularly relevant to the practice and study of insolvency law in Europe. The Editors would like to thank each contributing author for their hard work in helping create this issue. If you are interested in submitting an article for publication in the Newsletter, please contact Cullen Drescher or Johnathan Bolton.
Cupid Investments
Satterlee Stephens Burke & Burke LLP; New York
On June 14, 2010, the joint liquidators of Fairfield Sentry Ltd.—the largest Madoff “feeder fund”—filed a chapter 15 petition with the U.S. Bankruptcy Court for the Southern District of New York seeking recognition of the fund’s British Virgin Islands (BVI)-based insolvency proceedings. On July 22, 2010, the funds’ joint liquidators, with their BVI and U.S.-based counsel, walked out of bankruptcy court with the benefit of a bench ruling in their favor granting the relief requested in full, and heralding a new dawn for cross border recognition in Manhattan.[1]
The rosy fingers of this new dawn are truly remarkable. Fairfield seems to take the heft out of the evidentiary burden imposed by cases such as Bear Stearns[2] and Basis Yield,[3]and to allow practitioners to place greater reliance on the presumption that a debtor’s “center of main interests” (COMI) will be deemed to be the location of the debtor’s registered office.[4] There are even shades of SPhinX in the new dawn insofar as the bankruptcy court apparentlyproceeded from the starting point that some form of recognition was due and then determined its nature.[5]
Read the full article.
by: William F. Stutts
Baker Botts, LLP; Austin, Texas
The Basel Committee on Banking Supervision may be most widely known as the originator of the “Basel Capital Standards,” “Basel II” and “Basel [III].” They provide guiding principles for capital for credit institutions (principally deposit-taking institutions) and related actors in the organized and regulated financial markets. The committee traces its origins largely to bank failures. The collapse of Bankhaus Herstatt and of Franklin National Bank and related entities in the 1970s provided important reasons for the formation of the committee. The later tremors from the failure of the Bank of Credit and Commerce International created new forces that further influenced the direction of the committee’s work, and the increasingly notable tension between “universalist” and “national” systems of resolving organizational insolvencies. The last round of shocks involving the insolvency of Fortis, Lehman Brothers, Dexia, Kapthing and other Icelandic banks, as well as challenges to many other banks including UBS, has carried the flows of changes in the committee’s work. Among the changes in current times, perhaps the best known has been the seeming redirection of attention to the changes in the form and scope of capital standards recommended by the committee.
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by: Peter Fidler
Edwards Angell Palmer & Dodge LLP; London
One of the by-products of the Lehman insolvency is an increased focus on client money protection. The decision of Briggs J in the Lehman case concerning client moneys, reported as Lehman Brothers International (Europe) (in administration) v. CRC Credit Fund Limited & Ors, [2009] EWHC 3228, highlights a number of deficiencies in the current regime.
The client money rules are to be found in the Client Assets Source Book (CASS) of the Financial Services Authority (“FSA”), which sets out the regulatory framework under which regulated firms operate. These rules were made pursuant to the European Markets in Financial Instruments Directive (“MIFID”), which requires member states to implement the directive as closely as possible, without adding gold plating.
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by: Gerald H. Gline
Cole, Schotz, Meisel, Forman & Leonard PA; Hackensack, N.J.
Cole, Schotz, Meisel, Forman & Leonard PA; New York
At one time, insolvency proceedings were primarily confined to one jurisdiction. However, in the age of expanding globalization, corporate insolvencies may now involve businesses and assets in multiple jurisdictions. Congress enacted Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) and a new chapter of the Bankruptcy Code, chapter 15, entitled, “Ancillary and Other Cross-Border Cases.”1 Chapter 15 is based on the UNCITRAL Model Law on Cross-Border Insolvency (the “Model Law”), a body whose “business is the modernization and harmonization of rules on international business.”2 Chapter 15 repealed § 304 of the Bankruptcy Code which, prior to chapter 15, provided the method by which foreign trustees and liquidators could seek relief from U.S. bankruptcy courts in order to prevent piecemeal distribution of assets in the U.S. and obtain other assistance from the bankruptcy courts.
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GLOBAL INSOLvency is a joint project of the American Bankruptcy Institute and INSOL International. It serves as a comprehensive source of information both on current issues in international insolvency and restructuring law and on the legal framework for insolvency and restructuring around the world. The site features daily news headlines on insolvency developments around the globe. From current commentary and recent filings to international protocols and bankruptcy statutes to advice on cross-border lending, the GLOBAL INSOLvency site offers a range of information for insolvency practitioners, judges, accountants, trustees and others.
Not yet an INSOL member? Current ABI members may join INSOL when renewing ABI membership or at any time during the year. The option to join appears on your hard copy membership renewal form as well as your online renewal form at http://www.abiworld.org/renewals. You can also contact the Membership Department at 703.739.0800 or membership@abiworld.org.
ABI is pleased to announce that the Caribbean Insolvency Symposium is open for registration. This year's event will be held at the Westin Casuarina Resort on the beautiful island of Grand Cayman, February 3-5, 2011. Panels will focus on the hospitality industry, intercreditors and recent insolvency developments in the caribbean. Attendees will earn up to 7.5-9 hours of CLE/CPE credit!
Click here to register today.
