Recent headlines have once again drawn attention to pitched battles
over companies’ attempts to ease staggering pension and health care
burdens through Chapter 11 reorganisation.
In September 2011, the District Court for the Southern District of New
York applied these safe harbours to eviscerate the Madoff trustee’s
effort to recover $1 billion from the owners of the New York Mets
baseball team.
Two recent cases, however, suggest that US Bankruptcy Courts are still battling with parochialism. In an odd coincidence, these two cases from distant courts conclude that the unique US approach to information “discovery” trumps European approaches, both offensively and defensively.
In December 2010, the
supermarket giant Controladora Comercial Mexicana became the first major
Mexican company to achieve a pre-pack arrangement, for $2 billion of debt,
under new pre-pack-friendly concurso provisions.
Though
bankruptcy laws in the region today are largely dysfunctional, the Middle East
has a uniquely solid and venerable foundation on which more effective
insolvency laws might be built. Islam
devotes particular attention to notions of peace and forgiveness – including a
surprisingly specific rule of bankruptcy relief.
The only people who complain about insolvency proceedings more bitterly than creditors . . . are creditors’ lawyers. The recent case of the developer Al-Murjan points to a revival of the bankruptcy law in the United Arab Emirates, and even though that law is not known to be “debtor-friendly”...
Lawyers often seem too clever in arguing legal niceties to help clients
avoid responsibility. Sometimes, though, a lawyer is hoisted with his
own petard as a court fashions new super-niceties to reflect modern
developments and undercut long-established rules.
Forum shopping, or to put it more diplomatically, careful forum
selection, is absolutely essential to the effective pursuit of remedies
in US Bankruptcy Courts. Another recent decision regarding a Cayman
hedge fund seeking – and this time receiving – cooperation from a US
Bankruptcy Court illustrates ...