UNITED STATES and TRANSNATIONAL INSOLVENCY PROCEEDINGS

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UNITED STATESand TRANSNATIONAL INSOLVENCY
PROCEEDINGS
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UNITED STATESand TRANSNATIONAL INSOLVENCY
PROCEEDINGS

• JOEL I. SHER
• SHAPIRO SHER GUINOT SANDLER
• 36 S. Charles Street
• Baltimore, MD 21202
• USA
• 410-385-4277
• jis_at_shapirosher.com

L. MARC ZELL ZELL, GOLDBERG CO. 31 Mishol
Hadekalim 97278 Jerusalem Israel 972 2 571
5030 mzell_at_fandz.com
Washington DC Office 1800 K Street, N.W.
Washington, D. C. 20006
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United States Federal Circuits
United States Federal Circuits
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U.S. Court System
Federal Court System
State Court Systems
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FEDERAL LAWUnited States Bankruptcy Code

• Chapter 7 Liquidation of Assets
• Chapter 9 Municipality Bankruptcy
• Chapter 11 Business Reorganization
• Chapter 12 Family Farmer Bankruptcy
• Chapter 13 Individual Reorganization
• Chapter 15 Proposed Legislation

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STATE LAW

• Receiverships
• Assignment for the Benefit of Creditors
• Uniform Fraudulent Transfer Act (UFTA) / Uniform
  Fraudulent Conveyance Act (UFCA)

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CHAPTER 7

• Debtor
• Submits all non-exempt assets to jurisdiction of
  Court
• Trustee
• Charged with duty to liquidate all assets and
  distribute proceeds to creditors
• United States Trustee
• Performs administrative function
• Judge
• Decides motions and contested matters

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CHAPTER 11

• Debtor-in-Possession
• Remains in control of business affairs and given
  chance to rehabilitate business through plan of
  reorganization
• Official Committee of Unsecured Creditors
• Consults with debtor in possession concerning
  matters such as administration of case and
  formulation of the plan of reorganization
• United States Trustee
• Performs administrative function
• Appoints committee
• Judge
• Decides motions and approves plan after creditor
  vote

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RECOGNITION OF FOREIGN PROCEEDINGS

• Comity
• Proceeding pending in foreign jurisdiction
• Action in U.S. will interfere with foreign
  proceeding
• Facts warrant giving recognition to jurisdiction
  of foreign proceeding
• Used to halt proceedings in U.S. or have U.S.
  court recognize decisions of foreign courts

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SECTION 304 PROCEEDINGS

• Limited Proceeding Commenced in a U.S. Bankruptcy
  Court
• Requires
• A pending insolvency proceeding in foreign
  country
• A party designated as the foreign companys
  representative to commence action
• Usually liquidator or administrator

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DETERMINATION FOR GRANTING 304 RELIEF

• Court Guided by What Will Best Assure An
  Economical And Expeditious Administration of Such
  Estate, Consistent With
• (1) just treatment of all holders of claims
  against or interest in such estate
• (2) protection of claim holders in the United
  States against prejudice and inconvenience in
  the process of claims in such foreign
  proceedings
• (3) prevention of preferential or fraudulent
  dispositions of property of such estate

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DETERMINATION FOR GRANTING 304 RELIEF

• (4) distribution of proceeds of such estate
  substantially in accordance with the order
  prescribed by U.S. Bankruptcy Code
• comity and
• if appropriate, the provision of an opportunity
  for a fresh start for the individual that such
  foreign proceeding concerns

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REMEDIES AVAILABLE IN A 304 PROCEEDING

• Seek to Stay Actions Being Taken Against Foreign
  Debtor if it Affects Property Subject to Foreign
  Proceeding
• Enforce Foreign Decree With Respect to Property
  of Debtor
• Create or Enforce Lien On Property in U.S. of
  Foreign Debtor
• Order Turnover of Property in U.S. to Foreign
  Representative
• Other Limited Relief

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PLENARY PROCEEDINGS AVAILABLE

• Involuntary Chapter 7 Case
• Debtor must conduct business or have property in
  U.S.
• Can be brought by foreign representative of
  pending proceeding
• Must prove debtor is generally not paying its
  debts as they become due or custodian appointed
  within 120 days of filing
• Voluntary Chapter 7 or 11 Case

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BENEFIT OF PLENARY PROCEEDINGS

• Trustee Appointed to Administer Assets
• Right to Sell Assets Located in U.S.
• Sales free and clear of liens
• Higher and better offers
• Bidding protection for stalking horse
• Right to Set Aside Preferential and Fraudulent
  Transfers
• Federal Jurisdiction

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PROPOSED TITLE 15

• Based on UNCITRAL Model Law on Cross Border
  Insolvency
• Requires Existence of Pending Foreign Proceeding
• Upon Recognition of Foreign Main Proceeding
• Stay action against debtors property within U.S.
• Allow for collection of assets and sale of
  property within U.S.
• Allow foreign representation to operate debtors
  business
• Does not grant right to set aside preferential or
  fraudulent transfer
• Allows Foreign Representative to Initiate Plenary
  Chapter 7 or Chapter 11 Case