Tuesday, March 27, 2012

2nd Circuit Holds “Mandatory Abstention”
Appropriate Under Section 1334(c)(2)

The Second Circuit Court of Appeals recently issued an opinion on mandatory abstention in Parmalat Capital Fin. Ltd. v. Bank of Am., Corp., No. 09-4302, 2012 U.S. App. LEXIS 3391  (2d Cir. Feb. 21, 2012), where the Court explained the factors to be considered when determining whether mandatory abstention is appropriate.

German Provisions on Subordination of
Shareholder Loans Apply to Foreign Companies

The Federal Court of Justice ruled that the provisions of section 39 (1) no. 5 in conjunction with (4) and (5) German Insolvency Act, according to which all loans provided by a shareholder to a corporation (Kapitalgesellschaft) are subordinated, must also be applied to any corporation formed in an EU member state, if the “centre of the debtor’s main interests” [Articles 3 (1), 4 (1) Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings] is in Germany.

Cross-border Insolvency: German Insolvency
Administrators and Their Rights under English Law

The High Court of England and Wales recently confirmed that courts have an inherent common law jurisdiction to permit the statutory power under the English Insolvency Act 1986 (“Act”) to be applied to foreign insolvency administrators not falling within the express scope of the Act.

3rd Circuit Decides “Police Power” Exception to
Automatic Stay Applies Only in Limited Circumstances

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The Third Circuit Court of Appeals recently handed down its decision in In re Nortel Networks, Inc., No. 11-1895, 2011 U.S. App. LEXIS 25929 (3d. Cir. Dec. 29, 2011), where it clarified the exception to the automatic stay under 11 U.S.C. § 362(d)(4), commonly known as the “police power” exception, and  cemented the fact that the automatic stay will bar a party who has submitted to the jurisdiction of a United States Bankruptcy Court from participating in an international proceeding, the outcome of which would affect a U.S. debtor, unless the “police power” exception applies.