In this post, we return to cross-border insolvencies and examine one of the first decisions issued in 2018 by a bankruptcy court in a chapter 15 case: In re Energy Coal S.P.A., No. 15-12048 (LSS), 2018 Bankr. LEXIS 10 (Bankr. D. Del. Jan. 2, 2018), where the court allowed a creditor to liquidate its claim in a lawsuit brought against a debtor in the U.S., but required the creditor to seek collection from the debtor in the country where the foreign main proceeding was filed. The upshot of the decision is that respect for the foreign main proceeding and the concept of comity trumped contractual choice of law and venue provisions.
Background
The debtor, Energy Coal S.p.A., filed an insolvency proceeding in Italy, and the court there later approved a debt restructuring plan (Plan). In the interim, the foreign representative of the debtor filed a chapter 15 petition in Delaware and obtained recognition of the Italian case as a foreign main proceeding. The debtor planned to continue as a going concern and pay creditors from future revenues.
The foreign representative sought recognition in the U.S. of the order approving the Italian Plan and approval of procedures to close the chapter 15 case. The foreign representative also requested an injunction to bar creditors from seeking judgments against the debtor in the U.S. or from executing on the debtor’s assets in the U.S.
A supplier to the debtor objected to the requested relief. During the chapter 15 case, the foreign representative had terminated agreements the debtor had with the supplier, giving rise to claims by the supplier against the debtor. The agreements were governed by Florida law and had a venue clause requiring that suits related to the agreements be brought in Florida. The supplier wanted to pursue its claims in Florida and, if successful, to seek recovery in the U.S.[i]
The foreign representative initially asserted that the supplier must bring the lawsuit in Italy, but during the adjudication of the motion agreed that the lawsuit could be brought in Florida. The foreign representative continued to insist, however, that the supplier would need to seek satisfaction of any judgment in the Italian court under the terms of the Plan there. The supplier argued that it shouldn’t be put to the cost and inconvenience of seeking collection in Italy.
The Court’s Analysis
Bankruptcy Judge Laurie Selber Silverstein initially noted that the matter was a core proceeding because it concerned...
