[co-author: Samuel Kwak, Law Clerk]
In a recent cross-border insolvency case, In re Agrokor d.d., 591 B.R. 163 (Bankr. S.D.N.Y. 2018), Judge Glenn of the United States Bankruptcy Court for the Southern District of New York recognized and enforced a restructuring plan approved by a Croatian court. Due to the nature of the debt to be discharged under the plan, the Court went through an in-depth analysis of international comity in the context of international bankruptcy law.
In April 2017, Croatia enacted so-called “the Law on Extraordinary Administration Proceeding in Companies of Systemic Importance in the Republic of Croatia”[1] (the “EA Law”). The EA Law provides a specialized restructuring procedure that is available to entities of “systemic importance.” The Agrokor Group, one of the largest companies in Croatia, and some of its affiliates (the “Debtors”) initiated a restructuring proceeding under the EA Law, shortly after it was enacted.
Courts in different jurisdictions have disagreed as to whether to recognize under their laws Agrokor’s Croatian proceeding under the EA Law. Courts of the following jurisdictions have declined to recognize the Croatian proceeding: Slovenia, Serbia, Federation of Bosnia and Herzegovina, and Montenegro. Their primary rationale was that the EA Law puts Croatia’s interests ahead of the creditors’ interests. In contrast, the courts of England and Wales, and Switzerland have recognized the proceeding. [2] In addition, the Croatian proceeding has been recognized across the EU member states through a regulation issued by the European Parliament.
The Debtors also filed Chapter 15 cases in the United States Bankruptcy Court for the Southern District of New York. On September 21, 2018, the Court granted the Debtors’ request to recognize the Croatian proceeding under the EA Law as a “foreign main...
