In what the court characterized as an apparent matter of first impression, U.S. Bankruptcy Judge Christopher S. Sontchi of the District of Delaware considered what legal standard applies in a Chapter 15 case to a transfer of assets located in the United States pursuant to a "global" transaction previously approved by another court in a foreign main proceeding. In In re Elpida Memory , Case No. 12-10947(CSS) (D. Del. Bankr. Nov. 20, 2012), the court held, based upon the plain meaning of the statute and its legislative history, that it must review the transaction to the extent it impacts assets in the United States under the legal standards governing a transfer by a trustee outside the ordinary course of business, i.e., whether the transaction is a sound exercise of the trustee's business judgment. In so doing, Sontchi rejected the argument of the foreign representatives that, to the extent that the non-U.S. court in the foreign main proceeding authorized the transfer of assets over which it had shared jurisdiction, the U.S. court was required to grant comity to the orders of that court and to approve the application of the foreign representatives without more.
Business Judgment Standard Applies to Transfer of Assets by Foreign Representatives in Chapter 15 Proceeding
Delaware Business Court Insider
December 12, 2012
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