On December 4, 2017, the U.S. Bankruptcy Court for the Southern District of New York had to decide about a petition to recognise Dutch insolvency proceedings launched by an affiliate of Brazilian telecoms company Oi. The petition was brought by the insolvency trustee of Oi Brasil Holdings Coöperatief U.A. (Coop), a Netherlands incorporated subsidiary of a Brazilian parent company Oi S.A. The petition contains the request to recognise these proceedings in the Netherlands as a foreign main proceeding, and to terminate or modify the court’s prior recognition under Chapter 15 U.S. Bankruptcy Code of Brazilian bankruptcy proceedings in relation to Oi. These proceedings include the Dutch Coop. Aurelius Capital Management, and other creditors in the international bondholder committee, supported the petition. Together these parties are called ‘Movants’. The relief requested is opposed by the debtors that previously received recognition of the Brazilian bankruptcy proceedings in the New York Court. These debtors are joined by a separate group of Oi Group creditors (the ‘Steering Committee’). These parties are called Objectors. The Court decides on the parties’ competing views of the applicable legal standard for evaluating the Dutch petition and Coop’s centre of main interest (COMI). The Movants urge the Court to conduct a de novo review of Coop’s COMI under Section 1517(a) U.S. Bankruptcy Code as of the date this petition was filed. On the other hand, the Objectors advocate reviewing this case under Section 1517(d) U.S. Bankruptcy Code, which looks at whether a prior COMI determination should be terminated or modified because it was incorrect in the first instance or based on events that occurred after that recognition.
The Court finds that Section 1517(d) provides the appropriate standard.
Subsequently, the Court considers whether the doctrines of judicial estoppel and comity apply in this case: should the Court conduct its own determination of COMI under Chapter 15 or should it defer to prior rulings made by the Dutch courts. The Court concludes that judicial estoppel and comity should not apply here, one reason being the differences between the legal question before it and the one decided by the Dutch courts.
Finally, the Court evaluates the two prongs of Section 1517(d) for terminating or modifying a prior recognition. The first of these prongs directs the Court to determine whether the grounds for granting recognition were lacking. The Court examines the record before the Court at the time it recognized Coop’s COMI as Brazil. The Court determines that it should not modify or terminate recognition under the first prong in Section 1517(d). The second prong in Section 1517(d) examines whether the grounds of recognition have ceased to exist. The Court examines whether events after the prior recognition have changed Coop’s COMI from Brazil to the Netherlands. The Court concludes that this second prong has not been met and considers the economic reality of the special purpose nature of Coop, the expectations of creditors, the limitations on the Dutch Insolvency Trustee presented by the proceedings in Brazil, and allegations of impropriety against creditor hedge fund Aurelius. Aurelius’ actions are inconsistent with the trend in international insolvency law in the light of present draft rules from the UNCITRAL working group studying cross border insolvencies of multinational enterprise groups of the kind at issue in this case. Its actions here are at odds with the focus of this draft legislation on cooperation, value maximization and enterprise preservation.
In a 120 pages decision, the Court’s findings of fact and conclusions of law are presented. I have commented the case in the Dutch case law review JOR 2018/57, in English. The commentary is attached.
The Ian Fletcher International Insolvency Law Moot aims to encourage the best and brightest students around the globe to learn about international insolvency law and international commercial litigation. The yearly competition, which recently started, poses a hypothetical problem to challenge students' appellate advocacy skills. There is one qualifying written round, and the oral round finals were held in the beautiful and vibrant city of Sydney at the University of Sydney Law School Moot Courtroom. The competition is dedicated to raising the profile of insolvency and restructuring within the university curriculum. Students will have a chance to engage with their peers, judges and members of international insolvency bodies. The Fletcher Moot also provides an avenue for academics, judges and a diverse range of insolvency experts to collaborate in mentoring the next generation of lawyers. Professor Rosalind Mason (QUT Law Faculty, Brisbane) informed me that the 2018 Fletcher Moot was a great success. The names of the final 8 teams and the award winners can be found on: www.qut.edu.au/law/about/news-events/international-insolvency-law-moot/for-teams/awards. I see teams from Canada, Australia, Singapore. Are European continental universities up to the standard to enter into this global competition?
On March 23, 2018, at the University of Leuven, a celebration takes place of the 50th year since the adoption of the 1968 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, now Brussel I Recast. The Convention introduced and facilitated the free movement of judgments in the EU and helped to lay the foundations for the developments in European private international law (PIL) which have occurred since. Once PIL was obscure, now it forms the core of every cross-bor commercial relation or litigaton. The event is co-organised by Leuven Law’s Institute of Private International Law and Jura Falconis, KU Leuven’s student law review. Some eight topics will be presented and discussed, surrounding the European procedural rules on jurisdiction and enforcement of civil judgments (Brussels I Recast), including the future direction of EU private international law both for civil and commercial matters, provisional measures as well as ADR and Brussels I, the extra-EU application of European private international law, the relation between the Insolvency Regulation and Brussels I (see recently the 20 December 2017 case of Re CJEU C-649/16 Peter Valach & Ors v Waldviertel Sparkasse Bank AG & Ors (http://www.bobwessels.nl/blog/2018-02-doc1-liability-of-members-of-a-creditors-committee-in-cross-border-insolvency/) and the relation with the Hague Judgments Project. The conference ends with the future (the current European Commission agenda for the development of European private international law) and ends in a bit of a minor key (the relationship between the UK and the EU post Brexit). In all, an interesting event, not to be missed by students, scholars, judges and practitioners. Further information via https://gavclaw.com/2018/02/08/the-brussels-jurisdictional-regime-at-50-a-conference-at-leuven-on-23-march/
At Leiden Law School several Advanced Master programmes start again in September 2018. One ofe them is the programme on International Civil and Commercial Law, in which I lectured on matters of international restructuring and insolvency law. Since my retirement the present staff, professor Reinout Vriesendorp and Ilya Kokorin, asked me for some guest lectures. See https://www.universiteitleiden.nl/en/education/study-programmes/master/international-civil-and-commercial-law. This time my focus on a very interesting programme indeed, the full year programme of the Advanced Master on Law & Finance, see https://www.universiteitleiden.nl/en/education/study-programmes/master/law-and-finance, or see https://www.linkedin.com/pulse/advanced-llm-programme-law-finance-call-matthias-haentjens/.
The programme too has quite some output, to wich many international scholars or other financial experts contribute, including a programme of periodically inviting non-Dutch speakers. I was fortunate to work together with the director of this programme, professor Matthias Haentjens. The titles of the examples reflect the subjects lectures, such as Bank Recovery and Resolution – A Conference Book, The Hague: Eleven International Publishing 2014, a large Research Handbook on Crisis Management in the Banking Sector, in the series Research Handbooks on Financial Law, Edward Elgar Publishing, Cheltenham, UK, 2015, and last year with the second edition of Gabriel Moss, Bob Wessels and Matthias Haentjens (eds.), EU Banking and Insurance Insolvency, Oxford University Press, 2nd edition, 2017 (see http://www.bobwessels.nl/blog/2017-04-doc1-eu-banking-and-insurance-insolvency-2nd-ed-2017/) and the books published or forthcoming in the research together with Chinese professors and backed by the Netherlands Academy of Academic Science (KNAW) on New Bank Insolvency Law for China and Europe. Input is also delivered by a Dutch and a Chines PhD researcher, working in the Leiden staff. In 2017 the institute where this all is taking place celebrated its first lustrum, see http://www.bobwessels.nl/blog/2017-04-doc5-first-lustrum-of-hazelhoff-centre-for-financial-law/, and presently my colleague and I are in the final phase of editing a Research Handbook on Cross-border Bank Recovery and Resolution, with contributions on global and regional solutions to banks in distress, rules on corporate governance and risk taking by large banks, issues of law applicable to banks when measures taken must have effect outside the jurisdiction in which they are taken and an overview on cross-border cases (such as Lehman Brothers Treasury) and the way cross-border bank resolution is handled in Japan and China. Law & Finance covers global banking and financial matters, so the Advance Master welcomes candidates from all over the world.
Since the end of January 2018 the Law Library of the Leiden Law School holds one of the largest collections on insolvency (bankruptcy) law in Europe. A large portion of it contains the private library that I have been building up in over thirty years, since the early 1980s till 2016. From 2007 to 2014 I was a professor of international insolvency law at the University of Leiden. I have donated a large part of my privately held library (around 30 meters of books, reports, etc.) to the Stichting (Foundation) Bob Wessels Insolvency Law Collection. The statutory object of the Foundation is to promote the interest and knowledge of international and comparative restructuring and insolvency law and to maintain and manage the library and to promote worldwide access to it. The Foundation aims among other things, to hold public meetings and lectures, to organise courses, initiating initiatives and publishing and distributing publications. In addition, it strives to make the collection available via easy accessible, openly licensed text and other digital assets that are useful for teaching, learning, and assessing for research purposes. Donations and contributions from third parties will support the Foundation in reaching its goals. For Dutch tax purposes the Foundation is a public benefit institution (in the meaning of Dutch ANBI legislation). Its board members are
Prof. Matthias Haentjens, Professor of Financial Law, Leiden Law School, chair
Prof. Eric Dirix, Leuven, Judge Supreme Court; Professor of Private law, University of Leuven, Belgium
Prof. Ian F. Fletcher, Q.C. (hon.), Em. Professor of International Commercial Law, University College London, United Kingdom
Prof. Stephan Madaus, Professor of Civil Law, Civil Procedure and Insolvency Law, Martin Luther University Halle-Wittenberg, Halle, Germany
Prof. Reinout D. Vriesendorp, Professor of Insolvency Law, Law Leiden Law School, secretary/treasurer.
In turn, the greater part of the collection has been entrusted by the Foundation to the Leiden Law School Library. The latter will act as a prudent custodian, including activities such as conservation, having the collection catalogued, and making it available for consultation and research for the users of the Law School's library. On 26 January 2018 the official opening (symbolical, by un-flagging a show glass) of the insolvency law collection took place, by Law School dean professor Joanna van der Leun and the chairman of the Foundation, professor Matthias Haentjens. With gratitude I was able to say some words of thanks for all the effots made by everyone to have to insolvency law collection now professionaly availabe in one of the top libraries in Europe.
The Foundation can be reached via its secretary/treasurer professor Vriesendorp, firstname.lastname@example.org.