United States v. J.A. Jones Construction Group, LLC

Citations: 333 B.R. 637; 2005 U.S. Dist. LEXIS 30386; 45 Bankr. Ct. Dec. (CRR) 203; 2005 WL 3199053Docket: CV2003-1383(SJF)(MDG)

Court: District Court, E.D. New York; November 29, 2005; Federal District Court

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The United States District Court for the Eastern District of New York received a letter from Jean-Daniel Breton, the Interim Receiver for LBL Skysystems (U.S.A. Inc.), appointed under a Quebec bankruptcy order. Breton requests a stay of U.S. proceedings based on Canadian bankruptcy law, following the appointment of a trustee and a proposal to creditors. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 introduced Chapter 15 to the Bankruptcy Code, aimed at facilitating cross-border insolvency proceedings and ensuring cooperation between the U.S. and foreign jurisdictions. The chapter emphasizes the principle of comity, which is central to recognizing foreign proceedings. Upon recognition, U.S. courts must provide comity to foreign representatives, allowing access to various relief options under American bankruptcy law, including an automatic stay. However, relief under Chapter 15 requires the foreign representative to initiate an ancillary recognition proceeding in a U.S. bankruptcy court, accompanied by specific documentation confirming the foreign proceeding and the representative's appointment.

The minimal requirements of 11 U.S.C. § 1515 and the presumptions regarding evidence under 11 U.S.C. § 1516 aim to facilitate a straightforward recognition process for foreign representatives. Upon recognition, a foreign representative can directly apply for relief in U.S. courts (11 U.S.C. § 1509(b)(2)). Without such recognition under Chapter 15, the court lacks the authority to consider Mr. Breton's request for a stay, although this may become moot if a bankruptcy court recognizes the petition. Typically, initiating ancillary proceedings may be unnecessary due to low recovery prospects against an insolvent foreign corporation. A significant claim exists against the General Services Administration concerning construction delays linked to LBL, with Fireman’s Fund Insurance Company agreeing not to transfer funds related to these claims. LBL's Canadian parent filed for bankruptcy prior to this action, and it is acknowledged that LBL is insolvent and in receivership. Formal notification of the receivership to U.S. courts should have occurred sooner. Harlan Cohen, LBL's former attorney, represented it only due to a related Miller Act case and ceased communication post-settlement. Given the circumstances and the principle of comity in international bankruptcy, the court grants a 60-day stay for Mr. Breton or an authorized representative to seek Chapter 15 relief for LBL. The next conference is adjourned, and relevant attorney contact information will be provided to Mr. Breton and Mr. Michel Thibault from Raymond Chabot Grant Thornton Inc. Notably, while Mr. Breton's letter is marked "Confidential," it will be filed as it contains public record information. Definitions of "foreign proceeding" and "foreign representative" are provided under 11 U.S.C. §§ 101(23) and (24).