A federal appeals court has resolved a split among judges in U.S. Bankruptcy Court in Manhattan that could help determine when recognition as a foreign main proceeding should be granted in chapter 15 bankruptcy petitions, Reuters reported today. The ruling by the U.S. Court of Appeals for the Second Circuit also helped clarify that liquidators of investment funds chartered offshore will not be precluded from U.S. courts under chapter 15. The ruling determined that judges should look to the location of a company's "center of main interests" at the time of its chapter 15 petition to determine if it qualifies for recognition as a foreign main proceeding by U.S. courts. Yesterday's ruling by Chief Judge Dennis Jacobs, Judge Ralph Winter and District Court Judge Laura Swain stems from a dispute involving Fairfield Sentry, which was the largest feeder fund for Bernard Madoff. The Fairfield Sentry fund had channeled more than $7 billion to Madoff by the time he was arrested on Dec. 11, 2008, and his massive Ponzi scheme was exposed. After the Madoff fraud was revealed, Fairfield Sentry halted redemptions and eventually entered liquidation in July 2009 in the British Virgin Islands, where it was chartered. The firm's investment manager, Fairfield Greenwich Group, had carried out the fund's daily business and was located in New York.
