Assistance Grows for International Reorganizations

Section 304 of the Bankruptcy Code is proving to be an increasingly constructive
means to facilitate international restructurings that begin outside the United States.
The most recent application of §304 to assist an international reorganization arose
in a case in the U.S. Bankruptcy Court for the Central District of California
in Los Angeles.

</p><p>The case involved was a Canadian airline that filed for reorganizational protection
in Toronto under Canada's Companies' Creditors Arrangement Act (CCAA). (The
CCAA, as readers of the <i>Journal</i> may already know, is the Canadian equivalent
to chapter 11 proceedings under the Bankruptcy Code, although the CCAA is
dramatically short on virtually all of the structure and procedures of chapter 11).
International assistance was particularly appropriate in this airline's case, as there
were creditors in more than 20 countries reflecting its global operations. The airline
had major operations in the United States, and many of its creditors were based in
the United States.

</p><p>It was clearly essential to the prospects for a successful reorganization that the
airline's operations be continued in the normal course without creditors attempting to
seize its aircraft. To that end, the airline applied to the bankruptcy court for an
order under §304 granting a stay of proceedings by creditors while the Canadian
reorganization proceeded. The bankruptcy court acceded to the request, and <b>Hon.
Sheri Bluebond</b> granted a temporary restraining order (TRO) to that effect. The TRO
was subsequently enlarged into a preliminary injunction against creditors, which was
granted and continued from time to time by <b>Hon. Kathleen March.</b>

</p><p>ABI members, of course, figured prominently in both the Canadian and the U.S.
proceedings. In the §304 proceedings, counsel for the company were <b>Robert
Greenfield,</b> Tony Castanares and Margaret (Casey) Giles of Stutman, Treister &amp;
Glatt in Los Angeles. Counsel for the company in its Canadian reorganizational
proceedings were <b>Bruce Leonard</b> and William J. Burden of Cassels Brock &amp; Blackwell
LLP in Toronto. Ironically, the Canadian reorganization became unsuccessful when the
emergency Canadian Federal Government funding that had been expected for the Canadian
airline after 9/11 did not materialize. Interestingly, however, the preliminary
injunction that protected the company in its reorganization continued even after the
reorganization turned into the Canadian equivalent of a chapter 7 case. (<i>Re Canada
3000 Inc.:</i> Ontario Superior Court of Justice, Toronto: Case No.
01-CL-4314; <i>Re Canada 3000 Inc.:</i> C.D. Cal.: Case No.
LA-01-43656 KM).

</p><h3>Federal Judicial Center Publishes International Insolvency</h3>

<p>The Federal Judicial Center (FJC) is the research and education agency of the
federal judicial system. It was established by Congress in 1967, and among other
activities, it undertakes empirical and explanatory research on international legal
developments of importance to the federal judiciary.

</p><p>The FJC has recently published a very significant and very valuable study on
international insolvency systems and procedures called the Federal Judicial Center's
International Insolvency Monograph. The Monograph was written by four bankruptcy judges:
<b>Hon. Samuel L. Bufford</b> (C.D. Cal.), <b>Hon. Louise deCarl Adler</b> (S.D.
Cal.), <b>Hon. Sidney B. Brooks</b> (D. Colo.) and <b>Hon. Marcia S. Krieger</b>
(D. Colo.).<small>^{<a href="#1" name="1a">1</a>}</small> The authors served on the International Law Relations Committee
of the National Conference of Bankruptcy Judges.

</p><p>The Monograph is a very significant analysis (100 pages of text with 600
footnotes) covering both domestic cases with transnational aspects and international cases
with domestic aspects. It includes detailed commentary and descriptions of procedural
issues in transnational insolvency cases, international conventions and other sources of
international bankruptcy law. The Monograph contains the text of the International Bar
Association's Cross-border Insolvency Concordat, the UNCITRAL Model Law on
Cross-border Insolvency (on which the proposed new chapter 15 of the Bankruptcy
Code is based) and the European Union Regulation on Insolvency Proceedings (which
is due to come into force on May 31).

</p><p>The Monograph is a unique and highly valuable resource for judges, lawyers and
insolvency practitioners who are involved in international cases or domestic cases with
international aspects. The authors have performed a major service to the national and
international bankruptcy and insolvency community, and the Monograph is a highly valuable
and constructive guide that everyone who encounters international issues will benefit
from. Copies of the Monograph are available from the Publications Division of the
Federal Judicial Center, One Columbus Circle N.E., Suite 6-300 Washington,
D.C. 2002-8003 (Fax: 202-502-4077). An electronic version of
the Monograph is available online from the Federal Judicial Center at <a href="http://www.fjc.gov/newweb/jnetweb.nsf/pages/405&quot; target="window2">www.fjc.gov/newweb/jnetweb.nsf/pages/405</a&gt;. When requesting copies of the Monograph, please
remember to indicate that you read about it in the <i>Journal.</i>

</p><hr>
<h3>Footnotes</h3>

<p><small>^{<a name="1">1</a>}</small> Judge Krieger was recently elevated to the U.S. District Court. <a href="#1a">Return to article</a>