A battle of “bankruptcy tourists” has erupted in New York court, with unclear consequences for global companies and their bondholders, Bloomberg News reported. Bankruptcy Judge Martin Glenn yesterday refused to issue a ruling on a request by Ocean Rig UDW Inc. to block a lawsuit in the Marshall Islands that it said threatens a $3.7 billion restructuring approved in Cayman Islands Courts. Judge Glenn said he would think about the “extraordinary” issues the case raised, possibly ruling later. "You want me to stop litigation in another sovereign country," Glenn said in court Thursday, adding that he had never seen such a request and that there was no clear precedent. If Highland wanted to try to recover Ocean Rig’s U.S. assets in U.S. court, then the issue would be in his jurisdiction, he said. Any decision in the case could have wider implications for what restructuring experts call "bankruptcy tourism." In the past, bankruptcy participants wrangled over the merits of Delaware versus New York courts, and sometimes drew criticism about "forum shopping" for a venue that favored their case. Now companies and creditors are engaged in international battles over where they can best win their debt wars. "This is the next phase of the restructuring business,” said William Brandt Jr., chief of a New York-based restructuring advisory firm Development Specialists."Bankruptcy tourism will come into the fore." Brandt cited his work as a trustee in the international case of China Fishery Group Ltd., where he regularly travels from Lima to Hong Kong. Another example, he said, is Oi SA, a Brazilian telecom company, in which Aurelius Capital Management is fighting a battle that involves jurisdiction of Dutch, U.S. and Brazilian law.
