Although a chapter 11 plan can bind parties throughout the world, Judge Sontchi wouldn’t let a foreign debtor sue a foreign bank in the Delaware bankruptcy court over a transaction that occurred in England.
The Supreme Court’s Grupo Mexicano decision doesn’t bar a bankruptcy court from freezing a defendant’s assets prior to judgment in a fraud action, Judge Sontchi says.
Recent Supreme Court authority supports the conclusion by Delaware’s Judge Sontchi that law from the jurisdiction of incorporation, not federal common law, determines what is or isn’t a business trust eligible for chapter 11.