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Foreign Representatives in Chapter 15 petitions are specifically permitted to conduct discovery to locate the debtor’s assets within the United States to increase estate and creditor recoveries in the overseas proceedings and to probe the debtor’s affairs, rights, obligations or liabilities. In the U.S. ancillary proceeding, the Foreign Representative will encounter resistance and other entities may seek to propound subpoenas under Fed. R. Bankr. 2004. Sometimes, these entities are creditors who seek information relevant to their claim or assets available to pay the same. Other times, these entities are subpoena targets who seek to gain a peek into the Foreign Representative’s search, seek to distract and/or delay the Foreign Representative from the asset search, or who seek to “punish” the Foreign Representative. The Foreign Representative may be able to avoid responding to such requests by moving for protective order or to quash the subpoena based upon 11 U.S.C. 1521(a)(4) and/or Rule 2004(a). The arguments are based upon: 1) the language of 1521(a)(4) and two canons of statutory construction, or, alternatively; 2) interpretive case law under Rule 2004 as to the requirements to show a “pecuniary interest” in a case.
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By Michael L. Cook
A Chapter 11 corporate debtor’s monetary penalty obligation owed to the FCC, resulting from “fraud on consumers,” survived the debtor’s reorganization plan discharge, even when the FCC “was not a victim of the fraud,” the U.S. District Court for the Southern District of New York recently held.
By Andrew C. Kassner and Joseph N. Argentina Jr.
A supplier’s receipt of payment under a critical vendor order does not bar the debtor or trustee from pursuing a preference claim to recover amounts paid prepetition to the vendor, according to a recent ruling from the U.S. Bankruptcy Court for the District of Delaware.
By Rudolph J. Di Massa Jr. and Drew S. McGehrin
The U.S. Bankruptcy Court for the District of New Mexico recently ruled that any attempt to avoid preferential or fraudulent transfers must be supported by evidence that the avoidance will benefit the debtor’s estate and the debtor’s creditors — not just the debtor itself.
By Amanda Bronstad
A bankruptcy filing allows Johnson & Johnson to shift legal liability over its talc-based baby powder into a potential $2 billion compensation program for cancer victims, but not without a big fight from the plaintiffs bar.