Morning Mist Holdings Ltd. v. Krys (In re Fairfield Sentry Ltd.)

Summarized by Cassandra Porter , Cognizant Technology Solutions
12 years 10 months ago

Citation:

11-4376

Tag(s):

Ruling:

Second circuit upheld decisions of bankruptcy court and district court recognizing that Fairfield Sentry Limited ("Sentry") had its center of main intest ("COMI") in the British Virgin Islands ("BVI"). Accordingly, Sentry's previously filed liquidation in BVI would be recognized under section 1517 of the Bankrutpcy Code and the automatic stay would apply to any proceedings filed in the United States pursuant to sections 362 and 1520 of the Bankruptcy Code. The Second Circuit rejected the proposition that "principal place of business" should be used to determine COMI and instead adopted the test used by other courts, which looks at: (1) relevant time period for weighing interests and (2) principal factors for determining which jurisidiction predominates.

Procedural context:

Second Circuit affirmed the distict court ruling which affirmed the bankruptcy court ruling holding that Sentry's BVI Liquidation should be recognized as a "foreign main proceeding."

Facts:

On July 21, 2009, Fairfield Sentry Limited ("Sentry") entered liquidation proceedings under the Virgin Islands Insolvency Act of 2003 ("BVI Liquidation") and a liquidator was appointed. On June 14, 2010, Sentry's liquidator petitioned the United States Bankrutpcy Court in the Southern Distict of New York ("Bankruptcy Court") to recognize the BVI Liquidation. On July 22, 2010, the Bankruptcy Court granted the liquidator's petition and recognized the BVI Liquidation as a "foreign main proceeding" under section 1517(b)(1) of the Bankruptcy Code. Morning Mist Holdings, which had filed an action against Sentry in New York State court in May 2009 appealed. The United States District Court in the Southern Distict of New York ("District Court") upheld the Bankruptcy Court's ruling.

Judge(s):

Jacobs, Chief Judge; Winter, Circuit Judge; Swain District Judge

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