Liebmann v. French et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
In re: *
BETTY IRENE FRENCH, * Case No. 00-63163-JS
Debtor * Chapter 7
* * * * * * * * * * * * *
GEORGE W. LIEBMANN, *
Trustee * Adv. Pro. No. 02-5757-JS
v. *
RANDY LEE FRENCH *
and
DONNA MARIE SHAKA, *
Defendants *
* * * * * * * * * * * * *
MEMORANDUM OPINION DENYING THE DEFENDANTS’
MOTION TO DISMISS
Dated October 07, 2003
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This matter is before the Court upon the defendants’ motion to dismiss the
trustee’s complaint to recover fraudulently transferred estate property. For the
reasons set forth, the motion will be denied.
FINDINGS OF FACT
On October 20, 2000, the Peninsula Bank filed the instant involuntary Chapter
7 bankruptcy petition in this Court against the debtor, Betty Irene French. On January
29, 2001, an order for relief was entered.
On August 22, 2002, George W. Liebmann, the Chapter 7 trustee, filed the
instant complaint to avoid and recover an alleged fraudulent transfer made by the
debtor to her son, Randy French, and her daughter, Donna Shaka, of certain real
property located in Nassau in the Bahama Islands for no consideration within 12
months of the filing of the petition. The verified complaint alleged that the debtor did
not list the property in her schedules or disclose its existence in her Statement of Affairs
which she filed in her bankruptcy case. It further alleged that the property was
purchased by the debtor and titled in her name by deed dated November 11, 1976, and
recorded in the Bahamas; that she deeded the property to the defendants by deed dated
December 1981 but not recorded in the Bahamian land records until June 21, 2000.
The trustee also filed a motion [P. 2] for temporary restraining order (“TRO”),
which this Court granted by order [P. 3] entered August 26, 2002. The TRO prohibited
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1Section 548(a) provides, as follows:
§ 548. Fraudulent transfers and obligations.
(a)(1) The trustee may avoid any transfer of an interest of the
debtor in property, or any obligation incurred by the debtor, that was
made or incurred on or within one year before the date of the filing of the
petition, if the debtor voluntarily or involuntarily–
(A) made such transfer or incurred such obligation with
actual intent to hinder, delay, or defraud any entity to which the debtor
was or became, on or after the date that such transfer was made or such
obligation was incurred, indebted; or
(B)(i) received less than a reasonably equivalent value in
exchange for such transfer or obligation; and
(ii)(I) was insolvent on the date that such transfer was made
or such obligation was incurred, or became insolvent as a result of such
transfer or obligation;
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the defendants from transferring or encumbering the Bahamian property for a period
of ten days. On September 4, 2002, Judge E. Stephen Derby granted the plaintiff’s
request for a preliminary injunction [P. 7].
On October 10, 2002, the defendants filed the instant motion to dismiss [P. 9].
The motion was premised upon two legal arguments. First, that the transfer in question
occurred upon the date the unrecorded deed was executed, namely, December 1981,
well outside the one-year period authorized for the recovery of fraudulent conveyances.
Second, that Sections 548 and 550 of the Bankruptcy Code1
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(II) was engaged in business or a transaction, or was about
to engage in business or a transaction, for which any property remaining
with the debtor was an unreasonably small capital; or
(III) intended to incur, or believed that the debtor would
incur, debts that would be beyond the debtor's ability to pay as such debts
matured.
11 U.S.C. § 548(a).
Section 550 of the Code provides, as follows:
§ 550. Liability of transferee of avoided transfer
(a) Except as otherwise provided in this section, to the extent that
a transfer is avoided under section 544, 545, 547, 548, 549, 553(b), or
724(a) of this title, the trustee may recover, for the benefit of the estate,
the property transferred, or, if the court so orders, the value of such
property, from–
(1) the initial transferee of such transfer or the entity for whose
benefit such transfer was made; or
(2) any immediate or mediate transferee of such initial transferee.
(b) The trustee may not recover under section (a)(2) of this section
from–
(1) a transferee that takes for value, including satisfaction or
securing of a present or antecedent debt, in good faith, and without
knowledge of the voidability of the transfer avoided; or
(2) any immediate or mediate good faith transferee of such
transferee.
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(c) If a transfer made between 90 days and one year before the
filing of the petition–
(1) is avoided under section 547(b) of this title; and
(2) was made for the benefit of a creditor that at the time of such
transfer was an insider;
the trustee may not recover under subsection (a) from a transferee that is
not an insider.
(d) The trustee is entitled to only a single satisfaction under
subsection (a) of this section.
(e)(1) A good faith transferee from whom the trustee may recover
under subsection (a) of this section has a lien on the property recovered
to secure the lesser of–
(A) the cost, to such transferee, of any improvement made
after the transfer, less the amount of any profit realized by or accruing to
such transferee from such property; and
(B) any increase in the value of such property as a result of
such improvement, of the property transferred.
(2) In this subsection, "improvement" includes–
(A) physical additions or changes to the property transferred;
(B) repairs to such property;
(C) payment of any tax on such property;
(D) payment of any debt secured by a lien on such property
that is superior or equal to the rights of the trustee; and
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(E) preservation of such property.
(f) An action or proceeding under this section may not be
commenced after the earlier of–
(1) one year after the avoidance of the transfer on account of
which recovery under this section is sought; or
(2) the time the case is closed or dismissed.
11 U.S.C. § 550.
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providing for the recovery of fraudulent transfers, do not apply to property located
outside the borders of the United States, citing Maxwell Communication Corp. v.
Barclays Bank (In re Maxwell Communication Corp.), 170 B.R. 800 (Bankr. S.D.
N.Y. 1994), aff'd, 186 B.R. 807 (S.D.N.Y. 1995), aff'd, 93 F.3d 1036 (2d Cir. 1996),
and principles of International comity.
They also cited the case of Kojima v. Grandote Intern., LLC (In re Grandote
Country Club Co., Ltd.), 252 F.3d 1146 (8th Cir. 2001), for the proposition that foreign
law can never apply to property located in another country.
The defendants claim that there are no cases standing for the proposition that
Sections 547 and 548 may be applied outside the United States to permit a trustee to
recover property.
CONCLUSIONS OF LAW
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To the extent that the motion to dismiss contests the date of the transfer, it must
fail. “When ruling upon a motion to dismiss a complaint for failure to state a claim for
which relief can be granted pursuant to Federal Rule 12(b)(6), the Court must accept
as true all well-pleaded allegations in the complaint, including all reasonable inferences
that may be drawn from them, in the light most favorable to the plaintiff.” Hemelt v.
Pontier (In re Pontier), 165 B.R. 797, 798 (Bankr. D. Md. 1994). As stated in the
complaint, the transfer in this case occurred on June 21, 2000, when the deed to the
property was recorded among the Bahamian land records by the defendants. This
comports with Section 548(d)(1) of the Bankruptcy Code, which provides that a
transfer occurs “when such transfer is so perfected that a bona fide purchaser from the
debtor against whom applicable law permits such transfer to be perfected cannot
acquire an interest in the property transferred that is superior to the interest in such
property of the transferee, but if such transfer is not so perfected before the
commencement of the case, such transfer is made immediately before the date of the
filing of the petition.”
The motion to dismiss could be denied without even addressing the
extraterritoriality of the Bankruptcy Code, because the complaint does not allege that
the transfer occurred outside this country, which the motion to dismiss assumes.
Nevertheless, to the extent that the avoidance of the transfer at issue requires a
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discussion of extraterritoriality, it is noted that the extraterritorial application of the
Bankruptcy Code has been upheld in the context of the discharge injunction of Section
524, the worldwide effect of the automatic stay of Section 362, and the prohibition
against litigation against a reorganized debtor after confirmation of a plan, pursuant to
Sections 524 and 1141, considerations that have some application to the present
controversy.
In Hong Kong and Shanghai Banking Corp., Ltd. v. Simon (In re Simon), 153
F.3d 991 (9th Cir. 1998), the Ninth Circuit held in a Chapter 7 case that the violation
of the discharge injunction by a foreign creditor outside the United States was
sanctionable by the U.S. Bankruptcy Court. In so holding, the court stated:
Congress has the unquestioned authority to enforce its laws beyond
the territorial boundaries of the United States. E.E.O.C. v. Arabian
American Oil Co., 499 U.S. 244, 248, 111 S. Ct. 1227, 113 L. Ed. 2d 274
(1991) (“Aramco “). Whether Congress has exercised that authority in
a particular case is a matter of statutory construction. Stegeman v. United
States, 425 F.2d 984, 986 (9th Cir. 1970)(en banc). In construing a
statute to ascertain Congress’ territorial intent, we begin with the
presumption that “the legislation of Congress, unless a contrary intent
appears, is meant to apply only within the territorial jurisdiction of the
United States.” Foley Bros. v. Filardo, 336 U.S. 281, 285, 69 S. Ct. 575,
93 L. Ed. 680 (1949). With that presumption in mind, we analyze intent
by first examining the language of the act for indications of intent
regarding extraterritorial application. Aramco, 499 U.S. at 248, 111 S.
Ct. 1227. In addition to the plain statutory words, intent may be
discerned with reference to similarly-phrased legislation, id. at 250-51,
111 S. Ct. 1227, or the overall statutory scheme. Foley Bros., 336 U.S.
at 286, 69 S. Ct. 575. If these inquires are inconclusive, examination of
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legislative history is appropriate. Id. Resort to administrative
interpretations of the law may be employed if the legislative history is
inconclusive. Id. at 286-88, 69 S. Ct. 575.
If Congressional intent concerning extraterritorial application
cannot be divined, then courts will examine additional factors to
determine whether the traditional presumption against extraterritorial
application should be disregarded in a particular case. First, “the
presumption is generally not applied where the failure to extend the scope
of the statute to a foreign setting will result in adverse effects within the
United States.” Environmental Defense Fund, Inc. v. Massey, 986 F.2d
528, 531 (D.C. Cir. 1993) (citing Steele v. Bulova Watch Co., 344 U.S.
280, 73 S. Ct. 252, 97 L. Ed. 319 (1952)). Second, the presumption
against extraterritoriality is not applicable when the regulated conduct is
“intended to, and results in, substantial effects within the United States”
Laker Airways, Ltd. v. Sabena Belgian World Airlines, 731 F.2d 909, 925
(D.C. Cir. 1984).
Applying this analysis to the instant case, the district court was
entirely correct in upholding the bankruptcy court's order and giving effect
to the section 524 discharge injunction.
The district court properly concluded that as to actions against the
bankruptcy estate, Congress clearly intended extraterritorial application
of the Bankruptcy Code. The filing of a bankruptcy petition under 11
U.S.C. §§ 301, 302 or 303 creates a bankruptcy estate. 11 U.S.C. §
541(a). With certain exceptions, the estate is comprised of the debtor's
legal or equitable interests in property “wherever located and by
whomever held.” Id. (emphasis supplied). The district court in which the
bankruptcy case is commenced obtains exclusive in rem jurisdiction over
all of the property in the estate. 28 U.S.C. § 1334(e); Commodity Futures
Trading Comm'n v. Co Petro Marketing Group, Inc., 700 F.2d 1279,
1282 (9th Cir. 1983)(interpreting 28 U.S.C. § 1471, the statutory
precursor to 28 U.S.C. § 1334(e)). The court's exercise of “custody” over
the debtor's property, via its exercise of in rem jurisdiction, essentially
creates a fiction that the property – regardless of actual location – is
legally located within the jurisdictional boundaries of the district in which
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the court sits. See Katchen v. Landy, 382 U.S. 323, 327, 86 S. Ct. 467,
15 L. Ed. 2d 391 (1966)(noting that bankruptcy courts have “constructive
possession” over estate property) (internal quotation marks and citations
omitted); Commodity Futures, 700 F.2d at 1282 (noting that under the
bankruptcy code, “all property of the debtor, wherever located, is in
custodia legis of the bankruptcy court.”). This includes property outside
the territorial jurisdiction of the United States. See Stegeman, 425 F.2d
at 986 (construing extraterritorial jurisdictional reach of prior Bankruptcy
Act); see also Underwood v. Hilliard (In re Rimsat, Ltd.), 98 F.3d 956,
961 (7th Cir. 1996).
Given this clear expression of intent by Congress in the express
language of the Bankruptcy Code, we conclude that Congress intended
extraterritorial application of the Bankruptcy Code as it applies to
property of the estate. Although Hong Kong-Shanghai concedes this
point, it questions whether such an extraterritorial application may operate
to enjoin a foreign proceeding. As a matter of general principle,
protection of in rem or quasi in rem jurisdiction is a sufficient basis for
a court to restrain another court's proceedings. Donovan v. City of
Dallas, 377 U.S. 408, 412, 84 S. Ct. 1579, 12 L. Ed. 2d 409 (1964). In
such cases, “the state or federal court having custody of such property has
exclusive jurisdiction to proceed.” Id. This rationale extends to foreign
proceedings. See Seattle Totems Hockey Club v. National Hockey
League, 652 F.2d 852, 855 (9th Cir. 1981); see also Gau Shan Co. v.
Bankers Trust Co., 956 F.2d 1349, 1356 (6th Cir. 1992); China Trade &
Develop. Corp., v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir. 1987).
In the bankruptcy context, the Seventh Circuit has expressly held
that protection of the bankruptcy court's in rem jurisdiction over estate
property allows an international proceeding to be enjoined pursuant to the
automatic stay in 11 U.S.C. § 362. Underwood, 98 F.3d at 961. As
Chief Judge Posner explained: “The efficacy of the bankruptcy
proceeding depends on the court's ability to control and marshal the assets
of the debtor wherever located....” Id.
As applied to the concept of in rem bankruptcy jurisdiction, there
is no functional difference between the automatic stay imposed by 11
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U.S.C. § 362 upon the commencement of a bankruptcy and the injunction
prohibiting collection actions against the bankruptcy estate provided in 11
U.S.C. § 524(a)(3). Each stay operates to protect the estate and the in
rem jurisdiction of the bankruptcy court. Accordingly, we join the
Seventh Circuit's logic and hold that a bankruptcy court may validly
exercise its in rem jurisdiction to protect estate property wherever the
property is located in issuing a discharge injunction under 11 U.S.C. §
524. Thus, the district court correctly held in this case that the 11 U.S.C.
§ 524 discharge enjoined Hong Kong-Shanghai from commencing
collection against any bankruptcy estate property regardless of its
geographic location.
Simon, 153 F.3d at 995-96.
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2Section 541(a) provides, as follows:
§ 541. Property of the estate.
(a) The commencement of a case under section 301, 302, or 303 of
this title creates an estate. Such estate is comprised of all the following
property, wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this section,
all legal or equitable interests of the debtor in property as of the
commencement of the case.
(2) All interests of the debtor and the debtor's spouse in community
property as of the commencement of the case that is–
(A) under the sole, equal, or joint management and control
of the debtor; or
(B) liable for an allowable claim against the debtor, or for
both an allowable claim against the debtor and an allowable claim against
the debtor's spouse, to the extent that such interest is so liable.
(3) Any interest in property that the trustee recovers under section
329(b), 363(n), 543, 550, 553, or 723 of this title.
(4) Any interest in property preserved for the benefit of or ordered
transferred to the estate under section 510(c) or 551 of this title.
(5) Any interest in property that would have been property of the
estate if such interest had been an interest of the debtor on the date of the
filing of the petition, and that the debtor acquires or becomes entitled to
acquire within 180 days after such date–
(A) by bequest, devise, or inheritance;
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According to Section 541(a) of the Bankruptcy Code2 property of the
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(B) as a result of a property settlement agreement with the
debtor's spouse, or of an interlocutory or final divorce decree; or
(C) as a beneficiary of a life insurance policy or of a death
benefit plan.
(6) Proceeds, product, offspring, rents, or profits of or from
property of the estate, except such as are earnings from services
performed by an individual debtor after the commencement of the case.
(7) Any interest in property that the estate acquires after the
commencement of the case.
11 U.S.C. § 541(a).
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bankruptcy estate includes every interest of a debtor in property “wherever located and
by whomever held.” In Nakash v. Zur (In re Nakash), 190 B.R. 763 (Bankr. S.D.N.Y.
1996), this provision was held to indicate congressional intent that the automatic stay
provisions of Section 362 of the Code be given extraterritorial application to protect a
debtor from the filing of an insolvency proceeding against it in Israel.
In the case of In re Dow Corning Corp., 287 B.R. 396 (E.D. Mich. 2002), a
confirmed Chapter 11 plan was given extraterritorial effect based upon the following
analysis:
[G]enerally, there is a presumption against extraterritorial application of
United States law as argued by the Australian Claimants. However, in the
bankruptcy context, that presumption does not apply if ignoring the
bankruptcy court orders would have “substantial effects within the United
States.” In re Simon, 153 F.3d 991, 997 (9th Cir. 1998). As noted
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previously, Dow Australia is contributing cash and insurance assets to the
Joint Plan and Dow Australia has filed a contribution claim against the
Debtor. If the Australian Claimants were allowed to pursue their claims
against Dow Australia, the Debtor would lose Dow Australia’s
contribution and would also have to defend its products in the Australian
courts.
It is noted that the Australian Claimants have submitted themselves
to this Court's jurisdiction by participating in this bankruptcy action.
When a creditor submits to bankruptcy court jurisdiction by filing a proof
of claim in order to collect its debt, the creditor is subject to the court's
orders and any discharge order pursuant to 11 U.S.C. §524. Id. at 997.
International comity does not prohibit an injunction issued by the
bankruptcy court. Id. at 997-98. It is noted that the Bankruptcy Code
extends the bankruptcy court's power over the debtor's legal and equitable
interests in property “wherever located.” Id. at 998; 11 U.S.C. §541.
The bankruptcy was initiated in the United States and the Australian
Claimants participated in the action. It is noted that the release and
injunction provisions [of the Joint Plan] do not apply to the Australian
courts but to the participants in the bankruptcy proceedings, specifically,
the Debtor, Dow Australia and the Australian Claimants. The discharge
provision of the Bankruptcy Code, 11 U.S.C. §524, does not apply to
courts outside of the United States but to those creditors who enjoyed the
benefits of participating in the United States bankruptcy. In re Simon,
153 F.3d at 999. The release and injunction provisions in this case do not
conflict with the sovereignty of the Australian courts since those
provisions do not apply to the Australian courts but to those who
participated in the bankruptcy action, such as the Australian Claimants.
It is further noted that there is no competing bankruptcy proceeding in
Australia at this time, therefore, there is no conflict regarding the
bankruptcy laws at issue. The Australian Claimants are therefore bound
by the Court's orders because they participated in the bankruptcy action.
* * * * *
Without a release and injunction, the Shareholders would not have
agreed to a plan at the funding level of the current Plan or one that
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involved the Shareholders' rights to hundreds of millions of dollars of
insurance proceeds. . . The Debtor, alone, would have been unable to
fund the Plan at its current level without the insurance proceeds and
would have had to stay in bankruptcy. The Shareholders and the
subsidiaries/affiliates would each have potential contribution and
indemnity claims against the Debtor if litigation over the Debtor's
products were asserted against the non-debtors and would have no
interest in relinquishing any right to the insurance. As noted by the
Bankruptcy Court and the Sixth Circuit, claims for indemnification and
contribution would affect the size of the estate and the length of time the
bankruptcy proceedings will be pending, as well as Dow Corning's ability
to resolve its liabilities and proceed with reorganization. See, In re Dow
Corning Corp., 244 B.R. 721, 745 (Bankr. E.D. Mich. 1999); In re Dow
Corning Corp., 86 F.3d at 494.
The Debtor has consistently maintained that the main reason the
Debtor filed for bankruptcy was because of the thousands of pending
lawsuits against it claiming its silicone gel products caused injury and
disease. The Joint Plan submitted by the Debtor and the Tort Claimants'
Committee was to resolve the pending litigation against the Debtor, its
Shareholders and its subsidiaries and affiliates. . . The injunction and
release provisions are essential to the Joint Plan and to both the
consenting and non-consenting creditors.
Dow Corning, 287 B.R. at 411-13.
The fallacy of the defendants’ arguments is clear when one examines the cases.
In Interbulk Ltd. v. Louis Dreyfus Corp. (In re Interbulk, Ltd.), 240 B.R. 195 (Bankr.
S.D.N.Y. 1999), Chief Judge Tina Brozman distinguished her opinion in Maxwell, 170
B.R. 800 (Bankr. S.D. N.Y. 1994), holding that Section 547 might be invoked to
address a transfer in the form of an attachment obtained against an American debtor by
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an American corporation in a foreign court, and stated that such a transfer was not
extraterritorial:
. . .What Dreyfus fails to realize is that there are critical distinctions
between the facts of Maxwell and those present here.
In Maxwell, there were parallel bankruptcy proceedings in England
and the United States for the debtor, an English corporation. See Maxwell,
186 B.R. 807, 813 (S.D.N.Y. 1995). The joint administrators appointed
by the high court in London and the examiner appointed by this court
entered into a procedural protocol (the "Protocol") to coordinate their
efforts to administer the two cases as a single estate. Id. The Protocol
provided for the creation of a single pool of assets in which creditors from
both countries could share by filing claims in either jurisdiction. Id.
Three foreign (to the United States) creditors (the "Creditors") had
received transfers overseas from the debtor within 90 days of the debtor's
bankruptcy filings. Id. All three filed claims in England, but not here.
Cognizant that the administrators contemplated suit in the United States
to recover the preferences from them, the Creditors sought unsuccessfully,
in England, to enjoin the administrators from commencing suit under
section 547 of the Code. The administrators then filed adversary
complaints in this court to recover the transfers from the Creditors. Id. at
814. The Creditors promptly moved for dismissal, pursuant to Fed. R.
Civ. P. 12(b)(6), for failure to state a claim upon which relief could be
granted. Id. The Creditors argued that the transfers were extraterritorial
in nature and considerations of comity prevented the use of section 547
to avoid them. Id. I concluded that section 547 was not meant by
Congress to apply extraterritorially and that inasmuch as the center of
gravity of these transfers was indeed extraterritorial, they could not be
avoided. I alternatively concluded that principles of international comity
dictated that the avoidance actions had to be dismissed. Whereas my
decision was affirmed on both grounds in the district court, in the further
appeal to the circuit court, only the alternative holding was reached and
my decision was affirmed on that ground alone. The circuit court did not
rule on the question of first impression – whether the U.S. preference laws
are extraterritorial in their reach.
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Interbulk, 240 B.R. 195, 198-199.
Grandote Country Club, 252 F.3d 1146 (10th Cir. 2001), another case cited by
the defendants, is equally inapposite to the facts of the instant case as was Maxwell.
Grandote was a choice of law decision which, like Maxwell, involved parallel or
duplicate insolvency proceedings pending in this country and overseas. The trustee in
a Japanese bankruptcy case brought an ancillary action in this country under Section
304 to avoid the tax sale of a Japanese-owned golf course in Colorado as a fraudulent
conveyance. The question raised was whether to apply the law of Japan or of this
country to a proceeding brought in this country by a foreign national relating to land
located in this country. The bankruptcy, district and circuit courts discounted questions
of comity and applied the Colorado Uniform Fraudulent Transfer Act, holding that the
tax sale in question did not effect a fraudulent transfer. 252 F.3d at 1150-52.
The instant complaint was brought by the involuntary debtor’s bankruptcy trustee
in a proceeding filed in this country to determine the rights of the debtor in property
located outside of this country which she allegedly transferred to insiders, namely her
children, for no consideration and which she failed to disclose to her creditors.
The fact that there is no parallel or duplicative insolvency proceeding now
pending in the Bahamas is an important factor in this Court’s determination to deny the
motion to dismiss. The defendants claim that Bahamian law controls the interest of the
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debtor in property located there. However, having conveyed the property to the
defendant transferees, it is obvious that considerations of comity with the Bahamas are
not implicated here. Under Bahamian law, the debtor has no further interest in the
property conveyed and according to the defendants, the transfer to them cannot be
avoided.
This fact, if true, means that granting the motion to dismiss will most certainly
result in prejudice to the debtor’s American creditors, whose interests are represented
here by the trustee.
Professor Jay Lawrence Westbrook, Benno C. Schmidt Chair of Business Law
at the University of Texas School of Law, who was appointed amicus curiae by Chief
Judge Brozman in the Maxwell case, rendered his opinion regarding the proper choice
of law to be applied in such a straight-forward case as the instant one:
. . .In a case like Maxwell, a particularized choice-of-law analysis may be
unavoidable. In most transnational cases, however, the home country of
the debtor-transferor of an alleged preference will be beyond serious
argument. I continue to believe application of a home-country rule in
those cases makes the most sense.
Jay Lawrence Westbrook, The Lessons of Maxwell Communication, Fordham Law
Review, May 1996, 2531, 2541.
Regardless of the fact that the land in question is located in the Bahamas, it is
property of the estate within the subject matter jurisdiction of this Court pursuant to
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Section 541(a). This Court enjoys primary jurisdiction over the subject property
because there is no competing insolvency proceeding involving the debtor now pending
in the Bahama Islands. Cf. Stonington Partners, Inc. v. Lernout & Hauspie Speech
Products, N.V., 310 F.3d 118 (3d Cir. 2002)(U.S. Bankruptcy Court erroneously
entered “anti-suit” injunction against pending Belgian insolvency proceeding according
to the Maxwell analysis); and Official Committee of Unsecured Creditors v.
Transpacific Corp. Ltd. (In re Commodore Intern., Ltd.), 242 B.R. 243 (Bankr.
S.D.N.Y. 1999)(Bahamian insolvency proceedings were given deference under the
principle of comity, where a competing insolvency proceeding was pending in the
Bahamas).
This Court has personal jurisdiction as well over the parties, including the
defendants, both of whom are domiciliaries of the United States who were properly
served. As the debtor’s children, the defendant-transferees are insiders of the debtor.
This matter is a core proceeding over which this Court is exercising in rem jurisdiction.
28 U.S.C. § 157(b)(2)(F) and (H).
For all these reasons, the defendants’ motion to dismiss will be DENIED.
ORDER ACCORDINGLY.
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Cc; Orbie R. Shively, Esquire
George W. Liebmann, Esquire
Liebmann and Shively
8 W. Hamilton Street
Baltimore, MD 21201
Counsel to the Chapter 7 Trustee
George W. Liebmann, Esquire
Liebmann and Shively
8 W. Hamilton Street
Baltimore, Maryland 21201
Plaintiff and Chapter 7 Trustee
Stanton J. Levinson, Esquire
P.O. Box 1746
Silver Spring, Maryland 20915
Counsel for the Defendants
Randy Lee French
20957 Nanticoke Road
Bivale, Maryland 21814
Donna Marie Shaka
11322 Magnolia Place
Smithfield, Virginia 23430
Betty Irene French
3999 Greenhill Church Road
Quantico, Maryland 21856
Case 02-05757 Doc 20 Filed 10/07/03 Page 20 of 20