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UNITED STATES DISTRICT COURT
7 WESTERN DISTRICT OF WASHINGTON
AT SEATTLE
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WANECHEK MINK RANCH and SMITH
10 MINK RANCH CORPORATION, on behalf of
themselves and all others similarly situated, CASE NO. C06-089RSM
11 Plaintiffs,
ORDER ON DEFENDANT’S MOTION
12 v. TO STAY PROCEEDINGS

13 ALASKA BROKERAGE INTERNATIONAL,

INC., et al.,
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Defendants.
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This matter is before the Court for a ruling on Defendant Fein & Company’s motion to stay
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proceedings pending foreign insolvency proceedings. Dkt. # 184. Plaintiffs have opposed the motion.
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After careful consideration of the parties’ memoranda and relevant law, the Court has determined that
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the motion should be denied.
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DISCUSSION
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On October 19, 2009, defendant Fein & Co., a foreign entity based in London, United Kingdom,
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filed a voluntary petition for administration (a proceeding analogous to a Chapter 11 reorganization in
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the United States). Dkt. # 184, Exhibit A. Defendant contends that comity requires that this Court
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recognize the administration proceedings and stay the case as it would, had defendant filed for
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bankruptcy in the United States. Plaintiffs, in opposition to the motion, argue that Chapter 15 of the
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United States Bankruptcy Code is the exclusive means by which a debtor in a foreign insolvency
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ORDER ON MOTION TO STAY
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 1 proceeding may obtain relief, including a stay, in the United States district courts. To resolve this
2 dispute, the Court must turn to the history and effect of Chapter 15, 11 U.S.C. § 1501 et seq.
3 In 2005, Congress adopted Chapter 15 of the Bankruptcy Code, which is based on the Model
4 Law on Cross-Border Insolvency promulgated in 1997 by the United Nations Commission on
5 International Trade Law. 11 U.S.C. § 1501. The purpose of the statute is to “provide effective
6 mechanisms for dealing with cross-border insolvency,” with the objectives of cooperation, greater legal
7 certainty, fair and efficient administration, protection of the debtor’s assets, and facilitation of the rescue
8 of financially troubled businesses. Id.
9 Chapter 15 replaced former Section 304 of the Bankruptcy Code, which originally provided the
10 statutory framework for cases filed in the United States that are ancillary to insolvency proceedings filed
11 in foreign countries. The philosophies underlying former Section 304 were deference to the foreign
12 proceeding and the prevention of the piecemeal distribution of the debtor's estate. See Bank of New York
13 & JCPL Leasing Corp. v. Treco (In re Treco), 240 F.3d 148, 153-54 (2d Cir. 2001) (citing In re Koreag,
14 Controle et Revision S.A. v. Refco F/X Assocs., Inc., 961 F.2d 341, 358 (2d Cir.1992) (In re Koreag);
15 Cunard S.S. Co. Ltd v. Salen Reefer Servs. AB, 773 F.2d 452, 455 (2d Cir. 1985)). Former Section 304
16 provided a bankruptcy court with broad discretion in fashioning an appropriate remedy in a particular
17 case. Id. at 154-55. The section outlined several factors, including comity, that a court should consider
18 before granting a foreign representative any type of relief. 11 U.S.C. § 304(c) (repealed by Pub.L. 109-
19 8, title VII, § 802(d)(3), April 20, 2005).
20 With the advent of Chapter 15, the courts have been divested of much of this discretion and are
21 instead directed by objective statutory guidelines. In re Bear Stearns High-Grade Structured Credit
22 Strategies Master Fund, 389 B.R. 325, 333 (S.D.N.Y. 2008). Under Chapter 15, in order for a petition
23 for recognition of a foreign proceeding to be granted, it must meet several requirements:
24 (1) the foreign proceeding for which recognition is sought is a foreign main proceeding or
25 foreign non main proceeding within the meaning of § 1502;
26 (2) the foreign representative applying for recognition is a person or body; and
27 (3) the petition meets the requirements of § 1515.
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 1 11 U.S.C. § 1517(a). In order to meet the requirements of § 1515, the foreign representative must file a
2 petition for recognition, must establish that a foreign proceeding exists, and must demonstrate that the
3 petitioner has been appointed as the foreign representative. 11 U.S.C. § 1515(b); In re Gold & Honey,
4 Ltd., 410 B.R. 357, 366 (Bankr.E.D.N.Y. 2009).
5 These objective requirements are statutory prerequisites to recognition. However, once the
6 foreign proceeding has been recognized, “flexible and pragmatic” considerations, including “subjective
7 factors that embody principles of comity” are considered in fashioning appropriate relief. In re Bear
8 Stearns, 389 B.R. at 333-34. Thus, while Chapter 15 replaced Section 304 as the Bankruptcy Code's
9 operative provision for dealing with cross-border insolvencies, many of the principles underlying
10 Section 304 remain in effect. As stated by one district court,
11 Significantly, chapter 15 specifically contemplates that the court should be guided by principles
of comity and cooperation with foreign courts in deciding whether to grant
12 the foreign representative additional post-recognition relief. This is evidenced by the
pervasiveness with which comity appears in chapter 15's provisions. For example,
13 § 1509 specifically requires that if the court grants recognition under § 1517, it
“shall grant comity or cooperation to the foreign representative.” 11 U.S.C. § 1509(b)(3).
14 In addition, § 1507 also explicitly directs the court to consider comity in granting additional
assistance to the trustee.
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16 In re Atlas Shipping A/S, 404 B.R. 726, 738 (Bankr. S.D.N.Y. 2009).
17 Once a case is recognized as a foreign main proceeding, Chapter 15 specifically contemplates
18 that the court will exercise its discretion consistent with principles of comity. There is a logical reason
19 for this. “Deference to foreign insolvency proceedings will often facilitate the distribution of the debtor's
20 assets in an equitable, orderly, efficient, and systematic manner, rather than in a haphazard, erratic, or
21 piecemeal fashion.” In re Artimm, S.r.L., 335 B.R. 149, 161 (Bankr.C.D.Cal.2005). Chapter 15
22 “mandate[s] that the court cooperate ‘to the maximum extent possible’ with a foreign court or
23 representative . . . ” Id. at 159. Thus, “while Chapter 15 replaced § 304 and provided a more structured
24 framework for recognizing foreign proceedings, Congress specifically granted courts discretion to
25 fashion appropriate post-recognition relief, consistent with the principles underlying § 304.” In re Atlas
26 Shipping, 404 B.R. at 739.
27 In Chapter 15, Congress has provided a specific procedure for addressing cross-border
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 1 insolvencies, together with appropriate remedies. 11 U.S.C. § 1501. Nowhere has defendant Fein & Co.
2 either shown or argued that it could not file a petition for recognition of the foreign insolvency
3 proceedings under Chapter 15. Should it do so, and should recognition be granted, this Court may then
4 exercise its discretion to fashion appropriate relief. Until that time, the Court declines to stay these
5 proceedings.
6 Defendant’s motion to stay is accordingly DENIED, without prejudice to renewal at an
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8 DATED this 2nd day of December 2009.
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RICARDO S. MARTINEZ
UNITED STATES DISTRICT JUDGE
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