Amicus Curiae Brief — HSBC Holdings PLC, et al., Petitioners v. Irving H. Picard, et al.

No. 19-277

In the

Supreme Court of the United States

__________________

HSBC HOLDINGS PLC, CITIGROUP GLOBAL MARKETS

LIMITED, TENSYR LIMITED, AND BA WORLDWIDE FUND

MANAGEMENT LIMITED, ET AL.,

Petitioners,

v.

IRVING H. PICARD,

__________________

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Second Circuit

__________________

BRIEF OF AMICUS CURIAE RISA BERMUDA

IN SUPPORT OF PETITIONER

__________________

S. CHRISTOPHER PROVENZANO

Counsel of Record

MICHAEL A. GRANNE

JENNIFER BADER

PROVENZANO GRANNE & BADER LLP

1330 Avenue of the Americas

Suite 23A

New York, NY 10019

(212) 859-3516

chris.provenzano@pgbfirm.com

Counsel for Amicus Curiae

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . ii

INTEREST OF AMICUS CURIAE . . . . . . . . . . . . . . 1

SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . 5

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

I. The Second Circuit Minimized the

International Consequences of Its Decision on

Foreign Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

II. The Second Circuit Minimized the International

Consequences of Its Decision on the Legal

Systems of Foreign Nations . . . . . . . . . . . . . . . . 12

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ii

TABLE OF AUTHORITIES

CASES

Cambridge Gas Transportation Corp v. Navigator

Holdings plc, (2007) 1 A.C. 508 . . . . . . . . . . . . . 15

Ellefsen v. Ellefsen,

Civil Jurisdiction 1993, No. 202 . . . . . . . . . . . . . . 3

ICO Global Cmmcn’s Ltd.,

[1999] Bda LR 69 . . . . . . . . . . . . . . . . . . . . . . . . . 9

In re Bd. of Dirs. of Hopewell Int’l Ins. Ltd.,

275 B.R. 699 (S.D.N.Y. 2002) . . . . . . . . . . . . . . . 15

In re Gerova Fin. Grp. Ltd.,

482 B.R. 86 (Bankr. S.D.N.Y. 2012) . . . . . . . . 2, 15

In re Millennium Global Emerging Credit Master

Fund Ltd., 474 B.R. 88 (S.D.N.Y. 2012). . . . . . . 15

In re Picard, Tr. for the Liquidation of Bernard L.

Madoff Inv. Sec. LLC,

917 F.3d 85 (2d Cir. 2019) . . . . . . . . . . . . . . . . 6, 7

Lewis v. Eliades,

(2004) 1 W.L.R. 692 . . . . . . . . . . . . . . . . . . . . . . . 3

PwC Bermuda v. Kingate Global Fund Ltd.,

[2011] CA Bda 6 Civ . . . . . . . . . . . . . . . . . . . . . . 16

Re C&J Energy Servs. Ltd.,

[2017] Bda LR 22 . . . . . . . . . . . . . . . . . . . . . 14, 16

Re Celestial Nutrifoods Ltd.,

[2017] Bda LR 11 . . . . . . . . . . . . . . . . . . . . . 14, 16

iii

Re Focus Ins. Co.,

(1997) 1 B.C.L.C. 219 . . . . . . . . . . . . . . . . . . . . . 15

Re ICO Global Commcn’s (Holdings) Ltd.,

[1999] Bda LR 69 . . . . . . . . . . . . . . . . . . . 9, 14, 16

Re Refco Capital Markets Ltd.,

[2006] Bda LR 94 . . . . . . . . . . . . . . . . . . . . . 14, 16

Re Seadrill Ltd.,

[2018] SC Bda 30 Com. . . . . . . . . . . . . . . . . . . . . 16

Rubin v. Eurofinance,

(2012) U.K.S.C. 46 . . . . . . . . . . . . . . . . . . . . . . . 13

SAS Institute v. World Programming Ltd.,

(2018) E.W.H.C. 3452 . . . . . . . . . . . . . . . . . . . . . . 3

Vizcaya Partners Limited v. Picard,

(2016) U.K.P.C. 5 . . . . . . . . . . . . . . . . . . . . . . . . 13

ACTS

Bermuda Companies Act 1981, § 174 . . . . . . . . . . . . 8

Bermuda Companies Act 1981, § 175 . . . . . . . . . . . . 9

Bermuda Companies Act 1981, § 176 . . . . . . . . . . . . 9

Bermuda Companies Act 1981, § 225 . . . . . . . . . . 8, 9

Bermuda Supreme Court Act 1905, § 15. . . . . . . . . . 1

Bermuda Supreme Court Act 1905, § 18. . . . . . . . . . 1

iv

OTHER AUTHORITIES

Practice Direction, Circular No 6 of 2017,

Guidelines for Communication and Cooperation

between Courts in Cross-Border Insolvency

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Practice Direction, Circular No 17 of 2007,

Guidelines Applicable to Court-to-Court

Communications in Cross-Border Cases . . . . . . 16

1

INTEREST OF THE AMICUS CURIAE1

About Bermuda

Bermuda is a self-governing British Overseas

Territory and common law jurisdiction. Bermuda is

also a major international financial center, providing

services to businesses and investors throughout the

world. Among other financial services, Bermudian

companies provide extensive insurance and

reinsurance services to a significant number of

businesses in the United States. There are also a large

number of investment fund companies incorporated in

or managed or administered from Bermuda. As a

result, despite its relatively small size, Bermuda and

Bermudian law have an outsized impact on the U.S.

economy, and vice versa.

Bermuda law is influenced by and shares

considerable similarities with English law. Bermuda

jurisprudence is, as in most common law jurisdictions,

made up of legislation, common law, and equity,2 and

its legal system is separate and distinct from

England’s, although the final appellate Court for

Bermuda is the Judicial Committee of the Privy

Council, sitting in London. Bermuda has had a written

1

No counsel for a party authored this brief in whole or in part. No

one other than amicus curiae, its members or amicus’s counsel

made a monetary contribution intended to fund the preparation or

submission of this brief. Counsel of record for all parties received

notice at least ten days prior to the due date of amicus’s intention

to file this brief, and the parties have consented to the filing of this

brief.

2

See Bermuda Supreme Court Act 1905, §§ 15 & 18.

2

Constitution since 1968, which guarantees the

independence of Bermuda’s judiciary.

Bermuda’s Relationship with the United States

Bermuda and the United States of America have

had close and strong ties for more than 200 years.

Many U.S. citizens live and work in Bermuda,

including those employed in Bermuda’s international

insurance and reinsurance sector. In addition, since

Bermuda is one of the United States’ closest neighbors

and an attractive tourist destination, Bermuda

welcomes more than half a million American visitors

annually via air, cruise ship, or private sailing vessel.

Bermuda (whether through the United Kingdom or

in its own right) and the United States are parties to

many bilateral and multilateral agreements and

conventions that facilitate interjurisdictional

cooperation, including tax treaties and mutual legal

assistance treaties. Although there is no international

treaty in place between Bermuda and the United

States governing the conduct of international

insolvencies, Bermuda Courts regularly cooperate with

U.S. Courts and regularly receive cooperation from

U.S. Courts in the context of cross-border insolvency

proceedings.3

3

In In re Gerova Fin. Grp. Ltd., 482 B.R. 86 (Bankr. S.D.N.Y. 2012),

for example, the United States Bankruptcy Court of the Southern

District of New York granted Chapter 15 petitions presented by

liquidators appointed by the Supreme Court of Bermuda, noting

that the (then) Chief Justice of Bermuda was “an eminent authority

on cross-border insolvency issues and co-editor of Cross-Frontier

Insolvency of Insurance Companies (2001), as well as co-author

of Cross-Border Judicial Cooperation in Offshore Litigation (2009).”

3

Bermuda Courts generally have been willing to

enforce U.S. court judgments and U.S. arbitration

awards consistently with the common-law and

statutory requirements applicable in Bermuda4 subject

to the provisions of Bermuda’s Protection of Trading

Interests Act 1981.5

Interest of RISA Bermuda

The Restructuring and Insolvency Specialists

Association of Bermuda (“RISA Bermuda”) is a not-forprofit organization of preeminent lawyers and

accountants who practice in the restructuring and

4

One reported example of the Bermuda Courts enforcing a U.S.

monetary judgment at common law is Ellefsen v. Ellefsen, Civil

Jurisdiction 1993, No. 202. There have been other reported cases

in which, on their facts, certain U.S. judgments were not enforced

by the Bermuda courts, since they did not satisfy the common law

requirements. As to foreign arbitration awards, the Bermuda

International Conciliation and Arbitration Act 1993 implements

the New York Convention and the UNCITRAL Model Law on

International Commercial Arbitration into Bermuda law.

5

Bermuda’s Protection of Trading Interests Act 1981 was modelled

on the UK’s Protection of Trading Interests Act 1980. It provides

that a foreign judgment shall not be enforced in Bermuda to the

extent that it is a judgment for “multiple damages” (i.e., double or

treble damages), or in the event that it is a judgment that has been

certified by the Bermuda Government to be “anti-competitive.”

Section 6 of the Protection of Trading Interests Act 1981 also

enables the Bermuda Courts to decline to assist a foreign Court to

collect evidence in Bermuda where the request contravenes the

jurisdiction of Bermuda or Her Majesty’s sovereignty. There have

been no reported cases in Bermuda decided under the Protection

of Trading Interests Act 1981, although Bermuda Courts are likely

to find English decisions such as Lewis v. Eliades, (2004) 1 W.L.R.

692 and SAS Institute v. World Programming Ltd., (2018)

E.W.H.C. 3452 persuasive.

4

insolvency field. RISA Bermuda’s members have a

strong interest in promoting the stability and

predictability of Bermudian law as it relates to the

insolvency and restructuring of companies

incorporated, managed, or doing business in Bermuda.

RISA Bermuda’s members also have an interest in

promoting Bermuda as a reputable international

financial center and in promoting the Supreme Court

of Bermuda as a reliable primary or ancillary forum for

the supervision of a bankruptcy, liquidation, or

restructuring of a Bermuda company.

Many of RISA Bermuda’s members are concerned

by the decision of the United States Court of Appeals

for the Second Circuit at issue here.

The Second Circuit has endorsed an extraterritorial

application of an aspect of U.S. bankruptcy law

pursuant to an argument that it was only applying that

law domestically. By doing so, the Second Circuit is

setting up a conflict with, or at a minimum rendering

more uncertain, the orthodox and natural application

of Bermuda law, by the Courts of Bermuda, to matters

occurring within Bermuda and affecting Bermudian

parties. This might include transactions, liquidations

or corporate restructurings governed by Bermuda law,

involving Bermuda companies and their counterparties

who may have no connection with the United States or

its judicial system.

Because the Second Circuit’s analysis is predicated

on an argument that it was merely interpreting

domestic law rather than applying U.S. law

extraterritorially (as it was), and because it did not

adequately consider or address the international

5

ramifications of its decision, this Court should grant

certiorari.

SUMMARY OF THE ARGUMENT

RISA Bermuda respectfully appears as amicus

curiae to explain the complications associated with the

Second Circuit’s decision from a Bermudian perspective

and to show that the international consequences, which

the Second Circuit minimized in its analysis, are

neither hypothetical nor trivial.

The Second Circuit’s decision is likely to cause

significant uncertainty for Bermudian companies and

their counterparties, where the parties may (1) have

nothing to do with the United States, (2) have

expressly adopted Bermuda law to govern their

transactions and (3) have chosen the jurisdiction of the

Bermuda Courts. This uncertainty means that they

will be required to speculate whether some remote U.S.

bankruptcy could expose them to a contingent risk that

a transaction, valid and binding under Bermudian law,

will be unwound.

This uncertainty will increase risk in every financial

transaction, and increased risk means increased costs

and increased delays. Parties to apparently entirely

Bermudian transactions may now feel compelled to

research remote “upstream” parties to hedge against

the possibility of a U.S. court looking to them to satisfy

a U.S. bankruptcy order. Since the relative

predictability and certainty of Bermuda law provides

one of the very reasons for Bermuda’s success as an

international financial center (including Bermuda’s

success in attracting the capital necessary to provide

6

insurance and reinsurance services to the United

States and other economies), any interference

therewith is potentially detrimental to Bermuda’s

economy.

It is also likely to increase the costs and

complexities associated with every international

insolvency involving Bermuda, as U.S. bankruptcy

trustees and the U.S. Bankruptcy Court are likely to

find themselves competing, rather than cooperating,

with Bermuda Court-appointed liquidators and the

Bermuda Court, each operating by reference to

different legal systems.

RISA Bermuda respectfully submits that the Court

should grant certiorari so that these issues may be

adequately considered and addressed.

ARGUMENT

I. The Second Circuit Minimized the

International Consequences of Its Decision on

Foreign Parties

The Second Circuit held that because a debtor’s

initial transfer of property from the United States is

domestic U.S. activity for the purposes of the relevant

provisions of the Bankruptcy Code, a U.S. Court had

the power to claw back cash from a foreign remote

transferee regardless of the international issues and

interests involved. This conclusion completely

dispensed with the need to consider the application of

the presumption against extraterritoriality, and its

various policy implications, even where there are

multiple subsequent transfers occurring entirely

outside the United States. In re Picard, Tr. for the

7

Liquidation of Bernard L. Madoff Inv. Sec. LLC, 917

F.3d 85, 100 (2d Cir. 2019).

In so doing, the Second Circuit sidestepped

important concerns about international comity. While

it acknowledged that a foreign state has “at least some

interest in adjudicating property disputes” where a

U.S. debtor is also the subject of liquidation

proceedings in a foreign court, it rejected as “not

compelling” the interests of a foreign jurisdiction in

which a different debtor (such as a feeder fund

company incorporated in a jurisdiction like Bermuda)

is in liquidation. Id. at 103–04. Although the District

Court concluded, as a factual matter, that investors in

the foreign feeder funds “had no reason to expect that

U.S. law would apply to their relationships with the

feeder funds,” id. at 105 (citing the district court), the

Second Circuit dismissed these concerns, holding

instead that, while the U.S. recovery actions would

affect the subsequent foreign transferees, “that

consequence should not unfairly surprise them.” Id.

The Second Circuit did not appear to consider the

important consequences of its holding for foreign

sovereigns, foreign courts, and foreign participants in

a foreign bankruptcy, particularly in jurisdictions that

serve as important financial service hubs. Its decision

reduced the interests of a foreign jurisdiction such as

Bermuda to a simple desire “to ensure that the feeder

funds’ creditors can recover as much property as

possible,” noting that “[i]f the Trustee succeeds in these

recovery actions, his success might frustrate the efforts

of those entities’ trustees to recover the same property

in foreign court.” Id. at 104.

8

This is, however, not the sole interest of the

Bermudian courts, as a matter of Bermuda law. The

role of the Bermudian courts is to do justice to the

parties before them, in accordance with the statutory

law, common law, and principles of equity applicable in

Bermuda. And when only Bermudian parties or their

counterparties—who made no effort to avail themselves

of U.S. laws and have no relevant direct connection to

the jurisdiction of the United States—are involved,

they should be permitted to do so without interference.

Bermuda has a well-developed body of bankruptcy

law. In Bermuda, the formal liquidation procedures

available for bankrupt Bermuda companies are

principally contained in the Companies Act 1981 (the

winding up provisions of which are substantially

modelled on the UK’s Companies Act 1948). The

general purpose of the liquidation process is to gather

in and realise assets in order to pay off creditors in

accordance with their rights and priorities as

determined by principles of statutory and common law

and equity.6 If there are any remaining assets, they

may be distributed to the company’s shareholders.

Bermudian law is broadly similar to U.S. law in this

regard. The duties of marshalling and distributing

assets are entrusted to the Official Receiver or another

liquidator (analogous to a trustee in U.S. practice),

subject to the supervision of a Bermuda Court and any

creditors’ committee, and subject to the Official

Receiver’s or the liquidator’s obligation as a fiduciary

6

Sections 174 and 225 of the Companies Act 1981.

9

and Court officer to act honestly and with due care.7

Liquidators in the winding-up of a company have the

power to promote compromises and arrangements,

whether by consensual means or using a Courtsupervised Scheme of Arrangement. Furthermore,

where the company is not already in liquidation, the

winding-up jurisdiction of the court and statutory

machinery may be invoked in order to protect the

implementation of a restructuring.8 A Bermudian

liquidator undertakes all of this with the goal of

recovering assets of the debtor and achieving an

appropriate distribution of the limited assets available

to the creditors in accordance with Bermuda law (with

shareholders only receiving a distribution in the event

of a surplus after payment of all classes of creditors

and liquidation costs and expenses in full).9

But in any bankruptcy or insolvency proceeding, by

definition there is not enough to go around (save in the

most exceptional of circumstances); there must be

trade-offs between competing interests as a liquidator,

subject to the supervision of the Bermuda court, strives

to satisfy competing constituencies. In particular, there

is a trade-off between the competing interests of

facilitating distribution or payment to a wronged

7

Sections 175 and 176 of the Companies Act 1981.

8

This has occurred in many cases in Bermuda, the first reported

one of which was ICO Global Cmmcn’s Ltd., [1999] Bda LR 69.

9

Section 225 of the Companies Act 1981 provides that “subject to

this Act as to preferential payment the property of a company

shall, on its winding up, be applied in satisfaction of its liabilities

pari passu, and subject to such application, shall, unless the byelaws otherwise provide, be distributed among the members

according to their rights and interests in the company.”

10

creditor, recovering assets of the debtor, and respecting

the legal validity of subsequent transactions involving

innocent parties or counterparties that are not

otherwise subject to challenge under relevant statutory

provisions of Bermuda law. The weighing of these

interests in the case of Bermuda companies is a

quintessential policy matter as to which the

jurisdiction of Bermuda has both the right and the

interest to set its own policy to do justice to, and to

protect the reasonable interests of, Bermuda companies

and their counterparties.

Regardless of the broad similarities to U.S.

bankruptcy law and practice, a Bermudian liquidator,

acting under the supervision of the Bermudian courts

and pursuant to Bermudian law, or a Bermuda court

itself, may well reach conclusions very different from

those a U.S. court would reach. This is not an affront to

justice; this is the consequence of different jurisdictions

legitimately having different legislation, different laws,

and different policy priorities.

Against this background, the situation that

concerns RISA Bermuda is this: A U.S. entity transfers

cash to a Bermudian entity. The Bermudian entity uses

cash to pay a subsequent transferee (whether in

Bermuda or outside of Bermuda), with possibly

additional other transactions with “mediate”

transferees, all under Bermudian law. The U.S. entity’s

bankruptcy then sets off a cascade of bankruptcies all

over the globe, including the bankruptcy of the

Bermudian entity that had made the subsequent

transfer. A Bermudian court supervising the

compulsory liquidation of the Bermudian entity

11

carefully sifts the facts and weighs the legality and

equities of any transactions and determines that, under

Bermudian law, the Bermudian transaction should not

be disturbed; the money will not be returned to the

Bermudian debtor. This conclusion is based on all

relevant circumstances, legal provisions, relevant

matters of public policy and the public interest.

The remote transferee, secure in the knowledge that

a competent court in Bermuda —the only jurisdiction

of which it purposefully or knowingly availed

itself—has ratified the transaction after close scrutiny,

organizes its affairs accordingly. That entity then finds

that it must resist enforcement of an inconsistent U.S.

judgment in Bermuda or defend itself in a U.S. court

under a legal regime to which it had not the slightest

notion it was subject.

RISA Bermuda is also concerned by this alternative

possibility: a Bermudian court supervising the

liquidation of the Bermudian entity concludes that the

transaction should be set aside as a matter of Bermuda

law, and the transferee is ordered to repay a sum of

money to the Bermuda liquidator. The transferee

complies with the Bermuda Court’s order (since the

Bermuda Court is the court with competent

jurisdiction), thereby discharging its liability under

Bermuda law. That entity then finds that it must resist

enforcement of an inconsistent U.S. legal proceeding or

a U.S. judgment, brought at the initiative of a U.S.

bankruptcy trustee, arising out of the very same

transaction but giving rise to a duplicative (and

potentially greater) liability.

12

The Second Circuit’s opinion creates a very real risk

of two obviously unfair results. In either case, a

Bermudian or Bermudian-related remote transferee

finds that it cannot rely on the judgment of the only

courts to which it knowingly subjected itself; in the

first instance, it is insecure in its property rights as

adjudicated by a Bermudian court, and in the second,

it is subject to the risk of a double liability being

enforced against it or its assets. Neither consequence

would be reasonable or fair. And both would result

from the extraterritorial application of U.S. law to a

Bermudian transaction.

II. The Second Circuit Minimized the

International Consequences of Its Decision on

the Legal Systems of Foreign Nations

In addition to its effect on foreign parties, the

Second Circuit’s decision is likely to put Bermudian

courts and Bermuda liquidators in a difficult position

from a conflicts of laws perspective. In the situation we

are considering, the Bermudian courts have carefully

considered a matter between two entities properly

subject to their jurisdiction, and which had engaged in

a transaction subject to Bermudian law. They have

then rendered a decision to balance the legal and

equitable interests of those parties consistent with the

law, the public interest, and the public policy

determinations of Bermuda.

The Bermudian courts and the parties before it

might then be faced with an attempt to enforce a

conflicting U.S. court decision that has decided,

without reference, regard or accountability to the

Bermudian legal system, that the Bermudian entities

13

whose case they have already adjudicated must return

cash to a U.S. debtor with whom they have not

transacted any business, purportedly as an exercise of

U.S. domestic law.

In those circumstances, the Bermudian courts

certainly have the power to decline to enforce the U.S.

judgment as being inconsistent with the previous

Bermudian judgment. A Bermuda court may

reasonably conclude that Bermudian public policy does

not allow a U.S. court to exercise jurisdiction over the

parties or the subject matter of the transaction as a

matter of Bermuda’s conflicts of laws rules. Indeed, in

Vizcaya Partners Limited v. Picard, (2016) U.K.P.C. 5,

the Privy Council (following the United Kingdom

Supreme Court’s decision in Rubin v. Eurofinance,

(2012) U.K.S.C. 46) specifically refused to enforce a

U.S. Bankruptcy Court judgment in Gibraltar. The

U.S. Bankruptcy Court judgment had been entered in

default under the anti-avoidance provisions of the U.S.

Bankruptcy Code (including under Section 550 against

certain secondary foreign transferees), in

circumstances where the alleged judgment debtors had

no presence in the United States of America and had

not submitted to the jurisdiction of the U.S.

Bankruptcy Court.

It would be unfortunate if the courts of the U.S. and

the courts of friendly foreign jurisdictions such as

Bermuda were required to be increasingly at odds with

one another, as regards the domestic enforceability of

each other’s judgments, thereby undermining

principles of comity. In the case of Bermuda, the U.S.

courts are not dealing with a hostile or unhelpful

14

jurisdiction, or one in which the rule of law is

unreliable, or one in which the U.S. bankruptcy trustee

would have no other legal options to pursue.

Bermudian courts commonly deal with complex

matters that cross national borders. Even in the

absence of an international treaty regime governing

insolvency, it is routine for Bermudian courts to

coordinate with the courts of other jurisdictions,

including the U.S., under well understood principles of

international comity and common law.

Put simply, the Second Circuit’s decision creates a

potential for conflict between the courts of two

jurisdictions where none is necessary, and where all

the necessary mechanisms for cooperation exist. It is no

hardship to expect a U.S. trustee to utilize the

mechanisms provided for under Bermudian law when

attacking a transaction that has occurred in Bermuda

involving Bermudian parties.

The tools are certainly available. While Bermuda

has no statutory equivalent to Chapter 15 of the U.S.

Bankruptcy Code, section 426 of the UK’s Insolvency

Act 1986, or the UK’s Cross-Border Insolvency

Regulations 2006, the Bermuda Courts have indicated

their willingness, as a matter of common law, to take

into account all the circumstances of the case, including

a company’s place of incorporation and center of main

interests and the forum with the closest connection to

the issues in question.10 The Supreme Court of

10

See Re ICO Global Commcn’s (Holdings) Ltd., [1999] Bda LR 69;

Re Refco Capital Markets Ltd., [2006] Bda LR 94; Re Celestial

Nutrifoods Ltd., [2017] Bda LR 11; Re C&J Energy Servs. Ltd.,

[2017] Bda LR 22.

15

Bermuda has repeatedly confirmed, following the Privy

Council decision in Cambridge Gas Transportation

Corp v. Navigator Holdings plc,11 that as a matter of

common law the Supreme Court of Bermuda may (and

usually does) recognize liquidators appointed by the

court of a debtor’s domicile and the effects of a windingup order made by that court, and has discretion

pursuant to such recognition to assist the primary

liquidation court by doing whatever it could have done

in the case of a domestic insolvency.

There is a long history of successful cooperation

between the U.S. and Bermudian courts under current

law and principles of comity. For example, Bermuda

liquidators of Bermuda companies have applied for

recognition under Chapter 15 of the U.S. Bankruptcy

Code (and its statutory predecessors).12 The Supreme

Court of Bermuda has on a number of occasions issued

letters of request to foreign courts asking for foreign

court recognition of, and assistance to, Bermudian

liquidators of Bermudian companies.13 There have been

a number of restructuring cases in which solvent or

insolvent international companies with a Bermuda

connection have been restructured or liquidated with

the use of parallel schemes of arrangement (or

equivalent insurance business transfer schemes)

11

(2007) 1 A.C. 508.

12

See, e.g., In re Bd. of Dirs. of Hopewell Int’l Ins. Ltd., 275 B.R.

699 (S.D.N.Y. 2002), affirming 238 B.R. 25 (Bankr. S.D.N.Y. 1999);

In re Millennium Global Emerging Credit Master Fund Ltd., 474

B.R. 88, 92 (S.D.N.Y. 2012), affirming 458 B.R. 63 (Bankr.

S.D.N.Y. 2011); In re Gerova,482 B.R. at 96.

13

See, e.g., Re Focus Ins. Co., (1997) 1 B.C.L.C. 219.

16

sanctioned by the Bermudian courts and appropriate

foreign courts.14 There have been a number of cases in

which foreign companies with a Bermudian connection

have been placed into compulsory or provisional

liquidation both by foreign courts in their jurisdiction

of incorporation and by the Supreme Court of

Bermuda, whether on an ancillary basis or a primary

basis.15 The Supreme Court of Bermuda has also issued

various Practice Directions, setting out the guidelines

applicable to court-to-court communications and cooperation in cross-border insolvency cases.16 Prior to

those guidelines, there had been a number of cases in

which protocols had been agreed and approved on an

ad hoc basis.

Moreover, Bermudian statutory and common law

recognize many of the same categories of avoidable

transactions that U.S. law recognizes (though

sometimes under different names): fraudulent

conveyances, fraudulent preferential transfers, postpetition dispositions, unlawful returns of capital,

restitution and unjust enrichment, etc. Each of them

14

See Re ICO Global Commcn’s (Holdings) Ltd., [1999] Bda LR 69;

Re Refco Capital Markets Ltd., [2006] Bda LR 94; Re Celestial

Nutrifoods Ltd., [2017] Bda LR 11; Re C&J Energy Servs. Ltd.,

[2017] Bda LR 22; Re Seadrill Ltd., [2018] SC Bda 30 Com.

15

See, e.g., PwC Bermuda v. Kingate Global Fund Ltd., [2011] CA

Bda 6 Civ; Re Seadrill Ltd., [2018] SC Bda 30 Com.

16

Practice Direction, Circular No 6 of 2017, Guidelines for

Communication and Cooperation between Courts in Cross-Border

Insolvency Matters (adopting into Bermuda law the Judicial

Insolvency Network Guidelines), Practice Direction, Circular No

17 of 2007, Guidelines Applicable to Court-to-Court

Communications in Cross-Border Cases.

17

has its own body of Bermudian law, reflecting the

public policies derived from the statutory and common

law of Bermuda. In some cases, the particular outcome

may be more favorable to a liquidator, in others less

favorable. But in every decided case, the outcome

reflects Bermudian policy judgments—as determined

by the Bermuda courts, including the Privy Council as

Bermuda’s final appellate court.

CONCLUSION

In conclusion, for the reasons set out above, RISA

Bermuda respectfully submits that the Second Circuit

paid insufficient regard to the interests of non-U.S.

jurisdictions such as Bermuda, including the interests

of Bermuda’s citizens, Bermuda’s companies, and the

Bermuda courts when it deemed the application of U.S.

law purely domestic even if it reversed multiple

transactions and transfers that were between foreign

parties, under foreign law, and with no apparent

connection to the United States.

Substantial commercial uncertainty is likely to

result in Bermuda as a result of the Second Circuit’s

decision, because (1) liquidators appointed over

Bermuda companies by the Supreme Court of Bermuda

are likely to find themselves in

conflict with

bankruptcy trustees appointed by U.S. Courts with

respect to overlapping or competing claims to the same

or related assets or liabilities; (2) contracting

counterparties with an investment fund company or

other company incorporated in Bermuda, whose

contracts are governed by Bermuda law and subject to

Bermuda jurisdiction, might find themselves

unexpectedly exposed to the contingent liabilities

18

associated with the extraterritorial application of U.S.

bankruptcy law, and (3) different results flowing from

the application of Bermuda insolvency law and U.S.

insolvency law in related cases give rise to the risk of

double liability and inconsistent judgments.

RISA Bermuda therefore respectfully urges this

Court to grant certiorari so that the issue of

extraterritoriality and the consequences to

international comity may be more fully considered.

Respectfully submitted,

S. CHRISTOPHER PROVENZANO

Counsel of Record

MICHAEL A. GRANNE

JENNIFER BADER

PROVENZANO GRANNE & BADER LLP

1330 Avenue of the Americas

Suite 23A

New York, NY 10019

(212) 859-3516

chris.provenzano@pgbfirm.com

Counsel for Amicus Curiae

RISA Bermuda