Replies to post #115794 on Lehman Brothers Financial SA (LEHNQ)

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The reason Enasarco's claim was accepted in the broader U.S. bankruptcy distribution, despite its initial rejection in the Swiss proceeding, likely stems from fundamental differences between Swiss and U.S. bankruptcy laws and the legal framework of Chapter 15 of the U.S. Bankruptcy Code.
Territoriality vs. Comity: Swiss bankruptcy law generally adheres to a principle of territoriality, meaning foreign bankruptcy decrees often require formal recognition to have legal effect within Switzerland, and Swiss authorities apply Swiss law in local proceedings. The initial rejection was due to Enasarco missing strict local deadlines.
Chapter 15 Framework: The U.S. Chapter 15, which is based on the UNCITRAL Model Law on Cross-Border Insolvency, promotes cooperation and deference (comity) to foreign insolvency proceedings. It is designed to assist foreign tribunals and allows a foreign representative to petition a U.S. court for recognition of a foreign proceeding.
Protection of Creditors' Interests: A key provision of Chapter 15 is that it aims to ensure the interests of all creditors are sufficiently protected. U.S. courts can grant a broad range of relief "to preserve the foreign debtor's assets or the interests of creditors". U.S. law generally prohibits discrimination against foreign creditors (with limited exceptions).
U.S. Jurisdiction: The U.S. court likely had jurisdiction over assets located within the United States. While Chapter 15 emphasizes deference, U.S. courts still apply U.S. law regarding assets within its territorial jurisdiction and are not required to give effect to foreign orders that violate U.S. public policy or fail to protect creditors' interests adequately.
Enasarco likely utilized the mechanisms within the U.S. Chapter 15 case to have its claim adjudicated or included in the U.S. distribution, arguing that a complete disallowance based purely on a missed procedural deadline under strict Swiss law would be inequitable under the broader U.S. principles of equal creditor treatment and comity, particularly if significant assets were located or controlled within the U.S. jurisdiction.

AI Overview



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Enasarco's claim was ultimately accepted for the broader U.S. bankruptcy distribution because, despite failing strict Swiss deadlines, subsequent legal actions, arbitration, and stipulations recognized the claim's legitimacy, allowing it to be included in the overall insolvency distribution. While the Swiss proceeding initially rejected the claim due to missed deadlines, the ongoing international arbitration and subsequent legal maneuvers permitted the claim's inclusion in the final settlement.
Key factors for the eventual recognition included:
Arbitral Recognition: The Swiss Supreme Court noted that claims against a bankrupt party do not lose their arbitrability, and an arbitral award, if initiated before the bankruptcy, can be enforced.
International Coordination: The final, contested, and long-running dispute was resolved through stipulations, allowing for recognition in the broader U.S. context.
Procedural Cures: Although Enasarco missed the formal Swiss deadlines, the subsequent legal actions overcame these initial obstacles, allowing for the claim to be recognized.
Essentially, the claim was accepted because the legal challenges and the arbitration process validated the claim, bypassing the initial, procedural, and timely failures in the Swiss liquidation process.