IN RE BRITISH AMERICAN INS. CO. LTD.

• Decision Date: 22 March 2010
• Docket Number: 09-35888-EPK.,No. 09-31881-EPK,09-31881-EPK
• Citation: 425 B.R. 884
• Parties: In re BRITISH AMERICAN INSURANCE COMPANY LIMITED, Debtor in a Foreign Proceeding.
• Court: U.S. Bankruptcy Court — Southern District of Florida

425 B.R. 884

In re BRITISH AMERICAN INSURANCE COMPANY LIMITED, Debtor in a Foreign Proceeding.

Nos. 09-31881-EPK, 09-35888-EPK.

United States Bankruptcy Court, S.D. Florida, West Palm Beach Division.

March 22, 2010.

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Leyza F. Blanco, Esq., Miami, FL, for Debtor.

OPINION ON RECOGNITION OF FOREIGN PROCEEDINGS

ERIK P. KIMBALL, Bankruptcy Judge.

Two petitioners, one appointed in an action pending in the Commonwealth of The Bahamas ("Bahamas") and a second appointed in an action pending in Saint Vincent and the Grenadines ("SVG"), seek recognition of their proceedings under 11 U.S.C. § 1517. The foreign actions relate to the same debtor, British American Insurance Company, Limited ("BAICO"). Petitioner for the Bahamas action seeks recognition of such action as either a foreign main or a foreign nonmain proceeding. Petitioner for the SVG action seeks recognition of such action as a foreign nonmain proceeding.

On the evidence presented, the Court finds that both foreign actions are "foreign proceedings" as defined in 11 U.S.C. § 101(23). Thus, each proceeding meets the threshold for recognition under 11 U.S.C. § 1517.

With regard to the Bahamas proceeding, the petitioner's activities as court-appointed judicial manager are the only evidence offered to support petitioner's allegations that BAICO has the center of its main interest or an establishment in the Bahamas. In the circumstances of this case, such evidence does not support a finding that BAICO has the center of its main interest or an establishment in the Bahamas. Consequently, the Court denies the petition to recognize the Bahamas proceeding as a foreign main or foreign nonmain proceeding.

With regard to the SVG proceeding, the Court finds that BAICO has an establishment in SVG and recognizes the SVG proceeding as a foreign nonmain proceeding.

The petitions request coordination of foreign proceedings under 11 U.S.C. § 1530. Section 1530 contemplates coordination of multiple foreign proceedings recognized under chapter 15. The Court has recognized only a single foreign nonmain proceeding, so relief under 11 U.S.C. § 1530 is denied.

To the extent the petition relating to the Bahamas proceeding requests recognition of multiple foreign actions, through a single petition, such relief is denied. 11 U.S.C. §§ 1504, 1509, and 1515 require a separate petition for each foreign action for which recognition is sought. The Court accepts the petition as requesting recognition only of the proceeding pending in the Bahamas.

Petitioner for the SVG proceeding moves for relief under 11 U.S.C. § 1521. The Court will conduct a further hearing to address such request. In the meantime, the interim relief granted under 11 U.S.C. § 1519 will remain in effect pending order of the Court.

I. BACKGROUND

On October 9, 2009, Juan M. Lopez a/k/a John M. Lopez ("Mr.Lopez"), as duly appointed Judicial Manager for BAICO, filed an application (the "Bahamas Petition") with this Court pursuant to sections 1515 and 1517 of 11 U.S.C. §§ 101 et seq. (the "Bankruptcy Code").¹ The Bahamas Petition requests entry of an order recognizing a judicial action (the "Bahamas Proceeding") pending before the Commercial Division of the Supreme Court of the Commonwealth of The Bahamas (the "Bahamas Court") as a foreign main proceeding or, in the alternative, as a foreign nonmain proceeding. Upon recognition, the Bahamas Petition requests relief under sections 1520 and/or 1521, as well as coordination of multiple foreign proceedings under section 1530.

On October 29, 2009, this Court entered an order DE 11 granting provisional relief under sections 105(a) and 1519 including, without limitation, a stay of execution against assets of BAICO. The provisional relief granted by that order remains in effect subject to further order of this Court DE 24.

On November 6, 2009, the Court commenced an evidentiary hearing on the Bahamas Petition. The presentation of evidence was not complete on that date and so the Court continued the evidentiary hearing.

On November 23, 2009, Brian Glasgow ("Mr. Glasgow" and with Mr. Lopez, the "Petitioners"), as duly appointed Judicial Manager for BAICO, filed a petition (the "SVG Petition" and with the Bahamas Petition, the "Petitions") pursuant to sections 1515 and 1517. The SVG Petition requests entry of an order recognizing a judicial action (the "SVG Proceeding") pending before the Eastern Caribbean Supreme Court in the High Court of Justice Saint Vincent and the Grenadines (the "SVG Court") as a foreign nonmain proceeding. Upon recognition, the SVG Petition requests relief under section 1521, as well as coordination of multiple foreign proceedings under section 1530.

On December 1, 2009, the Court held a preliminary hearing on the SVG Petition and a hearing on a motion to jointly administer the two cases relating to the Petitions. The Court determined to jointly administer the cases and to conduct an evidentiary hearing on the SVG Petition concurrently with a continued evidentiary hearing on the Bahamas Petition on February 1, 2010.

Green Island Holdings, LLC ("Green Island"), a creditor of BAICO, opposes recognition of both the Bahamas Proceeding and the SVG Proceeding.

The Court has jurisdiction over these proceedings pursuant to 28 U.S.C. §§ 157(b) and 1334(b). These are core proceedings pursuant to 28 U.S.C. § 157(b)(2)(P). Venue is proper in this district under 28 U.S.C. § 1410.

II. FACTS

Debtor BAICO

BAICO is an insurance company chartered under the laws of the Bahamas. It has or had branch operations in Anguilla, Antigua and Barbuda, Bermuda, The Cayman Islands, Dominica, Guyana, Grenada, Montserrat, Saint Kitts and Nevis, Panama, Saint Lucia, Curacao, the Turks and Caicos Islands, and SVG. BAICO also operates or operated through subsidiaries in Barbados, Trinidad and Tobago ("Trinidad"), Curacao, Aruba, the Turks and Caicos Islands, and the British Virgin Islands.

Creditor Green Island

Green Island is a Florida limited liability company. It is the plaintiff in an action against BAICO and British American Isle of Venice (BVI), Ltd. in the United States District Court for the Southern District of Florida BAICO Ex. 114, and is the plaintiff in an action against BAICO in the Ninth Judicial Circuit in and for Osceola County, Florida. 09-31881 DE 2 Pet. ¶ 22.

BAICO Operations Before Appointment of Petitioners

For several years prior to the filing of the Petitions in this Court, and thus prior to appointment of the Petitioners by the Bahamas and SVG Courts, BAICO (a) did not issue insurance policies in or from the Bahamas, (b) did not sell policies to residents of the Bahamas, (c) did no claims adjustment or claims processing in the Bahamas, and (d) had no employees in the Bahamas. At the time of Mr. Lopez's appointment by the Bahamas Court, BAICO had no bank accounts in the Bahamas. For at least a year prior to Mr. Lopez's appointment, none of BAICO's officers or directors resided in the Bahamas. As of Mr. Lopez's appointment, BAICO's only ties to the Bahamas were that it was chartered in that country and that it had a registered agent in the Bahamas (a law firm). The registered agent maintained required corporate information for BAICO. Mr. Lopez confirmed that at the time of his appointment BAICO was not transacting business in the Bahamas.

Nearly all of BAICO's operations were undertaken by subsidiaries in Trinidad that acted as BAICO's agents. BAICO has two subsidiaries incorporated under the laws of and operated in Trinidad, British-American Insurance Company (Trinidad) Limited ("BAT") and BA Management Services Limited ("BA Management" and with BAT, the "Trinidad Subsidiaries"). BAICO owns 99.86% of BAT and 100% of BA Management. BAICO Ex. 103 at 26, 141, 144. Prior to 2005, BAT was the operational hub of the BAICO group of companies, performing various administrative functions. In 2005, to achieve certain tax benefits, BA Management was formed to assume this role; it commenced operations in 2006. BAICO Ex. 103 at 145. BAICO and BA Management are parties to a Services Agreement (the "Services Agreement"). BAICO Ex. 107. Under the Services Agreement, BA Management agreed to provide all financial, administrative, marketing, information technology, investment, actuarial, and legal services for BAICO. BA Management's responsibilities include policy administration and claims processing for the BAICO group. BAICO EX. 103 at 145. Mr. Lopez testified that BAICO paid for these services and the cost was shared among BAICO's various branch operations.

Lennox McCartney, the Insurance Commissioner for the Bahamas, testified that certain members of BAICO's board of directors met with him in the Bahamas in 2008 and 2009, at his request, to address the company's financial difficulties. Other than a meeting convened on April 20, 2009 for the purpose of changing the company's registered office BAICO Ex. 108, these meetings with the Insurance Commissioner were the only business conducted by BAICO board members in the Bahamas in recent years. The Insurance Commission then instituted restrictions on BAICO intended to "ring fence" BAICO's operations to insulate against further loss.

As of June, 2009, BAICO had eight directors. Four were resident in Trinidad, one in the United States, one in Barbados, one in Grenada, and one in Saint Kitts. On June 30, 2009, the remaining members of BAICO's board of directors resigned. Appointment of Mr. Lopez by Bahamas Court

By order dated September 8, 2009 (the "Bahamas Order of Appointment") BAICO Ex. 17, the Bahamas Court appointed Mr. Lopez as Judicial Manager for BAICO under Section 77(1)(b) of the Insurance Act, 2005 (the "Bahamas Insurance Act"). The Bahamas Order of Appointment empowers Mr. Lopez to: (a) ascertain the assets of BAICO and their location and take steps to obtain possession of such assets; (b) carry on all or any portion of the...