In re Condor Flugdienst GMBH

• Decision Date: 26 March 2021
• Docket Number: Case No. 20bk18167
• Citation: 627 B.R. 366
• Parties: IN RE: CONDOR FLUGDIENST GMBH, Debtor in a Foreign Proceeding.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

627 B.R. 366

IN RE: CONDOR FLUGDIENST GMBH, Debtor in a Foreign Proceeding.

Case No. 20bk18167

United States Bankruptcy Court, N.D. Illinois, Eastern Division.

Signed March 26, 2021

Attorneys for Christoph Debus, Ralf Teckentrup and Christian Schmitt, Foreign Representatives of Condor Flugdienst GmbH: Richard A. Bixter, John J. Monaghan and Kathleen St. John, Holland and Knight LLP, Chicago, Illinois and Boston, Massachusetts

German counsel to the Foreign Representatives: Dr. H. Philipp Esser, Schultz & Braun Rechtsanwaltsgesellschaft, Achern, Germany

Creditors appearing pro se: Elena and Rumen Mitzev, Vista, California Walter Wayne, Cool, California

Timothy A. Barnes, United States Bankruptcy Judge

MEMORANDUM DECISION

This matter comes on for consideration on the Foreign Representatives’ Motion for Order Granting Full Force and Effect to German Confirmation Order Pursuant to 11 U.S.C. §§ 105(a), 1521(a), 1525(a), and 1527 and Granting Related Relief (the "Motion") brought by Christoph Debus, Ralf Teckentrup and Christian Schmitt, foreign representatives (the "Foreign Representatives")¹ of debtor in foreign proceeding Condor Flugdienst GmbH ("Condor").

A hearing was conducted on the Motion on February 22, 2021 (the "Hearing"), at which hearing several pro se United States creditors appeared. One creditor, Walter Wayne, voiced at the Hearing objections to and concerns regarding the Motion. As a result of Mr. Wayne's objections and concerns, the court took the Motion under advisement, directing the Foreign Representatives to both revise and submit their proposed order on the Motion and to submit further explanation of how United States creditors were afforded notice of the German insolvency proceedings of Condor.

Having considered the Motion and all exhibits and filings made in conjunction therewith, the statements made at the hearing and the further filings made at the direction of the court, the court grants the Motion for the reasons stated in this Memorandum Decision.

JURISDICTION

The federal district courts have "original and exclusive jurisdiction" of all cases under title 11 of the United States Code, 11 U.S.C. § 101, et seq. (the "Bankruptcy Code"). 28 U.S.C. § 1334(a). The federal district courts also have "original but not exclusive jurisdiction" of all civil proceedings arising under the Bankruptcy Code, or arising in or related to cases under the Bankruptcy Code. 28 U.S.C. § 1334(b). District courts may, however, refer these cases to the bankruptcy judges for their districts. 28 U.S.C. § 157(a). In accordance with section 157(a), the District Court for the Northern District of Illinois has referred all of its bankruptcy cases to the Bankruptcy Court for the Northern District of Illinois. N.D. Ill. Internal Operating Procedure 15(a).

A bankruptcy judge to whom a case has been referred may enter final judgment on any core proceeding arising under the Bankruptcy Code or arising in a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(1). Bankruptcy judges must therefore determine, on motion or sua sponte, whether a proceeding is a core proceeding or is otherwise related to a case under the Bankruptcy Code. 28 U.S.C. § 157(b)(3). As to the former, the court may hear and determine such matters. 28 U.S.C. § 157(b)(1). As to the latter, the bankruptcy court may hear the matters, but may not decide them without the consent of the parties. 28 U.S.C. §§ 157(b)(1) & (c) ; In re Radco Merch. Servs., Inc., 111 B.R. 684, 686 (N.D. Ill. 1990). Instead, the bankruptcy court must "submit proposed findings of fact and conclusions of law to the district court, and any final order or judgment shall be entered by the district judge after considering the bankruptcy judge's proposed findings and conclusions and after reviewing de novo those matters to which any party has timely and specifically objected." 28 U.S.C. § 157(c)(1).

The scope of what is or is not a core proceeding when arising in a chapter 15 case is unsettled. See In re Ace Track Co., Ltd., 556 B.R. 887, 890 (Bankr. N.D. Ill. 2016) (Barnes, J.); In re Bluberi Gaming Techs., Inc., et al., 554 B.R. 841, 843 (Bankr. N.D. Ill. 2016) (Barnes, J.). As was stated in Ace Track

Recognition of foreign proceedings and other matters under chapter 15 of the Bankruptcy Code are expressly core proceedings. 28 U.S.C. § 157(b)(2)(P). At least one court has held, however, that the "other matters" language from this section is not outcome determinative. In re Fairfield Sentry Ltd. Litig., 458 B.R. 665, 676 (S.D.N.Y. 2011) ("that ‘recognition of foreign proceedings and other matters under chapter 15 of title 11’ are core proceedings is not relevant" to a determination of whether such "other matters" are in fact core proceedings). Put another way, the "other matters" catchall operates in much the same way as section 105 of the Bankruptcy Code ; it helps fill in the gaps but does not allow the court to act where it clearly should not. See, e.g., Mobil Oil Corp. v. Higginbotham , 436 U.S. 618, 625, 98 S.Ct. 2010, 56 L.Ed.2d 581 (1978) ("There is a basic difference between filling a gap left by Congress’ silence and rewriting rules that Congress has affirmatively and specifically enacted."); Levit v. Ingersoll Rand Fin. Corp, 874 F.2d 1186, 1197—98 (7th Cir. 1989) (same); see also Bluberi Gaming Techs., 554 B.R. 841, 2016 WL 4167281, at *1.

Ace Track, 556 B.R. at 890.

Here, Condor and the Foreign Representatives have voluntarily submitted to this court's jurisdiction by petitioning for chapter 15 relief. Though chapter 15 has no claims submission process whereupon a creditor's consent may be based, neither of the creditors who appeared at the Hearing voiced any concerns with respect to this court's jurisdiction and authority. Wellness Int'l Network, Ltd. v. Sharif, 575 U.S. 665, 669, 135 S. Ct. 1932, 1939, 191 L.Ed.2d 911 (2015) (parties may consent to bankruptcy court adjudication); Richer v. Morehead, 798 F.3d 487, 490 (7th Cir. 2015) (such consent may be implied by failure to raise objections).

Further, a question of relief available upon recognition under section 1521(a) of the Bankruptcy Code, cooperation with a foreign court under section 1525(a) or implementation of cooperation under section 1527 are each clearly creatures of the statute itself, the Bankruptcy Code, and thus are each core proceedings arising under title 11 of the United States Code. 28 U.S.C. § 157(b)(1). So too is an exercise of the court's power under section 105 of the Bankruptcy Code. See, e.g., Ace Track , 556 B.R. at 899 ("Granting ... a request under section 105 is clearly within the court's authority); see also Caesars Entm't Operating Co., Inc. v. BOKF, N.A. (In re Caesars Entm't Operating Co., Inc.), 808 F.3d 1186, 1188 (7th Cir. 2015) ( section 105 "grants the extensive equitable powers that bankruptcy courts need in order to be able to perform their statutory duties").

Thus, the court has jurisdiction and constitutional authority to hear and determine this matter.

HISTORY

Condor is a commercial airline based in Germany. Founded in 1955, it has operated continuously since 1956 to the present day. Over the years, ownership of Condor shifted between various entities. Ultimately, however, Condor was and is majority owned by and controlled through the Thomas Cook Group companies.

In large part as a result of the downturn in the travel industry caused by present, worldwide pandemic, the Thomas Cook Group was ordered into compulsory liquidation in the United Kingdom on September 23, 2019. The liquidation of the Thomas Cook Group thereafter resulted in liquidation proceedings for Condor as well. On September 26, 2019, the Frankfurt am Main County Court, Insolvency Court (the "German Court"), entered a preliminary decree qualifying Condor as a debtor under German insolvency law. On December 1, 2019, the German Court entered an order formally commencing a permanent insolvency proceeding for Condor (the "Foreign Proceeding").

On October 2, 2020, the Foreign Representatives commenced the above-captioned chapter 15 case, seeking recognition of the Foreign Proceeding as a foreign main proceeding as defined in section 1502(4). On October 8, 2020, the court conducted a hearing (the "Provisional Hearing") on, among other items, the Foreign Representatives’:

• Chapter 15 Petition for Recognition of a Foreign Proceeding [Dkt. No. 1] (the "Petition");

• Verified Petition for Recognition of Foreign Insolvency Proceeding to Sections 1504, 1509, 1517 and 1521 of the Bankruptcy Code (the "Verified Petition") [Dkt No. 3]; and

• Motion for (I) Provisional Relief Pursuant to 11 U.S.C. §§ 105(a) and 1519 and (II) Approval of Shortened Notice and Limited Notice Pursuant to Fed. R. Bankr. P. 9006(c) and 9007 [Dkt. No. 2] (the "Motion for Provisional Relief").

At the Provisional Hearing, the court concluded that the German Court is a foreign court as defined in section 1502(3) of the Bankruptcy Code, that the Foreign Proceeding is a collective judicial proceeding in a foreign country under a law relating to insolvency in which proceeding the assets and affairs of Condor are subject to supervision by the German Court for the purposes of reorganization or liquidation, and thus is a foreign proceeding as defined in section 101(23) of the Bankruptcy Code and that Condor is therefore a debtor as defined in section 1502(1) of the Bankruptcy Code. The court further concluded that the Foreign Representatives are persons authorized in the Foreign Proceeding to act as representatives of such foreign proceeding, and thus are foreign representatives as defined in section 101(24) of the Bankruptcy Code.

Given the foregoing conclusions and given that the relief sought in the Motion for Provisional Relief was within the relief contemplated by section 1519 of the Bankruptcy Code and that such relief was urgently needed to protect the assets of Condor and the interests of its creditors, the court in the absence of an objection granted the Motion for...