In re Loy
| Decision Date | 05 July 2011 |
| Docket Number | Case No. 07-51040-FJS,Case No. 09-51379-FJS |
| Court | U.S. Bankruptcy Court — Eastern District of Virginia |
| Parties | In re: Jonathan A. Loy Debtor. |
On May 20, 2011, the Court held a hearing on the Debtor's "Motion Objecting To Court's Orders And Opinion Of March 30, 2011 & Request For Leave to Appeal" (the "Motion for Leave to Appeal"). (Case No. 07-51040-FJS, Doc. No. 166.)1 The Debtor filed the Motion for Leave to Appeal because, on March 30, 2011, the Court entered an Order denying without prejudice the Debtor's motion to revoke recognition of a foreign main proceeding (Doc. Nos. 161, 162; the "March 30 Order"). In response to the March 30 Order, pursuant to 28 U.S.C. § 1292(b), the Debtor sought certification for interlocutory appeal to the United States District Court for the Eastern District of Virginia. For the reasons stated below, the Motion for Leave to Appeal is DENIED. The Court will not certify the appeal for interlocutory review. The Court will afford the Debtor the opportunity to complete the factual record before the Court.
The Court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 157(a) and 1334 and the General Order of Reference from the United States District Court for the Eastern District of Virginia, dated August 15, 1984. This is a core proceeding pursuant to 28 U.S.C. §157(b)(2)(A) and (P), in which final orders of judgments may be entered by a bankruptcy judge. Venue is appropriate in this Court pursuant to 28 U.S.C. §§ 1408(1) and 1409(a).
Jonathan A. Loy (the "Debtor") is a British citizen, appearing pro se, who resided lawfully in Hampton, Virginia until mid-to-late December 2010. The Debtor is the subject of a pending Chapter 15 proceeding before the Court, filed on October 28, 2007. (Doc. No. 1.) The Debtor is also the subject of a pending Chapter 7 case before the Court, filed on August 26, 2009. (Case No. 09-51379-FJS, Doc. No. 1.) On September 15, 2009, the Debtor sought termination of recognition of the Chapter 15 case (the "Motion to Revoke Recognition"). (Doc. No. 71.) After extensive briefing and multiple hearings, the Court issued the March 30 Order that denied without prejudice the Motion to Revoke Recognition. (Doc. No. 161.)
For a full recitation of the factual and procedural history of (i) the Debtor's Chapter 15 case, (ii) the Debtor's Chapter 7 case, (iii) and the insolvency matters pending against the Debtor in the United Kingdom, the March 30 Order provides a comprehensive summary of all of the proceedings. (Doc. No. 161, at 2-25.) What follows provides the facts pertinent to the Motion for Leave to Appeal and developments since the Court issued the March 30 Order.
Chapter 15 of Title 11 of the United States Code allows a foreign representative of a foreign bankruptcy proceeding to apply for recognition of that proceeding in the United States. 11 U.S.C. §§ 1501(b), 1512, 1515, 1517 (2006). Once the foreign proceeding qualifies for recognition, the foreign representative is permitted to sue or be sued in the United States' courts. 11 U.S.C. §§ 1520(c), 1521, 1523. A "foreign main proceeding" is defined as "a foreign proceeding pending in the country where the debtor has the center of its main interest" (or
"COMI"). 11 U.S.C. §§ 1502(4), 1515(a).
In this case, on August 9, 2002, the Debtor purchased real property in Hampton, Virginia, located at 200 Creekview Lane (the "Creekview Property"). The Debtor and his family relocated to Hampton, Virginia from the United Kingdom in November 2004.2 On August 17, 2006, Deputy District Judge Ayles of the Exeter Country Court, England issued an order adjudging the Debtor a "bankrupt" and appointed Jeremiah O'Sullivan (the "English Trustee") as trustee to oversee the Debtor's English Bankruptcy proceedings. (Doc. No. 3, Ex. F.) Subsequently, on October 28, 2007, the English Trustee, by counsel, filed the Petition for Recognition Of Foreign Main Proceeding, and supporting memorandum. (Doc. Nos. 1, 3.) On December 18, 2007, Judge St. John granted recognition of the foreign main proceeding, pursuant to 11 U.S.C. § 1517 (the "Recognition Order"). (Doc. Nos. 22, 23.); In re Loy, 380 B.R. 154 (Bankr. E.D. Va. 2007).
On September 15, 2009, the Debtor filed the Motion to Revoke Recognition. (Doc. No. 71.)3 Section 1517(d)4 of the Code allows courts to revisit a prior grant of recognition. The Debtor argued that revisiting the Recognition Order was appropriate because "facts were misrepresented to the court by the petitioner and important evidence was not presented to thecourt." (Doc. No. 71, ¶ 6.)
On November 19, 2010—after the parties submitted multiple briefs and supplementary briefs on the issue of recognition—the Court held a Status Hearing on the Motion to Revoke Recognition. (Case No. 09-51379-FJS, Doc. No. 215.) The Court stated at that hearing that it was inclined to terminate recognition. Ultimately, the Court afforded the parties the opportunity to submit final briefs, and scheduled a final hearing for December 14, 2010 in Norfolk, Virginia, a date and location set specifically to accommodate the Debtor's travel plans. (Nov. 19, 2010 Hr'g Tr. at 29:21-31:17.)
On December 14, 2010, the Court held a final hearing on the Motion to Revoke Recognition. (Case No. 09-51379-FJS, Doc. Nos. 219, 220.) The Court announced that it would enter an Order terminating recognition. (Dec. 14, 2010 Hr'g Tr. at 93:11-12.) That finding was premised on the Debtor's repeated representations in support of his argument that his COMI was at all relevant times Hampton, Virginia, not the United Kingdom. (Dec. 14, 2010 Hr'g Tr. at 88:23.) The Court stated that, following the hearing, it would reduce to a written Memorandum Opinion and Orders its rulings. The Court also stated that the forthcoming rulings would comprise a final, appealable judgment. (Dec. 14, 2010 Hr'g Tr. at 94:25-95:15.)
On January 4, 2011, however, the English Trustee filed a Post Hearing Status Report regarding the Debtor's COMI (the "Post Hearing Status Report"). (Doc. No. 144.) The Post Hearing Status Report arose out of an electronic-mail communication sent by the Debtor to counsel for the English Trustee. The e-mail message indicates that, as of January 4, 2011, the Debtor relocated to Meslan, France. Rather than terminate recognition, the Court convened a Status Hearing to schedule a Final Hearing at which (1) the Court would inquire into the facts behind the Debtor's statements that he had relocated to France; and (2) theDebtor would be required to appear in person before the Court. The Court afforded the Debtor the convenience of appearing by telephone. (Doc. No. 147.)
On February 25, 2011, the Court held a Status Hearing. The purposes of the Status Hearing was to provide the Debtor with notice of the Court's concerns about the developments in the case and to afford the Debtor the opportunity to schedule a full hearing at which he could appear and present evidence in support of his position. The Court questioned the accuracy of the Debtor's repeated representations that Hampton, Virginia was his COMI and would remain his family's permanent home. (Feb. 25, 2011 Hr'g Tr. at 4:6-11.) As stated in the March 30 Order, the Court would not afford the Debtor the remedy of termination of recognition without a complete factual record. Doing so on an incomplete record would preclude the Court's ability to adhere to the statutory mandate of § 1517(d), which permits the Court to exercise its discretion to revisit a recognition decision but which also requires the Court to take into account possible prejudice to parties in interest should the Court modify the Recognition Order.
The Court has the authority and discretion to revisit the Recognition Order. (Doc. No. 161, at 25-34.) Section 1517(d) makes clear that the statute permits "modification or termination" of the Recognition Order, "if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist." 11 U.S.C. § 1517(d). The Court, however, "shall give due weight to possible prejudice to parties that have relied upon the order granting recognition." 11 U.S.C. § 1517(d).5 Any final decision by the Court that either terminates, modifies, or leaves in place the Recognition Order shall examine the rights of parties in interest potentially prejudiced by termination or modification of the Recognition Order. The Court willonly consider terminating recognition on a fully articulated record because the rights of third parties are implicated.
On April 4, 2011, the Debtor filed a Motion for Leave to Appeal the March 30 Order. (Doc. No. 166.) In the Motion for Leave to Appeal, the Debtor argues that his relocation to France "does not change the historical facts in respect to [the Debtor's] COMI from 2004 to 2010, neither can it change [the Debtor's] COMI, then or now, to England." (Doc. No. 166, at 2.) The Debtor also asserts that the Court's request that the Debtor appear before the Court in person is unreasonable and unnecessary. (Doc. No. 166, at 5.) The Debtor argues that given his allegedly precarious financial condition and the advent of modern technology he should be permitted to appear by telephone or by video. (Doc. No. 166, at 5.)
On May 12, 2011, the Debtor filed a "Pre-Hearing Status Report In Re Jonathan Loy May 11, 2011" (the "Status Report"). (Doc. No. 171.) In the Status Report, the Debtor reiterates his position that his COMI was, at all relevant times, the United States of America, and, thus, recognition should be terminated even in light of his relocation to France. The Debtor asserted that the Court is bound to its oral ruling of December 14, 2010 and that, were the Court to issue the ruling and orders enumerated at the December 14, 2010 Hearing, then the Debtor's problems would cease. (Doc. No. 171, U 8.) Neither the Motion...
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