In re Shimmin

• Decision Date: 14 October 2022
• Docket Number: 22-10039-JDL
• Parties: In re: Petition of Andrew Paul Shimmin, as Liquidator of Comfort Jet Aviation, Ltd., Debtor in a Foreign Proceeding.
• Court: U.S. Bankruptcy Court — Western District of Oklahoma

In re: Petition of Andrew Paul Shimmin, as Liquidator of Comfort Jet Aviation, Ltd., Debtor in a Foreign Proceeding.

No. 22-10039-JDL

United States Bankruptcy Court, W.D. Oklahoma

October 14, 2022

Chapter 15

ORDER ON PETITION FOR RECOGNITION OF FOREIGN PROCEEDING

Janice D. Loyd U.S. Bankruptcy Judge

I. Introduction

On August 30, 2022, there came on for evidentiary hearing before the Court the issues framed by the following pleadings:

1. Chapter 15 Petition for Recognition of a Foreign Proceeding filed by Andrew Paul Shimmin in his capacity as Liquidator ("Liquidator") and Foreign Representative of Comfort Jet Aviation Ltd. ("Comfort Jet") [Docs. 1 and 2];

2. Objection of Dassault Falcon Jet - Wilmington Corp. ("DFJ") to Petition for Recognition of Foreign Proceeding [Doc. 28];

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3. Objection by Kent Aviation, LLC ("Kent Aviation") to Petition for Recognition of Foreign Proceeding [Doc. 29];

4. Response to Objections to Petition for Recognition of Foreign Proceeding of Andrew Paul Shimmin, as Liquidator of Comfort Jet Aviation, Ltd. [Doc. 41];

5. Supplemental Brief by Kent Aviation LLC in Support of Objection to Petition for Recognition of Foreign Proceeding [Doc. 83]; and

6. Response to Supplemental Brief by Kent Aviation LLC in Support of Objection to Petition for Recognition of Foreign Proceeding of Andrew Paul Shimmin, As Liquidator of Comfort Jet Aviation, Ltd. [Doc. 85].

Pursuant to Fed.R.Bankr.P. 7052 and 9014, the following constitutes the Court's Findings of Fact and Conclusions of Law.

II. Jurisdiction

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §1334(a), and venue is proper pursuant to 28 U.S.C. § 1409. Reference to the Court of this matter is proper pursuant to 20 U.S.C. § 157(a). This is a core proceeding pertaining to the recognition of foreign proceedings and other matters under Chapter 15 of title 11 as provided by 28 U.S.C. § 157(b)(2)(P).

III. Background

In the summer of 2018 Comfort Jet entered into certain agreements with Aeromanagenent, Inc. ("Aeromanagement") under which Aeromanagement was the listing agent and broker for Comfort Jet's sale of a 1987 Dassault Falcon 900 aircraft (the "Aircraft"). In accordance with the agreements between Comfort Jet and Aeromanagement,

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Aeromanagement was also responsible for matters pertaining to registration of the Aircraft and to obtain the services of a company to conduct a C-Check^[1] inspection of the Aircraft to make any repairs necessary. In September 2018, Comfort Jet, as Seller, and Kent Aviation, as Buyer, entered into an Aircraft Purchase Agreement for the sale of the Aircraft for the price of $1,500,000.

In accordance with the agreements between Comfort Jet and Aeromanagement, Aeromanagement retained the services of DFJ to conduct the C-Check and make any repairs to ensure that the Aircraft was airworthy. Over the next two years a dispute ensued between Comfort Jet, Aeromanagement and DFJ as to the extent and performance of the repairs. In June of 2020 the title company and escrow agent for the sale of the Aircraft which had been dispensing payments for repairs and services agreed to by the parties and was still holding $520,000 in escrow, filed an interpleader action in the District Court of Oklahoma County, Oklahoma, seeking a judicial determination as to who was entitled to the funds remaining in its possession. The action was thereafter removed to the United States District Court for the Western District of Oklahoma where it remains pending. Thereafter, Comfort Jet and DFJ filed answers and cross-claims against the other parties. Kent filed cross-claims asserting, among other claims, claims of breach of contract and fraud against Comfort Jet and DFJ. That court action remains pending with a demand for jury trial.^[2]

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Comfort Jet is a limited liability company organized and existing under the laws of the Isle of Man ("IOM").^[3] On October 1, 2021, pursuant to Section 226 of the Isle of Man Companies Act, in Douglas, IOM, the Petitioner was appointed Liquidator for Comfort Jet by an act of the Board of Directors of Comfort Jet and a vote of creditors.

On January 11, 2022, the Petitioner/Liquidator initiated this proceeding requesting that the Court recognize the liquidation proceeding which is currently pending in the IOM as a foreign main proceeding or, alternatively, a foreign nonmain proceeding, under Chapter 15 of the Bankruptcy Code.

IV. Discussion

This Court's recognition of a foreign insolvency proceeding under § 1517 of Chapter

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15 of the Bankruptcy Code is dependent upon several statutory requirements.^[4] The foreign representative has the ultimate burden of proof on the requirements for recognition. The three requirements, set forth in § 1517, are as follows:

(a) Subject to section 1506, after notice and a hearing, an order recognizing a foreign proceeding shall be entered if-

(1) such foreign proceeding for which recognition is sought is a foreign main proceeding or foreign nonmain proceeding within the meaning of section 1502;

(2) the foreign representative applying for recognition is a person or body; and

(3) the petition meets the requirements of section 1515.

While DFJ, but not Kent, has challenged the Liquidator's satisfaction of the existence of a "foreign proceeding" under factor (1), the Court finds that the Liquidator has clearly met the requirements of there being a "foreign proceeding" and that he is a "foreign representative."

First, § 101(23) defines a "foreign proceeding" as:

a collective judicial or administrative proceeding in a foreign country, including an interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation.

The IOM proceeding is a collective proceeding governed by the IOM Companies Act of 1931 through which Comfort Jet's financial affairs will be wound up and its assets distributed to creditors.

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Next, there is no dispute that Petitioner, the Liquidator appointed under the laws of the IOM, applying for recognition, is a person or body pursuant to subparagraph (2) of § 1517. Section 101(24) defines "foreign representative" as:

a person or body, including a person or body appointed on interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor's assets or affairs or to act as a representative of such foreign proceeding

In turn, § 101(41) defines "person" to include an individual. The Liquidator, an individual, is a "person," and was appointed Liquidator by vote of creditors on October 1, 2021. [Shimmin Tr. Ex. 000071-74; Doc. 2]. The Liquidator thus meets the requirements of subsection (2) of § 1517.

To comply with subparagraph (3) of § 1517, the foreign representative must file a petition that meets the requirements of § 1515, which are as follows:

(a) A foreign representative applies to the court for recognition of a foreign proceeding in which the foreign representative has been appointed by filing a petition for recognition.

(b) A petition for recognition shall be accompanied by-

(1) a certified copy of the decision commencing such foreign proceeding and appointing the foreign representative;

(2) a certificate from the foreign court affirming the existence of such foreign proceeding and of the appointment of the foreign representative; or

(3) in the absence of evidence referred to in paragraphs (1) and (2), any other evidence acceptable to the court of the existence of such foreign proceeding and of the appointment of the foreign representative.

(c) A petition for recognition shall also be accompanied by a statement identifying all foreign proceedings with respect to the debtor that are known to the foreign representative.

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(d) The documents referred to in paragraphs (1) and (2) of subsection (b) shall be translated into English. The court may require a translation into English of additional documents.

There is no challenge to the contents of the Petition, and the Court is entitled to presume that the documents submitted in support of the Petition are authentic. 11 U.S.C. § 1516(b). Thus, the Petition filed by Petitioner/ Liquidator herein meets the requirements of § 1515.

The final statutory requirement for recognition pursuant to § 1517(a)(1) is that the proceeding on the IOM be a "foreign main proceeding" or "foreign nonmain proceeding" within the definitions of § 1502. This is the issue in dispute. Pursuant to § 1502(4), a proceeding is defined as a "foreign main proceeding" if: (1) it is a "foreign...