Opinion ID: 724999
Heading Depth: 2
Heading Rank: 4

Heading: The Adversary Complaints and the Bankruptcy and District

Text: Court Decisions 22 Freed from the constraints of an anti-suit injunction, the administrators commenced adversary proceedings in the bankruptcy court against Barclays, National Westminster, and Societe Generale. The complaints sought the recovery of the above-described transfers to the banks on the theory that they were avoidable preferences under 11 U.S.C. § 547(b) and therefore recoverable under 11 U.S.C. § 550(a)(1). In addition, each complaint sought the disallowance under 11 U.S.C. § 502(d) of any claims made by the defendant, unless the defendant first returns to the debtor the transferred funds, with interest. This subject is discussed and resolved in Part IV, infra. The examiner joined the administrators in instituting these adversary proceedings against National Westminster and intervened in the proceeding against Barclays; he is not a party in Maxwell's suit against Societe Generale. 23 Defendants filed motions for dismissal under Fed.R.Civ.P. 12(b)(6) (made applicable in adversary bankruptcy proceedings by Bankr.R. 7012(b)) asserting, inter alia, that applying § 547 of the Bankruptcy Code to these transactions would violate the presumption against extraterritoriality and that dismissal was also warranted on grounds of international comity. The bankruptcy court granted the motions, holding that the transfers were extraterritorial and that the Bankruptcy Code does not apply to these transfers, whose center of gravity lies outside the United States and, in the alternative, that international comity precluded the application of the Code in this instance. Maxwell I, 170 B.R. at 808-18. 24 Treating comity as a canon of statutory construction, the bankruptcy court emphasized choice-of-law principles and asked which jurisdiction's laws and policies are implicated to the greatest extent. Id. at 814, 816. The answer, the court found, was England. Id. at 817-18. It also noted Maxwell's insolvency did not jeopardize United States interests because its holdings were sold as going businesses, because most of its creditors were not residents of the United States, and because the two countries' preference laws in any event serve similar ends, and that England had a greater interest in applying its own laws. Id. at 818. 25 The district court affirmed on both the extraterritoriality and comity grounds. On the latter question, it held that the bankruptcy court did not abuse its discretion in finding that traditional choice of law principles 'point decidedly towards the application of U.K. law.'  Maxwell II, 186 B.R. at 822. The district court's analysis of the relative interests was substantially similar to that of the bankruptcy court, but it also underscored the cooperation between the courts of the two countries and found that deference would comport with the previous efforts by both courts to harmonize the dual proceedings. Id. at 823. Judge Scheindlin believed this to be the unique aspect and the most important feature of this case. Id. at 813. 26 Maxwell and the examiner appealed. We consolidated the three cases on January 15, 1996 and now address the merits.