Special thanks to the
2013 TMA Partner
Sponsors for their
of TMA programs.
Charles M. Berk (top) is a managing director of
CBIZ MHM LLC, and Peter Whalley is a partner
with James Cowper LLP in London. Berk serves
as the Corporate Recovery Services co-practice
leader for his firm’s New York office and specializes
in providing business advisory services that help
clients make appropriate decisions and maximize
recovery during bankruptcy proceedings. He also
has extensive experience investigating financial
fraud and providing expert witness testimony, and
is a CPA, a CIRA, and a CFF. Whalley heads his firm’s
Business Restructuring and Insolvency group and
specializes in survival strategies for underperforming
businesses, including the negotiation (or
renegotiation) of debt and equity finance terms,
when appropriate. He is a chartered accountant.
rule permits enforcement only when the
defendant is present at the domestic
2 Was the claimant or the counter-claimant in the
3 Had voluntarily submitted to the foreign proceedings by appearing.
4 Had submitted to the jurisdiction before the commencement of
Soon after the decision was issued,
Irving Picard, the trustee for Bernard
L. Madoff Investment Securities LLC,
took the position in Picard v. Primeo
Fund that it was more advantageous to
commence proceedings in the Cayman
Islands seeking to bring avoidance
claims against Primeo pursuant to
U.S. and Cayman Island law. This is
a different tact than the Rubin and
New Cap cases, in which avoidance
actions were brought in the domestic
courts and enforcement of the default
judgments were attempted in a foreign
jurisdiction pursuant to the Model Law.
It is too early to tell what impact the
U.K. Supreme Court’s decision will have
on the Model Law’s encouragement of
cooperation between insolvency courts
in different foreign jurisdictions. The
Supreme Court seems to have reversed
the trend toward universal acceptance
of insolvency proceedings furthered by
the UNCITRAL Model Law, which will
create additional hurdles for pursuing
and enforcing default judgments and
avoidance-type litigation recoveries
from foreign jurisdictions in the U.K.
On January 14, 2012, the Cayman
Islands Grand Court issued a decision
allowing Picard to follow relevant
Cayman law, but not U.S. law, related to
avoidance claims against Primeo. Both
parties have appealed the decision.
The most immediate high-profile case
that will be affected by the Supreme
Court’s decision is the Madoff case.
The trustee in the case seeks to enforce
more than $1 billion of judgments
on behalf of the Madoff estate in
Gibraltar and the Cayman Islands,
both of which are British territories
and therefore subject to British law.
The U.K. Supreme Court’s decision to not
allow enforcement of default judgments
handed down in a foreign jurisdiction
may provide prospective defendants
in such actions some comfort in that
if they do not participate or are not
present at the proceeding, they may
not be pursued in a foreign jurisdiction.
Another potential consequence could
be increased avoidance proceedings
brought under insolvency law in the U.K.
or other foreign jurisdictions, potentially
leading to the duplication of proceedings
in domestic and foreign jurisdictions. J