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Interpool Ltd. v. Certain Freights of M/VS Venture Star

argued: May 15, 1989.

INTERPOOL, LIMITED
v.
CERTAIN FREIGHTS OF THE M/VS VENTURE STAR, MOSMAN STAR, FJORD STAR, LAKES STAR, LILY STAR, ET AL; ROBERT GEORGE DUNN, AS LIQUIDATOR OF THE ESTATE OF KKL (KANGAROO LINE) PTY LIMITED, DEBTOR IN A FOREIGN PROCEEDING, APPELLANT



On Appeal from the United States District Court for the District of New Jersey, D.C. Civil Nos. 86-0149, 86-0150, 86-0200, 86-0299 86-0340, 87-2292, 87-2888, 88-2225.

Mansmann, Greenberg and Scirica, Circuit Judges.

Author: Greenberg

Opinion OF THE COURT

GREENBERG, Circuit Judge

Presently before the court is an appeal by Robert George Dunn, the Australian liquidator of the estate of KKL (Kangaroo Line) Pty Limited ("KKL"), from an order of the district court denying his motion to dismiss a Chapter 7 proceeding brought by KKL's creditors and, correspondingly, granting leave for the Chapter 7 case to proceed. Because we find that Section 305(c) of the Bankruptcy Code forecloses appellate review of the district court's order, we will dismiss the liquidator's appeal.

Background

KKL, an Australian company incorporated in 1983, operated a liner service between the west coast of the United States and Australia. In January 1986, KKL went into liquidation in Australia. At about the same time, various American creditors of KKL filed complaints in the United States District Court for the District of New Jersey, seeking warrants of arrest and writs of maritime attachment against the freights of KKL's vessels and such relief was issued.*fn1 These lien creditor actions were consolidated on February 11, 1986.

On February 19, 1986, the Australian courts ordered KKL to wind up operations and appointed Dunn as KKL's liquidator. On February 27, 1986, Dunn commenced a case ancillary to a foreign proceeding by filing a petition in the United States Bankruptcy Court for the District of New Jersey pursuant to 11 U.S.C. 304(a). He ... simultaneously filed a complaint in that court against the American lien creditors, seeking an order enjoining them from further proceeding against KKL's assets and requiring them to turn over those assets. On April 28, 1987, the district court entered an interim order withdrawing the section 304 petition from the bankruptcy court, consolidating it with the lien creditors' actions against KKL, and enjoining the creditors from proceeding against KKL's assets. Most of the maritime lien claims ultimately were resolved by order of April 15, 1988.*fn2

Meanwhile, on April 2, 1986, a Chapter 7 involuntary petition in bankruptcy had been filed in the United States Bankruptcy Court for the Central District of California by other American creditors of KKL, which had provided it with transportation services. The case was transferred to the District of New Jersey in June 1987, and consolidated with the other actions involving KKL.

On September 3, 1987, the liquidator filed a motion to dismiss the Chapter 7 proceedings.*fn3 More specifically, in his notice of motion, the liquidator sought an order "pursuant to 11 U.S.C. 305, dismissing the pending Chapter 7 petition. . . ." The motion subsequently was withdrawn, but on February 22, 1988, the liquidator again moved for dismissal of the Chapter 7 petition. This time, however, he sought a final order "[pursuant] to Section 304 of the United States Bankruptcy Code" which would "recognize the pending Australian liquidation proceeding under principles of comity" and, correspondingly, would dismiss the Chapter 7 petition. The liquidator further sought approval of the settlement of the lien creditors' litigation; authorization of the distribution of assets to those creditors and to the liquidator; and an injunction prohibiting the continuation or commencement of any further proceedings against KKL. The Chapter 7 creditors opposed the liquidator's motion.

On October 14, 1988, the district court denied the liquidator's motion. In its comprehensive opinion, it first noted that most of the liens had been resolved by earlier orders, slip op. at 4 n. 1. It then went on to examine whether "the factors enumerated in 304 (c)" warranted granting the liquidator's motion to dismiss the Chapter 7 proceedings, slip op. at 11, and ultimately determined that they did not. It accordingly held that "the 304 petition should not be granted and the motion for a Chapter 7 Petition should be granted and an Order for Relief entered," adding that "[all] of the assets located in the United States . . . shall be considered part of the bankrupt estate and be administered under the laws of the United States Bankruptcy Code." Slip op. at 21. This appeal followed.

Sections 304 & 305

As its caption -- "cases ancillary to foreign proceedings" -- indicates, section 304 governs not full-fledged bankruptcy cases, but rather limited proceedings "designed to operate in aid of a principal proceeding abroad." 2 Collier on Bankruptcy, 304.01, at 304-8 (15th ed. 1988). The filing of a section 304 petition by a foreign representative does not trigger the automatic stay; instead, the foreign representative must affirmatively request injunctive or other available relief.*fn4

Section 304(c) provides that the touchstone in determining whether to grant any requested relief is "what will best assure an economical and expeditious administration of [the] estate," consistent with six enumerated criteria.*fn5 If, after consideration of the relevant factors, the court decides that relief is warranted, ...


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