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Source: http://www.ashfords.co.uk/news/cross_border_restructuring_insolvency_june2013
In re Paul Zeital Kemsley [2013] Case No 12-13570 (JMP), U.S. Bankruptcy Court, Southern District of New York
Kemsley v Barclays Bank Plc [2013] EWHC 1274 (Ch)
Courts in England and the United States held that a creditor may pursue an insolvent individual in the United States notwithstanding the existence of bankruptcy proceedings in England.
These two related cases, recently heard in New York and London, concern Paul Kemsley, the property developer and former Vice-Chairman of Tottenham Hotspur Football Club.
Mr Kemsley lived in London until 2009, when his business collapsed and he moved to the United States with his family. He lived successively in Florida, New York and California, and remained in New York when his wife returned to London with their children in June 2012.
In January 2012, Mr Kemsley petitioned for bankruptcy in London, facing debts of tens of millions of pounds. At the same time, he was being pursued in separate proceedings in the United States by Barclays Bank, which sought to recover £5 million it had lent him.
In August 2012, with Mr Kemsley's support, his English Trustee in Bankruptcy filed a petition with the U.S. Bankruptcy Court to have his English Bankruptcy proceedings recognised in the United States. Such recognition would impose an automatic stay on the American proceedings brought by Barclays.
Around the same time, Mr Kemsley applied in the English High Court for an order restraining Barclays from pursuing the proceedings in the United States.
In deciding whether to grant recognition to the English proceedings, the U.S. Bankruptcy Court had to determine where Mr Kemsley’s COMI was located. The Court held that the critical date for this question was January 2012, when he petitioned the English Court for bankruptcy. At that date, the Court found, Mr Kemsley was living with his family in Los Angeles, his children were attending school there, and he had no intention of returning to the UK. Accordingly, his habitual residence was in the United States, the English proceedings would not be recognised, and Barclays' American proceedings would continue.
The English High Court heard Mr Kemsley's application before the judgment of the U.S. Bankruptcy Court was given, but its judgment was handed down afterwards. The High Court held that it was "wholly inappropriate" to restrain Barclays from pursuing proceedings in the United States. First, Barclays had undertaken to transfer to Mr Kemsley's Trustee any assets recovered, so it would not gain an unfair advantage over his other creditors. Secondly, if Mr Kemsley were found by the New York Court to have his COMI in the United States, then it would not be appropriate for the English Court to intervene by preventing Barclays from pursuing its case there. This was very different from cases in which an anti-suit injunction had been granted where the creditors' conduct was unconscionable.
In finding against Mr Kemsley, both the English and U.S. Courts appear to have been motivated by a desire to do justice to his creditors. As the Judge in New York remarked, "Mr Kemsley is a bankrupt who does not live like one."
In re Paul Zeital Kemsley [2013] Case No 12-13570 (JMP), U.S. Bankruptcy Court, Southern District of New York
Kemsley v Barclays Bank Plc [2013] EWHC 1274 (Ch)
Courts in England and the United States held that a creditor may pursue an insolvent individual in the United States notwithstanding the existence of bankruptcy proceedings in England.
These two related cases, recently heard in New York and London, concern Paul Kemsley, the property developer and former Vice-Chairman of Tottenham Hotspur Football Club.
Mr Kemsley lived in London until 2009, when his business collapsed and he moved to the United States with his family. He lived successively in Florida, New York and California, and remained in New York when his wife returned to London with their children in June 2012.
In January 2012, Mr Kemsley petitioned for bankruptcy in London, facing debts of tens of millions of pounds. At the same time, he was being pursued in separate proceedings in the United States by Barclays Bank, which sought to recover £5 million it had lent him.
In August 2012, with Mr Kemsley's support, his English Trustee in Bankruptcy filed a petition with the U.S. Bankruptcy Court to have his English Bankruptcy proceedings recognised in the United States. Such recognition would impose an automatic stay on the American proceedings brought by Barclays.
Around the same time, Mr Kemsley applied in the English High Court for an order restraining Barclays from pursuing the proceedings in the United States.
In deciding whether to grant recognition to the English proceedings, the U.S. Bankruptcy Court had to determine where Mr Kemsley’s COMI was located. The Court held that the critical date for this question was January 2012, when he petitioned the English Court for bankruptcy. At that date, the Court found, Mr Kemsley was living with his family in Los Angeles, his children were attending school there, and he had no intention of returning to the UK. Accordingly, his habitual residence was in the United States, the English proceedings would not be recognised, and Barclays' American proceedings would continue.
The English High Court heard Mr Kemsley's application before the judgment of the U.S. Bankruptcy Court was given, but its judgment was handed down afterwards. The High Court held that it was "wholly inappropriate" to restrain Barclays from pursuing proceedings in the United States. First, Barclays had undertaken to transfer to Mr Kemsley's Trustee any assets recovered, so it would not gain an unfair advantage over his other creditors. Secondly, if Mr Kemsley were found by the New York Court to have his COMI in the United States, then it would not be appropriate for the English Court to intervene by preventing Barclays from pursuing its case there. This was very different from cases in which an anti-suit injunction had been granted where the creditors' conduct was unconscionable.
In finding against Mr Kemsley, both the English and U.S. Courts appear to have been motivated by a desire to do justice to his creditors. As the Judge in New York remarked, "Mr Kemsley is a bankrupt who does not live like one."
