X hits on this document

32 views

0 shares

0 downloads

0 comments

5 / 7

advantage, and unjust enrichment.

GM moved to

dismiss this lawsuit relying on principles international comity. The District Court granted

of this

motion Daewoo

and dismissed all claims, America’s claims as a

characterizing strategy “to

collaterally process and

attack the entire Korean reorganization result.” Daewoo Motor America, Inc., v.

General 2004).

Motors

Corp.,

315

B.R.

148,

161

(M.D.

Fla.

On appeal, the Eleventh Circuit Court of Appeals affirmed the dismissal of the claims asserted by Daewoo America, resting on principles of

international comity. court found that the

Specifically, the claims raised by

America “arise out of the same nucleus of

appellate Daewoo operative

facts considered by the Korean court” and “Daewoo America cannot now collaterally attack

that that

order by bringing claims against the recipients of property transferred based on the approval of Korean court.” 459 F.3d 1249, 1259.

the the

Although the Eleventh Circuit Court of Appeals did not engage in a traditional res judicata analysis, it clearly found that the Korean bankruptcy court necessarily considered and approved the entire agreement between GM and the debtor which encompassed not only the future distribution rights

but the purchase of Daewoo claims in Daewoo America’s

Korea.

Because the

complaint

sought

to

redistribute assets approval of the

previously transferred with the Korean court, the claims were

“inextricably intertwined” with the Korean court. 459 F.3d at

the order entered by 1260. The appellate

court specifically found that Daewoo America, actively participated in the bankruptcy case and

who who

had knowledge of to timely object to

the the

terms of the agreement, failed confirmation, and was forever

barred

from

collaterally

attacking

the

terms

of

the

agreement between appellate court then

GM and Daewoo Korea. The found that our federal courts

should Korean comity.

abide court

by out

and enforce this of the principles

decision of the of international

Because the terms of the agreement between GM and Daewoo Korea were critical and necessary to the debtor’s modified plan of reorganization, the Korean bankruptcy court necessarily considered and approved those terms when it confirmed the plan. The court did not specifically consider the impact of the implementation of the agreement on the debtor’s subsidiary, Daewoo America, because Daewoo America did not bring it to the court’s attention. Indeed, Daewoo America was fully aware that the debtor’s agreement with GM would shake the very core of Daewoo America’s future business, yet it made no attempt to protect its interests or to assert

5

any position in the bankruptcy case in regards to GM’s controlling the future vehicle distribution rights. Therefore, Daewoo America could not later collaterally attack this portion of the agreement in a different forum. The claim was barred.

ways

The decision in Daewoo is similar in many to the two other decisions of the Eleventh

Circuit Court of Appeals in Atlanta Retail and Piper Aircraft, which both involved non-debtor parties based in the United States and which raised classic issues of res judicata. In both of these cases, the non-debtor party was suing another non-debtor party for a claim that was related to the earlier bankruptcy

proceeding. that in these

However, the significant difference is two cases, the claim asserted in the later

litigation was to the claims

only indirectly and tangentially related decided by the bankruptcy court. As

such, res judicata continuing.

did

not

bar

the

later

litigation

from

In Atlanta Retail, the debtor operated a large retail camera and photographic supply business. Both Eastman Kodak Company and Wachovia Bank lent the debtor money. More significantly, Kodak had entered into two agreements with Wachovia, a

Subordination Agreement. In

Agreement and an Intercreditor a lawsuit filed after the bankruptcy

court confirmed a plan of debtor’s bankruptcy, Kodak

reorganization in the alleges that Wachovia

fraudulently $30 million

induced Kodak into lending the debtor on the eve of bankruptcy in violation of

the agreements between them. this post-confirmation litigation terms of the confirmation order.

Wachovia asserted was barred by the

The Eleventh Circuit Court of Appeals held that the bankruptcy case “did not involve the same nucleus of operative facts” presented in Kodak’s post-bankruptcy litigation and, further, that, even if Kodak could have raised its claims against Wachovia in the bankruptcy, “Kodak could not have received a

full

remedy.”

Atlanta

Retail,

456

F.3d

at

1280.

In

reaching this ruling, the appellate court the bankruptcy court never considered

explained that nor needed to

consider any breach Kodak and Wachovia.

of As

the agreements such, the dispute

between between

the two creditors bankruptcy forum.

could

continue

in

the

non-

The Eleventh Circuit Court of Appeals reached a similar conclusion in Piper Aircraft. In Piper, the major creditor of the Chapter 11 debtor, Teledyne Industries, Inc., entered into a Cooperation Agreement with Kaiser Aerospace and Electronics

Corp. to debtor’s

act as joint proponents of

assets.

Pursuant

to

this

a plan to buy the agreement, both

Kaiser

and

Teledyne

would

have

a

specified

equity

Document info
Document views32
Page views32
Page last viewedThu Dec 08 20:19:41 UTC 2016
Pages7
Paragraphs723
Words5313

Comments