The Global Restructuring Review recently featured a case that is being handled by Bankruptcy and Corporate Restructuring partner Alex Spizz, who is serving as Chapter 7 trustee to administer the affairs of Ampal-American Israel Corporation (Ampal). Ampal is a U.S.-registered holding company of several direct and indirect subsidiaries located primarily in Israel. A New York judge recently wrote in a decision that avoidance provisions within the U.S. Bankruptcy Code were not intended to apply extraterritorially, barring the Chapter 7 bankruptcy trustee in this case from recovering payments made by Ampal in Israel to an Israeli law firm.
Alex noted that the decision could make it more difficult for trustees in U.S. bankruptcy cases to recover voidable transfers which take place outside the United Stated and may prompt attempts by companies to conduct transfers offshore so that trustees are unable to void them. He said, “I can envision situations where multinational corporations headquartered in the U.S. which are contemplating bankruptcy would be able to structure transfers [in another jurisdiction]," he went on to state "These transactions would ordinarily be voidable transfers in bankruptcy but are now protected based upon the doctrine of extraterritoriality.”
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