Sidebar Publishes Essay on Rubin v. Eurofinance

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1 Response

  1. John Verrill says:

    The article’s bald assertion of exposure of persons to bankruptcy courts worldwide is misplaced in the context of the Rubin judgment.
    The Court of Appeal was only concerned with enforcement of core bankruptcy remedies (preference and fraudulent conveyance) notwithstanding that the default judgment in the US extended to damages arising from liability as general partners for the defendants from participation in the Ponzi scheme.

    It also misses the point that the defendants were free to dispute jurisdiction in the US without submitting to the jurisdiction and elected not to do so.

    In reality the judgment is consistent with US judgments in Condor in the 5th Circuit and with Metcalfe.

    The court is not amending the English common law, merely restating the extent of its inherent discretion to assist on principles of Comity, as Judge Glenn did in Metcalfe.

    If one takes as an example a director of a corporation established in the US (to operate a ponzi scheme)but where he resides in the UK and establishes his business on the internet using internet banking, where all the customers are US residents and the cash is held in the US and the business is resident there. If he makes preferential payments from his house in London at the click of a mouse, never having visited the US and the corporation becomes bankrupt in the US, the logic of this article is that it is sufficient to deprive the bankruptcy of all recourse for the director to say “I never submitted to the Jurisdiction”

    That is why the judgment is right. Bear in mind always that assistance of the court is always discretionary when principles of comity are engaged.

    It is therefore wholly inaccurate to state that the judgment has:

    “the immediate practical effect of subjecting any person who may have any property or interest worth attaching in the U.K. to the jurisdiction of all bankruptcy courts worldwide.”

    It is bankruptcy clawback which drives the process, the reference to “any property or interest worth attaching” is alarmist and plain wrong as is clear from a careful analysis of the judgment.