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Second Circuit: Krys v. Farnum Place

U.S. Court of Appeals for the Second Circuit – Bankruptcy – Investment Securities Investor Protection Act – Comity


Krys v. Farnum Place


Judges Newman, Walker and Cabranes


Background: At issue on appeal is whether it was proper to decline to conduct a Chapter 15 ancillary bankruptcy proceeding in the liquidation of Bernard L. Madoff Investment Securities under the Securities Investor Protection Act. The district found that the sale of an investment did not involve a section 1520(a) transfer and that comity dictates that deference to a British Virgin Islands Court’s judgment approving the sale.


Ruling: The Second Circuit vacated and remanded. The court concluded that the sale of the SIPA claims is a transfer of an interest of the debtor in property that is within the territorial jurisdiction of the United States. Therefore, comity is not warranted.


Paul D. Clement of Bancroft for the appellant; Kathleen M. Sullivan of Quinn Emanuel Urqhart & Sullivan for the appellee