In recent Chapter 11 dismissal rulings (In re Bad Faith Claim Assignments), the US Bankruptcy Court for the Southern District of New York dismissed Chapter 11 filings where corporate debtors executed pre-petition claim assignments solely to manufacture US bankruptcy jurisdiction and trigger the automatic stay against pending state or offshore court execution.
- Practice Impact: Restructuring advisers cannot rely on manufactured pre-bankruptcy assignment schemes to import foreign or state disputes into SDNY bankruptcy courts.
- Source: Review Arnold & Porter's SDNY Bankruptcy Assignment Advisory.
SDNY: Bad-Faith Pre-Petition Assignments Dismissed