On Tuesday, September 15, 2015, Judge Kevin J. Carey, United States Bankruptcy Judge for the District of Delaware, granted motions to dismiss Chapter 11 proceedings relating to the failed Baha Mar resort project filed by Baha Mar's Bahamian creditors CCA Bahamas Ltd. and Export-Import Bank of China. The Debtors include fourteen corporations based in the Bahamas, as well as Northshore Mainland Services, Inc., which is incorporated in Delaware.
In his Memorandum Opinion, Judge Carey dismissed the Chapter 11 cases filed by the Bahamas-based debtors under section 305(a) of the Bankruptcy Code. While the court considered a numbers of factors before concluding that granting the motions to dismiss would serve the best interests of the Debtors and all creditors, Judge Carey's decision rested primarily on the fact that: (i) CCA, Export-Import, and the Debtors are Bahamian entities and, (ii) given that the project was based in the Bahamas, the parties would expect any resolution of the proceedings to be most effectively accomplished in the Bahamas. Judge Carey therefore concluded that there was "no greater good to be accomplished by exercising jurisdiction over these chapter 11 cases."
However, Judge Carey denied the motion to dismiss with respect to Debtor Northshore, holding that as a Delaware corporation, the "[p]arties would expect Northshore's financial difficulties to be addressed in a proceeding in the United States."
The court's ruling may serve as a warning to international creditors that U.S. Bankruptcy Courts will not extend their jurisdiction limitlessly, and creditors should seriously consider whether a proceeding would be more appropriately brought in their home countries.
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