A New Litigation Tool for Chapter 15 Foreign representatives in the United States?
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In this article, our attorneys analyze the potential implications of the recent United States Supreme Court decision in Yegiazaryan v. Smagin, which adopts a context-specific test for determining whether a foreign plaintiff has standing to bring a civil action asserting claims arising under the Racketeer Influenced and Corrupt Organizations Act (RICO) in the US.
In a case presented and argued by attorneys Nicholas Kennedy and Alexander Burch, the Court rejected previously-used bright-line rules that barred RICO claims by foreign plaintiffs such as insolvency liquidators and administrators appointed in foreign proceedings, as well as by foreign debtors themselves. By moving to a flexible standard based on factors such as the location of the alleged wrongful conduct and resulting injury, the Court opens the door for foreign representatives in US Chapter 15 bankruptcy cases to pursue enhanced damage claims under civil RICO against defendants that harm foreign debtors' US-based assets through patterns of fraud or other predicate criminal acts.
We explore how this new tool for foreign representatives to seek recovery of treble damages and attorneys fees creates leverage and increases potential recoveries for stakeholders when assets have been illicitly transferred to or within the United States.
This article was first published in INSOL World Fourth Quarter 2023.
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