## Facts

- Gold & Honey, Ltd. (an Israeli corporation) and Gold & Honey (1995) L.P. (a New York limited partnership) operated a jewelry-manufacturing business connected to a related New York affiliate.
- The Israeli government provided substantial financing for operations in Israel; the financing and related security interests were later associated with the partnership structure.
- First International Bank of Israel (FIBI) was a secured lender and maintained key operating accounts; it expanded a working-capital facility and obtained guarantees and collateral support.
- In July 2008, after financial distress, FIBI seized substantially all assets and accounts in Israel and commenced a receivership case in the Tel-Aviv-Jaffa District Court.
- On September 23, 2008, the two Gold & Honey debtors filed chapter 11 cases in the Eastern District of New York.
- The bankruptcy court entered an order confirming that the automatic stay applied to the debtors’ property wherever located, including property subject to the Israeli receivership.
- After the U.S. filings and stay order, the Israeli receivership continued, and the Israeli court appointed permanent receivers on December 10, 2008.
- The Israeli receivers filed chapter 15 petitions in the U.S. bankruptcy court on January 28, 2009, seeking recognition of the Israeli receivership as a foreign main proceeding or, alternatively, a foreign nonmain proceeding.

## Issues

1. Whether the Israeli receivership qualified as a “foreign proceeding” under 11 U.S.C. § 101(23) and could be recognized under chapter 15 as a foreign main or nonmain proceeding.
2. Whether the petitioning receivers satisfied the documentary and evidentiary requirements for recognition under 11 U.S.C. § 1515.
3. Whether continuing the Israeli receivership and appointing receivers after the U.S. chapter 11 filings violated the automatic stay and the bankruptcy court’s orders.
4. Whether recognition had to be denied under 11 U.S.C. § 1506 because recognition would be manifestly contrary to U.S. public policy.

## Decision

- The bankruptcy court denied recognition of the Israeli receivership proceeding under chapter 15.
- The court held the receivers failed to carry their burden to prove the Israeli receivership met the statutory definition of a “foreign proceeding,” including the requirement that it be a collective insolvency-type process.
- The court concluded the Israeli receivership was continued after notice of the U.S. cases in violation of the automatic stay and the bankruptcy court’s stay-enforcement order.
- The court held that recognizing a proceeding pursued in defiance of the automatic stay would conflict with fundamental U.S. bankruptcy policies and therefore warranted denial under § 1506.

## Legal Principles

- Chapter 15 recognition requires proof that the foreign matter is a “foreign proceeding” under 11 U.S.C. § 101(23): a collective proceeding under a law relating to insolvency or adjustment of debt, supervised by a foreign court, for reorganization or liquidation.
- The foreign representative bears the burden to establish eligibility for recognition, including compliance with the evidentiary and documentary requirements of 11 U.S.C. § 1515.
- The automatic stay under 11 U.S.C. § 362 applies to estate property wherever located; actions taken postpetition against such property may be void or voidable as against the estate.
- Under 11 U.S.C. § 1506, a court may refuse recognition when the requested chapter 15 relief would be manifestly contrary to U.S. public policy, including protection of the automatic stay and U.S. bankruptcy court jurisdiction.

## Conclusion

The bankruptcy court denied chapter 15 recognition of an Israeli receivership because the receivers did not prove it was a qualifying collective insolvency proceeding and because the receivership was pursued after the U.S. chapter 11 filings in violation of the automatic stay, triggering the public-policy bar to recognition.


In re Gold & Honey, Ltd., 410 B.R. 357 (Bankr. E.D.N.Y. 2009)