The Eleventh Circuit held that a bankruptcy court order order recognizing a foreign proceeding is final.
April 11, 2024
In In re Al Zawawi, the Eleventh Circuit held that a bankruptcy court order recognizing a foreign proceeding is final and thus appealable.
The Proceedings in Al Zawawi
Al Zawawi involved a debtor who had been adjudged bankrupt by a court in the United Kingdom. His creditors then sought recognition of this foreign judgment in a U.S. bankruptcy court. Recognition of the judgment would subject the debtor’s assets in the United States to an automatic stay and permit discovery and other relief concerning those assets.
The bankruptcy court granted the request and recognized the judgment. The debtor then appealed. But bankruptcy proceedings were not yet over. Indeed, they had only just begun. The Eleventh Circuit thus had to determine its jurisdiction.
Finality in Bankruptcy
Finality in the bankruptcy context can get complicated. A single bankruptcy action can involve a variety of proceedings that, outside of the bankruptcy context, would have been separate actions. And some decisions bankruptcy courts make in the course of their proceedings can have an immense influence on all future proceedings.
In 2020’s Ritzen Group, Inc. v. Jackson Masonry, LLC, the Supreme Court laid out guidelines for determining finality in the bankruptcy context. The Court explained that a bankruptcy court order is final if “(1) it involves ‘a discrete procedural sequence, including notice and a hearing,’’ as set forth by statute, and (2) it ‘occurs before and apart from the proceedings on the merits of creditors’ claims.’” (For more on Ritzen Group, see my post Ritzen Group Holds that Denials of Relief from Bankruptcy’s Automatic Stay are Appealable.)
The Finality of Recognizing a Foreign Judgment
The resolution of a petition to recognize a foreign proceeding satisfied both Ritzen Group requirements:
Petitions for recognition trigger a discrete procedural sequence that includes notice and a hearing. And although the adjudication of a petition for recognition does not occur before the proceedings on the merits, i.e., the foreign proceeding, it occurs apart from those proceedings in the sense that it introduces for the first time and fully occurs in a new legal system, i.e., the federal courts of the United States.
(Cleaned up.)
The Eleventh Circuit added that delayed appeals from recognition orders could risk unraveling later bankruptcy proceedings that relied on the recognition. And the dispute was not minor—it would “determine[] whether the parties to a foreign proceeding will have access to the judicial resources and power of the United States,” which “can have significant implications for enormous amounts of property held in the United States and abroad.”
In re Al Zawawi, 2024 WL 1423871 (11th Cir. Apr. 3, 2024), available at the Eleventh Circuit and Westlaw