Vol 15 (2018) - Issue 3

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In re Fairfield Sentry II: Testing the Brakes on Comity

On September 26, 2014, in the case of In re Fairfield Sentry Ltd., the United States Court of Appeals for the Second Circuit (the 'Second Circuit') made an important holding regarding chapter 15 of the United States ('U.S.') Bankruptcy Code. Reversing the decisions of the courts below, the Second Circuit held that bankruptcy courts were required to engage in a full review of sales of property located within the U.S. under section 363 of the Bankruptcy Code, even when the property was the subject of a foreign main proceeding under chapter 15 of the Bankruptcy Code and even when the sale had been approved by the overseas court. As the lower courts had not done such a review, the case was remanded to the Bankruptcy Court for the Southern District of New York ('Bankruptcy Court') so they could conduct one.