Tuesday, April 17, 2018

Case of the Day: Tera Res. Co. v. Lee, 2018 Bankr. LEXIS 801 (Bankr. D. Haw. Mar. 20, 2018)


The bankrupt company, Cuzco USA, is a Hawaiian limited liability company, whose sole member is Cuzco Korea, a Korean corporation. Plaintiff Tera Resources is a shareholder of Cuzco Korea, who alleges that Cuzco USA's bankruptcy is a scheme to divert assets away from Cuzco Korea. Tera Resources filed the complaint alleging a number of claims including fraud on court, fraud against Tera, breach of fiduciary duty, etc. The defendants moved to dismiss by offering a number of theories.

The court granted in part and denied in part the motion to dismiss. Notably, the court rejected the defendants' argument that this action was essentially a shareholder derivative suit as to a Korean corporation, and the Korean law provides that such a suit can only be brought in the Seoul District Court. The court found that a foreign statute cannot change the subject matter jurisdiction of a United States court. However, the court dismissed the plaintiff's claims that relate solely to Cuzco Korea, as those claims were not sufficiently related to the core bankruptcy action.


Nothing very new in this action, but an interesting object lesson for how complicated a multinational bankruptcy case could be.

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