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Recognition, Not Relitigation

By Gary D. Farmer
February 25, 2014

If there were a James Bond movie featuring only lawyers, this might be it: SNP Boat Service, S.A. v. Hotel Le St. James, 483 B.R. 776 (Bankr. S.D. Fla. 2012). It begins in the south of France with a company that builds and designs luxury yachts. As part of a business deal, the company agrees to accept a trade-in yacht from a Canadian company 5,000 miles across the Atlantic. Unfortunately the deal results in a nasty contract dispute. The French sue the Canadians in France. The Canadians sue the French in Canada. The Canadians get a default judgment in Canada first and promptly start looking for assets to collect. They learn of two yachts owned by the French company that are berthed ' now enter a third country ' in the United States, several thousand miles south in Fort Lauderdale, FL. The Canadians head for Florida and promptly domesticate their judgment in the local Broward County court. Armed with a writ of execution from the court, the Broward county sheriff seizes the French boats for the Canadians.

But the French have an ace up their sleeve. Several months earlier, and before the Canadians had sued them, the French courts had approved a sauvegarde proceeding for the boat company. Such a proceeding is similar to an American Chapter 11 bankruptcy filing in that the goal of a sauvegarde (literally “safeguard”) is to allow the debtor to negotiate its debts while continuing to operate. Important for the French boat company, a sauvegarde proceeding also provides for an international automatic stay of all legal proceedings against the debtor. The French court-appointed administrator overseeing the boat company's sauvegarde knows that this stay should apply to any enforcement actions against the yachts in Florida. The administrator also wants control over the yachts because they are assets of the company that he is helping to reorganize.

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