36 speaking – involve intentional fraud of the type contemplated under Section 5-9 of the Recovery Act. Section 546(e) is expressly made applicable to Chapter 15 proceedings by Bankruptcy Code Section 561(d), which provides that the section applies in a case under Chapter 15 to limit avoidance powers to the same extent as in a proceeding under chapter 7 or chapter 11 of Title 11 of the United States Code; however, Section 1521(a)(7) expressly prohibits a foreign representative under Chapter 15 from asserting a claim under Section 548(a)(1)(A). The Court found that these statutory provisions taken together lead to one of two readings – either Section 1521(a)(7) prevents a chapter 15 foreign representative frommaking a claim under Section 548, such that a foreign representative if foreclosed from the only exception to the safe harbor or because Section 561(d) applies Section 546(e) to the same extent as in a proceeding under chapter 7 or 11 of the Bankrutpcy Code, the exception to the safe harbor remains applicable in Chapter 15 despite the prohibition of asserting claims under Section 548(a)(1)(A) in Chapter 15.15 Judge Glenn opined that, in analyzing the Section 548 issue, it would be erroneous to analogize prior decisions considering state law avoidance claims to foreign law avoidance claims because Section 546(e) preempts state law claims, whereas federal preemption does not apply to foreign law claims.16 Rather, Judge Glenn indicated that if Congress intended to bar assertion of foreign law avoidance claims in Chapter 15, it “could have said so simply and clearly.”17 The inquiry, the Court said, “must be a flexible one, taking into account not only the language of the statute but also the broader context of the foreign legal regime, rather than a rigid comparison of the language in the foreign statute and our own.”18 In conclusion, the Court dismissed the claims under Section 5-9 of the Recovery Action and the unjust enrichment claim; however, the Court permittedtheclaimsunderSection5-5oftheRecoveryActandSection17-1 of the Companies Act to survive, and granted the plaintiff leave to amend the complaint with respect to such counts. From a practical perspective, a Chapter 15 proceeding can allow a foreign trustee to keep alive claims that otherwise might become time barred; however, due to the unsettled issue of the applicability of the Section 546(e) exemption, certain fraudulent conveyance claims brought in the U.S. under a foreign insolvency law are at risk of failure. 15 See In re Bankruptcy Estate of Norske Skogindustrier ASA, --- B.R. ---, at --- (2021); 2021 WL 1687903 at *34. 16 See id. at 35 17 See id. 18 See id. at 36.
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