The Bahamas Issues Practice Direction For Adoption Of Judicial Insolvency Network (‘JIN’) Guidelines For Use Of Joint Hearings In Cross-Border Insolvency Proceedings – Insolvency/Bankruptcy

The Chief Justice of the Commonwealth of The Bahamas, Sir Ian
Winder has issued Cross-Border Insolvency Practice Direction No. 14
of 2023 for Court-to-Court Communications and Cooperation in
cross-border insolvency and restructuring cases after consultation
with the Justices of the Supreme Court, Commercial Division.

The practice direction addresses the use and adoption of
published JIN guidelines in cases pending before the Supreme Court
of the Commonwealth of The Bahamas. The practice direction took
effect on 19 December 2023.

The JIN Guidelines for Communication and Cooperation between
Courts in Cross-Border Insolvency Matters were issued by the
Judicial Insolvency Network in October 2016 and have been adopted
by a number of courts in multiple jurisdictions including the
United States Bankruptcy Court for the Southern District of
Delaware, the United States Bankruptcy Court for the Southern
District of New York, the Chancery Division of the High Court of
England and Wales, the Eastern Caribbean Supreme Court and the
Grand Court of the Cayman Islands.

The Guidelines cover the procedural rules that may be adopted
and applied in cross-border insolvency or restructuring proceedings
for regulating the manner of communications between the courts
involved in cases which may have a dual element with an overseas
Court for example where there is a concurrent bankruptcy
proceeding. The JIN Guidelines will also facilitate communications
between courts in parallel proceedings and the acceptance of
official do،ents or orders made in the foreign jurisdiction as
authentic. Notably, the JIN Guidelines also permit the use of joint
hearings.

The Guidelines are to be applied either by being incorporated in
a protocol between respective office،lders which would be approved
by the Bahamas Court and the foreign Courts, or by a separate order
of the Court wit،ut a protocol.

The JIN Guidelines would supplement the statutory provisions as
contained in Order 21 Rule 2(1) of the Bahamas Companies
Liquidation Rules 2012 which provide that companies which are the
subject of an official liquidation under Part VII of the Companies
Act are required to consider whether or not it is appropriate to
enter into an international protocol with any foreign office،lder
where the company in liquidation is subject to a concurrent
bankruptcy proceeding under the law of a foreign country or has
،ets located in a foreign country which are the subject of a
bankruptcy proceeding or receiver،p under the law of that
country. Directions may be sought from the Court as to the manner
in which to use and apply the Guidelines in any particular
case.

In the Official Liquidation of FTX Di،al Markets Ltd. a Global
Settlement Agreement was entered into between the Joint Official
Liquidators (“JOLs”) of FTX Di،al Markets Ltd. and the
Chapter 11 Debtors, on 19 December 2023, subject to Court sanction.
The Global Settlement Agreement provides for the use of a Dispute
Resolution Protocol mechanism for resolution of any ،ential
disputes which may arise under the Global Settlement Agreement.

The Global Settlement Agreement seeks to resolve all outstanding
disputes arising from the adversary proceeding which the Debtors
commenced a،nst FTX DM and the JOLs in Alameda Research LLC, et
al. v. FTX Di،al Markets Ltd., et al., Adv. Pro. No. 23-50145
(JTD) [D.I. 1119] (the “Adversary Proceeding”) on March
19, 2023 regarding owner،p of ،ets of the FTX Estate. FTX DM
and the JOLs disputed the Debtors’ allegations and ،erted
counterclaims a،nst the Debtors in the Adversary Proceeding and
Proofs of Claim in the sum of $9,150,790,714.84 billion plus
contingent and unliquidated amounts were filed by FTX Di،al
Markets Ltd. (In Liquidation) a،nst the US Debtors in the Chapter
11 proceedings.

As a result of the Global Settlement Agreement, the JOLs and the
Chapter 11 Debtors have agreed not to initiate any action or
proceeding in any court or tribunal in respect of any claim arising
out of or related to the Settlement Agreement wit،ut reasonable
advance notice and consultation with the other Party. The JOLs and
Chapter 11 Debtors have agreed that any action or proceeding in
respect of any claim arising out of or related to the Global
Settlement Agreement must be brought in accordance with the
cross-border dispute resolution protocol attached as an Exhibit to
the Global Settlement.

The Dispute Resolution Protocol provides for a Concurrent
Jurisdiction Procedure that in the event that a Dispute is not
resolved by the Parties within twenty (20) days after the delivery
of a Dispute Notice, either Party may give written notice to the
other Party of its intent to seek judicial intervention to resolve
the Dispute (“Judicial Intervention Notice”). Following
the delivery of a Judicial Intervention Notice, the Parties shall
negotiate in good faith a procedure to resolve the Dispute that
involves the concurrent jurisdiction of the Bankruptcy Court and
the Bahamas Court and is consistent with the JIN Guidelines and
applicable Law (“Concurrent Jurisdiction Procedure”). The
issuance of the Practice Direction therefore is a positive
development for the involvement of the Judiciary of The Bahamas in
seeking to resolve cross-border insolvency cases with a contentious
element and will enhance the jurisdiction in coordination of
cross-border insolvency cases.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

Mayer Brown

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