Suntech Cayman Islands proceedings recognized; venue transfer denied

By Caroline Salls

Pittsburgh, Nov. 17 – Suntech Power Holdings Co., Ltd.’s petition for U.S. recognition of its Cayman Islands provisional liquidation proceedings was granted Monday by the U.S. Bankruptcy Court for the Southern District of New York.

The court also denied a request by Solyndra Residual Trust to transfer Suntech’s Chapter 15 bankruptcy case to the Northern District of California. Solyndra also objected to the recognition motion.

Judge Stuart M. Bernstein said in Monday’s ruling that the recognition dispute centered on whether Suntech was eligible to be a debtor under the Bankruptcy Code, whether venue was proper in the New York Southern district and whether the Cayman Islands is the company’s “center of main interests.”

“Solyndra’s opposition to recognition as well as the support for its cross-motion are based on a mistaken assumption and allegations involving bad faith manipulation of the case,” Bernstein said.

Specifically, Solyndra argued that Suntech did business in San Francisco at the time the Chapter 15 case was filed, so it should have been filed there.

Solyndra claimed the company’s joint provisional liquidators manipulated the venue of the case by establishing a New York bank account in order to file the case in New York, and that Suntech should have sought reorganization in the People’s Republic of China.

Following a trial, Bernstein said he is satisfied that Suntech does not conduct business in the Northern District of California and there was no basis to place venue in that jurisdiction.

While the liquidators established a bank account in New York, in part, to satisfy the eligibility requirements for being a debtor, the judge said they did not intend and their actions did not wrest the venue of the case from California.

In addition, Bernstein said the activities the liquidators undertook that established Suntech’s center of main interests in the Cayman Islands were consistent with their duties.

Suntech is a Wuxi, China-based manufacturer and distributor of solar panels. Its liquidators filed the Chapter 15 case on Feb. 21, 2014 under case number 14-10383.

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