Foreign representative of Brazilian businessman accused of smuggling yacht files Chapter 15 in Miami

sailboat

iStock.com/mbbirdy

By Benjamin Clarke

The foreign representative of a long-time bankrupt businessman accused of concealing his assets and smuggling a US$30 million yacht into Brazil has filed Chapter 15 recognition proceedings in Miami.

On 8 November, Fernando Correia of Rio de Janeiro-based Carlos Magno Nery & Meiros filed a petition in the US Bankruptcy Court for the Southern District of Florida, asking the court to recognise the Brazilian involuntary liquidations of copper manufacturer SAM Indústrias, its parent company Boulder Participações, and Boulder’s majority shareholder Daniel Birmann.

Birmann and the two companies have been in insolvency proceedings for over a decade, after SAM defaulted on 40.1 million reais (US$14.5 million) worth of debentures back in December 2004.

Back then a Rio court issued a bankruptcy order against SAM under the Brazilian Bankruptcy Law after it also closed down its principal place of business.

Private pension fund Braslight, which held the defaulted notes, filed a petition for the involuntary liquidation of SAM and asked the court to extend the order to Boulder and Birmann – as the ultimate beneficial owner of the companies.

The Brazilian court found that SAM’s main assets were 135 million reais (US$36.05 million) worth of loans to Boulder, and made the requested order in February 2008.

The court said that Birmann had caused SAM’s collapse by transferring all of its available funds to Boulder and leaving it without sufficient liquid assets to pay creditors. Boulder then used the funds to make additional intercompany loans to Brazilian bank Banco Arbi, which is owned by Birmann’s family.

Braslight was made the judicial administrator by the court, but last year Head Judge Maria Ruckerreplaced the pension fund with Carlos Magno, noting the proceedings had “not had an actual solution for several years”.

Fraudulent transfers

As well as the bankruptcy proceedings, the Brazilian Securities Exchange Commission (CVM) also launched an action against Birmann.

According to a declaration filed by Correia in the US court, the CVM found that the loans extended to Banco Arbi were contracted under much more favourable conditions than those offered by the market and concluded that Birmann’s actions were an “abuse of control”.

It imposed a fine of 234 million reais (US464.88 million) on Birmann – “the largest fine ever imposed to an individual by the CVM” according to Correia.

“During the bankruptcy proceedings, Daniel Birmann was required to disclose of his assets to the Brazilian court, which he has failed to do,” Correia says. “Instead, it appears that he has fraudulently transferred assets to his family members in order to avoid enforcement of the bankruptcy order and to conceal his assets from creditors.

Brazil’s department of revenue discovered a further attempt to hide assets in 2012, when it seized a yacht called “Big Aron” in the city of Salvador. The yacht was registered in the name of Isle of Man-incorporated company Tango Bravo, which had applied for a tax-free admission on the grounds it was a non-resident.

But the authorities suspected that Brazilian resident Birmann was the actual owner and concluded that with Tango Bravo he had “smuggled” the yacht into the country.

The name “Big Aron” caught the attention of the authorities because Birmann’s father was named “Aron Birmann” and, upon further analysis, the department of revenue learned that Birmann and his family were consistently registered as guests on trips in Brazil and elsewhere.

After conducting investigations, the CVM found that Tango Bravo was held by another entity in the Cayman Islands, which in turn was held by a Panama-incorporated entity with a single shareholder: Birmann’s mother.

With a value of 60 million reais (US$30.1 million), the CVM sought to levy on the yacht and use the proceeds to pay off the fine it had imposed on Birmann. A federal judge in Rio, Judge Fatima Sequeira made such a seizure order in 2015.

But the following year, the department of revenue discovered furniture and appliances had been “stolen” from the yacht and transported to a Banco Arbi address.

Public prosecutors were informed, and a criminal lawsuit for embezzlement and misappropriation was filed against Birmann last year.

With counsel from Gregory Grossman of Sequor Law, Correia filed the Chapter 15 proceedings in Miami “in furtherance of a worldwide pursuit of assets” to satisfy unpaid claims.

Birmann has a Florida driver’s licence listing an address in Florida, Correia says, and the debtors’ have assets located in the United States.

Judge Robert Mark has listed the matter for a hearing on 4 December.

In the United States Bankruptcy Court for the Southern District of Florida, Miami Division

In re SAM Industrias S.A.; Boulder Participacoes LTDA; and Daniel Benasayag Birmann

• Judge Robert Mark

Counsel to the foreign representative

• Sequor Law

Partner Gregory Grossman with Nyana Miller in Miami

Foreign representative to SAM Industrias, Boulder Participacoes and Daniel Birmann

• Carlos Magno Nery & Meiros

Partner Fernando Correia in Rio de Janeiro

 

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Art, Cars, Parrots and Other Spoils of Miami Fraud Lawyer Edward H. Davis

“Corruption is like an acid eating away the steel understructure of society,” said Edward H. Davis Jr. of Sequor Law, Miami, who’s made it his mission to pursue corrupt politicians and Ponzi-schemers hiding money, boats, sports cars and exotic pets around the globe.”

By Raychel Lean

Ask Miami asset recovery lawyer Edward H. Davis Jr. where in the world he hasn’t been, and he’ll have to pause for a moment to think.

Israel — Davis hasn’t gone there yet. But by next week it’ll be the 81st country he’s visited, edging him one step closer to a spot in the Travelers’ Century Club.

“You have to prove you’ve been to 100 countries to join,” Davis said. “I’m on my way.”

Lucky for Davis, founding shareholder of Sequor Law, fraudsters don’t just leave stolen money in their backyard. They scatter it all over the globe, using it to buy outlandish collectibles, unconventional modes of transport and exotic pets.

As a representative of fraud victims, it’s Davis’ job to seize those assets, sell them and return as much as possible to the client.

“We’ve repossessed some very, very beautiful sports cars, yachts and airplanes. We’ve recovered land, houses, hotels,” Davis said. “One time we got a guy’s prized dog and prized parrot, and were able to sell them back to him for money to give to the victims.”

Davis once recovered a Jean-Michel Basquiat painting, bought with money a fraudster had stolen from a Brazilian bank. He represented the liquidator in the case and sold the piece by the renowned painter for $13 million.

“I hate to say this, but it looked like a 5-year- old drew it,” Davis said.” The fraudster paid $1.2 million for it, so we actually made money on that particular piece.”

Davis also seized a Serge Poliakoff painting that once belonged to Edemar Cid Ferreira, former president of Brazilian bank Banco Santos, who was charged with money laundering.

Offshore jurisdictions and remote islands are particularly popular hiding place for fraudsters, who “try to use places that are hard to get to and hard to find,” according to Davis.

Mauritius, Guernsey, Dominica, the British Virgin Islands, Trinidad and Tobago, the Dutch and French sides of Saint Martin — all regular haunts.

Davis has also been to Finland twice, but only to the airport, so it doesn’t count toward his 100-country goal.
“I’m very strict about that,” he said.

Early in his career, Davis represented a defrauded Guatemalan family business in a case spanning 10 jurisdictions.

“I grew up dreaming about going to these places, and when you get there you still pinch yourself a little bit,” said Davis, who grew up in a tiny farm town near Buffalo, New York, where he said dairy cows outnumbered humans.

Though it’s tough spending up to 100 nights away from home every year, the attorney says he still hasn’t gotten over the novelty.

“I’ve been to Slovenia, Dubai, Hong Kong, India. I get to learn about other cultures, hear their language, eat their food, understand how they live,” Davis said. “And when you really get down to it, most people are pretty much the same. But instead of focusing on that 90 percent of stuff we all agree on, we tend to focus on the 10 percent that we disagree on.”

The way Davis sees it, corruption is “the No. 1 thing that we have to fight in the world.”

“Lack of medical care, lack of adequate clean water, food and housing can be stopped if we get rid of corruption,” he said. “It should be a human right to live in a society free from corruption, and it’s not.”
On a daily basis, Davis encounters people who’ve lost everything “but the lint in their pocket,” so funding litigation can be a big problem.

Third-party litigation funders have emerged in the last few years to help pay for asset recovery. But before then, Davis said, many cases languished and fraudsters went unpunished.

Never a Pang of Guilt

These criminals are almost always men — often “amazingly intelligent and charming” businessmen or politicians who, according to Davis, are “almost like computers,” unable to process emotion ”the way most normal human beings do.”

“They can smile at you, tell you they love you, then steal your money and walk away, and never feel a pang of doubt, a pang of guilt. Nothing,” Davis said. “What’s really tragic is that most of them are so smart that they could actually do really well if they applied themselves.”

At the beginning of every case, Davis and his team write two words on a white board — “We win.”

“We ask every client, ‘What do you define as a win?’ Then we design a strategy to get to that point,” he said.
Davis served as co-general counsel to the liquidators of Stanford International Bank in a case against Allen Stanford, the second most notorious Ponzi- schemer in history — after Bernie Madoff. He found many of Stanford’s victims were seniors, forced to return to work after losing their retirement.

While sending perpetrators to jail provides a sense of justice, Davis admits this does nothing to restore what victims have lost.

“Corruption is like an acid eating away the steel understructure of society,” he said. “If you let it get out of hand, and you don’t fight it and don’t get the money back, then eventually that acid will eat through the under-structure, the metal skeleton, and the whole society collapses.”

Davis calls himself an “accidental lawyer,” having switched tracks from marine biology on a whim and taken the LSAT without studying. But since then, he’s developed an unwavering mission statement.

“What I think we’re doing is restoring hope and trying to do our little part to help society work,” he said. “So much of what we have is based on trust, and the minute that people say they can’t trust, you’re done. We’re trying to counteract that.”

Edward H. Davis Jr.
Born: March 1962, Buffalo, New York
Spouse: Kateri Davis
Children: Ashley, Alissa and Jaclyn Davis
Education: University of Miami, J.D., 1987; University of Miami, B.A., 1984
Experience: Founding shareholder, Sequor Law, 2017-present; founding shareholder, Astigarraga Davis, 2000-2017; founding shareholder, Davis, Devine, Goodman & Wells, 1998-1999; associate and partner, Steel Hector & Davis 1992-1998; law clerk and associate, Paul Landy Beiley & Harper, 1987- 1992.

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The $70B loophole, or: How to turn your mansion into an offshore account

Wealthy in a financial bind increasingly turn to the homestead exemption

By Konrad Putzier

In the fall of 2016, Roger Ailes was by all accounts a very wealthy man. Fox News had just pushed him out from the company he built over allegations of sexual harassment, but paid him $40 million for his troubles. So he did what many other rich retirees before him have done: he bought a house in Florida.

Through a trust, Ailes paid $36 million in cash for a six-bedroom, 12,747- square-foot mansion in Palm Beach. In November that year, the longtime Putnam County, NY resident filed a declaration of domicile in Florida, public records show, making the new property at 6 Ocean Lane his primary home.

The declaration had its perks. Ailes was a defendant in a potentially expensive sexual-harassment lawsuit by former Fox News host Andrea Tantaros and was about to become a defendant in another, by former contributor Julie Roginsky. A judgment against him could put his assets on the line. But making the Palm Beach mansion his primary residence could insulate the house and up to half an acre of land around it from any legal claims, thanks to a handy Florida law known as the “homestead exemption.”

Ailes died in May 2017 at age 77. Fox News, also a defendant in the suits, settled Roginsky’s lawsuit in December of that year and Tantaros’ lawsuit was dismissed in May 2018. Ailes’ widow, Elizabeth Ailes, declared the Palm Beach property her homestead for tax purposes in 2017 and 2018, property records show. A spokesperson for Elizabeth did not respond to requests for comment.

Curious if someone of means is in a financial pickle? Check if they recently bought a mansion in Florida or Texas.

Paying millions for a palatial home in the Sunshine State is usually an indicator of unfettered wealth. But it could also be a warning sign that the buyer may be trying to protect money from creditors or legal claims. Florida and Texas are among the few states with a so-called unlimited homestead exemption, a law enshrined in the state constitution stipulating that your home is off limits to creditors, no matter how much it is worth or how much you owe. For people staring down big debts or potentially costly lawsuits, this creates a powerful incentive to buy the priciest property they can find in a homestead state.

Rising home prices mean more wealth is now beyond the reach of creditors. In three South Florida counties — Miami-Dade, Broward and Palm Beach — alone, the combined appraised value of all luxury homes appraised at $1 million or more whose owners claim the homestead exemption in tax filings is $69.9 billion (see chart), according to The Real Deal’s analysis of the Florida Department of Revenue’s 2018 tax roll. The true market values of these properties could be much higher.*

“If you go to a lawyer and ask ‘how do I protect my assets?,’ the first thing they say is: ‘Buy a valuable homestead,’” said Jeffrey Davis, a law professor at the University of Florida. “Some people just sort of call it estate planning.”

Funny laws

Residents of most U.S. states get a homestead exemption protecting some of their home equity from creditors. In California, for example, most people have a cap of $75,000, while in Virginia, the cap is $5,000.

Florida, Texas, Kansas, Iowa, Oklahoma and South Dakota, however, have no limit. In these states, buying an expensive property and claiming the homestead exemption has some of the perks of stashing your money in an offshore account — protection from creditors and lawsuits — without having to transfer money overseas.

“If you’re faced with losing what you have, the psychological toll it takes on you is the same whether you’re really rich or an average Joe,” said Wayne Patton, a Miami-based asset-protection attorney. “So the idea of moving somewhere where you can protect the bulk of what you have is very appealing.”

The list of the rich and famous who have taken advantage of the exemption is long, and it includes NFL legend O.J. Simpson, movie star Burt Reynolds and one of the original Miami Worldcenter developers, Marc Roberts.

Simpson had spent much of his life in California, but bought a home in Miami for $575,000 in 2000 and moved there after he lost a $33.5 million civil suit brought by the relatives of his murdered ex-wife.

“They got funny laws in this state,” Simpson told the New Yorker in 2001, explaining why he likes living in Florida.

The unlimited exemption has been around for more than a century, but its popularity is on the rise. Several offshore financial centers have increased transparency and made life harder for those looking to hide money abroad. Meanwhile, Florida’s rising property market over the past decade has made buying homes there more attractive.

In both Florida and Texas, debtors need to actually move into the property and show that they want to make it their permanent residence – by changing their voter registration, for example – to get the exemption. But they do not need to have lived in it for long. There are exceptions: those who buy a home with proceeds from criminal activity aren’t protected, and homeowners who fail to pay taxes or don’t make mortgage payments on their homestead can still see it seized.

Evading creditors isn’t the main reason people claim the homestead exemption, asset-recovery lawyers say. Making a property your homestead carries significant tax benefits.

But even if people buy a property purely and explicitly to bilk their lenders, that’s totally legal – at least in Florida.

In 2001, the state’s Supreme Court ruled that the exemption protects a property owner even if she bought the home with “the specific intent of hindering, delaying, or defrauding creditors.” The ruling has turned into a nightmare for lenders and asset-recovery lawyers nationwide. Because many debtors across the U.S. can, in theory, move to Florida at a moment’s notice and buy a house, they know that a part of their fortune equivalent to the value of a hypothetical Florida mansion can’t ever be seized by creditors. Of all of Florida’s eccentric laws, the homestead exemption is the one it sort of managed to force on the rest of the country as well.

“We’ll have a lawsuit against somebody where they will say ‘you can sue me, and might even win, but by the time you win I’m going to sell my house up here and all my other assets and I’m going to buy a house in Florida’,” said Schuyler Carroll, a New York-based asset-recovery attorney at Perkins Coie, adding that he’s been involved in dozens of cases where the exemption came up. “So we settle.”

Paupers with palaces

Tom Hicks made a fortune as a private-equity investor and a name for himself as the owner of the Texas Rangers baseball team and English soccer club Liverpool F.C. But the Dallas resident found himself in deep trouble after the financial crisis. In 2010, the Rangers filed for bankruptcy, and Hicks sold the team to pay off his creditors. In 2011, a group of former Rangers investors sued Hicks, claiming he had used the team to improperly enrich himself. JPMorgan Chase reportedly sought $35.4 million from him.

As Hicks fought for what was left of his wealth – he had also been forced to sell Liverpool F.C. – he could be fairly certain of one thing: no one could take away his palatial Dallas estate.

Hicks had bought the nearly 30,000-square-foot home at 10000 Holloway Drive in 1999 — the year his Dallas Stars hockey team won the Stanley Cup. Built by architect Maurice Fatio for Italian aristocrat Pio Crespi in the 1930s, the 25-acre property includes a library decked in walnut wood, crystal chandeliers, two guest houses, a pool and a lake. In 2013, Dallas County appraisers valued the property at $40 million. Property records show that Hicks claimed the homestead exemption on the property.

“He was pleading poverty, but everyone knew he had this absolutely phenomenal house,” recalled a source familiar with the Rangers bankruptcy. An attorney for Hicks declined to comment for this article.

Hicks can thank an earlier banking crisis for the law that shielded his mansion. In 1837, a year after Texas declared its independence from Mexico, a financial panic hit the U.S., leading to a wave of loan defaults and bank failures. The crisis would have a lasting impact on the state’s laws, according to Michael Ariens, a legal historian at St. Mary’s University.

“When Texas became a state in 1845, the idea that creditors could take the essentials of a farmer’s or workman’s way to earn a living was anathema,” Ariens said. “And there are always more debtors than creditors as voters.”

The homestead exemption eventually became a “sacrosanct” part of the constitution, according to Joe Wielebinski, a Texas-based asset-recovery attorney at Winstead PC. “Texas is a state with a history of people from other areas coming to this free, open and large state for a lot of reasons,” he said. “Whether it’s embarrassing or not, one of the reasons they came here was to avoid creditors in other states.”

In Texas, the debtor protection covers up to 10 acres in cities and up to 100 acres for an individual (200 for a family) in the countryside from creditors. In Florida, which included the exemption in its constitution in 1868, it covers just half an acre in a municipality and 160 acres outside a municipality. But as property prices in Miami and Palm Beach rose in the 1990s and early 2000s, debtors realized that they could squeeze a lot of money into half an acre.

So sue me

In late 1989, former Major League Baseball commissioner Bowie Kuhn’s Manhattan law firm went bankrupt. Weeks later, Kuhn bought a $1 million, five-bedroom home in Ponte Vedra Beach and claimed the homestead exemption.

“There is nothing inappropriate about my actions,” he told the New York Times in 1993: “People do this all the time.”

In 1996, Burt Reynolds filed for bankruptcy but kept his $2.5 million property near Palm Beach. Paul Bilzerian, a former corporate raider who went bankrupt in Florida for the second time in 2001 with $140 million in debt, got to keep his $5 million, 11-bedroom home in Tampa Bay, which included an indoor basketball court and a cinema.

Martin Kenney, a British Virgin Islands-based asset-recovery lawyer, recalls representing a hedge fund in the early 2000s. The fund had lent $20 million to a Florida doctor, who defaulted on the loan and pleaded poverty even though he owned a $7 million home near Sarasota, according to Kenney.

“We didn’t litigate over the house because we thought, ‘why do that if you’re just going to waste your time and lose?’” he said. “Like all policy choices, you end up with people that are unethical, abusing the privilege, doing things that probably the folks who created that homestead law never envisioned would happen.”

As abuse spread, the banking industry lobbied to change bankruptcy laws, facing fierce resistance from the real-estate industry and property owners in homestead states. In 1998, George W. Bush, then governor of Texas, wrote a letter to the House Judiciary Committee arguing that a “homestead cap is a clear violation of states’ rights with regard to state private property.” Current Attorney General Jeff Sessions, then a senator representing Alabama, found himself on the other side, telling the Times in 2001 that the unlimited exemption “isn’t just.”

The bankers prevailed and in 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. It stipulated, among other changes, that those who file for bankruptcy can no longer claim the unlimited exemption unless they have lived in the property for at least 40 months.

“If a bankruptcy filing occurs today, it’s not clear that a homestead is bulletproof from all creditors’ claims,” said Wielebinski, the asset-recovery attorney. “Thirty years ago, if you put money into your homestead you were virtually immune from the claims of all creditors except for the mortgage lender and taxes. So it’s a dramatic change.”

The housing crisis further eroded the appeal of the exemption. Property prices plummeted, and there’s no point in claiming the exemption on a home that’s underwater anyway.

“Since 2008 we saw less people claiming it because there was no equity in the house,” said Michael Bakst, a Palm Beach-based attorney at Greenspoon Marder who specializes in bankruptcy and insolvency cases.

But as the Florida real estate market recovered from the crisis and the state attracted more of the world’s wealthy, so did the homestead exemption.

Marc Roberts, a former boxing promoter and one of the original developers behind the Miami Worldcenter project, claimed the homestead exemption on his $1.5 million home in Jupiter, Florida, when he filed for bankruptcy in March 2010, court records show. Roberts could not be reached for comment.

Keurig Green Mountain founder Robert Stiller reportedly paid $55 million for a mansion in Palm Beach through an LLC in January 2014 while he was still a defendant in three shareholder lawsuits against Green Mountain. He already owned a home in the same town but soon declared the new property his homestead, public records show. Although there is no indication Stiller bought the property because of the exemption, his role as a defendant meant he could potentially benefit from the law. An attorney representing Stiller did not comment.

The exemption continues to be highly effective. Gregory Grossman, a Miami- based asset-recovery attorney at Sequor Law, said he was unable to contest the exemption on behalf of creditors in more than 95 percent of the cases he was involved in.

And even the fact that your money is tied up in your home isn’t too much of a problem for those with patience.

Take Tom Hicks. While the lawsuits against him dragged on, he continued to claim the Dallas estate as his primary residence. Then, in late 2012, Hicks settled a legal dispute with the Rangers, and on January 11, 2013, a lawsuit brought by his lenders was dismissed.

Two weeks later, news broke that Hicks had put the home on the market for $135 million — at the time reportedly the most expensive residential listing in the country. He later cut the asking price to $100 million and sold it in January 2016 for a reported $58 million.

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Burford Raises $250 M in 24 Hours, Litigation Funding Rolls On

By Stephanie Russel-Kraft

Burford Capital, the world’s largest litigation finance firm, announced this week that it had raised another $250 million in a span of just 24 hours, the latest sign that litigation funding is still booming.

As Bloomberg Law reported in March, Big Law firms are increasingly gravitating toward litigation finance as the practice sheds its stigma. And yet, according to lawyers and funders in the market, the contours of that boom remain fuzzy.

“My anecdotal sense, confirmed by Burford putting more money in the market, is that it’s growing,” said Lucian Pera, commercial litigation partner at Adams and Reese who has worked with litigation funders. “How much it’s growing is very hard to say.”

The practice of litigation funding, in which third parties pay litigation fees up- front in the hopes of making a return, originated in Australia in the 1990s and only took hold in the United States in the past decade.

The practice is not without its critics, most notably the U.S. Chamber of Commerce, which argues it can lead to unnecessary litigation. Critics also question the ethics of litigation being funded by third parties that can remain anonymous.

Burford is by far the largest litigation funder. The firm, which has been publicly traded since launching in 2009, now employs over 100 people and claims a market cap of over $5.4 billion.

Growth Expected

In the first half of 2018, Burford invested $540.3 million, and the firm says it expects continued growth in coming years.

Unlike Burford and Bentham, another publicly traded litigation finance firm with a $5.6 billion portfolio, most litigation funders are not public companies, nor are they disclosed in litigation itself.

“It’s very opaque,” said Pera. “There’s no place to go to find a reliable list of funders. It’s difficult for example to find out how much money is deployed in the market. You can look at Burford and guestimate upward.”

Greg Grossman, a shareholder at Sequor Law who focuses his practice on asset recovery, estimates that 40 percent of his law firm’s revenue comes from litigation funders. And yet he says he still lacks an overview of the market.

In addition, because litigation finance is still a relatively new practice in the U.S., it still lacks standardization, according to Grossman.

“It’s not the kind of market that is transparent, so you’re comparing apples to oranges,” Grossman said.

For example, he said Burford’s documents don’t look anything like those provided by Bentham.

Calls More Frequent

Lawyers and funders who spoke with Bloomberg Law said they believe market saturation will eventually come, but it isn’t imminent. Over the past five years, a slew of smaller funders have entered the market, though none of them near the size of Burford or Bentham.

Curiam Capital, one of those new players, launched with $100 million in capital earlier this year. Managing principal Ross Wallin said the firm is on track to commit that money “quicker than we expected.”

“We have continued to receive calls from entities who are interested in the asset class and who want to be on the list the next time we want to raise capital,” Wallin told Bloomberg Law.

“Investors are looking for returns that are off the beaten track,” said Pera. “I keep hearing from people, … mostly law firms and lawyers exploring some option. They want to talk through how does it work, what are the possibilities, what are the dangers.”

Pera said these calls are becoming more frequent.

“I’m old enough to remember when mediation was not common, and now you can’t be a trial lawyer without having some clue of how it works,” he said. “I think we’ll see a time when that’s the case with litigation funding, that it’s just another tool in the toolbox. That’s what I think is coming, but it sure is not here yet.”

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IWIRC announces new board of directors

By Mohamed Dabo

The International Women’s Insolvency and Restructuring Confederation (IWIRC) has announced its newly elected and appointed incoming board of directors for 2018 – 2019.

The international networking and professional growth organization, aimed at women in the restructuring and insolvency industries, announced the names of its five-member executive board and its ten-member management committee on 17 September.

IWIRC also published the names of its new regional directors, directors at large, as well as its standing committee and vice directors.

Carrianne Basler, a managing director at AlixPartners in Chicago who was vice chair, succeeds outgoing chair Jennifer McLemoreMichelle Pickett, a partner at PricewaterhouseCoopers in Toronto, Canada, becomes the new vice chair. McLemore will remain on the board as immediate past chair.

The executive board also includes Leyza Blanco of Sequor Law in Miami as secretary, Jennifer Kimble of New York restructuring firm Prime Clerk as treasurer, and Marjorie Kaufman of Getzler Henrich in Boston as Vice Finance Director.

Appointees to the group’s management committee include Tinamarie Feil, president of the California-based BMC Group, who becomes the group’s UNCITRAL committee director. Alexandra Schnapp, a law clerk at the US Bankruptcy Court in Atlanta, is the communications director.

Eloise Fardon, a senior associate at Stephenson Harwood in Hong Kong, is now the Asia regional director. Rita Gismondi, an associate at Gianni Origoni Grippo Cappelli & Partners in Rome, is the new Europe regional director. Kelly McDonald, of Shearman & Sterling in New York, is  US regional director and Toronto-based Dentons counsel Sara-Ann Van Allen is Canada regional director.

Outgoing chair McLemore says, “The composition of the Board speaks to the depth and expertise of our membership base and we look forward to working with these talented women.”

In a phone interview, she told GRR the organisation’s focus right now is to bring the international experience to the local level—so that members who are unable to attend international conferences can still have access to those international resources.

IWIRC’s newsletter is one resource the organisation is aiming to make more accessible; for example, by using social media to give it a stronger international presence on the internet.

Founded in 1993, IWIRC is a not-for-profit organisation currently located in Asia, Europe, and North America and continues to grow. McLemore says IWIRC welcomes the development of new networks in these or new regions.

Executive Board (terms ending October 2019)

  • Carrianne Basler, AlixPartners, Chair
  • Michelle Pickett, PricewaterhouseCoopers, Vice Chair
  • Leyza Blanco, Sequor Law, Secretary
  • Jennifer Kimble, Prime Clerk, Treasurer
  • Marjorie Kaufman, Getzler Henrich & Associates, Vice Finance Director
  • Jennifer McLemore, Christian & Barton, Immediate Past Chair

Management Committee (terms ending October 2019)

  • Tinamarie Feil, BMC Group, UNCITRAL Committee Director*
  • Karen Fellowes, DLA Piper, Newsletter Director
  • Terri Freedman, Freedman Law, Program Committee Co-Director
  • Melissa Hager, Morrison & Foerster, US Networks Director
  • Evelyn Meltzer, Pepper Hamilton, Member Services Director
  • Alexandra “CC” Schnapp, U.S. Bankruptcy Court, Communications Director
  • Helen Sevenoaks, CMS Cameron McKenna Nabarro Olswang, Europe Networks Director
  • Carren Shulman, NYU School of Law, UNCITRAL Committee Director*
  • Pooja Sinha, Global Legal Solutions (GLS Law), Asia Networks Director
  • Melaney Wagner, Goodmans, Canada Networks Director

Regional Directors (terms ending October 2019)

  • Eloise Fardon, Stephenson Harwood, Asia Regional Director
  • Rita Gismondi, Gianni, Origoni, Grippo, Cappelli & Partners, Europe Regional Director
  • Kelly McDonald, Shearman & Sterling, U.S. Regional Director
  • Sara-Ann Van Allen, Dentons, Canada Regional Director

Directors at Large (terms ending October 2019)

  • Jacqui Calderin, Agentis
  • Kelly Beaudin Conlan, Connolly Gallagher
  • Catherine D’Alton, Harney Westwood & Riegels
  • Mary Grace Diehl, former judge, U.S. Bankruptcy Court
  • Rebecca Hume, Kobre & Kim
  • Ericka Johnson, Womble Bond Dickinson
  • Nicole Stefanelli, Cullen and Dykman
  • Blanche Zelmanovich, Ernst & Young

Directors at Large (terms ending October 2020)

  • Monica Blacker, BAX Advisors
  • Kristen Siracusa Eustis, Miles & Stockbridge PC
  • Elizabeth Gunn, Virginia Office of the Attorney General
  • Rachel Lao, SSG Capital Management
  • Kerri Mumford, Landis Rath & Cobb
  • Leanne Williams, ThorntonGroutFinnigan

Standing Committee Vice-Directors (terms ending October 2019)

  • Valerie Banter-Peo, Buchalter Nemer, Vice Director of Regional Programming*
  • Aisling Dwyer, Maples and Calder, Asia Regional Vice Director*
  • Rosa Evergreen, Arnold & Porter Kaye Scholer, Vice Director of Communications and Newsletter*
  • Justine Lau, Mourant Ozannes, Asia Regional Vice Director*
  • Tina Lucas, Banner Bank, Vice Director of Budget*
  • Lauren McKelvey, Odin Feldman & Pittleman, Vice Director of Spring Programs*
  • Tara Schellhorn, Riker Danzig Scherer Hyland & Perretti, Vice Director of Fall Programs*
  • Nellwyn Voorhies, Donlin Recano, Vice Director of Communications and Social Media*
  • Blanche Zelmanovich, Ernst & Young, Vice Director of Member Services*
  • Rita Gismondi, Gianni, Origoni, Grippo, Cappelli & Partners, Europe Regional Director
  • Kelly McDonald, Shearman & Sterling, U.S. Regional Director
  • Sara-Ann Van Allen, Dentons, Canada Regional Director

Directors at Large (terms ending October 2019)

  • Jacqui Calderin, Agentis
  • Kelly Beaudin Conlan, Connolly Gallagher
  • Catherine D’Alton, Harney Westwood & Riegels
  • Mary Grace Diehl, former judge, U.S. Bankruptcy Court
  • Rebecca Hume, Kobre & Kim
  • Ericka Johnson, Womble Bond Dickinson
  • Nicole Stefanelli, Cullen and Dykman
  • Blanche Zelmanovich, Ernst & Young

Directors at Large (terms ending October 2020)

  • Monica Blacker, BAX Advisors
  • Kristen Siracusa Eustis, Miles & Stockbridge PC
  • Elizabeth Gunn, Virginia Office of the Attorney General
  • Rachel Lao, SSG Capital Management
  • Kerri Mumford, Landis Rath & Cobb
  • Leanne Williams, ThorntonGroutFinnigan

Standing Committee Vice-Directors (terms ending October 2019)

  • Valerie Banter-Peo, Buchalter Nemer, Vice Director of Regional Programming*
  • Aisling Dwyer, Maples and Calder, Asia Regional Vice Director* 
  • Blanche Zelmanovich, Ernst & Young, Vice Director of Member Services*     
  • Rosa Evergreen, Arnold & Porter Kaye Scholer, Vice Director of Communications and Newsletter*
  • Justine Lau, Mourant Ozannes, Asia Regional Vice Director*
  • Tina Lucas, Banner Bank, Vice Director of Budget*
  • Lauren McKelvey, Odin Feldman & Pittleman, Vice Director of Spring Programs*
  • Tara Schellhorn, Riker Danzig Scherer Hyland & Perretti, Vice Director of Fall Programs*
  • Nellwyn Voorhies, Donlin Recano, Vice Director of Communications and Social Media*
  • Blanche Zelmanovich, Ernst & Young, Vice Director of Member Services*

To view full article, click here.

Two Sequor Law Attorneys Named Rising Legal Stars by Latinvex

ARNOLDO LACAYO Bio Image

ARNOLDO LACAYO
Partner, Sequor Law

Arnie Lacayo, a partner at Sequor Law, focuses his international litigation practice on financial fraud and asset recovery.

He has extensive experience litigating complex disputes in state and federal courts and has represented multi-national corporations, sovereign governments, receivers, trustees and other foreign officeholders in matters pending in U.S. Courts.

Key work includes representing the judicial administrator appointed in a Brazilian bankruptcy case in one of the largest failed bank bankruptcies in Brazil’s history; acting as lead U.S. counsel for the Liquidator and has successfully pursued recognition of the Chilean insolvency proceedings and of the Liquidator as foreign representative under Chapter 15 and Brazilian Liquidator in an adversary proceeding clawback action within a Chapter 15.

Lacayo has also worked at length with the versatile 28 U.S.C. § 1782 discovery statute, including in one of the leading cases out of the Eleventh Circuit Court of Appeals.

Lacayo holds a J.D. from the University of Miami School of Law (2003) and a B.A. from the University of Notre Dame (2000).

 

 

NYANA A. MILLER Bio Image

NYANA A. MILLER
Associate, Sequor Law

Nyana Abreu Miller, an attorney at Sequor Law, focuses her practice on international asset recovery and financial fraud.

Miller has worked on cases brought under Chapter 15 of the U.S. Bankruptcy Code on behalf of foreign office holders of bankrupt Latin American companies and financial institutions where insiders misappropriated hundreds of millions of dollars’ worth of assets into or through the United States. She represents individuals, corporations, receivers and trustees in litigation to recover assets that were concealed, fraudulently transferred, or otherwise misappropriated.

Prior to joining Sequor Law, she worked on commercial, financial and real estate transactions at an international law firm. In that position, Miller represented bank syndicates in financial transactions for various purposes, including working capital, international trade and acquisitions.

She holds a J.D., University of Miami School of Law (2011) and a B.A., University of Kansas (2005).

 

The Bankruptcy Episode w/ Paul Orshan, Leyza Blanco, Jacqueline Calderín, and Joe Stone

Felony Miami explores the disparities in the criminal justice system and the intersection of those disparities and the arts.

In this exploration, Felony Miami seeks to educate, entertain, enlighten and contribute towards the improvement and fairness of the system.  Felony Miami intends to do this by bringing together thought leaders, decision makers, the accused, the guilty, the not guilty and other participants in the system and in the arts to examine the current state of being, ways in which the system can be improved and ways in which the arts can contribute to this exploration and improvement.

Sequor Law’s Leyza Blanco spoke with Felony Miami as part of their Bankruptcy Episode. Click below to listen.

Gibraltarian payday loans business files Chapter 15 in Miami

Two weeks after its UK sister company filed for Chapter 15 protection in New Jersey, the joint liquidators of a Gibraltar-registered payday loans business embroiled in fraud and mismanagement allegations, have sought recognition of their appointment in Miami.

With counsel from Sequor Law shareholder Leyza Blanco, Grant Thornton partners David Ingram and Frederick White filed the Chapter 15 petition in the US Bankruptcy Court for the Southern District of Florida on 14 August.

Ingram and White were appointed joint liquidators of Privilege Wealth One by the Supreme Court of Gibraltar in June, five months after administrators were appointed over its sister company, UK-registered holding company Privilege Wealth, in England.

Soon after the UK administrators were appointed, the group caught the attention of the UK’s Mail on Sunday, which quoted a letter to investors from Privilege Wealth One blaming the group’s problems on a series of bad decisions, including the UK company;s investment in a payday loans business in South Dakota run by a Native American Sioux Tribe, and serviced – at least initially – from a call centre in Panama.

The head of that call centre, according to the Mail, was a UK national and “well known scam operator” who was reportedly shot in an assassination attempt in Panama last year. He was later arrested at the request of Spanish police, which accused him of running a scam oil venture from a call centre in Marbella targeting British investors.

In a declaration filed at the Miami court, Ingram said Privilege Wealth One was plunged into compulsory liquidation after Chilean creditor Richard Leclerc filed a statutory demand in Gibraltar in March. Leclerc requested payment owed to him by Privilege Wealth One and its general partner Privilege Wealth Management (PWM) under a loan note agreement.

After the companies failed to satisfy the demand they were presumed insolvent under Gibraltarian law and Leclerc made an application to appoint the joint liquidators, supported by three additional investors. Those four creditors have combined unsatisfied debts of US$600,000 in US loan notes and £800,000 (US$1.02 million) in European loan notes.

Ingram told the US court that he has taken steps to gather information on the affairs of Privilege Wealth One and PWM, and to notify all creditors and interested persons of his appointment. But he said that the information available to the joint liquidators so far has not allowed them determine “the precise details of the funds received from creditors” for investment in the Privilege companies, or how the proceeds were used.

The Chapter 15 application “is of critical importance to addressing these issues”, Ingram’s declaration said. “[R]ecogonition under Chapter 15 is essential to the joint liquidators’ worldwide pursuit of assets with which to recover the funds received from creditors”.

Under Gibraltarian insolvency law, no distinction is applied between the assets of an insolvent entity located within Gibraltar and those outside the territory. “The joint liquidators are empowered to seek recovery of all assets and rights, wherever located,” Ingram said, adding they are duty bound to pursue assets and claims of the debtor in the United States.

Other actions

GRR has already reported that the UK administrators Privilege Wealth, filed Chapter 15 recognition proceedings in New Jersey on 2 August. David Rubin & Partners’ Stephen Katz and John Kelmanson of Kelmanson Insolvency Solutions were appointed by the England and Wales High Court back in January, after the company defaulted on funds owed to the Gibraltarian entity.

In a declaration filed in New Jersey, Katz said he had become aware that Privilege Wealth had possible rights and causes of action arising out of a 25,000 strong portfolio of payday loans. He said any outstanding loans and the proceeds from the portfolio may now lie with US company Oliphant Financial, which was allegedly engaged to service the loans after the UK company’s own Panamanian subsidiary stopped servicing them.

Katz and Kelmanson intend to file lawsuits in the US to obtain what funds they can for creditors, and have also asked the New Jersey bankruptcy court’s permission to repatriate any proceeds recovered to the UK.

Privilege Wealth One and Luxemburgish fund Helix Investment Management are described as the UK company’s two primary lenders in its Chapter 15 application. They appear on a list of entities against whom Katz and Kelmanson may seek provisional relief in the US, along with Florida foreign limited partnership Privilege Direct, and numerous Oliphant entities, which are being pursued by Helix in the District Court of the Middle District of Florida.

Helix, which may be owed US$7 million by Privilege Wealth according to the UK’s Mail on Sunday, is seeking damages of US$75,000 plus interest and injunctive relief in those proceedings for the breach of various security arrangements relating to loans it issued to the company.

In Ingram and White’s Chapter 15 petition in Miami, they also list the Oliphant groups and Helix as entities against whom the Gibraltarian company may seek interim relief, as well as the UK company Privilege Wealth.

A hearing to decide Privilege Wealth One’s recognition application will take place before Judge Laurel Isicoff in Florida on 9 September.

Meanwhile, a recognition hearing for Privilege Wealth’s action in New Jersey has been listed for 6 September, with Judge John Sherwood assigned to the case.

In the US Bankruptcy Court for the Southern District of Florida

In re: Privilege Wealth One Limited Partnership
• Judge Laurel Isicoff

Joint Liquidators of Privilege Wealth One

• Grant Thornton

Partners David Ingram in London and Frederick White in Gibraltar Counsel to the joint liquidators of Privilege Wealth One

• Sequor Law

Partners Leyza Blanco and Edward Davis in Miami

To view full article, click here.

New ‘Substantial Doubt’ Standard for Foreign Judgment Enforcement in Fla.

A recent change to a state law concerning the recognition and enforcement of foreign judgments in Florida may make it easier to avoid payment of valid debts.

By Arnoldo B. Lacayo, Juan J. Mendoza and Andres H. Sandoval

 

Left to right: Juan Mendoza, Andres Sandoval and Arnoldo B. Lacayo, Sequor Law

A recent change to a state law concerning the recognition and enforcement of foreign judgments in Florida may make it easier to avoid payment of valid debts. An amendment to the Uniform Out-of-Country Foreign Money- Judgment Recognition Act (the act) adds two further grounds for denial of recognition of foreign country money-judgments, potentially making it harder to recognize and enforce foreign judgments in the Sunshine State, a jurisdiction already viewed domestically and abroad as a debtor’s haven due to its generous exemptions.

On March 19, House Bill No. 623 was signed into law and, per Article III, Section 9 of the Florida Constitution, went into effect on May 9. The bill adds two discretionary grounds to Section 55.605(2), Fla. Stat., to challenge recognition of a foreign money-judgment. Under these additional grounds, a Florida court need not recognize a foreign money-judgment if the judgment was rendered in circumstances that “raise substantial doubt about the integrity of the rendering court” or “the specific proceeding in the foreign court leading to the judgment was not compatible with the requirements of due process of law.” These new grounds apply only to judgments of other countries and not to judgments of other U.S. states, territories or commonwealths.

Enacted in Florida in 1994, the act largely follows the 1962 version of the Uniform Foreign Money-Judgments Recognition Act (the Uniform Act), promulgated by the National Conference of Commissioners on Uniform State Law (the NCCUSL). The act applies to final, conclusive, and enforceable money-judgments of other countries. Generally, such judgments are entitled to recognition under the act; however, there are several mandatory and discretionary grounds set forth in Section 55.605, Fla. Stat., upon which a court may deny recognition.

While the purpose of the act is to “provide a speedy and certain framework for recognition of foreign judgments,” Laager v. Kruger, 702 So. 2d 1362, 1363 (Fla. 3d DCA 1997), in practice, this may not be the case.

At first glance, the new amendment may seem unnecessary as the act already provides avenues to challenge recognition of a foreign judgment if it is “rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law,” or if it is “obtained by fraud.” The official comment to the Uniform Act draws a distinction between the new and existing grounds by stating that the focus of these two new grounds is on the integrity and procedure of the specific court that rendered the judgment, rather than on the judicial system of the foreign country.

Nevertheless, one potential concern is that the amendment invites a case-by-case review of foreign judgments, rather than further the “speedy and certain framework” the act intended to establish. This concern is compounded by the uncertainty as to the application of the nebulous “substantial doubt” standard when evaluating the “integrity” of the foreign court. Based on this language, some may argue that a debtor need only present enough evidence to raise substantial doubt in the mind of the trier of fact rather than affirmatively demonstrating fraud. Thusly, at face value, the amendment appears to welcome the enterprising debtor to argue the interpretation and limits of these new provisions in an effort to delay and possibly frustrate the recognition and enforcement of a legitimate foreign judgment.

Though the “substantial doubt” standard appears broad and ambiguous, it should in fact be narrowly interpreted. The NCCUSL explains that the standard is tantamount to “a showing of corruption in the particular case that had an impact on the judgment that was rendered.” At least two courts have followed the NCCUSL’s guidance in this respect. See In re Carmona, No. 16-50155, 2018 WL 889358, at *13 (Bankr. S.D. Tex. Jan. 19, 2018); Savage v. Zelent, 243 N.C. App. 535, 545 (2015). Neither found “substantial doubt” as to the integrity of the foreign court.

In short, the new amendment may leave room for abuse if courts do not adhere to the guidance of the Uniform Act and the interpretation of other courts. If so, the nebulous “substantial doubt” standard should have minimal impact for experienced creditor’s rights and asset recovery lawyers seeking to enforce valid foreign judgments entitled to recognition in Florida.

To view full article, click here.

Partner Q&A

This June, we welcomed two new powerhouse attorneys as partners at Sequor Law. We sat down with Leyza Blanco and Fernando Menendez to discuss what led them to our firm, their viewpoints on their unique practice areas, and their interests and community involvement.

Why did you decide to join Sequor Law?

  • Fernando – Being geographically situated in Miami, which serves as a gateway to Latin America and a hub for international business, Leyza and I were excited by the possibilities presented in joining a firm with a great depth of experience and knowledge in the international asset recovery arena. We have known the lawyers at Sequor Law professionally for many years and greatly admire their practice. We believe that our addition to this exceptional team creates natural synergies, adds to the firm’s resources and helps us all respond to the needs of our clients worldwide.
  • Leyza – Sequor Law presented an excellent opportunity to join professional colleagues who are world-class experts in the fields of Insolvency, Creditors’ Rights and Asset Recovery, and who would augment my cross-border practice with an already established global presence in those fields.

What do you think is unique about the firm?

  • Fernando – The firm’s depth of experience in international asset recovery matters is truly impressive. In the few short weeks since joining the firm, I’ve had the opportunity to assist clients and work with global teams on matters with ties, not only to the U.S., but to the U.K., Gibraltar, Luxembourg, Panama, Turkey, and Romania. I don’t know that I could say that anywhere else.
  • Leyza – Sequor Law is unique because it is a specialized firm with a niche practice and global reach in the Insolvency, Restructuring and Asset Recovery space.

How are your practice areas important for Sequor, and/or in general?

  • Fernando – I’ve focused my practice on bankruptcy and creditors’ rights matters for some time. Sequor’s focus on representing companies and individual clients in the areas of asset recovery, financial fraud, insolvency and financial services litigation fits perfectly within the scope of the work I’ve done throughout my career. I believe that our addition to the team will amplify the firm’s already formidable resources, and allow us to better assist and respond to the needs of our clients, whenever and wherever they may arise.
  • Leyza – Our practice areas have synergy with Sequor’s existing cross-border insolvency and restructuring practices. We look forward to adding to Sequor’s already deep bench in these areas.

How do you see your practice areas evolving or changing in the next 5-10 years?

  • Fernando – In a world that (at least as it relates to commerce) is getting smaller by the day, I see the scope of my work expanding to meet the needs of U.S.-based clients engaged in international business, and to assist clients in their asset recovery efforts around the world.
  • Leyza – I see our practice evolving to expand the use of U.S. Courts to assist clients from all parts of the world in asset recovery and insolvency proceedings.

What special strengths do you bring to Sequor?

  • Fernando – During my career, I’ve had the opportunity to handle numerous types of bankruptcy and insolvency matters from a number of different perspectives. In addition to working for plaintiffs and defendants in various fraudulent transfer and avoidance cases, I’ve also assisted a broad range of clients acting in various capacities in bankruptcy and other litigation proceedings, including debtors, trustees, secured creditors, bondholders, judgment creditors, and shareholders. I think the broad range of my prior engagements provides the benefit of multiple perspectives on how to handle new challenges.
  • Leyza – We bring additional depth of experience in both cross-border and domestic insolvency and creditors’ rights matters as well as the ability to counsel clients in Spanish, as we are native Spanish speakers.

How do you give back to the community?

  • Fernando – My wife and I contribute to several charities that are primarily focused on assisting children in developing countries.
  • Leyza – For many years, I have taught law students in clinical programs with the goal of serving the profession of law and the community. Most recently, I have assisted with a medical/legal partnership clinic assisting students with indigent clients who seek pro bono assistance in insolvency matters. I am also committed to increasing diversity and inclusion in the legal profession and to this end have served in various leadership roles, including Treasurer of the Florida Bar’s Business Law Section and Finance Director of IWIRC (International Women’s Insolvency & Restructuring Confederation.) When I served as President of the Bankruptcy Bar Association of the Southern District of Florida, I brought the Credit Abuse Resistance Education Program (C.A.R.E.) to South Florida, and then throughout the state. The C.A.R.E. Program teaches students of all ages the dangers of credit abuse. Through this program, we have presented to students in middle schools through to university freshmen. I am still involved in this program and most recently presented to students at the Department of Juvenile Justice in collaboration with the Legal Up Program. Teaching at-risk students and foster youth in transition about the dangers of credit abuse has been a good way to merge my skill set and experience as a bankruptcy lawyer with my love of teaching.

What is something people don’t know about you? (could be a hobby, interesting experience, skill or talent)

  • Fernando – Last year, I decided to take on the challenge of building a large wooden deck in my backyard. Not being a carpenter, and working only on weekends, the project turned out to be somewhat ambitious, and took far, far, . . . far longer than anticipated. Although it was a very rewarding experience, I’m fairly certain that my wife will insist that all future carpentry be left to the professionals.
  • Leyza – Many people do not know that law is my second career, having worked as a public school teacher prior to and during my law school years. Since then, I have also served as an adjunct professor teaching law students.