The proceeds agreements prohibited JPL from putting the Debtors into bankruptcy, provided that the security agent would act on behalf of the lenders, and included a payment waterfall for any sale proceeds received.
In connection with these financing arrangements, each JPA Entity entered into similar proceeds agreements with their intermediate lessor, JPL, the security agent, and the various lenders. To finance the purchase of their respective aircrafts, each of the Debtors entered into senior and junior financing arrangements. In addition, the Debtors did not have any regular operations or ordinary-course business in the United States, their airplanes were leased to a foreign carrier (Vietnam Airlines), and those planes had never flown to or been in the United States. The Debtors did not have any employees, were managed by the president and chief executive officer of JPL (which maintained an office in Tokyo), and did not maintain their own independent offices. (“JPL”), and were created for the purpose of acquiring and leasing aircrafts. The Debtors were owed and managed by the same parent entity, JP Lease Products & Services Co. The cases involved two Japanese special-purpose vehicles: JPA No. in the form of reversionary interests in certain retainer deposits held by their bankruptcy counsel notwithstanding the fact that the debtors did not actually fund the deposits and they seemingly had no other ties to the United States. Instead, the Court found that the companies were permissible debtors entitled to the protections of the Bankruptcy Code because each owned property in the U.S.
1, 2022), the bankruptcy court denied a secured lender’s motion to dismiss the chapter 11 cases of two Japanese companies, arguing, among other things, that the debtors did not have significant ties to the United States to satisfy the eligibility requirements of section 109(a) of the Bankruptcy Code. Despite recent criticisms of venue selection and cries to limit or curtail various provisions of the Bankruptcy Code, a recent decision from the Bankruptcy Court of the Southern District of New York demonstrates that the bankruptcy courts may continue to broadly interpret the scope of their jurisdictional reach and the powers and authorities granted to them under the Bankruptcy Code.