Pursuing Avoidance Power Claims Against Foreign Entities

A recent decision by the Delaware Bankruptcy Court, in In re FAH Liquidating Corp., addressed the issue of whether a transfer of a debtor’s assets that occurred outside of the United States can be avoided and recovered under the Bankruptcy Code. The Bankruptcy Court held that a trustee or debtor-in-possession can avoid and recover fraudulent conveyances (and, by extension, preferential transfers) that occurred outside of the U.S., following decisions by the Bankruptcy Court for the Southern District of New York and the U.S. Fourth Circuit Court of Appeals.