In re: Icenhower

The Diaz Defendants challenged the bankruptcy court's and district court's orders invalidating the transfer to them of a Mexican coastal villa owned by debtors and requiring them to convey the property to Kismet for the benefit of debtors' bankruptcy estate. The court concluded that, notwithstanding the local action doctrine, 28 U.S.C. 1334(e) granted the bankruptcy court exclusive in rem jurisdiction over the Villa interest; given the court's ruling that H&G was debtors' alter ego and its substantive consolidation of H&G with the bankruptcy estate, the Villa interest was property of the estate as of the petition date; the bankruptcy court properly declined to honor the forum selection clauses in the Mexican contracts and declined to abstain from ordering recovery of the property based on international comity; Mexico was not a necessary party and the bankruptcy court could enter judgment without Mexico; the bankruptcy court properly applied U.S. law rather than Mexican law; and the bankruptcy properly found that Martha Barba de la Torre purchased the property in bad faith. Accordingly, the court affirmed the bankruptcy court's judgment with respect to the postpetition transfer action; the fraudulent conveyance action is moot as a result; and the district court granted Kismet's and the Diaz Defendants' requests for judicial notice. View "In re: Icenhower" on Justia Law