Today, the Second Circuit upheld a district court’s refusal to dismiss claims to recover more than $100 million that once belonged to two Yugoslavian banks operating in New York.
After civil unrest roiled former Yugoslavia, the U.S. government responded in 1992 by freezing the banks’ assets. A decade later, and with federal permission, the New York banking superintendent seized the assets with a view to distributing them through state court proceedings. Meanwhile, back in Yugoslavia, the authorities commenced their own insolvency proceedings to resolve claims to the banks’ assets. They also filed a bankruptcy petition in the Southern District of New York to aid the Yugoslavian proceedings. (The U.S. Bankruptcy Code authorizes such petitions.) In the S.D.N.Y. case, the Empire State’s banking superintendent asserted sovereign immunity under the eleventh amendment. The district judge declined to dismiss, holding that the case fell within the exception of Ex parte Young, 209 U.S. 123 (1908), to sovereign immunity.
The Second Circuit affirmed, agreeing that the Ex parte Young did indeed apply because the Yugoslav authorities (1) asserted a non-frivolous claim of an ongoing violation of federal (bankruptcy) law and (2) sought prospective relief (in the form of a turnover order). In re Deposit Ins. Agency, No. 04-4997 & 04-4999 (2d Cir. Mar. 29, 2007).
For international bankruptcy law and eleventh amendment mavens, the opinion will seem as manna from heaven. Blawgletter will post a link to the opinion in the morning. You may in the meantime retrieve it directly from the Second Circuit website.
Worth $100 million but still free — our feed available here.