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10-04285-brl Doc 127 Filed 08/17/12 Entered 08/17/12 14:29:55 Main Document
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Luxalpha has not met its burden of establishing that a court in Luxembourg could hear
and resolve the subject matter of this litigation, which is the recovery of initial transfers to
Luxalpha and Groupement and subsequent transfers to other Defendants. If Luxembourg law
applies, as Luxalpha contends is a possibility in its brief and supporting affidavit (see Luxalpha
Mot. at 17,) Luxalpha has not addressed which of the various Luxembourg statutes it cites would
apply to this case. Critically, Luxalpha has failed to address the fact that there is no Luxembourg
clawback statute that allows a trustee to recover from subsequent transferees. (See Declaration
of Franz Schiltz, dated July 25, 2012 (the “Schiltz Decl.”) at 7–8.) Luxalpha, therefore, has
not met its burden in demonstrating that the subject matter of this adversary proceeding—the
movement of money from BLMIS to Luxalpha and Groupement as initial transferees and to the
other Defendants as subsequent transferees prior to BLMIS’s liquidation—is capable of litigation
under Luxembourg law. 49
If U.S. law were to apply to this matter in Luxembourg, it is unclear at best whether this
case could be litigated in Luxembourg. As a threshold matter, Luxembourg courts consider
foreign law to be an issue of fact that must be litigated by the parties and determined by a panel
of judges. (Schiltz Decl. 9.) This process involves each party offering what it believes is the
relevant, controlling law for the case and can take one to two years depending on the complexity
of the matter. (Id.) Given the evolving nature of bankruptcy law in the Second Circuit and the
New York courts as it applies to avoidance actions, it is an insurmountable task at this stage for
Luxalpha to meet its burden to demonstrate whether Luxembourg courts could properly
determine U.S. bankruptcy law in order to “permit litigation of the subject matter of this
49 It is immaterial that Luxalpha is an initial and not a subsequent transferee, as the entire case, including the
subsequent transferee causes of action, would be dismissed under forum non conveniens. Luxalpha must meet the
standard as to all causes of action against all defendants. See Concesionaria, 307 F. Supp. 2d at 563.
99