The Chief Judge of the U.S. District Court in New Jersey has dismissed a $2 billion RICO and corporate mismanagement lawsuit brought by the trustees in bankruptcy of the giant Dutch fiber optic network provider KPNQwest against its majority shareholder, two of the company’s former directors, and the company’s former Chief Executive Officer. Ira Finkelstein represents the CEO. Two lawsuits brought by KPNQwest shareholders and bondholders in which Ira is counsel for the defendant CEO remain pending in the U.S. District Court for the Southern District of New York. Ira is also coordinating the defense of the CEO in a shareholder lawsuit in Arizona, and several additional matters pending in the courts of the Netherlands.

Stephen M. Harnik was recently interviewed by Anwalt Aktuel, (transl.: "Today's Lawyer") an Austrian magazine which focuses on prominent lawyers and topical legal issues relating to Austria.

In re Parmalat Finanziaria S.p.A.

U.S. DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

Judge Kaplan

These motions require the Court to consider the procedural interaction of a set of foreign and domestic proceedings all arising out of the historic collapse of Parmalat Finanziaria S.p.A. and affiliated entities, which began in December 2003.

Parmalat Finanziaria S.p.A., Parmalat S.p.A, and twenty-one affiliates and subsidiaries (together, "Parmalat" or the "Foreign Debtors"), all foreign corporations, are currently in reorganization proceedings in Parma, Italy. [1] Last June, Dr. Enrico Bondi, the Foreign Debtors' "Extraordinary Administrator," [2] commenced a proceeding in the Bankruptcy Court for the Southern District of New York under Section 304 of the Bankruptcy Code [3] seeking a stay of all proceedings against the Foreign Debtors (the "Section 304 Proceeding"). The Bankruptcy Court granted the requested relief in the form of a preliminary injunction.

Grant Thornton International ("GTI") and Bank of America, N.A. ("BoA") (together, the "Movants") now move for an order partially withdrawing the reference of the Section 304 Proceeding to the Bankruptcy Court and modifying the Bankruptcy Court's preliminary injunction order to allow the Movants to assert counterclaims and third-party claims against, and take discovery of, the Foreign Debtors.

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From The New York Law Journal, Feb. 3, 2004

Stolen, Rare Violin Ordered Back to Owner
Cerisse Anderson
New York Law Journal
01-29-2004

The property clerk of New York City's Police Department must return a valuable stolen violin that it has been holding for nine years while the alleged thief has been on the run, a state judge in Manhattan has ruled.

Acting Justice Lewis Bart Stone ordered that the stolen violin be released to the son of the now-deceased owner after the attorney for the long-vanished defendant, Carlos Gonzalez, is notified and given an opportunity to examine and photograph the instrument pursuant to New York's Penal Law §450.10.

The violin was crafted by Joseph Rocca of Cremona, Italy, around 1850 and is worth more than $140,000.

Ruling Jan. 14 in Matter of Okada v. Property Clerk, 122154/02, the Supreme Court judge rejected the property clerk's argument that city regulations and New York City's Administrative Code barred the return of the violin without a release from the Manhattan District Attorney's Office, which was prosecuting the crime.

Two violins were recovered when Mr. Gonzalez was arrested on Nov. 29, 1994, while trying to sell them to an undercover police officer. The violins were allegedly stolen from a Japanese violin dealer four months earlier while he was in New York to meet a possible buyer. Mr. Gonzalez was indicted for criminal possession of stolen property, posted bail of $10,000 and then absconded.

Munehiro Okada, son and heir of the violins' owner, Sojiro Okada, continued his father's attempts to recover the instruments after his father died in 1999. The district attorney's office refused on the grounds that the violins were evidence in the criminal case against Mr. Gonzalez. Finally, Mr. Okada sued the Police Department's property clerk, who was holding them.

Ownership Established
Justice Stone said Mr. Okada had established his ownership of the Rocca violin in the proceeding before him by affidavit and documentary evidence. The other violin's authenticity as a Stradivarius and the district attorney's suspicions of a possible case of insurance fraud were being dealt with separately.

"As the property clerk must be deemed to hold the violin for the benefit of its owner, subject to the rights of the People to sequester it for use in a criminal proceeding, the lack of any adverse claim in . . . a year period makes it presumptive that Sojiro was and Munehiro is the owner of the Rocca," the judge said.

Justice Stone rejected the property clerk's contention that return of the instrument was barred by either the four-month statute of limitations for commencing an Article 78 proceeding or the requirement in the General Municipal Law §§50-e and 50-i for notice of claims to be filed within 90 days.

The General Municipal Law notice requirements for a tort claim did not apply to a demand for the return of property, he said.

And a claim under Penal Law §450.10 was valid before or during a criminal proceeding, which in this case was still pending, he added.

Although the city's rules and administrative code may provide for how the police department and prosecutors are to handle a demand for the return of property, those "cannot be read to countermand, subvert or negate state law" enacted to speed the return of non-contraband property seized in a criminal investigation, the judge said.

Justice Stone denied Mr. Okada's request to declare the city rules invalid, deciding to "construe them so as to require all proceedings under such rules to be carried out in a timely manner consistent with the 15-day time limit set forth in PL §450.10."

Ira A. Finkelstein, who represented Mr. Okada, said yesterday that the statutory notice that had been given to Mr. Gonzalez's attorney stated that he had 15 days to inspect the instrument. He said he expected that Mr. Okada would be able to retrieve the Rocca violin in a few weeks.

Mr. Okada was also represented by Mr. Finkelstein's partner, Stephen M. Harnik of Harnik & Finkelstein. Tzivyah C. Weber of the Police Department's Legal Division appeared for the property clerk. Assistant District Attorney Michael D. Kitsis represented Manhattan District Attorney Robert M. Morgenthau.

On July 1, 2004, there appeared under "Decisions of Interest" two recent cases which cite as precedent two prominent cases handled by Harnik & Finkelstein.  In the first the issue was what criteria a court will look to in deciding whether comity should be extended to a foreign bankruptcy proceeding and the court cited to Rashi Textiles v. Rhomberg Textil Gesellschaft m.b.H of Austria; the second discussed the necessary elements for a successor liability claim on a default judgment and the court cited to Cargo Partner AG v. Albatrans, Inc.   Our firm represented both Austrian parties in those two important cases.  A synopsis of the Decisions follows:

Bertisch v. Drory
NEW YORK COUNTY
Civil Practice
Loan Contract Breach Claim Dismissed; Court Accords Comity to Israeli Bankruptcy Proceeding

Bertisch v. Drory
July 1, 2004

Justice Fried

Plaintiff, Alberto Bertisch, by motion for summary judgment in lieu of a complaint, filed on September 26, 2003 (the complaint), seeks to recover $335,000 from defendant, Sarid Drory, for defendant's alleged breach of a loan contract. Defendant cross-moves to dismiss the complaint.
This action concerns a loan agreement between plaintiff and defendant, dated November 27, 2001, which was executed in Hebrew and subsequently translated into English. Under the loan agreement, plaintiff, an American citizen who claims to do business with defendant in the United States and in Israel, borrowed $352,000 from Bank Leumi of Israel, Ltd. and loaned the funds to defendant, an Israeli citizen. On January 29, 2002, the day by which the loan was to be repaid, a balance of $335,000 remained. On February 1, 2002, the parties entered into an amendment to the agreement (together, with the loan agreement, hereinafter referred to as the Agreement), which was also executed in Hebrew and subsequently translated into English. Under the Agreement, defendant agreed to make payments to plaintiff beginning February 20, 2002 through November 1, 2002 for the remaining balance of $335,000, plus an additional $50,000 in damages. Subsequently, defendant made $50,000 in payments to plaintiff and allegedly defaulted on the remaining $335,000.

Washington Mutual Bank FA v. SIB Mortgage Corp.
PLAINTIFF SOUGHT $335,000 based on defendant's alleged breach of a loan agreement under which plaintiff borrowed $352,000 from Bank Leumi of Israel, Ltd., and loaned the funds to defendant, an Israeli citizen. On April 29, 2002 bankruptcy proceedings were instituted against defendant in an Israeli District Court. In July 2003, plaintiff filed a lawsuit asserting defendant's indebtedness in the Israeli bankruptcy proceeding. In January 2004, the Israeli court declared defendant bankrupt and appointed a trustee. The court, finding that comity should be extended to the Israeli bankruptcy proceeding, dismissed plaintiff's complaint. In addition to finding that Israeli liquidation procedures are comparable to procedures found in the U.S. Bankruptcy Code, the court, citing Rashi Textiles v. Rhomberg Textil Gesellschaft M.B.H. of Austria, found that plaintiff would not be prejudiced because he was aware of the Israeli bankruptcy proceeding and had submitted to the Israeli court's jurisdiction by filing a claim therein.



KINGS COUNTY
Business Law

Bank Failed to Allege Necessary Elements For Successor Liability Claim on Default Judgment

Washington Mutual Bank FA v. SIB Mortgage Corp.
July 1, 2004

Justice Demarest

ALLEGING THAT defendant mortgage provider succeeded to a mortgage banker's liabilities under a theory of de facto merger, plaintiff bank sought to recover, from defendant, a default judgment that its predecessor-in-interest obtained against defendant's alleged predecessor. Defendant sought dismissal, arguing that plaintiff bank failed to state a cause of action for successor liability because the criteria for de facto merger - particularly continuity of ownership between it and its alleged predecessor - were not satisfied. The court dismissed plaintiff's complaint for failure to state a cause of action for successor liability under the doctrine of de facto merger. Noting that continuity of ownership remains an essential requirement of the doctrine of de facto merger in contract cases, the court found that plaintiff failed to show any continuity of ownership between defendant's stockholders and those of its alleged predecessor-in-interest.