Case of the Day: In re Hawker Beechcraft

The case of the day is In re Hawker Beechcraft, Inc. (Bankr. S.D.N.Y. 2013). Hawker Beechcraft was an aircraft manufactuer. In November 2009, Hawker and Lider International Aviation, B.V., entered into a sales contract for a $3.9 million used Premier aircraft, and the sale was consummated. Lider later sold the aircraft to Helicoptor Finance LLC, which the leased the aircraft to Rotorwing B.V., with an option to purchase.

In 2012, Hawker filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the Southern District of New York. Hawker moved for rejection of certain aircraft purchase agreements; the aim was to shed certain warranty obligations. Rotorwing objected to the motion. It asserted various substantive and procedural objections, but for our purposes the issue was whether Hawker had served the motion on Rotorwing, as required by Bankruptcy Rule 6006. Without going into detail, Rule 6006 requires that motions to reject executory contracts must be served in the manner provided for the service of a summons and complaint under FRCP 4. Hawker served the motion on Rotorwing, a Dutch company, by private courier (Fedex or the like) addressed to the “president or legal department” of the company. As we know, FRCP 4(f)(1) permits service by internationally agreed means, and FRCP 4(f)(2)(C)(ii) permits service by “any form of mail that the clerk addresses and sends to the individual and that requires a signed receipt.”

The bankruptcy judge held, correctly in my view, that a private courier is within the Hague Service Convention’s definition of “postal channels”, because it is the functional equivalent of mail. The judge also rejected, again correctly in my view, the minority view that service of process by postal channels is never permissible under Article 10 of the Convention.

But I think the judge missed the main question here. The main question, it seems to me, is whether the service complied with FRCP 4(f)(2)(C)(ii), and if not, whether it was nevertheless authorized by FRCP 4(f)(1). The return of service doesn’t mention a signed receipt, and it seems clear from the return that Hawker itself, not the clerk, mailed the documents. Some cases have given some leeway under FRCP 4(f)(2)(C)(ii) when, for example, the clerk refuses to mail the documents and directs the plaintiff to mail them. But in the absence of a return receipt it seems clear that the service did not meet the requirements of the rule. So the remaining question is whether FRCP 4(f)(1) itself authorizes the service. In the Second Circuit, it may be enough to simply mail the document, without complying with Rule 4(f)(2)(C)(ii), because in Ackerman v. Levine, 788 F.2d 830 (2d Cir. 1986), as interpreted by Papir v. Wurms, No. 02 Civ. 3273 (RCC), 2005 WL 372061 (S.D.N.Y. Feb. 15, 2005), the court arguably held that Article 10 of the Convention affirmatively authorizes service by mail rather than merely permitting it to the extent it is authorized by the law of the forum. I don’t agree with this outcome, and other courts (e.g., Brockmeyer v. May, 383 F.3d 798 (9th Cir. 2004)) have rejected it. But the bankruptcy judge didn’t even address the question.

There is a practical point to all of this. Bankruptcy cases frequently require mass mailings, given the large number of creditors and others involved. It’s worth asking whether a mass-mailing approach is sufficient when sending documents abroad, given the kind of objection that Rotowing raised here.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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