Case of the Day: In re Vivaro Corp.

The case of the day is In re Vivaro Corp. (Bankr. S.D.N.Y. 2015). Vivaro Corp. filed a Chapter 11 petition in the bankruptcy court in 2012. Breezecom FZC and several other parties filed claims in the bankruptcy case, and Vivaro objected to the claims.

There is a split in authority on how objections to claims are to be served on the claimants. Some courts apply FRBP 3007, under which the objection is to be served on the claimant by mail at least 30 days before the hearing on the objection. Other courts apply FRBP 7004, which incorporates FRCP 4. The Vivaro court, for reasons that I won’t get into, decided in today’s case that FRBP 3007 applies in such instances. The interesting point is that the court seemed to think that because FRBP 3007 applied, service by mail was always permissible, while if FRBP 7004 and thus FRCP had applied, then it might be necessary to comply with the Hague Service Convention in case of a foreign claimant.

The problem with this approach, it seems to me, is that the rules of procedure should not be read to permit methods of service that violate the Convention, which after all is part of the law of the United States. We see in FRCP 4(f)(3) that even if the court can authorize a method of service that is inconsistent with a foreign state’s law, it cannot authorize a method of service that is inconsistent with the Convention, which is a treaty that binds the United States. The Rules of Bankruptcy Procedure should be read the same way, it seems to me.

Perhaps the answer to this puzzle is that the objection is not “process” in the narrow sense, and thus the Convention does not apply. In the past I’ve suggested that the Convention might apply to service of any judicial documents, not just to process. But now I’m not sure. Article 1 of the Convention says that the Convention applies “where there is occasion to transmit a judicial or extrajudicial document for service abroad.” The question is: what does “service abroad” mean here? I am not going to give a view now, but I want to try to get a good answer. Thoughts from interested readers are welcome.

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