In re Solar Trust of America, LLC: Delaware Bankruptcy Court Requires English Translation of Foreign Documents Supporting a Proof of Claim | Practical Law

In re Solar Trust of America, LLC: Delaware Bankruptcy Court Requires English Translation of Foreign Documents Supporting a Proof of Claim | Practical Law

In In re Solar Trust of America, the US Bankruptcy Court for the District of Delaware held that a claimant submitting foreign materials with a proof of claim must provide an English translation of those documents in their entirety.

In re Solar Trust of America, LLC: Delaware Bankruptcy Court Requires English Translation of Foreign Documents Supporting a Proof of Claim

by Practical Law Finance
Published on 15 Sep 2014 • USA (National/Federal)
In In re Solar Trust of America, the US Bankruptcy Court for the District of Delaware held that a claimant submitting foreign materials with a proof of claim must provide an English translation of those documents in their entirety.
On August 18, 2014, in In re Solar Trust of America, LLC, the US Bankruptcy Court for the District of Delaware held that a claimant submitting foreign materials with a proof of claim must provide an English translation of those documents in their entirety (No. 12-11136, (Bankr. D. Del. Aug. 18, 2014)).

Background

In 2010, Utz Classen, the former CEO of Solar Millennium, initiated a lawsuit in Germany seeking a declaratory judgment that Solar Trust of America, LLC and certain of its affiliates (Debtors) had no claim for defamation against him. The Debtors retained the German law firm Krammer Jahn Rechtsanwaltsgesellschaft mbH (Krammer Jahn) to represent them. The German court dismissed Classen's lawsuit because:
  • Classen failed to allege an identifiable harm.
  • The German court lacked the legal authority to enjoin a judicial proceeding that would be filed in the US.
In February 2012, Classen appealed the dismissal. Shortly thereafter, the Debtors filed a petition for relief under Chapter 11 of the Bankruptcy Code, staying the appeal. In June 2012, the German appellate court issued an opinion setting the amount in controversy in the lawsuit at 30 million euros.
In July 2012, Krammer Jahn sent a final invoice to the Debtors for $264,319.94 in fees. Krammer Jahn then filed a proof of claim asserting a general unsecured claim based on the final invoice and explaining that under the German Lawyer's Fee Act, the fees are based on the amount in controversy in the German lawsuit, as set forth in the German opinion. The proof of claim included English translations for certain documents including Krammer Jahn's final invoice, and an English translation of only the first paragraph of the German opinion stating the holding, but did not include a copy or a translation of the German Lawyer's Fee Act provisions referenced in the invoice.
The liquidation trustee objected to the claim, alleging that:
  • The Debtors' books and records did not indicate any liability to Krammer Jahn because the Debtors paid the invoice for the underlying lawsuit prepetition and Krammer Jahn did not represent the Debtors in the appeal.
  • Krammer Jahn failed to establish its entitlement to payment of any fees under the German opinion or relevant German law because the German opinion was issued against the Debtors' co-defendants, and not the Debtors.
In response, Krammer Jahn argued that the liquidation trustee failed to rebut the prima facie validity of the claim and moved for summary judgment seeking allowance of the claim. Krammer Jahn provided a translated excerpt of the German Lawyer's Fee Act, which states that fees are calculated based on the amount in controversy. However, Krammer Jahn again failed to provide a translation of the entire German opinion and German Lawyer's Fee Act.
The liquidation trustee responded to Krammer Jahn's motion for summary judgment by arguing that:
  • A question of material fact existed as to whether the German opinion was void regarding the Debtors because it was entered while the automatic stay was in effect.
  • The Debtors were not represented in the German appeal proceedings.
  • Section 502(b)(4) of the Bankruptcy Code allows a court to examine an attorney's claim to determine the reasonable value of services rendered and there remains a question as to the reasonable value of Krammer Jahn's services.

Outcome

Citing opinions from multiple jurisdictions, the Court held that, where a document is written in a foreign language and the submitting party fails to provide an English translation, a court may properly decline to consider the document as part of the record on summary judgment. The Court noted that, although Krammer Jahn asserted its claim under German law and based it on a German opinion, it failed to provide a complete translation of the German opinion and the foreign laws that served as the bases for its claim. Therefore a question of material fact remained as to the amount of Krammer Jahn's claim, and the Court denied its motion for summary judgment.

Practical Implications

This case serves as a reminder that a bankruptcy court may refuse to consider a foreign law or opinion unless the claimant provides a proper English translation of those documents in their entirety.
For more information on a filing proofs of claims, see Practice Note, Filing a Proof of Claim in a Chapter 11 Bankruptcy Case.