Barclays to face NY court over MCC cash

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The Independent Online
BARCLAYS Bank may have to pay dollars 30m ( pounds 18m) to Price Waterhouse, the administrators of Maxwell Communication Corporation, after losing an appeal against a ruling that it must face proceedings in the New York bankruptcy court.

PW is claiming that dollars 30m paid to Barclays shortly before MCC went into administration in December was a preferential payment as defined by US bankruptcy laws.

Barclays had said that under UK law the payment was legitimate because MCC had been granted a short-term overdraft that was repayable on demand.

In July Mr Justice Hoffman ruled in the High Court that as MCC was placed under Chapter 11 bankruptcy protection in the US as well as put into administration in the UK, the US courts had jurisdiction.

Yesterday the Court of Appeal upheld this ruling and told Barclays that it could not appeal to the House of Lords. Barclays now faces a hearing before the New York court on 21 October and PW is confident that the bank will be forced to repay the dollars 30m.

The New York court yesterday approved a 60-day extension to the deadline for PW to come up with a reorganisation plan for MCC. John Gellene, of the lawyers Milbank Tweed Hadley and McCloy, representing PW, said the plan was 'making great progress'.

Judge James Garrity Jr dropped the court's previous objections to a bill submitted by lawyers and accountants working on the MCC case, and approved all but dollars 6,000 of a dollars 677,000 fee due to Milbank Tweed.

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