Failure to Provide a Translation Does not Translate to Victory

Contributed by Erika del Nido
Proofs of claim filed against a debtor can be as varied as the claimants themselves. Everything from hand-written notes to hundreds of pages of sophisticated corporate documents has been submitted in support of claims. Matters become even more complicated when the claimant is a foreigner relying on foreign law and foreign language documents. In Solar Trust of America, LLC, the United States Bankruptcy Court for the District of Delaware recently reminded a claimant—specifically a law firm—that the materials submitted with a proof of claim must be complete and must be completely translated into English, if the claimant wishes to rely on them in support of its claim.
Solar Trust of America hired the German law firm Krammer Jahn Rechtsanwaltsgesellschaft mbH to represent it in a law suit filed by the former CEO of Solar Millennium in Germany seeking a declaratory judgment that Solar Trust and certain affiliates did not have a claim for defamation against him. The German court dismissed the case because the CEO did not allege that he was harmed and because the German court lacked authority over cases filed in the U.S. with respect to the allegations. The CEO appealed, and Solar Trust and certain affiliates commenced chapter 11 cases, staying the appeal. Two months later, the German appeals court issued an opinion establishing 30 million euros as the amount in controversy in the lawsuit, based on the defendants’ loss allegations.
Krammer sent an invoice to the debtors’ claims agent in the amount of approximately $260,000 for fees owing to Krammer under German law. Subsequently, Krammer filed a general unsecured claim asserting that its fees were based on the amount in controversy in the German lawsuit, as set forth in the German opinion and pursuant to the German Lawyer’s Fee Act. Although the proof of claim included English translations of certain documents, including the final invoice of fees and an engagement letter, Krammer only provided a translation of the holding of the German opinion and failed to provide a copy of the German Fee Act.
The liquidation trustee for the debtors objected to the claim, alleging that the debtors’ books and records demonstrate that Solar Trust paid the invoice prepetition; Krammer did not represent Solar Trust in the appeal; and the German opinion was issued against Solar Trust’s co-defendants and not Solar Trust.
In response, Krammer argued that the trustee failed to rebut the prima facie validity of the claim and moved for summary judgment allowing the claim. Krammer further asserted that, as set forth in the engagement letter, under the German Fee Act, it is entitled to certain minimum fees. Krammer provided a translated excerpt of the German Fee Act providing that fees are calculated based on the amount in controversy, which the German opinion held was 30 million euros. Again, Krammer failed to provide a translation of the entire German opinion and German Fee Act.
In response to Krammer’s motion for summary judgment, the liquidation trustee argued that a question of material fact exists with respect to whether: (i) the German opinion is void as to the debtors because it may have been entered in violation of the automatic stay, (ii) Solar Trust is liable to Krammer because it was not represented in the German appeal, and (iii) the reasonable value of services provided by Krammer have been established pursuant to section 502(b)(4) of the Bankruptcy Code.
Analysis and Holding
Citing ample precedent, including from the First and Eleventh Circuits, the bankruptcy court found that when a foreign language document is submitted without a translation, such document may be excluded from the record on summary judgment. The bankruptcy court noted that although Krammer’s claim is based on the German opinion and the German Fee Act, it failed to provide complete translations of these documents. The bankruptcy court explained that these documents were integral to adjudication of the motion for summary judgment. Because the German opinion could not be considered part of the record, a question of material fact persisted as to the amount in controversy. As such, the bankruptcy court denied Krammer’s motion for summary judgment.
The Delaware bankruptcy court’s opinion in Solar Trust reminds claimants to know their audience. Although a bankruptcy court may wish to consider a foreign law or opinion, it may not be able to do so unless a translation is provided by the claimant. The small step of providing documentation in a language that the court understands can go a long way in achieving an allowed claim.