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Loeb & Loeb secured a reversal of a lower court ruling in the U.S. Court of Appeals for the Second Circuit on behalf of Brian Ryniker, litigation administrator of the post-confirmation estates of Décor Holdings, Inc. et al.
The reversal reinstates a default judgment and resolves important issues involving bedrock agency law, which has far ranging implications outside of the bankruptcy context.
The defendant, Sumec Textile Company Ltd., through its agent, Brown & Joseph (B&J), filed a proof of claim in the Décor bankruptcy, listing B&J as its noticing agent. After Ryniker filed a preference action complaint, Ryniker proceeded to serve process on Sumec via B&J.
Sumec failed to answer the complaint and the bankruptcy court entered a default judgment and denied Sumec’s motion to vacate the default judgment. Sumec appealed to the district court, which reversed and vacated the default judgment.
Ryniker, represented by Loeb, appealed to the Second Circuit. In a decision issued on May 27, 2026, the Second Circuit agreed with Ryniker’s position advanced by Loeb and reversed the district court’s ruling and reinstated the bankruptcy court’s judgment.
The primary issue on appeal was the sufficiency of service of process on Sumec via B&J. Sumec contended that service was invalid because B&J was not acting as Sumec’s agent when process served. Rather, B&J was acting as the agent of Sumec’s credit insurer, Sinosure, which was the party that engaged B&J to file the proof of claim.
Loeb successfully argued to the Second Circuit that service of process on Sumec was proper under bedrock principles of agency law. In particular, the Second Circuit found that Sumec retained Sinosure (as agent for Sumec), and that Sinosure retained B&J (as subagent to Sumec).
In reaching this result, the Second Circuit reaffirmed core agency law, including that principals and subagents do not need to be in direct contact in order for the subagent to bind a principal.
The result is especially important because Sumec, a Chinese conglomerate with no assets located in the United States, posted 100% of the judgment in cash in the district court’s registry. Sumec only did so after Ryniker, advised by Loeb, mounted a wide ranging and compelling judgment enforcement campaign involving Sumec’s customers based in the U.S. Thus, Loeb was able to convert a judgment against a foreign creditor with no assets in the U.S. into a fully collectible judgment.
The Loeb team was led by Restructuring & Bankruptcy partner Noah Weingarten.
The reversal reinstates a default judgment and resolves important issues involving bedrock agency law, which has far ranging implications outside of the bankruptcy context.
The defendant, Sumec Textile Company Ltd., through its agent, Brown & Joseph (B&J), filed a proof of claim in the Décor bankruptcy, listing B&J as its noticing agent. After Ryniker filed a preference action complaint, Ryniker proceeded to serve process on Sumec via B&J.
Sumec failed to answer the complaint and the bankruptcy court entered a default judgment and denied Sumec’s motion to vacate the default judgment. Sumec appealed to the district court, which reversed and vacated the default judgment.
Ryniker, represented by Loeb, appealed to the Second Circuit. In a decision issued on May 27, 2026, the Second Circuit agreed with Ryniker’s position advanced by Loeb and reversed the district court’s ruling and reinstated the bankruptcy court’s judgment.
The primary issue on appeal was the sufficiency of service of process on Sumec via B&J. Sumec contended that service was invalid because B&J was not acting as Sumec’s agent when process served. Rather, B&J was acting as the agent of Sumec’s credit insurer, Sinosure, which was the party that engaged B&J to file the proof of claim.
Loeb successfully argued to the Second Circuit that service of process on Sumec was proper under bedrock principles of agency law. In particular, the Second Circuit found that Sumec retained Sinosure (as agent for Sumec), and that Sinosure retained B&J (as subagent to Sumec).
In reaching this result, the Second Circuit reaffirmed core agency law, including that principals and subagents do not need to be in direct contact in order for the subagent to bind a principal.
The result is especially important because Sumec, a Chinese conglomerate with no assets located in the United States, posted 100% of the judgment in cash in the district court’s registry. Sumec only did so after Ryniker, advised by Loeb, mounted a wide ranging and compelling judgment enforcement campaign involving Sumec’s customers based in the U.S. Thus, Loeb was able to convert a judgment against a foreign creditor with no assets in the U.S. into a fully collectible judgment.
The Loeb team was led by Restructuring & Bankruptcy partner Noah Weingarten.
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