What is Chapter 15 Bankruptcy?

Chapter 15 bankruptcy allows foreign debtors, trustees and other estate representatives with insolvency cases pending in other countries access to the U.S. Bankruptcy Courts if the debtor has assets, property, or requires other relief in the United States. One of the goals of Chapter 15 bankruptcy is to promote cooperation and communication between the U.S. Bankruptcy Courts and parties involved in foreign or cross-border insolvency proceedings.

Chapter 15 also grants foreign creditors the right to participate in cases before the U.S. Bankruptcy Courts and bars the courts from discriminating against foreign creditors. Finally, it requires that foreign creditors be notified of U.S. bankruptcy cases and of their right to file claims.

How do you file for Chapter 15 bankruptcy?

A Chapter 15 case cannot be filed unless there is a pending foreign insolvency proceeding. A U.S. Chapter 15 case usually begins with a debtor’s foreign representative files a Bankruptcy Court petition that seeks to recognize the foreign insolvency proceeding.

Does Chapter 15 offer protection to a foreign debtor?

After conducting a hearing, the Bankruptcy Court will make a determination as to whether the case is a “foreign main proceeding” that is taking place where the debtor’s main interests are located. The court may also find the debtor is involved in a “foreign non-main proceeding” taking place where the debtor has an establishment, but not the location of its main interest.

If the court determines that the debtor or estate representative is involved in a foreign main proceeding, it will issue an automatic stay that ends collection actions against the debtor and most other U.S. litigation. In cases where the Bankruptcy Court has recognized a foreign main proceeding, Chapter 15 allows a foreign representative to seek additional relief through the Bankruptcy Courts or in other state and federal courts.

Do the U.S. Courts Play a role in the foreign proceedings?

When a foreign main proceeding is pending, the U.S. Bankruptcy Court’s jurisdiction is usually limited to the debtor’s U.S. assets. This allows foreign entities to protect their rights to U.S. assets while not interfering excessively in another country’s affairs. However, if the Bankruptcy Court finds it necessary, it is allowed to appoint a trustee or examiner in another country on behalf of the debtor’s U.S. bankruptcy estate.

Can Thomas H. Curran Associates help with Chapter 15 cases?

The attorneys at Thomas H. Curran Associates have extensive experience representing clients involved in cross-border bankruptcy cases and can represent the interests of debtors, creditors, financial institutions, investors, and other parties involved in Chapter 15 proceedings. Our lawyers have represented foreign and domestic clients involved in all types of restructuring and liquidation proceedings. They also have extensive litigation experience with disputes involving financially distressed companies.