I. Introduction

Chapter 15 of the US Bankruptcy Code provides a doorway for non-US companies to obtain creditor protection and other benefits of a US bankruptcy in support of insolvency proceedings for those companies in their "home" jurisdictions. But how wide open is that doorway? Recent decisions interpreting section 109(a) of the US Bankruptcy Code in the chapter 15 context provide answers—but not necessarily consistent ones—to this question.

Under chapter 15, a representative of a non-US debtor company may obtain recognition in the United States for an insolvency proceeding pending for the company outside the United States. Recognition of a foreign insolvency proceeding allows a foreign debtor company to take advantage of significant benefits available under the US Bankruptcy Code, such as the application of the automatic stay within US borders, even though the company's primary insolvency proceeding is pending in a different country1.

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1 See In re Creative Fin. Ltd., 543 B.R. 498, 503 (Bankr. S.D.N.Y. 2016) (stating if recognition order was granted, foreign debtor would reap the "benefits of the US automatic stay, and preclude execution ...on [its] assets ... in the United States."); In re Chiang, 437 B.R. 397, 402 (Bankr. C. D. Cal. 2010) ("The recognition of a foreign proceeding as a main proceeding brings certain statutory benefits to the debtor. Section 1520(a) specifies that, upon recognition: (a) the automatic stay provisions of §§ 361 and 362 apply with respect to a debtor's US property within the territorial jurisdiction of the United States; (b) §§ 363, 549 and 552 apply to a transfer of interest of the debtor in US property; (c) the foreign representative may operate the debtor's business in the United States and may exercise the powers of a trustee pursuant to §§ 363 (use, sale or lease of property) and 552 (postpetition effect of security interests); and (d) § 5[4]2 applies to US property of the debtor.").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.