Proskauer Rose International Practice Guide Proskauer Rose LLP | Proskauer.com
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
  TRENDS  |  NEWS & EVENTS  |  CONTACT  |  AUTHORS
Text Size:  A  A  A
Print Print
  1. Overview
    1. Chapter 15 is designed to facilitate U.S. recognition of foreign insolvency proceedings and to increase international cooperation among courts in multinational insolvency cases in order to address more effectively issues in cross-border insolvency. Certain relief is afforded to a foreign debtor upon the filing of a valid petition for relief. Thereafter, upon recognition of the foreign proceeding, Chapter 15 divides foreign insolvency proceedings into two categories: main proceedings and non-main proceedings. Subject only to a limited public policy exception, if a foreign proceeding is recognized as a foreign main proceeding, Chapter 15 provides, among other types of mandatory relief, an automatic stay of proceedings by creditors against the foreign debtor’s assets in the United States. If a foreign proceeding is recognized as a foreign non-main proceeding all relief afforded the foreign debtor is discretionary and subject to the requirement that all creditors be “sufficiently protected.”
    2. Chapter 15 codifies the Model Law on Cross-Border Insolvency (the “Model Law”) in substantially the same form as was written by the United Nations Commission on International Trade Law or, as it is more commonly referred to, UNCITRAL. In addition to adoption in the U.S., the Model Law has already been codified in Colombia (2006), Eritrea, Japan (2000), Mexico (2000),New Zealand (2006), Poland (2003), Romania (2003), Montenegro (2002), Serbia (2004); South Africa (2000), Great Britain (2006), British Virgin Islands, and certain overseas territories of the United Kingdom of Great Britain and Northern Ireland (2005). In addition the European Union Regulation on Insolvency Proceedings, which is similar in many respects to Chapter 15, became effective in all but one member country of the European Union in May 2002.
    3. In the United States, Chapter 15 has been held to be the exclusive remedy for a foreign representative seeking injunctive relief against litigation in U.S. courts that would interfere with a foreign bankruptcy proceeding. US v. Jones, 333 B.R. 637 (Bankr. E.D.N.Y. 2005)(denying receivers request to stay a U.S. lawsuit against a Canadian debtor absent formal recognition under Chapter 15).
      1. This marks a clear departure from pre-chapter 15 law and practice.
      2. Prior to the enactment of Chapter 15, relief such as the enjoining of U.S. litigation could be granted to foreign receivers, liquidators, etc., on comity grounds alone. See Cunard S.S. Co. v. Salen Reefer Servs. AB, 773 F.2d 452 (2d Cir. 1985)(while stressing that the preferred remedy would have been for the Debtor to seek an injunction pursuant to §304, the U.S. courts vacated an attachment that Cunard had obtained against the U.S. assets of a Swedish debtor; the court found that the attachment had been obtained in direct contravention of the Swedish liquidation proceeding, that it interfered with the orderly disposition of the debtor's assets, and that the Swedish proceeding was entitled to "comity" and recognition here); Ecoban Finance Ltd. v. Grupo Acerero del Norte, S.A. de C.V., 108 F. Supp. 2d 349 (S.D.N.Y. 2000)(a New York noteholder brought suit on notes issued by a Mexican company that later filed reorganization or suspension de pagos proceedings in Mexico. The courts dismissed the New York suit on grounds of comity, finding that the Mexican proceedings were fair as written and that claims of bad faith by reason of delay were both speculative and should be brought before the Mexican courts).
  2. Commencement of a Chapter 15 Case
    1. Requirements and Procedures
      1. A Foreign Representative must file the Chapter 15 petition
        1. A “Foreign Representative” is a person or body, including a person or body appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor’s assets or affairs or to act as a representative in such foreign proceeding. 11 U.S.C. §101(24).
        2. This definition has been expanded from the definition under prior §304 and may eliminate litigation over what constitutes a Foreign Representative. For example the inclusion of a “body appointed… or authorized” codifies the §304 case law that determined that a Board of Directors qualifies as a Foreign Representative. See, e.g., In re Bd. of Dir. of Hopewell Int'l Ins. Ltd., 238 B.R. 25, 53-54 (Bankr. S.D.N.Y. 1999), aff'd, 275 B.R. 699 (S.D.N.Y. 2002)
        3. Practice Tip: The filing of a petition does not, in and of itself, subject the Foreign Representative to jurisdiction in any court in the United States for any other purpose. See 11 U.S.C. §1510.
      2. the petition must be accompanied by:
        1. a certified copy, translated into English, of the decision commencing such foreign proceeding and appointing the foreign representative;
        2. a certificate from the foreign court, translated into English, affirming the existence of such foreign proceeding and the appointment of the foreign representative;
        3. in the absence of a certificate from a foreign court, any other evidence acceptable to the court, translated into English, of the existence of such foreign proceeding and the appointment of the foreign representative; and
        4. a statement identifying all foreign proceedings with respect to the debtor
      3. Practice Tip: Unlike the commencement of a plenary U.S. Bankruptcy Case where the automatic stay immediately protects a debtor, the filing of the petition under Chapter 15 does not result in automatic relief. Automatic relief is only granted upon recognition of a foreign main proceeding.
    2. Relief available upon filing but before recognition – the GAP PERIOD
      1. Relief during the GAP Period is governed by §1519. The types of relief available in the GAP Period include:
        1. staying execution against the debtor's assets which would otherwise be stayed under §362
        2. entrusting the "administration or realization" of the debtor's property, located within the territorial jurisdiction of the U.S., to the foreign representative or another person appointed by the court, including an examiner;
        3. suspending third parties' right to transfer, encumber, or dispose of the debtor's property; or
        4. granting any additional relief that may be available to a "trustee" (except for the power to exempt property, avoid and recover preferences or fraudulent transfers, or avoid certain liens).
      2. Issues Relating to Injunctive Relief in the GAP Period and in general
        1. While reference is made to §362 and the automatic stay, the stay available during the gap period is limited to "execution" actions and does not apply to litigation to liquidate claims; however, it may be possible to obtain a broader stay under §1521(a)(7)'s “additional relief” provision, incorporated by reference into the GAP period by §1519(a)(3),
        2. TRO – Preliminary Injunctions - Bankruptcy Court has the power to grant emergency relief under Rule 7065 , pending the requisite hearing to determine if recognition of the foreign proceeding is ultimately available to the Foreign Representative
        3. During the GAP period, Chapter 15 continues to apply the same standards used for determining whether to grant injunctive relief as were applied under former § 304. The wealth of case law developed in the § 304 context should therefore continue to have precedential value. Under § 304, the procedure was to schedule a hearing immediately after filing the petition during which TROs were routinely granted as a type of “first day relief” similar to the procedures for first day orders in a chapter 11 case. Similarly, in order to get a “first day hearing” in a Chapter 15 case, petitioners may file a request for relief during the Gap Period at the same time as the filing of the petition.
        4. In seeking or defending against a preliminary injunction during the GAP period respecting a foreign main proceeding (or at any time in a non-main proceeding), the standards under non-bankruptcy law apply. 11 U.S.C. 1519(e). Generally, to obtain a temporary restraining order and/or preliminary injunction the moving party must show:
          • either (a) probability of success on the merits or (b) sufficiently serious questions on the merits and a balance of hardship tipping in favor of the moving party; and
          • irreparable injury if the injunction is denied. See Green v. Drexler (In re Feit & Drexler, Inc.), 760 F.2d 406, 415 (2d Cir. 1985); Netia Holdings, 278 B.R. at 352.
        5. Under former § 304 there was a lack of consistency with respect to the irreparable harm prong. See In re Avila, 296 B.R. 95, 114 (Bankr. S.D.N.Y. 2003)(“[T]he need to show irreparable harm has not been uniformly applied in § 304 cases.”) Neither former §304(b)(1), which authorized a bankruptcy court to issue injunctive relief, nor §304(c), which describes the factors that the court must consider, required a showing of irreparable harm.
          • As a consequence, some cases have held that irreparable harm is not a condition to the issuance of preliminary injunctive relief. E.g., In re Singer, 205 B.R. 355, 356 (S.D.N.Y. 1997); In re Bird, 229 B.R. at 92; In re Rukavina, 227 B.R. 234, 242 (Bankr. S.D.N.Y. 1998); see Vesta Fire Ins. Corp. v. New Cap Reinsur. Corp., 244 B.R. 209, 221 (S.D.N.Y. 2000); In re Ocana, 151 B.R. 670, 673-74 (S.D.N.Y. 1993); see also 2 COLLIER P304.05, at 304-20 ("section 304 does not specify irreparable harm as a predicate to the issuance of an injunction").
          • Others courts have insisted that the party seeking injunctive relief must meet the usual preliminary injunction test, and show irreparable harm. E.g., In re Commodore Bus. Mach., 246 B.R. 476, 486 (S.D.N.Y. 2000); In re Lines, 81 B.R. 267, 270 (Bankr. S.D.N.Y. 1988); see In re Gee, 53 B.R. 891, 894 (Bankr. S.D.N.Y. 1985)(referring to an earlier ruling that the movant "failed to carry the burden necessary for the issuance of preliminary injunctions"); 2 COLLIER P304.05, at 304-20 ("Temporary and preliminary injunctive relief is appropriate [under § 304] when the general standards for such relief are satisfied”).
    3. Recognition of a Foreign Proceeding
      1. A foreign proceeding, upon the valid filing of a petition for recognition, by a duly appointed foreign representative, and after notice and a hearing, is given automatic and mandatory recognition in the United States pursuant to § 1517.
      2. What qualifies as a foreign proceeding?
        1. It is well settled that a liquidation proceeding where a trustee is appointed by a foreign court is a foreign proceeding, however, the case law developed under § 304(a) allowed for an increasing array of out-of-court proceedings to qualify as foreign proceedings. Along with the passage of Chapter 15, Congress amended the definition of a foreign proceeding as follows:
          1. The term “foreign proceeding” means a collective judicial or administrative proceeding in a foreign country, including an interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, of the purpose of reorganization; or liquidation. 11 U.S.C. § 101(23)
        2. This new definition explicitly codifies the concept developed in the case law under former §304 that an interim proceeding qualifies as a foreign proceeding. See In re Netia Holdings, S.A., 277 B.R. 571 (Bankr. S.D.N.Y. 2002).
        3. While codifying certain concepts under former §304, this definition also represents a shift from the pre Chapter 15 case law. Under Chapter 15’s new definition, the assets and affairs of the debtor must be subject to the control or supervision of a foreign court. The new requirement that there be an actual court may have a limiting effect on the type of proceedings that will now qualify for relief as foreign proceedings.
      3. Recognition as Foreign Main Proceeding or Foreign Non- Main Proceeding
        1. A foreign main proceeding is a proceeding pending in the country where the debtor has the center of its main interests
          1. In the absence of evidence to the contrary, the debtor’s registered office, or habitual residence in the case of an individual, is presumed to be the center of the debtor’s main interests. 11 U.S.C. §1516(c)
          2. In determining the center of main interest under § 1516(c) the Bankruptcy Court will not mechanically make a determination but will look at a variety of factors, including: “the location of the debtor’s headquarters; the location of those who actually manage the debtor (which conceivably could be the headquarters of a holding company); the location of the debtor’s primary assets; the location of the majority of the debtor’s creditors or of a majority of the creditors who would be affected by the case; and/or the jurisdiction whose law would apply to most disputes.” In re SPhinX, Ltd., 351 B.R. 103, 117 (Bankr. S.D.N.Y. 2006)
            • In re SPhinX concerned a Cayman Islands liquidation proceeding of certain hedge funds incorporated and registered as LLCs or segregated portfolio companies in the Cayman Islands. The hedge funds business was conducted in the U.S., the operations on the Cayman Islands were mostly back-office operations, few if any assets were located in the Cayman Islands, and most of the creditors were located outside the Cayman Islands.
            • The Court declined to recognize the proceeding as a foreign main proceeding because it determined that the filing of the liquidation proceeding in the Cayman Islands was done for an improper purpose. The Court did, however, recognize it as a foreign non-main proceeding.
          3. At least one court has likened the term “center of main interest” to the term more common in the U.S. “principal place of business.” In re Tri-Continental Exch., Ltd., 349 B.R. 627, 633-34 (Bankr. E.D. Cal. 2006).  In re Tri-Continental Exch., Ltd., involved three insurance companies organized under the laws of and operating in St. Vincent and the Grenadines (“SVG”). The debtors had been involved in a large-scale insurance fraud. Ultimately, the Court recognized the SVG proceeding as being a foreign main proceeding. The Court determined that although the fraud was perpetrated in the United States, the debtors were registered in SVG, had their only offices in SVG, employed approximately 20 employees in SVG and, therefore, had its center of main interest in SVG.
          4. Practice Tip: The burden of proof with respect to a determination of the center of main interest never falls on the party opposing “main” status. In re Tri-Continental Exchange Ltd., 349 B.R. 627 (Bankr. E.D.Ca. 2006)
        2. A foreign non-main proceeding is a proceeding pending in a country where the debtor merely has an establishment
      4. Effect of Recognition as Foreign Main Proceeding
        1. Section 1520 provides certain automatic protections upon recognition of a foreign main proceeding
          1. In a significant departure from the former § 304 under which recognition of a foreign proceeding did not automatically entitle a debtor to relief, §§ 361, 362, 363, 549, and 552 of the bankruptcy code automatically apply with respect to property within the territorial jurisdiction of the United States. These provisions are described below.
          2. Section 361 provides secured creditors with right to have their interest in secured collateral adequately protected;
          3. Section 362 provides that the automatic stay become effective and enjoins all actions against the debtor or its property in respect of pre-petition claims, within the territorial limits of the United States;
            • As discussed below, a creditor may seek relief from the effects of the Automatic Stay.
            • Creditors are not enjoined, however, from commencing an individual action or proceeding in a foreign country to the extent necessary to preserve a claim against the debtor.
          4. Section 363 provides for the use and sale of property by a trustee outside of the ordinary course of business, among other things;
          5. Section 549 governs the avoidance of post-petition transfers,
          6. Section 552 specifies the extent to which security interests attach to transferred property, and related rights; and
          7. the foreign representative may operate the debtor's business, and enjoy the powers of a trustee to the extent otherwise provided for by sections 363 and 552 of the Bankruptcy Code.
        2. Discretionary Protections: In addition to the aforementioned automatic protections, the court may also grant certain discretionary relief. For a discussion of such discretionary relief see section (II)(C)(5)(b) below.
        3. The automatic stay effective as a result of recognition does not affect the foreign representative's right or ability to initiate a voluntary plenary bankruptcy case under Section 301 or an involuntary plenary bankruptcy case under Section 303.
          1. Practice Tip: In the absence of a foreign insolvency proceeding, a debtor with assets in the Unites States, or that otherwise meets the jurisdictional requirement set forth in the Bankruptcy Code, may still file a plenary bankruptcy case in the United States without commencing a Chapter 15 case. See In re Aerovias Nacionales de Colombia S.A. Avianca, 303 B.R. 1 (Bankr. S.D.N.Y. 2003)(permitting Chapter 11 filings by the principal airline of the Republic of Colombia and its wholly-owned U.S. subsidiary).
        4. Creditors' relief from the Automatic Stay: Once Chapter 15 relief is granted and the Automatic Stay takes effect, a creditor may request that the court allow it to proceed against the debtor in another forum. In determining whether cause exists to grant relief from the stay, the following factors are often used:
          1. Whether relief requested would result in a partial or complete resolution of the issues;
          2. whether the relief requested would have any connection to or interfere with the bankruptcy case;
          3. whether the other proceeding involves the debtor as a fiduciary; whether a specialized tribunal with the necessary expertise has been established to hear the cause of action;
          4. whether the Debtor’s insurer has assumed full responsibility for defending it; whether the action primarily involved third parties;
          5. whether litigation in another forum would prejudice the interests of other creditors;
          6. whether the judgment claim arising from the other action is subject to equitable subordination;
          7. whether the movant’s success in the other proceeding would result in a judicial lien avoidable by the debtor;
          8. whether the interests of judicial economy and the expeditious and economical resolution of litigation if forwarded;
          9. whether the parties are ready for trial in the other proceeding; and
          10. whether the harms resultant from a stay of proceedings outweigh the harms occurring from a lifting of a stay.

          In re Sonnax, Indus.,Inc., 907 F.2d 1280, 1286 (2d Cir. 1990).

      5. Effect of Recognition as Foreign Non-Main Proceeding
        1. After recognition of a foreign proceeding as a non-main proceeding, all relief that the Bankruptcy Court may grant is discretionary. Such relief may granted upon a showing that it is “necessary to effectuate the purpose of this chapter and to protect the assets of the debtor or the interest of creditors…” 11 U.S.C. § 1521
        2. Such discretionary relief includes:
          1. A stay of actions, comparable to the broad stay of § 1520
          2. The Bankruptcy Court may, at the request of a Foreign Representative, order the turnover of the debtor’s assets located in the United States to the Foreign Representative.
          3. Any relief that is available during the GAP Period, discussed above, including the continuation of any such relief granted during the GAP Period
        3. Practice Tip: The discretionary relief available pursuant to § 1521 may be granted in a Chapter 15 case recognizing a foreign proceeding as either main or non-main.
    4. Additional Protections For Creditors
      1. When granting the discretionary relief referenced above respecting either a foreign main or non-main proceeding, congress required that all creditors must be “sufficiently protected”
      2. In enacting § 1522, Congress intended to give the Bankruptcy Court broad latitude to mold relief, especially where it is shown that a foreign proceeding is seriously and unjustifiably injuring U.S. creditors.
      3. The requirement of sufficient protection would likely allow a Court acting under Chapter 15 to reach the same decision as the United States Court of Appeals for the Second Circuit did under former §304 in In re Treco, 240 F.3d 148 (2d Cir. 2001).
        1. In Treco, the liquidators of a Bahamian bank filed a §304 petition seeking the turnover of funds held in the United States by a New York bank that claimed a right to the funds by virtue of a security interest and the common law right of setoff. Both the Bankruptcy and District Courts held that even if the New York bank was a secured party, the security interest would continue after a transfer of the funds to the Bahamas and therefore ordered the turnover. The Court of Appeals vacated the transfer order for two reasons. First, under U.S. law, the collateral securing the bank's security interest would not be used to pay for the costs of administration of the insolvency proceedings, whereas under Bahamian law it would be used to satisfy administrative claims. Second, because of the size of the Liquidators’ claim for administrative fees and the rate at which they were continuing to accrue, all of the bank's collateral was likely to be used to satisfy the Liquidators’ claims leaving the bank with no recovery at all. The Treco court held, "if [the Bank's] claim is secured, turnover of these funds would be improper because of the extent to which the distribution of the proceeds of these funds in the Bahamian bankruptcy proceeding would not be 'substantially in accordance with the order prescribed by the United States Bankruptcy Code’ – one of the former §304(c) factors.” In re Treco, 240 F.3d 148 (2d Cir. 2001).
        2. Under Chapter 15, irrespective of whether the foreign proceeding is determined to be main or non-main, the turnover of a foreign debtor's assets located in the United States for "distribution" by the foreign representative will expressly be subject to the court being satisfied "that the interests of creditors in the United States are sufficiently protected." 11 U.S.C. §1521(b). Chapter 15 should, therefore, afford the Bankruptcy Court the discretion to reach the same outcome. It is also possible for the Bankruptcy Court to reach the same outcome as the Treco Court by application of the public policy exemption, discussed below.
    5. Public Policy Exemptions to Recognition of Main and Non-Main Proceedings
      1. § 1506 provides that “Nothing in this chapter prevents the court from refusing to take an action governed by this chapter if the action would be manifestly contrary to the public policy of the United States.”
      2. The only Bankruptcy Court to have examined the issue has determined that the public policy exemption must be narrowly construed. In re Ephedra Prod. Liab. Litig., 349 B.R. 333 (Bankr. S.D.N.Y. 2006). The Ephedra case dealt with a creditors challenge to recognition of an order issued in a Canadian insolvency proceeding on the ground that the claims resolution procedures contemplated by the order did not provide for a jury trial and thus violated U.S. public policy. The Bankruptcy Court disagreed, stating that federal courts have regularly dismissed cases in favor of foreign forums despite objections that the foreign forum provides no trial by jury, so long as the foreign forum affords claimants a fair and impartial proceeding. Id.
    6. Commencement of Avoidance Actions in a Chapter 15 Case
      1. Chapter 15 allows for the commencement of certain avoidance actions by a foreign representative. The language of § 1523 seems to indicate, however, that this grant of authority only allows for such actions to be commenced if there is also a plenary U.S. bankruptcy case pending.
      2. An avoidance action allows for the recovery, or avoidance, of certain pre-petition transfers of debtor’s property for the benefit of all creditors of the debtor’s estate.
    7. The Permanent Injunction under Chapter 15 – the Discharge
      1. Procedurally, at least one court has determined, relying on Bankruptcy Rule 1018 and pre-Chapter 15 case law under former §304, that a debtor is entitled to seek permanent injunctive relief by motion and does not have to initiate a separate adversary proceeding. In re Lee, 348 B.R. 799 (Bankr. W.D. Wa. 2006).
      2. As at least one commentator has surmised that granting a permanent injunction may also be seen as giving effect to a discharge granted to a foreign debtor in a foreign proceeding. See Jay Lawrence Westbrook, Chapter 15 and Discharge, 13 Am. Bankr. Inst. L. Rev. 503 (2005). As such, a permanent injunction may fall under the heading of additional assistance allowed pursuant to §1507 and not by virtue of the imposition of the automatic stay upon recognition as a foreign main proceeding.
      3. § 1507 provides that additional assistance may be provided to a foreign representative so long as certain factors, substantially the same as the former §304(c) factors, are met
      4. Old § 304(c) provided that in determining whether to grant relief, the court shall be guided by what will best assure an economical and expeditious administration of such estate consistent with:
        1. just treatment of all holders of claims against or interest in such estate;
        2. protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in such foreign proceeding;
        3. preventions of preferential or fraudulent dispositions of property of such estate;
        4. distribution of proceeds of such estate substantially in accordance with the order prescribed by this title;
        5. comity; and if appropriate,
        6. the provision of an opportunity for a fresh start for the individual that such foreign proceeding concerns.
      5. When Congress enacted §1507 it made a significant change to the former §304 factors. Congress removed comity as a separate factor and, instead, directed that the remaining five factors must all to considered consistent with the principles of comity
      6. Very few cases under former §304 actually dealt with the issue of discharge and none did so by actually mentioning the concept directly. One such case that eventually granted a discharge in the form of a permanent injunction was In re Multicanal. In Multicanal, the Bankruptcy Court issued an order permanently enjoining "all creditors of Multicanal from taking any actions in the United States, which includes suits or proceedings in any forum, which would impede administration of the APE." The district court affirmed the granting of the injunction subject to Multicanal’s successful resolution of certain issues and concerns relating to the APE’s discriminatory effects against certain United States noteholders. The claims of discrimination stemmed from a distribution mechanism designed by Multicanal to promote their restructuring efforts and comply with the United States securities laws at the same time. See In re Bd. of Dirs. of Multicanal S.A., 314 B.R. 486, 505 (Bankr. S.D.N.Y. 2004), aff'd in part, 331 B.R. 537 (S.D.N.Y. 2005) The case was remanded for further exploration of the interplay between the United States securities laws and an adequate resolution of the discriminatory treatment of U.S. creditors. Ultimately the injunctive order was entered, but only after satisfactory resolution of the discriminatory treatment of U.S. creditors and a settlement with the objecting noteholders. As the effects of the Multicanal injunction are indistinguishable from the effects of a §524 discharge injunction, one can conclude that the Court effectively entered an order enforcing a discharge afforded by a non-U.S. proceeding.
    8. Cooperation and Direct Communication Among Courts
      1. There are times where a plenary bankruptcy proceeding is brought in the U.S. as well as in a foreign jurisdiction. Before the enactment of Chapter 15 there was no statutory framework to govern such situations. The Courts were therefore compelled to navigate the web of concurrent bankruptcy cases and develop what has become known as “protocols”.
      2. While there have been numerous cases since then, the case of In re Maxwell Communication Corp., 93 F.3d 1036 (2d Cir. 1996), is a well-known example of a U.S. Bankruptcy Court working out a protocol with a foreign court. A Chapter 11 case was filed in the United States (where many of the company's assets were located) by the company’s principals. However, an administration proceeding was commenced in England by creditors and administrators were appointed. These administrators, who were partners of an accounting firm, took control of the U.S. case and, in a protocol approved by the U.S. Bankruptcy Courts and the insolvency courts in England, were recognized as the controlling representatives of the debtor and were therefore entitled to act as debtor in possession in the United States. Eventually, the U.S. Bankruptcy Court and the English insolvency court approved similar plans (a plan of reorganization in the U.S. and a scheme of arrangement in England) that paid priority creditors in both jurisdictions and then provided for one distribution to general unsecured creditors, whether in the U.S. or in England.
      3. With the passage of Chapter 15, Congress determined that courts must cooperate to the maximum extent possible with foreign courts and foreign representatives.
      4. Among other things, Chapter 15 expressly codifies the Maxwell-type protocol and provides for certain additional forms of communication and cooperation.

< Previous Section | Next Section >

ideology-miner