Richards Layton & Finger

Second Circuit and Delaware Bankruptcy Court Take Different Views of Whether a Foreign Debtor Must Have Assets in the United States to Be Eligible for Recognition under Chapter 15

April 2014

Courts in the two circuits, which saw the majority of 2013’s Chapter 15 recognition proceedings, recently addressed—and came to opposite conclusions about—a novel issue: whether an entity is required to have property in the United States to qualify for relief as a debtor under Chapter 15 of the United States Bankruptcy Code. Chapter 15 is the equivalent of a proceeding under Part IV of Canada’s Companies’ Creditors Arrangement Act [CCAA]1 (i.e., the U.S.’s enactment of the UNCITRAL Model Law on Cross Border Insolvencies). Chapter 15 was adopted in 2005; thus, case law is continuing to develop. It is noteworthy that two courts with significant dockets disagreed with one another in rulings issues less than a week apart in December 2013.

Reproduced with permission of the publisher LexisNexis Canada Inc. from Commercial Insolvency Reporter, Vol. 26, Nos. 3 & 4, April 2014.