Continued globalization of trade and investment led Congress, through the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), to amend the Bankruptcy Code (“the Code”) in 2005 to include chapter 15. Chapter 15 adopted UNCITRAL’s Model Law on Cross-Border Insolvency —both aim to guide parties through cross-border insolvency proceedings. In addition to the policy objectives for all bankruptcies, chapter 15 specifically aspires to foster cooperation between the United States and foreign countries involved in cross-border insolvency cases and promote greater legal certainty in global trade and investment. A chapter 15 case is generally meant to supplement the plenary case brought in the debtor’s home country. Among other situations, Chapter 15 applies where “assistance is sought in the United States by a … foreign representative in connection with a foreign proceeding.”
This Article will discuss the steps necessary to commence a Chapter 15 case and the Second Circuit’s recent ruling requiring foreign debtors to meet the eligibility requirements of section 109(a). Part I-A will discuss how to commence a Chapter 15 case, focusing on obtaining recognition as a foreign main or non-main proceeding. Part 1-B will discuss recent rulings in the Second Circuit requiring debtors to meet an additional eligibility requirement in section 109(a). Part II will discuss the implications of these rulings by highlighting a possible circuit split between the Second and Third Circuits and the effect the second circuit rulings will have on future debtors.