Document Type
Research Memorandum
Publication Date
2022
Abstract
(Excerpt)
When Chapter 15 of title 11 of the United States Code (the "Bankruptcy Code") was adopted in 2005, it repealed the former section 304, which had often led to ad-hoc and inconsistent rulings for foreign debtors seeking assistance in U.S. bankruptcy courts. The new Chapter was passed to achieve greater efficiency on a domestic scale, as well as the "fair and efficient administration of cross-border insolvencies" by promoting greater cooperation between U.S. and foreign courts. For a foreign debtor to reap the benefits of this cooperation, a representative of the foreign bankruptcy proceeding must petition a U.S. bankruptcy court for an order of recognition. While it has been understood by the overwhelming majority of courts that Chapter 15 recognition is the sole gateway for foreign debtors to initiate proceedings in the United States, some courts have recently held that recognition is not required. This memorandum focuses on the divide among courts in interpreting Chapter 15. Part I describes the statutory background of Chapter 15 and the principle of comity. Part II examines the varying interpretations of Chapter 15 in relation to the statute’s text and purposes.