Section 109 of title 11 of the United States Code (the “Bankruptcy Code”) provides that “only a person that resides or has a domicile, a place of business, or property in the United States . . . may be a debtor.” In In re Barnet, the United States Court of Appeals for the Second Circuit held that debtor eligibility requirements of section 109 apply to a debtor in recognition proceedings under chapter 15. If a debtor does not have a domicile or place of business in the United States, as is often the case with foreign debtors, then the debtor may rely on the broad interpretation of property to gain eligibility to file for bankruptcy. An analysis of chapter 11 and recent chapter 15 cases shows that the property requirement under section 109(a) can be satisfied in a multitude of ways, unrestrained by value limitations.
Part I of this memorandum will discuss chapter 11 case law that supports the general principle that the property element of section 109(a) may be satisfied by any property of any amount belonging to the Debtor in the United States. Part II focuses on chapter 15 cases where courts stated that retainers, causes of action and contract rights are sufficient property for debtor eligibility under section 109(a).