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Bankruptcy Litigation

The Domesticity Barrier to Recognition of a Foreign Proceeding Under Chapter 15

How Low Can You Go?

In In re B.C.I. Finances Pty Limited, Judge Sean Lane reiterated the low domestic presence threshold (Domesticity) that a foreign representative must meet when it is petitioning for recognition of a foreign proceeding under Chapter 15.

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This past April, in In re B.C.I. Finances Pty Limited, 583 B.R. 288 (Bankr. S.D.N.Y. 2018), Judge Sean Lane reiterated the low domestic presence threshold (Domesticity) that a foreign representative must meet when it is petitioning for recognition of a foreign proceeding under Chapter 15. While Judge Lane’s decision was consistent with a developing body of case law that has generally accepted this low Domesticity threshold, it is significant because it: 1) arises out of the Second Circuit, whose precedent requires that the petition for recognition meets the requirements of both Section 1517 and Section 109(a) of the Bankruptcy Code before it may be granted; and 2) shows that even with the additional Domesticity requirement of Section 109(a), a foreign representative can successfully obtain recognition of a foreign proceeding with only a nominal domestic presence.

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