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Why International Litigants Are Using Chapter 15 to Optimize Financial Recoveries in Foreign Insolvency Proceedings

By Rebecca Hume, Jeremy Hollembeak and Anna Gilbert
August 01, 2016

Since its introduction in 2005, Chapter 15 of the U.S. Bankruptcy Code has increasingly featured in foreign bankruptcy proceedings. While it is now a well-trodden path for foreign office holders seeking more traditional ancillary assistance, Chapter 15 continues to evolve as enterprising U.S. legal advisers and foreign office holders team up to deploy progressively novel cross-border strategies.

For the sophisticated insolvency professional outside the U.S., expanding one's playbook to include Chapter 15 is a must. As the recent decision discussed below demonstrates, Chapter 15 enables foreign office holders to avail themselves of the benefits of the expansive U.S. discovery powers and procedural rules. This often proves advantageous to those pursuing assets or information about fraudulent actors. Furthermore, U.S. bankruptcy courts have recently demonstrated a willingness to exercise their discretion under Chapter 15 to permit foreign office holders to bring foreign law claims in the United States. When that happens, Chapter 15 courts effectively expand the jurisdiction of the foreign proceeding, allowing the office holder to pursue foreign law claims against defendants beyond the reach of the court where the foreign proceeding is pending.

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