Over There or The Wretched Refuse - Leading the Foreign Corporation to a Fresh Start in the US

02/28/2003

Introduction

Since the late 1800s, a shining, steadfast monument has stood over the United States as a savior of the poor and downtrodden.  The sculptor intended the work to be an immense and impressive symbol of human liberty.  As this guardian of the lowly and oppressed approached its historic 100th birthday, it was in need of restoration.  Congress therefore authorized and funded a major renovation of the national shrine that improved access, repaired existing structural problems, and refurbished this hallmark of our heritage.  Millions of Americans now visit it each year, and this protector also stands as a beacon to foreigners–those wretched refuse looking for a fresh start.
 
Yes, the Bankruptcy Act and Code–Mecca to the financially tempest-tossed all around the world for over a century.  Countless individuals from overseas have sought the benefits and protections of the American bankruptcy system, including its award of a discharge of indebtedness to the honest but unfortunate debtor.  But is this financial freedom available only to individuals, or may foreign companies also seek shelter here from their creditors?  That is, may a foreign corporation, headquartered in a foreign country, initiate a full-fledged bankruptcy case in the United States?  Yes.  The company need only establish that it has a residence, place of business, or property within the United States.  Sounds simple, right?  Actually, that determination can be a tricky one, and even if the company establishes its credentials, there is no guaranty that a bankruptcy court will retain jurisdiction over the case.  Sometimes the foreign corporation must seek bankruptcy protection in its own country and file a more limited, ancillary proceeding in the U.S.

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