Chapter 15 of the U.S. Bankruptcy Code: Overview of Procedures for Cross Border Insolvencies

07/25/2012

The Bankruptcy Abuse, Prevention and Consumer Protection Act of 2005, which was signed into law in the United States on April 20, 2005 and became effective, for the most part, on October 17, 2005, creates a new chapter of the United States Bankruptcy Code (11 U.S.C. 101, et seq., as amended) (the “Bankruptcy Code”) – Chapter 15. Chapter 15 is entitled “Ancillary and Other Cross Border Cases,” and replaces existing § 304 of the Bankruptcy Code in dealing with cross border cases.

Chapter 15 is based on the Model Law on Cross Border Insolvency which had been prepared by the United Nations Commission on International Trade Law (UNCITRAL), with significant input from insolvency practitioners all over the world. U.S. v. J.A. Jones Constr. Group, LLC, 333 B.R. 637, 638 (E.D.N.Y. 2005). It was designed to create procedures for cooperation among foreign courts where insolvency proceedings are pending in more than one country and establish guidelines for the protection of assets internationally, while being sensitive to the political issues and differing legal systems of the countries involved. Any determination
of a request for assistance under Chapter 15 must be “consistent with the principles of comity.” 11 U.S.C. § 1507; see J.A. Jones, 333 B.R. at 638.

Presented at Haynes and Boone's Bankruptcy, Restructuring and Insolvency seminar entitled Going South: Issues in Cross-Border Insolvency and Restructuring between the U.S. and Mexico, July 25, 2012. A version of this paper was also presented at the ILS annual Institute, State Bar of Texas in 2009. To read the paper, click on the PDF linked below.

PDF - Cross Border Insolvencies.pdf

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