Bankruptcy under Chapter 15 is a recent inclusion to the bankruptcy code. It is an important inclusion as far as corporate entities with business spread over different parts of the world are concerned. Bankruptcy Chapter 15 specifies the manner in which the cross – border insolvency cases are to be dealt with. It is a new chapter which has been added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The chapter has been incorporated in the lines the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law ("UNCITRAL") in 1997. The Chapter has been included basically to bring about a more uniform and coordinated legal regime for cross-border insolvency cases. There might be cases of insolvency wherein the debtors, assets, claimants, and other parties of interest might be in more than one country, Chapter 15 specifies the law in that regard. 11 U.S.C. § 1501 specifies the objectives of the Act and the same are:
- To promote cooperation between the US courts and parties of interest and other competent authorities and courts of foreign countries involved in cross-border insolvency cases;
- To establish greater legal certainty for trade and investment;
- To provide for the fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested entities, including the debtor;
- To afford protection and maximization of the value of the debtor's assets; and
Chapter 15
Chapter 15 grants the authority to the bankruptcy courts to assist in the administration of the bankruptcy proceedings pending in the foreign courts. A bankruptcy case under Chapter 15 is usually filed by a foreign company. The foreign company would have filed a case of bankruptcy in its own country and in order to extend the bankruptcy protection in US, it files a bankruptcy petition under this chapter. This would be required if the debtor has assets and debts in US. The petition by the foreign representative should be filed along with documents which would make the existence of the foreign proceeding clear. After notice and hearing, the bankruptcy court is authorized to issue an order recognizing the foreign proceeding. On recognition as a foreign main proceeding, the automatic stay and certain other provisions of the Bankruptcy Code will take effect within the United States. A foreign representative can seek additional relief from the bankruptcy court or from other state and federal courts and is also authorized to initiate a complete bankruptcy case. The foreign representative is also authorized to participate as a party of interest in any pending U.S. insolvency case and to intervene in any other U.S. case where the debtor is a party.
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