Chapter 15 at 11: Bankruptcy Code’s cross-border insolvency law approaches 11th anniversary
Introduction
Chapter 15 of the Bankruptcy Code, which deals with cross-border insolvency cases, took effect nearly 11 years ago.(1) Congress enacted Chapter 15 in 2005 to replace Bankruptcy Code Section 304, which previously addressed transnational insolvencies.(2) Chapter 15 largely incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, which was promulgated in May 1997. The Model Law is designed:
“to assist States to equip their insolvency laws with a modern, harmonized and fair framework to address more effectively instances of cross-border proceedings concerning debtors experiencing severe financial distress or insolvency.”(3)
The Model Law has been enacted in one form or another in more than 40 countries, including Canada, Colombia, Japan and Mexico.(4) This update focuses on the US version of the Model Law – Chapter 15. A series of updates to be published here will explore key components of Chapter 15, how courts in the United States have interpreted those provisions over the past decade and the areas of Chapter 15 where the decisional law is split. Among other things, they will:
l cover the requirements for obtaining recognition by the US bankruptcy court of a foreign insolvency proceeding;
l consider the various forms of judicial relief that become available once recognition is granted; and
l examine discrete issues that have occupied the courts’ attention during the past 11 years, such as the treatment of third-party releases in cross-border insolvency cases.
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