Chapter 15 is anticipated to be secondary to a bankruptcy proceeding in the debtor's home country. Once a foreign bankruptcy proceeding is confirmed, filing Chapter 15 opens communication between U.S. and foreign bankruptcy proceedings as well as triggering an automatic stay that limits creditors' ability to pursue collection of debts. One advantage of chapter 13 is it allows individuals to avoid foreclosure on their houses, in contrast to chapter 7. Chapter Chapter 15 bankruptcy, added to the U.S. bankruptcy code in , provides a way for dealing with cases that involve more than one country. The main goal of chapter 15 is to provide cooperation between a foreign debtor, foreign courts and the U.S. bankruptcy courts. Therefore, a . Solutions Manual, Chapter 15 Exercise (20 minutes) 1. and 2. End-of-year allocations of variable costs should be based on the actual level of activity multiplied by the budgeted rate. End-of-year allocations of fixed costs should be based on the same predetermined lump-sum amounts as at the beginning of the karacto.xyzg: bankruptcy.
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Chapter 15 seems to give courts greater discretion in fashioning relief while making the recognition of a foreign proceeding easier. Additionally, any provisional relief granted under section prior to recognition automatically is extended upon entry of the order of recognition of the foreign proceeding. Some limitations still exist. Most notably, the ability of the foreign representative to commence avoidance actions actions for the recovery of preferences and fraudulent transfers is limited to cases where a full Chapter 11 case is subsequently filed.
Otherwise, avoidance actions are not within the powers granted a foreign representative under Chapter Thus, one of the benefits of the determination that a foreign proceeding is a main proceeding is the ability to file for Chapter 11 and obtain avoidance powers. Once a foreign proceeding is recognized in the United States, the foreign representative may file a case under Chapter 11 or Chapter 7 provided the debtor has assets in the United States.
Subchapters IV and V of Chapter 15 provide somewhat detailed procedures for cooperation and coordination of the simultaneous proceedings, including determinations of insolvency, distribution of assets and coordination of rulings to prevent inconsistent rulings and results. Chapter 15 expressly provides that in interpreting this chapter, the courts shall consider its international origin and the need to promote its application consistent with the application of similar statutes adopted by foreign jurisdictions.
The international aspects of the new law have received little attention outside of legal circles. The changes codified in Chapter 15 could make cross border filings easier to accomplish and multi-national cases easier to administer.
This would result in significant benefits to the global economy in terms of financial market stability, saved jobs and stronger global companies. If you would like to learn how Lexology can drive your content marketing strategy forward, please email enquiries lexology.
Back Forward. Share Facebook Twitter Linked In. Follow Please login to follow content. It is the U. The purpose of Chapter 15, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country.
This general purpose is realized through five objectives specified in the statute: 1 to promote cooperation between the United States courts and parties of interest and the courts and other competent authorities of foreign countries involved in cross-border insolvency cases; 2 to establish greater legal certainty for trade and investment; 3 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; 4 to afford protection and maximization of the value of the debtor's assets; and 5 to facilitate the rescue of financially troubled businesses, thereby protecting investment and preserving employment.
Generally, a chapter 15 case is ancillary to a primary proceeding brought in another country, typically the debtor's home country. As an alternative, the debtor or a creditor may commence a full chapter 7 or chapter 11 case in the United States if the assets in the United States are sufficiently complex to merit a full-blown domestic bankruptcy case.
In addition, under chapter 15 a U. An ancillary case is commenced under chapter 15 by a "foreign representative" filing a petition for recognition of a "foreign proceeding. Chapter 15 gives the foreign representative the right of direct access to U.
The petition must be accompanied by documents showing the existence of the foreign proceeding and the appointment and authority of the foreign representative. But the US Bankruptcy Court can authorize the appointment of a trustee or examiner to act in the other country on behalf of the bankruptcy estate in the United States. The foreign representative is also authorized to conduct the US business of the company in the ordinary course.
The US Bankruptcy Court may also offer additional aid to a foreign representative—but only in circumstances where the Bankruptcy Court determines that the laws of the foreign court did not violate US laws or public policy and that the foreign court is fair. If the US Bankruptcy Court determines that the foreign court is lacking in this regard, it can offer additional assistance to the foreign national.
This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this article does not create an attorney-client relationship between the author of this article and the user or browser. Bankruptcy Types. By Full Bio.