Under the Bankruptcy Code of the United States, the Chapter 15 Bankruptcy, also known with its official title as “Ancillary and Other Cross-Border Cases,” can be seen as one of the most unique chapters dealing with bankruptcy. This might be because this chapter has only been added into the Bankruptcy Code when the Bankruptcy Abuse Prevention and Consumer Protection Act or BAPCPA bill has been passed last 2005.
What is Chapter 15?
In a nutshell, Chapter 15 Bankruptcy cases are unique since it allows foreign or cross-border debtors and creditors to access the bankruptcy courts in the U.S. This chapter is also the United States’ adoption of the Model Law on Cross-Border Insolvency addressing bankruptcy issues on the international trade, as promulgated in 1997 by the United Nations Commission on International Law Trade or UNCITRAL.
The Main Objectives of Chapter 15 Bankruptcy
Though the main purpose of Chapter 15 bankruptcy is to promote a coordinated and uniform legal system for insolvency cases on cross-borders, it also stands to provide operational mechanisms to deal with insolvency cases. On a whole, the main purpose of the Chapter 15 bankruptcy is divided into five objectives:
- Promote cooperation between bankruptcy courts in the U.S. and interested parties from foreign countries that are both dealing with cross border bankruptcy cases;
- Establish the assurance of better legal confidence for both investment and trade;
- Protect the interest of creditors, debtors, and other parties involved by delivering a just and efficient management of cross-border insolvencies;
- Maximize debtor’s assets values and give them protection;
- Protect and preserve investments and employments by facilitating ways to save businesses that are financially troubled.
Another thing to note is that major proceedings of the bankruptcy case usually takes place on the foreigner’s home country so the Chapter 15 proceeding stands as a secondary or “ancillary” proceeding for cross-border cases.
Filing for a Chapter 15 Bankruptcy case
Typically, foreign representatives who wish to request a foreign proceeding must file their Chapter 15 cases on a United States Bankruptcy court to further give proof that the foreign proceeding is existent. After filing for a case, the US bankruptcy Court will designate the foreign proceeding to be either a “main” or a “non-main” proceeding; the latter in which debtor’s do not have their main interests in the foreign country. A foreign main proceeding puts into effect the automatic stay wherein all assets of the foreign debtor that are within the United States are protected. Once a Chapter 15 bankruptcy case is initiated, further relief can be found by filing petitions of full bankruptcy just like under Chapter 7.
The United States’ Bankruptcy Court Jurisdiction
Because Chapter 15 bankruptcy cases work with cross-border bankruptcies, the jurisdiction of the U.S. Bankruptcy Court on such proceedings are quite limited. That is, the U.S. Court needs to defer its actions with regards to the foreign court’s actions. Also, as long as the foreign court do not violate any laws or policies in the in the U.S., then the latter court may offer supplementary aid to foreign representatives. If you need to know more information about Chapter 15 bankruptcy, then you should get the advice of a bankruptcy lawyer to help.