Thought Leadership
Chapter 15 Recognition in the United States: Is a Debtor “Presence” Required?
Abstract
A recent appellate decision in the USA (In re Barnet) confuses the foreign debtor with the foreign insolvency representative. Notwithstanding the focus of US bankruptcy law on a foreign proceeding as the object of an ancillary case under Chapter 15, with the foreign representative as its emissary, the decision dismayed the international insolvency community by ruling that section 109(a) of the Bankruptcy Code applies to recognition under Chapter 15. The result is to require that the debtor in a foreign proceeding has some minimum jurisdictional presence in the USA as a condition of Chapter 15 recognition. Such a presence might include a domicile, a place of business, or property.While there might be a “backdoor” device avoiding this result, the decision creates serious confusion and a potential obstacle to full international recognition. Copyright © 2015 INSOL International and John Wiley & Sons, Ltd