Japan's Elpida Memory Inc asked U.S. Bankruptcy Court in Delaware on Wednesday to enforce its reorganization plan sale to Micron Technologies Inc, a final step to creating the world's second-largest maker of memory chips, Thomson Reuters News & Insight reported. Boise, Idaho-based Micron has been losing money as the market for personal computers steadily loses ground to smartphones and tablets. Acquiring Elpida will allow Micron to create greater economies of scale and will rank the company behind Samsung Electronics in the memory chip market. The majority of Elpida's secured and unsecured creditors approved the plan, which included the sale of assets to Micron for 60 billion yen ($...
Chapter 15 Database of U.S. Cross-border Cases
Chapter 15 is a new chapter added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It is the U.S. domestic adoption of the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law ("UNCITRAL") in 1997, and it replaces section 304 of the Bankruptcy Code. Because of the UNCITRAL source for chapter 15, the U.S. interpretation must be coordinated with the interpretation given by other countries that have adopted it as internal law to promote a uniform and coordinated legal regime for cross-border insolvency cases.
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. 11 U.S.C. § 1501.
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. 11 U.S.C. § 1520(c). In addition, under chapter 15 a U.S. court may authorize a trustee or other entity (including an examiner) to act in a foreign country on behalf of a U.S. bankruptcy estate. 11 U.S.C. § 1505.
An ancillary case is commenced under chapter 15 by a "foreign representative" filing a petition for recognition of a "foreign proceeding." (1) 11 U.S.C. § 1504. Chapter 15 gives the foreign representative the right of direct access to U.S. courts for this purpose. 11 U.S.C. § 1509. The petition must be accompanied by documents showing the existence of the foreign proceeding and the appointment and authority of the foreign representative. 11 U.S.C. § 1515. After notice and a hearing, the court is authorized to issue an order recognizing the foreign proceeding as either a "foreign main proceeding" (a proceeding pending in a country where the debtor's center of main interests are located) or a "foreign non-main proceeding" (a proceeding pending in a country where the debtor has an establishment, (2) but not its center of main interests). 11 U.S.C. § 1517. Immediately upon the recognition of a foreign main proceeding, the automatic stay and selected other provisions of the Bankruptcy Code take effect within the United States. 11 U.S.C. § 1520. The foreign representative is also authorized to operate the debtor's business in the ordinary course. Id. The U.S. court is authorized to issue preliminary relief as soon as the petition for recognition is filed. 11 U.S.C. § 1519.
Through the recognition process, chapter 15 operates as the principal door of a foreign representative to the federal and state courts of the United States. 11 U.S.C. § 1509. Once recognized, a foreign representative may seek additional relief from the bankruptcy court or from other state and federal courts and is authorized to bring a full (as opposed to ancillary) bankruptcy case. 11 U.S.C. §§ 1509, 1511. In addition, the representative is authorized to participate as a party of interest in a pending U.S. insolvency case and to intervene in any other U.S. case where the debtor is a party. 11 U.S.C. §§ 1512, 1524.
Chapter 15 also gives foreign creditors the right to participate in U.S. bankruptcy cases and it prohibits discrimination against foreign creditors (except certain foreign government and tax claims, which may be governed by treaty). 11 U.S.C. § 1513. It also requires notice to foreign creditors concerning a U.S. bankruptcy case, including notice of the right to file claims. 11 U.S.C. § 1514.
One of the most important goals of chapter 15 is to promote cooperation and communication between U.S. courts and parties of interest with foreign courts and parties of interest in cross-border cases. This goal is accomplished by, among other things, explicitly charging the court and estate representatives to "cooperate to the maximum extent possible" with foreign courts and foreign representatives and authorizing direct communication between the court and authorized estate representatives and the foreign courts and foreign representatives. 11 U.S.C. §§ 1525 - 1527.If a full bankruptcy case is initiated by a foreign representative (when there is a foreign main proceeding pending in another country), bankruptcy court jurisdiction is generally limited to the debtor's assets that are located in the United States. 11 U.S.C. § 1528. The limitation promotes cooperation with the foreign main proceeding by limiting the assets subject to U.S. jurisdiction, so as not to interfere with the foreign main proceeding. Chapter 15 also provides rules to further cooperation where a case was filed under the Bankruptcy Code prior to recognition of the foreign representative and for coordination of more than on foreign proceeding. 11 U.S.C. §§ 1529 - 1530.
The UNCITRAL Model Law has also been adopted (with certain variations) in Canada, Mexico, Japan and several other countries. Adoption is pending in the United Kingdom and Australia, as well as other countries with significant international economic interests.
- A "foreign proceeding" is a "judicial or administrative proceeding in a foreign country ... under a law relating to insolvency or adjustment of debt in which proceeding the [debtor's assets and affairs] are subject to control or supervision by a foreign court for the purpose of reorganization or liquidation." 11 U.S.C. § 101(23). A "foreign representative" is the person or entity authorized in the foreign proceeding "to administer the reorganization or liquidation of the debtor's assets or affairs or to act as a representative of such foreign proceeding."
- An establishment is a place of operations where the debtor carries out a long term economic activity. 11 U.S.C. § 1502(2).
Thu., May 23, 2013
Thu., April 18, 2013
A federal appeals court has resolved a split among judges in U.S. Bankruptcy Court in Manhattan that could help determine when recognition as a foreign main proceeding should be granted in Chapter 15 bankruptcy petitions, Thomson Reuters News & Insight reported. The ruling by the 2nd U.S. Circuit Court of Appeals also helped clarify that liquidators of investment funds chartered offshore will not be precluded from U.S. courts under Chapter 15. The ruling determined that judges should look to the location of a company's "center of main interests" at the time of its Chapter 15 petition to determine if it qualifies for recognition as a foreign main proceeding by U.S. courts. Such...
Mon., April 15, 2013
U.S. units of Canadian telemarketer iMarketing Solutions Group Inc. entered Chapter 15 in Delaware bankruptcy court Friday and sought immediate recognition of the insolvency proceedings commenced by its parent in a Toronto court earlier in the day, Law360 reported. Counsel for Xentel Inc. and seven other IMSG subsidiaries appeared in Wilmington hours after the Chapter 15 filing and asked the Delaware court to officially recognize the foreign proceedings as the company was “gravely concerned” that U.S. creditors hearing of the Canadian case would otherwise seek to terminate contracts and other agreements, said attorney Domenic E. Pacitti of Klehr Harrison Harvey Branzburg LLP. U.S....
Fri., March 22, 2013
A US bankruptcy judge has approved a $US45 million ($43.3m) settlement between Lehman Brothers Holdings' Australian unit and a group of insurers over claims the bank misled a group of councils, charities and churches into buying risky securities backed by US mortgages, The Australian reported. Judge James Peck, of the US Bankruptcy Court in New York, yesterday signed off the settlement between 10 US insurance companies and the liquidators of Lehman Brothers Australia to settle the matter over collateralised debt obligations, or CDOs. The insurers, who admitted no wrongdoing as part of the settlement, will pay $US45m to Lehman Australia. In return, the insurers will be off the...
Wed., December 19, 2012
Mexican glassmaker Vitro said on Monday it had begun a legal process to recover up to $1.59 billion in damages from hedge funds who sued the company in Mexico but lost on appeal, Reuters reported. Vitro went through a $3.4 billion bankruptcy reorganization in Mexico, but some creditors strenuously opposed that plan, and they have been fighting in U.S. courts. Vitro said in a statement that it could collect damages from a trust that has been holding new bonds and payments that correspond to investors who opposed the Mexican restructuring. "Under the applicable legal framework in (the state of) Nuevo Leon, the amount claimed could reach US$1.59 billion," the company said in a statement....
Fri., December 14, 2012
PT Berlian Laju Tanker Tbk creditors, with a combined total of about $125.5 million in claims, filed an involuntary Chapter 11 petition against the Indonesian ship operator, Bloomberg reported. Gramercy Distressed Opportunity Fund II, Gramercy Distressed Opportunity Fund, and Gramercy Emerging Markets Fund, all located in Greenwich, Connecticut, filed today in U.S. Bankruptcy Court in Manhattan, according to court papers. In March, PT Berlian put about a dozen subsidiaries into Chapter 15 proceedings in Manhattan to complement a bankruptcy reorganization in Indonesia, where the companies are based. In April, the U.S. bankruptcy judge ruled that Indonesia is home to the so-called foreign...
- Uncitral Model Law on Cross-Border Insolvency with Guide to Inactment
- BAPCPA Legislative Summary
- (P.L. 109-8)
- Senate Bill 256 (as introduced)
- Senate Hearing 109-1014
- H.Res. 211
- House Report 109-31 (Part 1)
- House Debate 4-14-05
- Senate Debate 3-10-05
- Senate Debate 3-09-05
- Senate Debate 3-08-05
- Senate Debate 3-07-05
- Senate Debate 3-04-05
- Senate Debate 3-03-05
- Senate Debate 3-02-05
- Senate Debate 3-01-05
- Senate Debate 2-28-05
This database collects and summarizes U.S. opinions issued in or related to chapter 15 cases. The database does not include every written decision issued in such cases, however. In addition, nothing herein is intended to provide legal advice, and no legal or business decision should be based on its content.
|Case Name||Foreign proceeding||Locations||Bankruptcy Provisions||Summary|
|In re Qimonda AG, 2011 WL 5149831 (Bankr. E.D.Va. 2011)||German insolvency proceeding||Europe, Germany||1506, 1521, 1522, 365||On remand from the District Court, the Bankruptcy Court held that the failure of German insolvency law to afford patent licensees the protections they would enjoy under section 365(n) of the Bankruptcy Code (a) is “manifestly contrary” to the public policy of the United States, and (b) did not ensure that licensees of the debtor’s United States patents are “sufficiently protected.” The Bankruptcy Court accordingly denied the foreign representative’s motion to remove reference to section 365(n) of the Bankruptcy Code from the order granting relief in favor of the foreign proceeding, and clarified that section 365(n) applies in the chapter 15 case with respect to the foreign debtor’s US patents.|
|In re Daewoo Logistics Corporation, 2011 WL 4706197 (Bankr. S.D.N.Y. Oct. 5, 2011)||Korean rehabilitation proceeding||Asia, South Korea||1517, 1518, 1520, 1521, 362||Bankruptcy Court denied foreign debtor's motion seeking an order directing a creditor to release funds the debtor had posted as security for releasing a vessel that the creditor had arrested following the close of the Korean proceeding. The Bankruptcy Court held that, consistent with the ancillary nature of Chapter 15, absent exigent circumstances, a stay imposed pursuant to Chapter 15 is coterminous with the stay in the corresponding foreign proceeding. Accordingly, when the Korean rehabilitation case closed, the corresponding chapter 15 stay also terminated.|
|In re Millennium Global Emerging Credit Master Fund Ltd., 2011 WL 3805787 (Bankr. S.D.N.Y. Aug. 26, 2011)||Bermuda liquidation proceeding||Bermuda, North America||108, 1502, 1515, 1516, 1517||Bankruptcy Court entered an order recognizing the Bermuda liquidation proceeding of two offshore investment funds as foreign main proceedings, or alternatively, as foreign nonmain proceedings. The Bankruptcy Court held that the date of the commencement of the foreign proceeding, not the date on which the chapter 15 petition was filed in the US, was the relevant date for purposes of determining the existence of the foreign debtors’ “center of main interests” or “establishment.” The Bankruptcy Court also adopted the reasoning of In re Fairfield Sentry, 452 B.R. 52 (Bankr. S.D.N.Y. 2011), holding that the two-year tolling period of section 108 of the Bankruptcy Code applies in Chapter 15 cases.|
|In re Glitnir banki hf, 2011 WL 3652764 (Bankr. S.D.N.Y. Aug. 19, 2011)||Icelandic liquidation||Europe, Iceland||1521||Bankruptcy Court entered an order granting in part and denying in part a motion to quash subpoenas served by the Foreign Representative of Glitner banki hf, an Icelandic bank, seeking production of documents containing, among other things, personal financial information of two individuals who allegedly acted as “ring leaders” of a scheme to loot the bank. Among other rulings, the Bankruptcy Court held that the scope of the Foreign Representative’s discovery should meet the criteria of Chapter 15 and accordingly, should be limited to those materials that were germane to the assets, affairs, rights and obligations or liabilities of the foreign debtor.|
|In re Fairfield Sentry Ltd., 2011 WL 1998376 (Bankr. S.D.N.Y. May 23, 2011)||British Virgin Islands liquidation.||British Virgin Islands, North America, Road Town||108, 1507, 1521||Bankruptcy Court entered order holding that the two-year tolling period of section 108 of the Bankruptcy Code applies in chapter 15 cases or alternatively, is otherwise appropriate as discretionary or additional relief available in a chapter 15 case.|
|In re Fairfield Sentry Ltd., 2011 WL 1998374 (Bankr. S.D.N.Y. May 23, 2011)||British Virgin Islands liquidation||British Virgin Islands, North America, Road Town||1334, 1452, 1521, 157||Bankruptcy Court denied motion to remand to the state court numerous lawsuits filed by the foreign representatives of the foreign debtors in the U.S., holding among other things (a) that the Bankruptcy Court had core jurisdiction over the actions; (b) that Chapter 15 did not otherwise prohibit subject matter jurisdiction over the action; (c) that even if the actions were not core proceedings, they were “related to” the foreign debtors’ Chapter 15 cases; and (d) that equitable remand and permissive abstention were unavailable or otherwise denied; (e) mandatory abstention was unavailable; and (f) deadline for removal was 90 days after recognition order.|