by Howard Seife and Francisco Vazquez
In considering an appeal of an order granting recognition to the Australian liquidation of Octaviar Administration Pty Ltd. (“Octaviar”), the United States Court of Appeals for the Second Circuit in In re Barnet, 737 F.3d 238, 58 Bankr. Ct. Dec. (CRR) 251, 70 Collier Bankr. Cas. 2d (MB) 1203, Bankr. L. Rep. (CCH) P 82554 (2d Cir. 2013), held that a foreign debtor must satisfy section 109(a) of Title 11 of the United States Code (the “Bankruptcy Code”)1 before a foreign proceeding can be recognized under Chapter 15.2 While there is no question that the eligibility requirements of section 109(a) apply to a debtor that is the subject of a plenary bankruptcy case, until the Second Circuit's ruling no court had imposed that requirement on a foreign debtor in a Chapter 15 case. After ruling that section 109(a) applies to a foreign debtor in a Chapter 15 case, the Second Circuit found that the foreign representatives of Octaviar had not made any attempt to demonstrate that Octaviar satised that requirement. Therefore, the Second Circuit vacated the bankruptcy court's order granting recognition to Octaviar's liquidation and remanded the matter to the bankruptcy court.
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