On December 11, 2013, the U.S. Court of Appeals for the Second Circuit in Drawbridge Special Opportunities Fund LP v. Barnet, No. 13-612, 2013 WL 6482499 (2d Cir. Dec. 11, 2013) held that in order for a foreign company to obtain recognition of its foreign insolvency proceeding in the United States under Chapter 15 of the Bankruptcy Code, such foreign company must have a domicile, place of business or property in the United States. The Second Circuit reversed a decision of the Bankruptcy Court for the Southern District of New York, which held that a foreign debtor need not make such a showing, and that such an interpretation would be contrary to pre-2005 case law under now-superseded section 304 of the Bankruptcy Code. In its opinion certifying Drawbridge’s appeal of its recognition Order, the Bankruptcy Court noted that the result of the appeal “will dramatically impact the jurisdiction of the United States bankruptcy courts and the use of Chapter 15 to assist in the administration of cross-border insolvency cases and the legitimate investigation of claims and assets in the United States.”
Location