DailyDAC
Share this...

90 Second Lesson: What is a Chapter 15 Proceeding of the Bankruptcy Code?

QUESTION:

90 Second Chapter 15Harry A asks, what is a Chapter 15 Proceeding?

ANSWER:

Chapter 15 of the Bankruptcy Code was enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). It replaced existing section 304 of the Bankruptcy Code. Section 304 empowered U.S. courts to open an “ancillary” proceeding to representatives of foreign debtors and grant various broad forms of relief over U.S. operations and assets. Section 304 ancillary proceedings, however, did not expressly authorize foreign representatives to operate the debtor’s business or sell its assets. Chapter 15 was designed to improve upon section 304 by providing a framework to coordinate the administration of cross-border insolvencies across multiple jurisdictions in a more flexible and efficient manner.

Generally, the Chapter 15 proceeding is ancillary to the main proceeding which will take place in the foreign debtor’s home country. Once the bankruptcy court has recognized the foreign proceeding, the automatic stay and select other provisions of the Bankruptcy Code will go into effect. Recognition will also give the foreign debtor access to state and federal courts and additional relief from the bankruptcy court. In fact, they are authorized to bring a full bankruptcy proceeding instead of just an ancillary proceeding.

[Editor’s Note: This 90 Second Lesson is based, in substantial part, in material reprinted from Commercial Bankruptcy Litigation 2d and Strategic Alternatives For and Against Distressed Businesses, with permission of Thomson Reuters. For more information about these publications, please visit www.legalsolutions.com.

Check out these related webinars, which can be taken for Continuing Legal Education (CLE) credit, or simply for practical and entertaining education for business owners, Accredited Investors, and their legal and financial advisors: The Nuts and Bolts of a Chapter 11 Plan.]

About The DailyDAC Editors

The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts and similar topics.

View all articles by The DailyDAC »

The DailyDAC Editors
>
close

​Stay Update​d ​With Our Weekly​ Newsletter

​Our weekly newsletter, sent every Tuesday at 9am, includes:

  • check
    ​​Most recent Premium Public Notices
  • check
    ​All deals added to our proprietary database in the past week
  • check
    ​​The latest bankruptcy articles and related content