What Is Chapter 15 of the Bankruptcy Code?

What Is Chapter 15 of the Bankruptcy Code? "Chapter 15 of the bankruptcy code -- have you heard of it? The vast majority of bankruptcy attorneys do not submit these kinds of cases. Prior to the recent high-profile bankruptcy cases of numerous municipalities in the United States, Chapter 9 of the United States Bankruptcy Code was not widely known. Chapter 15 was added to the bankruptcy code in 2005, when it was amended. Therefore, why was another chapter necessary? You can already liquidate assets, and you have two options for reorganizing your debts. Along with municipalities, family producers and fisherman have their own specialized chapters.So why does Chapter 15 exist? Companies that conduct business in multiple countries are already subject to insolvency proceedings. International insolvency is governed internationally by the United Nations Commission on International Trade Law. Prior to the establishment of Chapter 15, there was section 304 of the bankruptcy code, which involved debtors, asset claimants, and parties with foreign interests. The objective is to facilitate cooperation between American and international tribunals. If you conduct business internationally, you are already aware that there is ambiguity when dealing with the laws of other nations. In the event that things go awry, there is now more certainty, or so the theory goes, when dealing with a cross-border insolvency situation. As with the other chapters of the bankruptcy code, the objective is to serve all parties involved fairly and maximize assets for the benefit of creditors.Another objective is to assist these struggling businesses in an effort to save employment and safeguard existing investments. Typically, a chapter 15 case is associated with another proceeding in a foreign jurisdiction. This does not rule out the possibility of a chapter 7 or chapter 11 reorganization. There may be multiple parties with assets in the United States or debts owed to parties that require administration under other chapters of the bankruptcy code.When a chapter 15 petition is filed by a foreign representative, the foreign entity is permitted to receive an automatic stay and continue operations. Another objective is to protect foreign creditors and debtors from discrimination. This is a very complex area of bankruptcy law, and this article only scratches the surface of what is possible and how it can be accomplished. Consult with a knowledgeable bankruptcy attorney in your area if you believe you have foreign debts that need to be resolved. As foreign businesses continue to operate in the United States, this chapter of the bankruptcy code will be utilized more frequently. Hopefully, foreign tribunals will become more cooperative for the benefit of employees and those owed money.
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