Chapter 15 Recognition Is No Rubber Stamp: Recent Trends Regarding Foreign Main and Nonmain Recognition
The number of complex cross-border restructurings continues to rise as the various economies of the world become more integrated. A growing contingent of countries has enacted sophisticated restructuring regimes or refined existing statutory structures offering distressed companies and their lenders foreign restructuring alternatives other than, or in addition to, U.S. chapter 11 to effectuate a worldwide balance sheet restructuring. This trend has resulted in an uptick in filings under chapter 15 of the U.S. Bankruptcy Code to obtain recognition of foreign restructuring proceedings, plan confirmation orders, and additional relief applicable to assets located in the United States.
This White Paper highlights certain of the advantages of pairing a foreign restructuring proceeding with chapter 15 recognition while examining recent trends emphasizing that access to chapter 15 relief is far from a rubber stamp. Indeed, debtors seeking to obtain chapter 15 recognition for a foreign proceeding must carefully navigate the Bankruptcy Code's recognition provisions, in addition to the legal requirements in the "primary" foreign proceeding, in order to implement a comprehensive restructuring. These aspects are examined in the context of actual case examples illustrating the burden a foreign representative must satisfy to qualify for chapter 15 relief.
