Managing the Chapter 15 

Cross-Border Insolvency Ca

A Pocket Guide for Judges

Hon. Louise DeCarl Adler

U.S. Bankruptcy Court for the Southern District o

Federal Judicial Center

2011

This Federal Judicial Center publication was undertaken in fur

Center’s statutory mission to develop educational materials f

branch. While the Center regards the content as responsible an

publication does not reflect policy or recommendations of th

Federal Judicial Center.
ii

first printing
iii

g

Granted, 4

1. What forms of interim relief may be provided 

granting a recognition petition? 4

2. How does the foreign representative obtain in

relief? 4

B. Filing the Petition for Recognition of a Foreign 

Proceeding, 6

1. Who may file the petition for recognition? 6

2. What proof of capacity to act is required? 7

3. What notice of the petition for recognition is 

4. Problems or pitfalls and suggested solutions, 

C. Hearing the Petition for Recognition, 10

1. Must a hearing be held on the petition for 

recognition? 10

2. What if the petition for recognition is contest

3. What will be the likely subject matter of a con

recognition petition? 11

4. What is the effect of determining that a chapt

ancillary to a foreign main proceeding versus 

nonmain proceeding? 14

5. Problems or pitfalls and suggested solutions, 

II. Debtor Operations in a Chapter 15 Case, 16

A. First Day Orders and the Chapter 15 Debtor, 16

1. Which provisions of Bankruptcy Code chapt

chapter 11 apply to the chapter 15 case? 16

2. Which Bankruptcy Code avoidance powers a

chapter 15 case? 16
iv

B. Retention of Counsel and Other Professionals a

Chapter 15 Debtor, 19

1. Are counsel and other professionals in a chap

governed by the requirements of §§ 327–330

2. Problems or pitfalls and suggested solutions, 

III. Court-to-Court Communication, 20

A. Duty of Cooperation, 20

1. Should I make calls to or answer calls from a 

judge? 20

2. How should communication with a foreign c

established? 21

3. What subject matter may be covered in comm

with a foreign court? 21

B. Cross-Border Agreements, 23

1. When should a cross-border agreement be 

considered? 23

2. What are typical provisions a judge might see 

border agreement? 24

IV. Claims, 25

A. May a Creditor File a Claim in More Than One 

in a Cross-Border Proceeding? 25

B. May a Creditor Receive Distributions on a Clai

More Than One Case in a Cross-Border Procee

C. Problems or Pitfalls and Suggested Solutions, 2

1. Must a multiple-filing claimant net out its cla

the distribution in another case? 25
v

issues? 26

Conclusion, 27

Appendix: Selected Additional Resources, 28

1

jg, , 

filed in their jurisdictions.1

 As with all novel proce

chapter 15 filing may raise unique case-managemen

This guide attempts to help judges in handling transna

ruptcy cases. 

Chapter 15 is a nearly verbatim adoption of the 

Model Law (“Model Law”), an international effort 

cross-border insolvency issues. The Model Law was r

United Nations General Assembly in 1997.3

 As of the 

publication, it has been adopted in 19 countries. The 

has not been adopted by the European Union (“EU”) 

zation although several EU member states have indiv

so.4

 EU countries have their own, somewhat simila

procedures called the EC Regulation,

5

 which govern 

among member states. However, concepts embodie

Regulation—for example, “centre of main interest

 

 1. Chapter 15 took effect Oct. 17, 2005, and applies to al

bankruptcy cases filed on or after that date. See Bankruptcy Abuse 

Consumer Protection Act of 2005 (“BAPCPA”), Pub. L. No. 10

§§ 801–802 and Title XV, 119 Stat. 23, 134–46. Hereinafter, a

section references refer to 11 U.S.C. §§ 1501–1532 unless otherwis

 2. United Nations Commission on International Trade.

 3. UNCITRAL Model Law on Cross-Border Insolvency 

Enactment, enacted by G.A. Res. 52/158, U.N. Doc. A/Res/52/158 

See also www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1

(last visited April 29, 2010).

 4. As of this writing, those states are Great Britain, Romania, 

and Slovenia.

 5. Council Reg. (EC) No. 1346/2000 of May 29, 2000.
2

substantive bankruptcy law is integrated. It is a t

countries are encouraged to incorporate into their do

ruptcy law, making changes to the Model Law, where 

accommodate the local law. 

When the Model Law was adopted by the Unit

chapter 15, former 11 U.S.C. §304, which had been th

mechanism for handling ancillary proceedings under p

bankruptcy law, was expressly repealed. Although th

history to chapter 15 suggests some of the substant

contained in case law construing former §304 may re

tality, it is also clear from the directive in 11 U.S.C. 

judges wrestling with interpretation of chapter 15 sho

side U.S. case law not only for guidance but also to av

and to promote a harmonious interpretation of its pro

appendix to this guide provides some research resou

in locating foreign court decisions.

Typically, chapter 15 may be invoked in one of tw

the trustee of a domestic case with foreign assets may a

ruptcy court for authorization under § 1505 to act 

country on behalf of a U.S. case. This authorization

appointing the trustee, examiner, or debtor-in-posses

eign representative—is an important first step to tha

taining recognition to act on behalf of the U.S. bank

in the foreign country. The concepts of authorizing th

party to act in a specific country, and defining the s

 

 6. 11 U.S.C. § 1508 provides: “In interpreting this chapter, 

consider its international origin, and the need to promote an app

chapter that is consistent with the application of similar statu

foreign jurisdictions.”
3

expenses of the representatives foreign activities.

Second, and more commonly, the foreign represen

insolvency proceeding pending in another country w

the U.S. will ask the U.S. bankruptcy court for recogni

authority—to act on behalf of that foreign proceeding 

ter those U.S. assets. In this situation, the U.S. case u

15 will be ancillary to a case pending elsewhere. 

This guide will focus only on the management 

cases. It is divided into two major components. Part I 

will assist in understanding the process of recognitio

how to deal with requests for interim relief while the 

process is under way. Parts II–IV of the guide addre

lems and considerations of operating a business in 

court-to-court communication including cross-borde

or protocols, and claims issues. 

The appendix to this guide contains a list of resour

assist in providing a deeper understanding of this statu

I. Commencing the Chapter 15 Ca

The typical chapter 15 case is commenced by a foreign 

tive filing a petition for recognition. “Recognition” is 

an order conferring status on the foreign representativ

before U.S. courts.8

 The process for obtaining re

spelled out in § 1515; the presumptions applied to a 

recognition are contained in § 1516; and the element

sion to grant recognition are found in § 1517. 

 

 7. 11 U.S.C. § 101(24).

 8. 11 U.S.C. § 1502(6)
4

judge for extraordinary interim relief immediately af

petition for recognition but before recognition has bee

a time when the judge has little information about t

that reason, this guide will first discuss interim reli

followed by the standards and process for recognition.

A. Interim Relief Before a Petition for Recognition I

1. What forms of interim relief may be provided before 

recognition petition? 

Typically, the foreign representative seeking re

dealing with pending litigation that threatens to seiz

impair the debtor’s value to the creditor body. If the 

suaded that interim relief is “urgently needed to prot

of the debtor or the interests of the creditors,” § 15

court a toolbox of remedies. They include: 

• staying execution; 

• staying litigation; 

• entrusting U.S. assets that are perishable or s

devaluation to either the foreign representativ

other person, like an examiner, to protect them

• freezing the right to transfer or encumber the a

• authorizing witnesses to be examined by 

representative (in a manner similar to a 

examination) to obtain evidence about the debt

2. How does the foreign representative obtain interim r

Section 1519(e) has some troublesome language. 

the “standards, procedures, and limitations applicab

junction shall apply to [the] relief under this section
5

quire a foreign representative to file an adversary proc

legislative history to §1519 seems to support this conc

section (e) makes clear that such [§ 1519] relief 

specific rules and a body of jurisprudence.”10 

However, the legislative history to § 1519 also p

“[t]his section does not expand or reduce the scope o

as determined by cases under section 105 . . . .”11 In co

nearly identical language in § 1521(e), the court in In 

Lee12 held that an adversary proceeding was not requ

injunctive relief because the legislative history to § 

“[t]his section does not expand or reduce the scope 

rently available under sections 105 and 304” and pr

authorized injunctive relief under § 304 without requ

versary proceeding. 13 

In In re Pro-Fit Holdings Ltd.,14 the court recogn

adversary proceeding is required to obtain interim inj

such as “staying execution against the debtor’s 

 

 9. Fed. R. Bankr. P. 7001(7).

10. H.R. Rep. No. 109-31, 109th Cong., 1st Sess., 114 (2005)

2005 U.S.C.C.A.N. 88, 176–77.

11. 11 U.S.C. § 105(a) states: “The court may issue any ord

judgment that is necessary or appropriate to carry out the provisi

No provision of this title providing for the raising of an issue by a 

shall be construed to preclude the court from, sua sponte, takin

making any determination necessary or appropriate to enforce 

court orders or rules, or to prevent an abuse of process.”

12. 348 B.R. 799, 802 (Bankr. W.D. Wash. 2006).

13. Id. at 802 (citing H.R. Rep. No. 109-31, 109th Cong., 1st S

Petition of Rukavina, 227 B.R. 234 (Bankr. S.D.N.Y. 1998)). 

14. 391 B.R. 850, 860–63 (Bankr. C.D. Cal. 2008).
6

held that: [A]n adversary proceeding is never neede

bankruptcy code for imposition of the automatic stay, 

tion of the requirements for an injunction is never req

Based on these cases, a judge could decide to 

troublesome language of § 1519(e) by ordering that th

stay applies on an interim basis, pending a ruling on 

for recognition. However, if the judge concludes that 

quires adherence to the injunction standards in order 

requested interim relief, the foreign representative m

ther: (a) irreparable injury and a likelihood of success 

its; or (b) presence of serious questions and a balance 

tipping in its favor, since this is the test generally appl

taining injunctive relief. As a rule irreparable injury 

ever local creditors are attempting to enforce claim

foreign debtor’s assets to the detriment of other credit

foreign representative is forced to participate in li

threatens to drain the debtor’s assets.17 

B. Filing the Petition for Recognition of a Foreign P

1. Who may file the petition for recognition? 

Section 1515(a) states that a foreign representative 

who files the petition for recognition. That party may n

ily be someone appointed by a foreign court but may b

ple, the U.S. equivalent of a receiver or liquidator un

 

15. Id. at 860–63.

16. Id. at 864–65; see also In re ABC Learning Centres Ltd., 

WL 5439808 (Bankr. D. Del. 2010).

17. See In re MMG LLC, 256 B.R. 544, 555 (Bankr. 

(construing former § 304(b) and (c)).
7

order from the bankruptcy court granting the petition 

tion is the precursor to any appearance by the foreign 

tive in other federal or state courts. 

2. What proof of capacity to act is required? 

Sections 1515(b)(1)–(3) list, in the alternative, the r

for filing the petition for recognition in the bankrupt

sically, the requirements are some form of proof, satisf

court, that there is a foreign proceeding pending and 

eign representative was appointed to act on its beha

ally, the foreign representative must submit a stateme

any other foreign proceedings pending elsewhere wi

the debtor (§ 1515(c)). Certified copies of the openin

the foreign proceeding and appointment of the foreign 

tive, translated into English, will suffice; however, if n

any other form of proof acceptable to the judge ma

tuted. There is no requirement that this proof be auth

any formal way; the judge is entitled to rely on the au

documents submitted in support of the petition. See § 

3. What notice of the petition for recognition is require

Notice of the petition for recognition must be g

scribed by Fed. R. Bankr. P. 2002(q)(1). Notice is given 

or as the court otherwise directs. Notice must be 

debtor, to others who are administering the foreign 

debtor (e.g., subsidiaries in other countries), entities in 

the U.S. with the debtor, and anyone against whom 

 

18. 11 U.S.C. §§ 101(23)–(24); In re Betcorp, 400 B.R. 266, 

Nev. 2009).
8

ing or a foreign nonmain proceeding. As more fully 

section C.3 below, a foreign main proceeding is one 

country where the debtor has its “center of main inter

(§ 1502(4)). In the absence of contrary evidence, the j

tled to presume that the case pending where the debto

istered office or the individual debtor has his habitua

the main case (§ 1516(b)). A foreign nonmain proce

pending in a foreign country other than where the d

center of main interest but has an “establishment” 

which is a place where it conducts “nontransitory” 

term establishment has been interpreted to exclude 

“letter box” company locations from the definition 

cases.19

4. Problems or pitfalls and suggested solutions

(a) The 20 days’ minimum notice period may be 

for the foreign representative who urgently needs p

the debtor’s assets or creditors’ interests. One solutio

interim relief on a temporary basis as described in § 15

(b) Although the statute emphasizes holding a hea

ognition at the earliest possible time, as a practical m

judge has given the foreign representative sufficient i

pending recognition, there may not be a need to rush 

A judge may wish to wait a bit longer to get complete 

about the case and take some time to make the decisio

ognition if there is no other urgent need for recognitio

 

19. In re Bear Stearns High-Grade Structured Credit Strategie

Ltd., 374 B.R. 122 (Bankr. S.D.N.Y.), aff’d, 389 B.R. 325 (S.D.N.Y. 2
9

information about other complementary forms of no

reach those foreign parties-in-interest, such as public

facsimile, service on agents for service of process, etc.

that notice be given in more than one form. If notice 

be given in more than one form, it might be helpful t

confusion as to which mode of service is deemed t

process by entering an order that one form of notice

by publication—is presumed to be sufficient notice to 

ties under the circumstances.

(d) Sections 1514(c)(1)–(2) require a court to n

creditors of the commencement of the case and, as pa

tice, to indicate the time and place for filing proofs 

whether secured creditors must file proofs of claim. 

be asked by the foreign representative not to give th

required upon case commencement by § 1514(c)(1)–(

tion of that section to avoid confusion and a confl

process seems to be appropriate in instances in whic

has already been fixed in the foreign case and notice 

been given to creditors in that case. Deferral may also 

because the claims process has not yet been establishe

eign jurisdiction and the foreign representative may 

time to coordinate the filing of claims as between the U

foreign case. Finally, if there is some question whethe

proceeding is the “main” proceeding, the judge may 

struct the parties to defer sending out notice of where 

until the judge has decided the issue.
10

pg

use negative notice (notice and opportunity to reques

if the petition is uncontested, it is possible that an or

entered without a formal hearing. However, it is 

mended that recognition be granted without a formal 

cause the foreign representative has the burden of pr

lishing the recognition criteria (see infra) and it is 

interested parties may not have received notice in tim

ten opposition, it seems better practice to require an 

presentation in open court where last-minute oppos

heard.

2. What if the petition for recognition is contested?

(a) Form of the opposition: It is important to remem

foreign representative has the burden of proof o

§ 1515(a) elements—existence of the foreign proceed

representative’s authority to file the petition for recog

either of these predicates is challenged by a party-in

contest is treated under the same rules applied to con

untary petitions. Fed. R. Bankr. P. 1011(b) governs th

ods for filing the objections (20 days with some exce

1011(d) limits the substance of that opposition to cla

to defeating the petition—that is, claims alleging no 

ceeding pending and/or no authority to act. Rule 101

the judge to authorize a reply; otherwise, none is perm

(b) Form of the hearing: Because opposition to a 

recognition is treated like a Fed. R. Civ. P. 12(b) moti

decided on the pleadings alone. However, if it is no

treated as civil litigation with the caveat that § 1517(c

ute urges courts to decide these matters at the earl
11

petition? 

Most contested recognition petitions to date have b

about whether the case before the court should be rec

case ancillary to a foreign main proceeding or a fore

proceeding (the petition for recognition should state 

of recognition the representative is requesting) or ne

terms of art are defined in §§ 1502(4) and 1502(5) of c

Whether the chapter 15 case is recognized as a

main proceeding or nonmain proceeding has far more 

to the direction of the chapter 15 case than merely th

lief available under §§ 1520 and 1521. If the judge de

chapter 15 case is ancillary to a foreign main proceedi

sions in that foreign main proceeding will largely co

rection of the ancillary case. The foreign main proceed

the decisions of whether and how to reorganize the d

related entities or whether to liquidate will be made. 

sions are entitled to deference from the U.S. bankruptc

In contrast, if the judge decides an ancillary case 

the U.S. judge is determining that the foreign represen

ing on behalf of a foreign nonmain case that will be 

structions from a foreign main case filed in yet anot

tion. Decisions in the foreign nonmain case may ha

importance to the overall direction of the foreign ma

those in the U.S. chapter 15 case. Although, on occasi

court may express an opinion as to whether its procee

or nonmain, the U.S. bankruptcy judge is not bound 

pression of opinion.

 The distinction between the two types of procee

and nonmain—turns on the situs of the foreign pro

determination of situs depends on the court’s determi
12

chapter 15, § 1516(c) assists a court in this deter

adopting the presumptions that the CoMI of an indi

habitual residence of that person,

20 and the CoMI of 

the debtor’s registered office. A “registered office” is 

principal place of business for the entity. After exh

viewing the various circuit tests for determining princ

business, the recent U.S. Supreme Court decision in H

Friend21 defined it as being “best read as referring 

where a corporation’s officers direct, control and co

corporation’s activities. It is the place that Courts of 

called the corporation’s ‘nerve center.’”22 However, th

sion is one made in the context of a diversity dispute i

civil action and not a chapter 15 case and, although he

not be strictly applicable to determining CoMI in all in

(b) Contesting the presumption of CoMI: Althou

appears absolute in its pronouncement that in the abs

trary evidence, CoMI is presumed to be the chapter 

registered office (if an entity) or habitual residence (i

ual), developing U.S. case law supports a more active 

judge, even in the absence of contrary evidence. Jud

been shy in demanding additional evidence of CoMI

the petition for recognition is unopposed. In In re 

High-Grade Structured Credit Strategies Master Fun

 

20. See discussion in In re Chiang, 437 B.R. 397, 404 (Bankr. 

(habitual residence of the individual debtor was where he li

children attended school, where he had assets, and where he had a 

21. 130 S. Ct. 1181, 1188–94 (2010).

22. Id. at 1192.

23. 374 B.R. 122 (Bankr. S.D.N.Y.), aff’d, 389 B.R. 325 (S.D.N.
13

situs of the main case. In In re Basis Yield Alpha Fund 

the judge directed the petitioner to provide 21 catego

tional information to assist him in making the decisio

recognize the case as a main case. In other words, co

necessarily rubber-stamping the decision of recogniti

case.

If the judge finds that CoMI is not located where 

representative claims it is, the ancillary case does not a

revert to a nonmain proceeding. That is because a n

ceeding must be a case pending where the debtor ha

lishment.” An establishment is defined as any place o

where the debtor carries out nontransitory econom

Therefore, so-called “letter box” companies, which 

any actual operations, will not qualify as nonmain 

either.26 

In those instances where the judge concludes tha

representative represents neither a foreign main proc

nonmain proceeding,

27 the foreign debtor with assets 

not without remedy. A full plenary proceeding (eithe

or involuntary chapter 11 or chapter 7) may still be fi

quirements for filing a domestic case are met.

 

24. 381 B.R. 37 (Bankr. S.D.N.Y. 2008).

25. 11 U.S.C. § 1502(2).

26. Supra at n.17.

27. Bear Stearns, 374 B.R. at 132.
14

foreign proceeding is main or nonmain is the relief a

available to the foreign representative under chapter 

to § 1520, upon recognition that the chapter 15 case i

a foreign main proceeding, §§ 361 and 362 automa

Additionally, § 1520 permits the foreign representativ

the debtor’s business, subject to the provisions of §§ 

However, it is important for the judge to remember t

tional powers accorded the foreign representative of 

ceeding are limited to property of the debtor within t

jurisdiction of the United States. There is no “estate” c

§ 541(a) in a chapter 15 case.

If the judge determines that the foreign proceeding 

the rights provided in § 1520 are not automatically ava

ever, pursuant to § 1521, in the judge’s discretion, so

these powers may be available to the foreign represent

showing that the relief is necessary to protect assets th

administered in the foreign nonmain proceeding. See § 

Further, regardless of whether the foreign proceed

nized as main or nonmain, if recognition is granted, 

mits a court to provide “additional assistance” unde

other laws of the United States. This is a catch-all p

incorporates the jurisprudence under former §§ 304

There have been instances in which a court has dete

the foreign proceeding is neither main nor nonmain

termination is that the foreign proceeding is neith

nonmain, then no recognition at all is granted. 

 

28. See H.R. Rep. 109-31, 109th Cong., 1st Sess., 109 and 119 (

29. See Bear Stearns, 374 B.R. at 131–32, aff’d, 389 B.R. 325 (S.
15

tively, some expedited trial procedures such as declara

cipient witnesses (subject only to cross-examinatio

limited examination may suffice.

(b) As noted above, if interim relief granted und

adequate to protect the chapter 15 debtor while the 

petition is under consideration, the judge may be abl

time necessary to develop complete information as to 

(c) In cases in which the foreign debtor has mult

locations and has been in foreign proceedings for so

fore filing a chapter 15 case, the judge may have to de

for determining the CoMI—that is, is it the date of 

foreign filing or the date of the recognition hearing? 

the case may have changed if foreign liquidators have 

operations. Some guidance in making this determin

found in the discussion in In re Betcorp Ltd.

30 and in th

the court in In re Fairfield Sentry Ltd.

31

(d) It is important to scrutinize proposed orders o

or proposed orders for interim relief for provisions y

have anticipated. For example, § 1510 states that a fo

sentative is not subject to court jurisdiction of any U

the “sole fact” that he has filed a petition for recog

§ 1515. You may, for example, see an attempt to use § 

tify expansive language in an order of recognition o

relief exempting the foreign representative or its p

now and in the future, from U.S. court jurisdiction no 

they do in the conduct of their duties. 

 

30. 400 B.R. 266, 290–91 (Bankr. D. Nev. 2009).

31. 440 B.R. 60, 63–66 (Bankr. S.D.N.Y. 2010).
16

apply to the chapter 15 case?

Although § 1520(a)(3) permits the recognized fo

sentative of a foreign main case to operate the debto

the operating chapter 15 debtor is not subject to the 

tions as the operating chapter 11 debtor. A number o

provisions simply are not incorporated into chapte

omissions include § 364, governing the debtor’s 

credit; § 365, describing the debtor’s rights and obli

respect to executory contracts and unexpired leases

governing the debtor’s relations with utility service pro

2. Which Bankruptcy Code avoidance powers apply in 

chapter 15 case? 

None of the avoidance provisions found in §§ 52

547, 548, 550, 553, or 724(a) apply in a chapter 15 cas

of whether the foreign case is a main or nonmain p

The only way in which a foreign representative can 

avoidance actions under U.S. law is by filing a full or 

under another chapter of Title 11.33 At least one cou

that authority exists to permit the pursuit of avoidanc

der the foreign law of the jurisdiction where the main 

ing as a component of “additional relief” under § 1521

However, a foreign representative may be able to 

avoid unauthorized postpetition transfers of an in

debtor in property that is within the territorial jurisd

 

32. See § 1520; § 1521(a)(7); and § 1523(a) (collectively, prov

avoidance provisions do not apply in a chapter 15 case).

33. See § 1523(a).

34. In the Matter of Condor Insurance Ltd., 601 F.3d 319 (5th C
17

Arguably, it should run from the date on which the 

ceeding was commenced since an estate would have 

under the jurisdiction of the foreign court at that time

3. Are there any creditor protections the judge may app

before or after recognition of the chapter 15 case? 

Interim relief accorded under § 1519 or discretion

corded under § 1521 may be conditioned under § 15

creditors and other interested parties. The standard fo

tion is not the § 361 standard of adequate protection; r

speaks in terms of “sufficient protection.” The legislati

this section is clear that Congress intended this to b

standard; however, there is no definition in the sta

guidance in interpretation of the term “sufficient pro

be found by consulting not only other domestic decis

other international decisions on this issue. Section 1

that a court consider the international character of ch

construe the statute consistently with those other fore

tions that have adopted chapter 15. 

4. Problems or pitfalls and suggested solutions 

From the court’s point of view, the omissions from 

of key provisions in chapter 3 governing the operatio

ness create some interesting dilemmas. Time periods 

tion/rejection of executory contracts and leases do 

apply. Indeed, there does not seem to be any oblig

debtor to perform the lease terms until assumption 

occurs. Further, a debtor might be able to obtain 

 

35. See H.R. Rep. 109-31, 109th Cong., 1st Sess., 115–16.
18

on lease rejection damages. 

Because the omitted chapter 3 provisions discusse

tain protections for the debtor as well as its credito

should raise and discuss these issues with the foreign 

tive and parties in interest at the earliest possible time

representative may already be subject to similar prov

the foreign insolvency law. If not, it may be desira

some chapter 3 and chapter 11 provisions to the opera

15 debtor. The foreign representative may request the 

corporate certain provisions of the Bankruptcy Code a

to § 1507(a) the court could do so as “additional assist

der this title or under other laws of the United Stat

tively, if there is no request to incorporate these om

sions, the court has the leverage provided by § 1520

which grants the foreign representative power to 

debtor’s business “unless the court orders otherwise.”

Although one solution is to import and apply all p

chapter 3 and chapter 11 into the chapter 15 case, som

selective and sensitive to the needs of the case shoul

ered. A cautionary tale of the unintended consequenc

ing other Bankruptcy Code sections into a chapter 15 

in In re Qimonda AG Bankruptcy Litigation.

36 There 

dered that numerous chapter 3 and chapter 5 section

as additional relief under § 1521(a).37 (It is unclear 

was a sua sponte action or at the request of a party

assets of the foreign debtor were patents subject to cr

agreements. When the foreign debtor sought to 

 

36. 443 B.R. 547 (E.D. Va. 2010).

37. Id. at 553.
19

patents. The courts belated attempt to reconcile the 

tween German insolvency law and § 365(n) by modi

cretionary order for reasons of comity satisfied neit

spun off an appeal. 

Chapter 15’s international character requires an 

case problems that is more flexible and accommodati

straining the case to the straitjacket of chapter 11’s ru

limits. The chapter 15 case is, after all, ancillary to a 

elsewhere, and judges should carefully consider poss

with the law of that jurisdiction before automatica

U.S. insolvency law. 

B. Retention of Counsel and Other Professionals an

Chapter 15 Debtor

1. Are counsel and other professionals in a chapter 15 c

governed by the requirements of §§ 327–330? 

Chapter 15 is silent on what standards apply to 

ment of counsel and other professionals in a chapter 1

2. Problems or pitfalls and suggested solutions

Because the statute is derived from and ba

UNCITRAL Model Law, it is likely that the U.S. req

disinterestedness and absence of adverse interest fo

debtor’s counsel and professionals were simply no

standards universally applicable to other countries

chapter 15 case is a case ancillary to a case pending 

jurisdiction. As such, there is no chapter 15 corollary 

defining the estate created upon filing a voluntary or 

case under § 301, 302 or 303. Since there is no estate 

chapter 15 case, arguably, professionals are not being 
20

ployment of professionals and regulation of their fe

problem of the U.S. court but rather of the foreign cou

of course, professionals are still subject to the dutie

appearing in a federal court. 

If, despite the above considerations (or because it 

ment of a cross-border agreement, discussed infra at I

believes it necessary to enter orders authorizing empl

unlikely that the court or the U.S. Trustee will be s

excusing counsel and other professionals from demon

do not hold adverse interests and are disinterested, f

detailed time records, and from seeking court appro

ment of fees. It is suggested that the court discuss its 

of compliance with §§ 327–330, obtain acknowledgm

compliance obligations from the affected professional

court order “importing” application of these sections 

tion of permitting business operations under § 1520(a

III. Court-to-Court Communicati

A. Duty of Cooperation

1. Should I make calls to or answer calls from a foreign 

Section 1525 mandates that a bankruptcy judge co

any foreign court or foreign representative “to the m

tent possible.” Direct communication is authorized 

mandated. However, establishing communication in 

cases is encouraged as a means to obtain a better unde

the applicable foreign law and any differences from U

might lead to litigation. 
21

court. Further, local ethical restrictions may prohibit 

tion between judges, and language barriers and time 

ences may make direct communication impossible. 

Conversely, the judge may get a surprise phone c

visit from a foreign judge about the pending chap

While the judge’s first impulse is to be courteous and 

any extensive discussion about the case with that f

should be deferred until parties in interest have been 

of the fact the judge will be having this conversation or 

2. How should communication with a foreign court be 

Communication between foreign judges may be 

direct. Examples of indirect communication would be 

of copies of foreign orders, judgments, opinions, t

hearings, declarations of parties, and the like. It may 

munication through intermediaries, such as between 

representatives themselves. Examples of direct com

would be by way of telephone or video conference. 

proof that one form of communication is more effec

other. The type of communication used may, in la

influenced by language, time zone, legal system, tech

ability, and other factors. In some instances, simply c

ing your ideas in a simple opinion or an in-court 

which a transcript is made and then directing the forei

tative to deliver this to the foreign judge will suffice.

3. What subject matter may be covered in communica

foreign court? 

Obviously the subject matter of court-to-court 

tions will vary enormously based on the nature of the 
22

ing in court-to-court communication, the initiating 

consider a number of questions:

• What will be the subject of the communicatio

vance agreement as to the topics to be discu

court-to-court communication is likely essen

misunderstandings.

• Who is to receive notice of the communication

• Who may and who will participate in the com

Will the communications be limited to the ju

include the parties’ representatives? Will parti

tatives be allowed to speak or merely monito

exchange? 

• In what language will the communication be c

English is not the shared language of the cour

visions for simultaneous translation will be ma

• Will the parties be required to file written state

sition or documents in advance of the comm

so, will they be required to file in each jurisdic

Must the documents be translated?

• What record will be made of the communicatio

• If the communication is direct, what form will 

eoconferencing is the preferred method, but 

courts or foreign courts have access to it. F

may be considerations of time zone differenc

such joint hearings inconvenient. 

• Is the court-to-court communication to be a

nary event in the case or used on a routine bas

both procedural and substantive matters as the
23

judge may be appropriate or desirable in some instanc

court communication should not be viewed as alter

independence, jurisdiction, or sovereignty. 

B. Cross-Border Agreements

Many of the issues raised above may be resolved b

cross-border agreement (sometimes called a “protoc

been negotiated between and among the insolvency 

tives or practitioners in the multiple insolvency proc

debtor-in-possession (if retained), and, in some inst

secured creditors and official creditors’ committee

were originally developed in cross-border cases in 

court had a plenary case (e.g., a U.S. chapter 11 case 

dian C.C.A.A. proceeding) over which each court had 

tion. In those instances, harmonization was necessary 

tential conflicts and to promote efficient cross-border 

tion of the multiple insolvency proceedings. The scop

tance of cross-border agreements in a chapter 15 

somewhat diminished if the U.S. court is merely bei

to provide ancillary assistance to a main proceeding l

foreign jurisdiction. Cross-border agreements are not 

between courts, although many courts encourage th

and in some instances approve the agreement in order 

ticipating parties.

1. When should a cross-border agreement be considere

When there are multiple foreign insolvency pr

complex debtor structure (such as a corporate parent 

ous subsidiaries in different locations), some similar

vency laws, and the possibility of conflicting rulings on 
24

2. What are typical provisions a judge might see in a cr

agreement? 

Cross-border agreements vary widely, depending u

ture of the cases and the similarity of the legal system

ous jurisdictions participating in the case. A typical 

agreement might address the following topics:

• allocation of responsibility between the courts 

stration of the case;

• coordination of asset recovery or asset disposit

fit of creditors;

• submission and treatment of claims;

• framework for future communication between 

• coordination of reorganization plans;

• allocation of responsibility between courts for 

substantive law issues;

• agreement between the insolvency represent

limitations on their actions without approv

courts or insolvency representatives; 

• provisions for amendment of the cross-borde

or for dispute resolution in the event of diffe

terpretation; and

• legal effect of the cross-border agreemen

whether court approval or creditor approval is 

the agreement to be effective.

An exhaustive discussion of cross-border agreem

ing sample provisions and an analysis of agreements 

number of cross-border insolvency cases, can be foun
25

IV. Claims

A. May a Creditor File a Claim in More Than One of 

in a Cross-Border Proceeding? 

Nothing prevents a creditor from filing a claim i

one of the insolvency proceedings for the same debtor

B. May a Creditor Receive Distributions on a Claim 

More Than One Case in a Cross-Border Proceedi

 Yes, a creditor may receive distributions from 

cases pending as to the same debtor; however, no c

receive more than 100 percent of its claim. Further, un

ants of the same rank receive the same percentage rec

multiple-filing claimant, that claimant may not receiv

tion. Section 1532 restricts distribution and enforces p

claimants of the same class.

C. Problems or Pitfalls and Suggested Solutions

The claims area is one fraught with ambiguity and 

questions. Some that might occur are:

1. Must a multiple-filing claimant net out its claim to r

distribution in another case? 

Section 1532 adopts the “hotchpot rule” which w

in now-repealed § 508(a). There is some support fo

claim as a “right to payment,” which remains the s

proceeding regardless of distributions from other ca

 

38. http://www.uncitral.org/pdf/english/texts/insolven/Practic

Ebook_eng.pdf. 
26

of prior distributions. However, no claimant receives 

distribution of more than 100 percent of its claim. 

2. Is a priority claim from another country entitled to p

chapter 15 case when U.S. law does not entitle that c

priority? 

No, priority status is determined by local law. The 

tion for the foreign claimant having priority under f

that a claim from that foreign creditor may not be t

than a general unsecured creditor in the chapter 15 c

the basis of nationality (§ 1513(b)(1)). Of course, this 

fect the foreign creditor having superior rights to U

pursuant to U.S. law (e.g., a security interest in tangibl

3. Is it likely that the chapter 15 judge must decide clai

Claims issues may not arise at all unless the foreign 

tive decides, upon obtaining recognition, to file a par

11 case. In most instances where there is no paralle

case, cross-border agreements will address the claim

distribution issues. However, in the event of a full-fle

11 case being filed by the chapter 15 case foreign re

the judge should be aware that former § 508(a), which 

sis for § 1532, neither restricts distribution nor enfor

chapter 11 cases, thus further complicating cases hav

proceedings.
27

with chapter 15 cases a quick understanding o

management issues that may arise and possible soluti

meant to substitute for carefully parsing the statute i

treatises that have been written to further explain th

the statute and developing case law. The appendix t

contains a non-exhaustive list of resources where a

formation and guidance may be found. The case la

materials discussed are current through December 31, 
28

og te NCoutes (003).

American Law Institute & The International Insolvenc

Guidelines Applicable to Court-to-Court Commu

Cross-Border Cases, available at 

http://www.ali.org/doc/Guidelines.pdf (last visite

2010).

Andre J. Berends, The UNCITRAL Model Law on Cros

Insolvency: A Comprehensive Overview, 6 Tul. J. I

Comp. L. 309 (1998).

Samuel L. Bufford, United States International Insolve

2008–2009 (2009).

Case Law on UNCITRAL Texts (CLOUT), available at 

http://www.uncitral.org/uncitral/en/case_law.htm

(last visited July 15, 2010). 

Leif M. Clark & Daniel M. Glosband, Collier Monogra

lary and Other Cross-Border Insolvency Cases U

ter 15 of the Bankruptcy Code (2008).

European Union Insolvency Regulation, Council Regu

No. 1346/2000 of 29 May 2000 on insolvency pro

available at 

http://eurlex.europa.eu/LexUriServ/LexUriServ.d

2000:160:0001:0018:en:PDF (last visited July 15, 

1 W.H. Manz, Bankruptcy Reform: The Legislative Hi

Bankruptcy Abuse Prevention and Consumer Pro

of 2005, 105–18 (2006).
29

yf 

Rapidly Maturing Jurisprudence of Chapter 15 of 

ruptcy Code, Pratt’s Journal of Bankruptcy Law (2

UNCITRAL Model Law on Cross-Border Insolvency a

Enactment, available at 

www.uncitral.org/pdf/english/texts/insolven/inso

(last visited July 15, 2010).

UNCITRAL Practice Guide on Cross-Border Insolven

tion, available at 

http://www.uncitral.org/pdf/english/texts/insolve

Guide_english.pdf (last visited July 15, 2010). 

Jay L. Westbrook, Locating the Eye of the Financial Sto

Brook. J. Int’l L. 1019 (2007).
Judge David O. Carter, U.S. District Court for the Central District of Califo

Magistrate Judge John M. Facciola, U.S. District Court for the District of C

Judge James B. Haines, Jr., U.S. Bankruptcy Court for the District of Maine

Judge Loretta A. Preska, U.S. District Court for the Southern District of Ne

Judge Edward C. Prado, U.S. Court of Appeals for the Fifth Circuit

Judge Philip M. Pro, U.S. District Court for the District of Nevada

James C. Duff, Director of the Administrative Office of the U.S. Courts

Director

Judge Barbara J. Rothstein

Deputy Director

John S. Cooke

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