Opinion ID: 147384
Heading Depth: 2
Heading Rank: 2

Heading: Chapter 15's Framework

Text: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) enacted Chapter 15 of the Bankruptcy Code, so as to provide effective mechanisms for dealing with cases of cross-border insolvency. 11 U.S.C. § 1501(a). It replaced former Section 304 of the Bankruptcy Code and incorporate[s] the Model Law on Cross-Border Insolvency drafted by UNCITRAL, the United Nations Commission on International Trade Law, which in turn, is based upon the European Union Convention on Insolvency Proceedings (the EU Convention). See 11 U.S.C. § 1501(a) et seq.; see also In re Tri-Continental Exch. Ltd., 349 B.R. 627, 633-34 (Bankr.E.D.Cal. 2006). The statutory intent to conform American law with international law is explicit in the text of Section 1501(a), and also is expressed in Section 1508, which states that [i]n interpreting this chapter, the court shall consider its international origin, and the need to promote an application of this chapter that is consistent with the application of similar statutes adopted by foreign jurisdictions. 11 U.S.C. § 1508; see also House Report on the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, H.R.Rep. No. 109-31, pt. I, at 105 (2005), reprinted in 2005 U.S.C.C.A.N. 88, 169 ([Chapter 15] incorporates the Model Law on Cross-Border Insolvency to encourage cooperation between the United States and foreign countries with respect to transnational insolvency cases. . . . [hereinafter House Report]; 8 ALAN N. RESNICK & HENRY J. SOMMER, COLLIER ON BANKRUPTCY § 1501.01 (15th ed. rev.2008) (explaining the basis for Chapter 15)). A non-exhaustive list of relief available to a foreign proceeding's representative in a Chapter 15 case includes: (1) an automatic stay of actions against the debtor under Bankruptcy Code Section 362; (2) the ability to operate the debtor's business; (3) examination of witnesses; and (4) the entrusting of the administration of the debtor's United States assets to the foreign representative. See generally 11 U.S.C. § 1520(a)(1)-(3); see also id. § 1519(a)(1)-(3). In order for a foreign proceeding to gain recognition within the framework of Chapter 15, the following prerequisites must be met: (1) such foreign proceeding for which recognition is sought is a foreign main proceeding or foreign nonmain proceeding within the meaning of section 1502; (2) the foreign representative applying for recognition is a person or body; and (3) the petition meets the requirements of section 1515. 11 U.S.C. § 1517(a); see also In re Betcorp Ltd., 400 B.R. 266, 285 (Bankr.D.Nev. 2009). This statutory mandate is subject to a narrow public policy exception which permits a court to refuse recognition if the action would be manifestly contrary to the public policy of the United States. 11 U.S.C. § 1506. But, the exception is intended to be invoked only under exceptional circumstances concerning matters of fundamental importance for the United States. See In re Iida, 377 B.R. 243 (9th Cir. BAP 2007); In re Atlas Shipping A/S, 404 B.R. 726 (Bankr.S.D.N.Y.2009); In re Ernst & Young, Inc., 383 B.R. 773, 781 (Bankr.D.Colo.2008). Nevertheless, recognition under Section 1517 of the Bankruptcy Code is not a rubber stamp exercise. In re Basis Yield Alpha Fund (Master), 381 B.R. 37, 40 (Bankr.S.D.N.Y.2008). Even in the absence of an objection, courts must undertake their own jurisdictional analysis and grant or deny recognition under Chapter 15 as the facts of each case warrant. See In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 389 B.R. 325, 335 (S.D.N.Y. 2008). The ultimate burden of proof on the requirements of recognition is on the foreign representative. See id. at 334. Although listed as the third element, the first requirement for recognition under Section 1517 is purely procedural in nature; that is, the petition must meet the pleading requirements of Section 1515. See 11 U.S.C. § 1517(a)(3). Section 1515 establishes several pleading requirements. First, it requires that the foreign representative has filed a petition for recognition. Id. § 1515(a). Second, Section 1515 requires the petitioner to establish that a foreign proceeding exists, and that the petitioner has been appointed as the foreign representative. Id. § 1515(b). The first two paragraphs of this subsection provide for what constitutes sufficient evidence, and specify that the petitioner may satisfy this requirement by providing a certified copy of the decision commencing such foreign proceeding and appointing the foreign representative and a certificate from the foreign court affirming the existence of the foreign proceeding and the appointment of the foreign representative. Id. Third, Section 1515 requires that the petition for recognition must be accompanied by a statement identifying all foreign proceedings with respect to the debtor that are known to the foreign representative. Id. § 1515(c). Lavie has satisfied all of these procedural requirements. Thus, Section 1517(a)(3) has been satisfied. Lavie has also met the requirements of the second element of Section 1517(a) because the foreign representative applying for recognition is a person or body[.] Id. § 1517(a)(2). Because the second and third requirements set forth in Section 1517(a) are indisputably met, the only substantive issue before the court becomes the first delineated requirement of Section 1517(a)(1) whether the foreign proceeding for which recognition is sought, here Ran's ongoing, involuntary bankruptcy proceeding pending in Israeli, is a foreign main or nonmain proceeding. If the foreign proceeding is neither then it is simply ineligible for recognition under Chapter 15. See In re Bear Stearns, 389 B.R. at 334; see also In re SPhinX, Ltd., 351 B.R. 103, 120 n. 22 (Bankr.S.D.N.Y.2006), aff'd, 371 B.R. 10 (S.D.N.Y.2007).