Successful international companies often want to establish a presence in the United States. Business-friendly laws in some jurisdictions and a large consumer base make the United States an ideal destination for successful and growing companies seeking to open new locations.
Even the most successful companies may sometimes face temporary setbacks as the economy shifts. With major changes in consumer spending in recent years, international organizations with assets and multiple countries may need to consider restructuring and other ways to regain control over significant debts.
A Chapter 15 bankruptcy case initiated in the Southern District of New York can help organizations filing bankruptcy in other countries protect their domestic assets from creditor claims during restructuring.
How does Chapter 15 bankruptcy work?
Chapter 15 bankruptcy requires the cooperation of domestic courts in New York with foreign courts hearing the primary bankruptcy or business insolvency case. Many Chapter 15 cases involve creditors filing for bankruptcy in either the United Kingdom or Germany.
During that process, it may also be necessary to petition the Southern District of New York to approve a Chapter 15 bankruptcy due to the cross-border nature of the bankruptcy case. The Chapter 15 case pursued domestically helps protect assets in the United States from seizure by creditors.
While the initial filing abroad may protect international holdings and guide the restructuring process, resources in the United States could be vulnerable to creditor actions. The Chapter 15 case is not the primary bankruptcy filing but is rather ancillary to the main insolvency filing already initiated in a different jurisdiction.
Typically, the trustee or other foreign representative appointed to oversee the foreign bankruptcy or insolvency case petitions the domestic courts for cooperation via a Chapter 15 ancillary case. Struggling organizations that effectively utilize Chapter 15 protections can preserve domestic resources until they have effectively resolved their complex, cross-border financial matters.
Having local representation can be of the utmost importance for international organizations seeking to use Chapter 15 bankruptcy in addition to a foreign bankruptcy initiated in another country. The proper application of Chapter 15 protections can preserve domestic resources and make it possible for international businesses to restructure without losing key resources to domestic creditor claims during that process.