Your company is restructuring in your home country, which is already a challenge in itself. However, when your company has a footprint in New York or anywhere in the United States, the stakes multiply. You may suddenly find yourself facing aggressive American creditors threatening to seize your assets or launch disruptive lawsuits in federal courts.
Fortunately, U.S. law can provide international businesses with breathing room through the Chapter 15 automatic stay. Understanding how you can use this legal tool to safeguard your company’s American assets is key to ensuring your continued success.
What is an automatic stay?
This is a federal injunction that halts all collection actions, lawsuits and asset foreclosures.
The automatic stay features a unique mechanism that automatically imports Section 362 or the domestic stay into your cross-border case. Once an U.S. court formally recognizes your case, the broad stay legally stops the following:
- Actions to execute a judgment against your American assets
- Beginning or continuation of civil lawsuits against you inside the country
- Seizure, creation or enforcement of liens on your American property
It is best not to wait for a U.S. judgment or asset seizure to file a Chapter 15 petition. You may also want to coordinate your U.S. filing with your home insolvency for effective protection.
Understanding the caveat
Acting promptly when you file is vital because the injunction does not freeze U.S. actions the moment you initiate your petition. Before the stay takes effect, there is a gap period where your assets are vulnerable until a judge grants formal recognition of your case.
During that time, your legal team can ask the court for an emergency temporary stay with limited asset protection while waiting for the recognition hearing. It is only after that court order where the automatic stay becomes active.
The “foreign main” prerequisite
The automatic stay is generally only guaranteed if your home case is recognized as a foreign main proceeding. This means that your Center of Main Interests (COMI) is located there.
Immediately upon full recognition of your case, the automatic stay takes effect on your wealth and property within the United States.
Turning global pressure into structured progress
When facing international financial distress, the automatic stay ensures that your domestic restructuring is not derailed by rogue actions across the Atlantic. A lawyer can help you secure emergency provisional relief to prevent immediate asset grabs while working with your home country’s legal team.