Although I’ve practiced bankruptcy law for more than twenty years, when I first heard about Chapter 15, I thought it must be shorthand for another serial bankruptcy filing combination.  After all, I’d quickly adapted to Chapter 20 in which a Chapter 13 proceeding is followed by a Chapter 7 and I’m certainly familar with Chapter 22 consisting of successive Chapter 11 reorganization proceedings. 

But Chapter 15?  For the uninitiated, Chapter 15 was added to the Bankruptcy Code as part of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act which is perhaps better known for its credit card industry inspired “means testing” provisions restricting consumer use of Chapter 7.  Chapter 15 addresses cross-border insolvencies and offers a way for debtors involved in foreign insolvency proceedings to administer assets found in the U.S.  In plain English, it deals with situations in which assets, creditors, or affiliates of the debtor exist in more than one country.  According to 11 U.S.C. 1501, Chapter 15 of the Bankruptcy Code is designed to

  • promote cooperation between the United States courts and parties in interest and the courts and other competent authorities of foreign countries involved in cross-border insolvency cases; 
  • establish greater legal certainty for trade and investment;
  • provide for the fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested entities, including the debtor;
  • afford protection and maximization of the value of the debtor’s assets; and
  • facilitate the rescue of financially troubled businesses, thereby protecting investment and preserving employment.

>>>>>>>>>   Chapter 15 of the Bankruptcy Code is still not well known, but there are some useful resources available to anyone wanting to know more.

There is a good overview of the statutory provisions making up Chapter 15 on the U.S. Courts website.

The Canadian law firm of Cassels offers a Canadian view of the important provisions of Chapter 15 and how it addresses issues of particular concern to domestic creditors.

Bob Eisenbach of the In the (Red) business bankruptcy blog provides a terrific summary of the major substantive aspects of Chapter 15 and how it works on a practical level.  Among other useful information, Bob explains that if a U.S. Bankruptcy Court “recognizes’ a “main” insolvency proceeding pending outside the United States, the foreign debtor receives important protections such as the application of the automatic stay to U.S. creditors and assets without the necessity of a separate U.S. filing.  There are also other provisions giving U.S. bankruptcy courts discretion to grant other appropriate relief. 

For those wanting to follow Chapter 15 cases in detail, Chapter15.com is an invaluable resource.  In addition to various commentary on the pertinent law, Chapter15.com provides summary information about cases and related foreign proceedings, as well links to the dockets and pleadings for Chapter 15 cases filed throughout the U.S.  The website’s database is searchable in a variety of ways, including by court, debtor, filing date, and industry.

While many cases are filed in New York as one might expect, at least one case has been filed in every circuit according to Chapter15.com.  In Ohio, the following cases involving Canadian insolvencies have been filed, including a recent filing here in the Southern District of Ohio:

  • In the Northern  District of Ohio >>>  Kirshan K. Sudan, Case No. 07-11166, Judge Harris 
  • In the Southern District of Ohio >>>  ROL Manufacturing (Canada) Ltd., Case No. 08-31022, Judge Walter presiding
    • Marwil, Inc., Case No. 08-31029, Judge Walter presiding
    • ROL Holdings USA, Inc., Case No. 08-31025, Judge Walter presiding
    • ROL Holdings (Canada) Inc., Case No. 08-31024, Judge Walter presiding
    • ROL Manufacturing of America, Inc. Case No. 08-31027, Judge Walter presiding