Chapter 15 Bankruptcy

Chapter 15 is a new chapter added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It replaces section 304 of the Bankruptcy Code. The new chapter was meant to compliment the Model Law on Cross-Border Insolvency (UNCITRAL) enacted by the United Nations in 1997.

Chapter 15, per Bankruptcy Code, is designed to meet the following objectives:

1. Promote cooperation between the U.S. courts and parties of interest and the courts of foreign countries involved in cross-border insolvency cases.
2. Establish greater legal certainty for trade and investment.
3. Provide for fair and efficient administration of cross-border insolvencies that protects the interests of all creditors and other interested parties.
4. Afford protection and maximization of the value of the debtor’s assets.
5. Facilitate the rescue of financially troubled businesses, to protect investments and preserve employment.

Usually, a Chapter 15 case is ancillary to a primary proceeding started in another country, typically the debtor’s home country. As an alternative, the debtor can file a Chapter 7 or Chapter 11 in the U.S. if the assets in the U.S. meet the requirements necessary to file.

With a Chapter 15 the bankruptcy court may authorize a trustee to act in a foreign country on behalf of the U.S. Also, it gives foreign creditors the right to participate in U.S. bankruptcies cases as well as prohibits discrimination against foreign creditors. The UNCITRAL Model Law has also been adopted in Canada, Mexico, Japan and several other countries. It is pending in the United Kingdom and Australia.

Margaret Norton, a Personal Life Coach/Writer/Speaker, resides in St. Peters, Mo.

April 13th, 2009 by admin | Posted in Business | (0)