Chapter 15 – entitled Ancillary and Other Cross-Border Cases, is the United States domestic adoption of the Model Law on Cross-Border Insolvency promulgated by the United Nations Commission on International Trade Law (“UNCITRAL”) in 1997. The purpose behind this Chapter, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants and other parties-in-interest involving more than one country.
Generally, a Chapter 15 case is ancillary to a primary proceeding brought in another country – typically the debtor’s home country. As an alternative, the debtor or a creditor may commence a full Chapter 7 or Chapter 11 case in the United States if the assets in the United States are sufficiently complex to merit a full-blown domestic bankruptcy case. In addition, under Chapter 15, a United States Court may authorize a bankruptcy trustee or other entity (including an examiner) to act in a foreign country on behalf of a United States bankruptcy estate.
Equally important, Chapter 15 gives “foreign creditors” the same rights as “domestic creditors” to commence and participate in United States bankruptcy cases, and “mandates nondiscriminatory” treatment for them. This Chapter also requires notice to “foreign creditors” concerning a United States bankruptcy case, including notice of the right to file claims.
To this date, the UNCITRAL Model Law has been adopted (with certain variations) in Mexico, Canada, Japan, Chile, Israel, the United Kingdom, Australia, South Korea, Colombia, Singapore, Greece, the British Virgin Islands and several other countries.