If a business has filed bankruptcy in a foreign country, they may also file Chapter 15 bankruptcy in the United States to protect their assets held here. When the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA") was passed, Congress added Chapter 15 bankruptcy so that the system could effectively handle cross-border insolvency issues.
In order for a foreign bankruptcy to gain recognition within the framework of Chapter 15, the following prerequisites must be met:
(1) such foreign proceeding for which recognition is sought is a foreign main proceeding or foreign non-main proceeding within the meaning of section 1502;(2) the foreign representative applying for recognition is a person or body; and(3) the bankruptcy petition meets the requirements of section 1515.Section 1515 imposes several pleading requirements on a Chapter 15 petition for recognition:(a) A foreign representative applies to the bankruptcy court for recognition of a foreign proceeding in which the foreign representative has been appointed by filing a petition for recognition.(b) A petition for recognition shall be accompanied by-(1) a certified copy of the decision commencing such foreign proceeding and appointing the foreign representative;(2) a certificate from the foreign court affirming the existence of such foreign proceeding and of the appointment of the foreign representative; or(3) in the absence of evidence referred to in paragraphs (1) and (2), any other evidence acceptable to the court of the existence of such foreign proceeding and of the appointment of the foreign representative.(c) A petition for recognition shall also be accompanied by a statement identifying all foreign proceedings with respect to the debtor that are known to the foreign representative.(d) The documents referred to in paragraphs (1) and (2) of subsection (b) shall be translated into English. The bankruptcy court may require a translation into English of additional documents.
In essence, Chapter 15 bankruptcy allows the U.S. bankruptcy court to recognize a foreign bankruptcy case and give the foreign entity's U.S. based assets protection from creditors while the case continues. However, under Chapter 15 bankruptcy, if the foreign bankruptcy court grants relief to any of the creditors in the case, the U.S. bankruptcy court will lift the automatic stay as it relates to those particular creditors.