If you're a corporate debtor with operations in the United States and abroad, there are several factors you need to consider before filing bankruptcy.
Let's take a look:
- Chapter 15 of the Bankruptcy Code, which was created in 2005, allows U.S. courts to recognize the bankruptcy proceedings of foreign countries. This means that when a corporate debtor who has multinational operations files bankruptcy in a foreign country, that foreign bankruptcy trustee can make sure that a creditor does not seize American assets while the debtor's foreign assets are protected. In other words, the debtor would be able to file bankruptcy in a foreign country and still have their American assets protected.
- One of the inconveniences of filing bankruptcy if you have operations globally is that you may need to still file separate bankruptcy filings for each country in which you operate depending on the agreements that the foreign nation has with U.S. bankruptcy courts. You will need to work with a bankruptcy attorney who is experienced in helping you through the process of coordinating your domestic bankruptcy filing with your foreign bankruptcy filings.
- The U.S. and Canada currently have an arrangement that makes filing bankruptcy in the two countries more seamless than other global locations. The Companies' Creditors Arrangement Act in Canada and Chapter 11 bankruptcy in the United States are routinely coordinated, resulting in an international bankruptcy reorganization process between the two countries which is a bit more unified.
Currently legislators and bankruptcy experts are seeking out ways to create an international bankruptcy process that could make it easier for multinational corporations to file Chapter 11 bankruptcy in a more seamless way despite how many countries they operate in. Right now, bankruptcy cooperation agreements are being hammered out on a country by country basis.