Of all the bankruptcy laws in the Bankruptcy Code, those surrounding Chapter 15 cases of cross-border insolvency are the most recent additions to the register. On a domestic front, these new kids on the block, so to speak, do not constitute significant changes for the sake of the average American.
Nonetheless, expanding our view of things, Chapter 15 bankruptcy law is an important symbol of the United States’ affirmation of the global commitment to ensuring the health of public and private enterprises. Moreover, it is one that is respectful of foreign bankruptcy laws and those who officiate them, giving them, within reason, at least equal weight in American bankruptcy courts.
Chapter 15 bankruptcy is based on conventional bankruptcy law, that is, international bankruptcy law established by global coalitions and their conventions. The primary forerunner of Chapter 15 as seen in the United States Code today is the United Nations Commission on International Trade Law (UNCITRAL).
It should be noted that America has its own bankruptcy law precedents that foreshadowed the creation of a separate chapter to handle international bankruptcy cases. Previous to Chapter 15’s formation, the Bankruptcy Reform Act of 1978, Section 304, addressed international bankruptcies that were filed in the U.S. Bankruptcy Court.
As of the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, though, Section 304 became obsolete, and was expressly repealed to make way for Chapter 15. In terms of the practical impacts to United States bankruptcy law affected by the emergence of Chapter 15 bankruptcy, its provisions make sure that international cases surrounding the financial affairs of businesses specifically pertain to matters of insolvency, account for “main” and “non-main” foreign bankruptcy hearings, and allot greater authority to bankruptcy courts abroad to manage businesses brought before them.
