Chapter 15 Practice: U.S. Venue Selection Clause Does Not Trump Distribution Scheme in Italian Restructuring Plan

The U.S. Bankruptcy Court for the District of Delaware recently considered these requirements in In re Energy Coal S.p.A., 2018 WL 276139 (Bankr. D. Del. Jan. 2, 2018). The court ruled that choice of law and venue selection provisions in a contract between a U.S. creditor and Italian debtor did not trump the debt restructuring plan approved by an Italian bankruptcy court. In short, the court determined that, although the parties reached a compromise allowing the creditors to liquidate their claims in a U.S. court, it is “appropriate to expect U.S. creditors to file and litigate their claims” in non-U.S. bankruptcy cases, just as U.S. bankruptcy courts expect non-U.S. creditors to do in U.S. bankruptcy cases.

Procedures and Relief under Chapter 15

Under Chapter 15, the “foreign representative” of a non-U.S. debtor may file a petition in a U.S. bankruptcy court seeking “recognition” of a “foreign proceeding.” A “foreign representative” is defined in §101(24) of the Bankruptcy Code as “a person or body, including a person or body appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor's assets or affairs or to act as a representative of such foreign proceeding.”