Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistFeaturesBankruptcyLitigation

The Domesticity Barrier to Recognition of a Foreign Proceeding Under Chapter 15

By Brian L. Shaw and Christina M. Sanfelippo
August 01, 2018

This past April, in In re B.C.I. Finances Pty Limited, 583 B.R. 288 (Bankr. S.D.N.Y. 2018), Judge Sean Lane reiterated the low domestic presence threshold (Domesticity) that a foreign representative must meet when it is petitioning for recognition of a foreign proceeding under Chapter 15. While Judge Lane's decision was consistent with a developing body of case law that has generally accepted this low Domesticity threshold, it is significant because it: 1) arises out of the Second Circuit, whose precedent requires that the petition for recognition meets the requirements of both Section 1517 and Section 109(a) of the Bankruptcy Code before it may be granted; and 2) shows that even with the additional Domesticity requirement of Section 109(a), a foreign representative can successfully obtain recognition of a foreign proceeding with only a nominal domestic presence.

In B.C.I. Finances, the foreign representative was held to have met the Domesticity requirement of Section 109(a) because the debtor possessed breach of fiduciary duty claims whose situs was the United States. Similarly, other bankruptcy court decisions have held that cash and investment accounts, account receivables and attorney retainers are sufficient enough to meet the Domesticity requirement set forth in Section 109(a); namely, that the debtor reside or have a domicile, a place of business or property in the United States. 11 U.S.C. §109(a).

Background of Chapter 15

Chapter 15, entitled “Ancillary and Other Cross-Border Cases,” was added to the Bankruptcy Code with the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, replacing former 11 U.S.C. §304 to govern cases of cross-border insolvency. Chapter 15 incorporates the Model Law on Cross-Border Insolvency, which was promulgated by the United Nations Commission on International Trade Law in 1997 to encourage cooperation between the United States and foreign countries with respect to transnational insolvency cases. See, House Report No. 109-31, Pt. 1, 109th Cong., 1st Sess. 105-106 (Apr. 8, 2005), reprinted in 2005 U.S.C.C.A.N. 88, 169.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?

Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

A Lawyer's System for Active Reading Image

Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.

Protecting Innovation in the Cyber World from Patent Trolls Image

With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.