The Split in the Application of Section 109(a) Requirements to Chapter 15 Cases

(Excerpt) Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”) governs recognition of foreign bankruptcy, insolvency, and debt-restructuring proceedings. Section 1517 of the Bankruptcy Code generally sets forth the requirements for recognition. In addition to those requirements, some courts have held that a foreign debtor must satisfy traditional debtor eligibility requirements for a debtor’s foreign proceeding to be recognized under Chapter 15. Other courts disagree and hold that a foreign debtor does not need to meet the traditional requirements for its foreign proceeding to be recognized under Chapter 15. This memorandum explores the applicability of the traditional debtor eligibility requirements set forth in section 109(a) of the Bankruptcy Code to Chapter 15 cases. Part I describes section 1517 and section 109(a). Part II examines the cases that apply section 109(a) in their Chapter 15 cross-border insolvency proceedings. Part III explores the cases that hold section 109(a) inapplicable to Chapter 15 foreign insolvency issues