Journal of
Corporate
Renewal
May
2014
Nava Hazan is a partner in the Squire Sanders (US)
LLP Restructuring & Insolvency practice group
and is resident in the New York office. Her practice
involves the representation of foreign liquidators,
administrators, and debtors in cross border
proceedings, both in and out of court, including
the filing of Chapter 15 cases. She also represents
debtors, secured and unsecured creditors, and
creditors’ committees in Chapter 11 cases. She is
admitted to practice both in New York and Paris.
The author thanks Derek Judd, an associate with
Squire Sanders for his assistance in writing this article.
code sections to provide appropriate
relief. In In re AJW Offshore Ltd., 488
B.R. 551 (Bankr. E.D.N. Y. 2013). The
Bankruptcy Court found it had authority
in a Chapter 15 case to order the turnover
of debtor property under Section 542
of the Bankruptcy Code. The court
required that the turnover order apply
only to assets located in the U.S. and
include appropriate conditions to protect
creditors and other parties in interest.
Application of other code sections
may be mandatory. For example,
in Jaffe v. Samsung Electronics Co.
Ltd., 737 F.3d 14 (4th Cir. 2013), the
4th Circuit upheld the Bankruptcy
Court’s mandatory application of the
protections in Section 365(n) of the
Bankruptcy Code to licensees of U.S.
intellectual property as part of the
protection offered under Chapter 15.
The enforceability in Chapter 15 of
certain third-party release provisions in
a foreign plan of reorganization, which
remains an open question in most
jurisdictions, was at issue in In re Sino-Forest Corp., 501 B.R. 655 (Bankr. S.D.N. Y.
2013). In that case, certain third-party
releases of the debtor’s accountants had
been approved as part of the debtor's
Canadian insolvency proceeding.
The Bankruptcy Court determined
that through a Chapter 15 case, such
releases were enforceable in the U.S.
The court distinguished the case of
In re Vitro S.A.B. de CV, 701 F.3d 1031
(5th Cir. 2012), where certain third-party releases approved in Mexico
were not honored in the U.S. because
the result of such releases, among
other things, would have resulted in
violation of the absolute priority rule.
Extensive Discretion
From a foreign representative's point of
view, Chapter 15 provides a very flexible
and efficient way of obtaining relief
from the U.S. Bankruptcy Courts to
preserve the integrity of a debtor’ estate
that spans borders. Once a Bankruptcy
Court recognizes a foreign proceeding
as a main proceeding, or even a non-
main proceeding, the bankruptcy
judge has extensive discretion under
Chapter 15 to provide appropriate relief
and assist the foreign representative in
managing a debtor’s estate, subject to
the proviso that there is no violation of
U.S. laws or the rights of U.S. citizens. J
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