Chapter 15, Title 11, United States Code
Encyclopedia
Chapter 15, Title 11, United States Code is a section of the United States
bankruptcy
code that deals with jurisdiction
. Under Chapter 15 a representative of a corporate bankruptcy (insolvency) proceeding outside the U.S. can obtain access to the United States courts. It allows cooperation between the United States courts and the foreign courts, as well as other authorities of foreign countries involved in cross-border insolvency cases.
proceeding in one country
has a connection to assets or information located in another. Because of the involvement of multiple jurisdictions unique problems arise. In order to solve some of these problems, the United States enacted Section 304 of the US Bankruptcy Code in 1978. Section 304 has recently been repealed and replaced with Chapter 15, titled "Ancillary and Other Cross Border Cases". This section has increased the range of options available in the United States in support of foreign bankruptcy proceedings.
s, orders to turn over assets, the issuance of stays
on pending actions, and orders of other types as circumstances dictate. The ancillary proceeding permitted under Chapter 15 is often a more efficient and less costly alternative to initiating an independent bankruptcy proceeding in the United States. It also avoids the conflicts which could arise between the jurisdictions involved in two independent bankruptcy proceedings initiated in connection with the same debtor.
Chapter 15 also establishes mechanisms for the cooperation between US and foreign courts and representatives regarding proceedings which involve the same debtor
.
The main consideration the US courts will take into account in making this decision is whether the laws of the foreign jurisdiction in connection with which the additional assistance is sought violate the laws or public policy of the United States and if the foreign courts conduct their proceedings according to basic rules of procedural fairness.
Among other factors the US courts will consider how the foreign jurisdiction treats creditor
s, whether it prevents the fraudulent transfer of debtor's property, if US creditors are protected against prejudice in the processing of their claims there, and the manner in which assets are distributed.
The court may conduct an evidentiary hearing, including the hearing of expert testimony, to determine whether the proceedings of the foreign forum are sufficiently just to grant the assistance requested.
, which it established as a trial in some judicial districts to assume roles which formerly belonged to the bankruptcy judge and others, including the selection and oversight of private trustees in individual cases. At that time, the other chapters of the Bankruptcy Code described how bankruptcy worked in districts without United States Trustees; original Chapter 15 modified the text of the other chapters for districts with United States Trustees. Section numbers in original Chapter 15 incorporated the section numbers in the main Code that they modified; for example, section 151325 (a section of original Chapter 15) modified section 1325, which sets the requirements of Chapter 13
plans.
Since the trial program was considered a success, Congress in 1984 ordered the creation of United States Trustees in all states except Alabama
and North Carolina
. Since original Chapter 15 now applied in most states, its text was then merged into the main Bankruptcy Code; separate provisions were enacted for Alabama and North Carolina, where other officers of the court assume the role of the United States Trustee.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
code that deals with jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
. Under Chapter 15 a representative of a corporate bankruptcy (insolvency) proceeding outside the U.S. can obtain access to the United States courts. It allows cooperation between the United States courts and the foreign courts, as well as other authorities of foreign countries involved in cross-border insolvency cases.
Jurisdiction issues
It happens with increasing frequency that a bankruptcyBankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
proceeding in one country
Country
A country is a region legally identified as a distinct entity in political geography. A country may be an independent sovereign state or one that is occupied by another state, as a non-sovereign or formerly sovereign political division, or a geographic region associated with a previously...
has a connection to assets or information located in another. Because of the involvement of multiple jurisdictions unique problems arise. In order to solve some of these problems, the United States enacted Section 304 of the US Bankruptcy Code in 1978. Section 304 has recently been repealed and replaced with Chapter 15, titled "Ancillary and Other Cross Border Cases". This section has increased the range of options available in the United States in support of foreign bankruptcy proceedings.
UNCITRAL
Chapter 15 incorporates the Model Law on Cross Border Insolvency drafted by the United Nations Commission on International Trade Law. The law provides solutions to problems which arise in connection with cross-border bankruptcy, allowing US courts to issue subpoenaSubpoena
A subpoena is a writ by a government agency, most often a court, that has authority to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of subpoena:...
s, orders to turn over assets, the issuance of stays
Court order
A court order is an official proclamation by a judge that defines the legal relationships between the parties to a hearing, a trial, an appeal or other court proceedings. Such ruling requires or authorizes the carrying out of certain steps by one or more parties to a case...
on pending actions, and orders of other types as circumstances dictate. The ancillary proceeding permitted under Chapter 15 is often a more efficient and less costly alternative to initiating an independent bankruptcy proceeding in the United States. It also avoids the conflicts which could arise between the jurisdictions involved in two independent bankruptcy proceedings initiated in connection with the same debtor.
Chapter 15 also establishes mechanisms for the cooperation between US and foreign courts and representatives regarding proceedings which involve the same debtor
Debtor
A debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor...
.
Discretionary assistance
Whether the US courts will extend the "additional assistance" sought in connection with a foreign proceeding under Chapter 15 is a matter of discretion.The main consideration the US courts will take into account in making this decision is whether the laws of the foreign jurisdiction in connection with which the additional assistance is sought violate the laws or public policy of the United States and if the foreign courts conduct their proceedings according to basic rules of procedural fairness.
Among other factors the US courts will consider how the foreign jurisdiction treats creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s, whether it prevents the fraudulent transfer of debtor's property, if US creditors are protected against prejudice in the processing of their claims there, and the manner in which assets are distributed.
The court may conduct an evidentiary hearing, including the hearing of expert testimony, to determine whether the proceedings of the foreign forum are sufficiently just to grant the assistance requested.
Original Chapter 15 (1978-1984)
The original 1978 Bankruptcy Code had a different Chapter 15 dealing with the United States Trustee ProgramUnited States Trustee Program
The United States Trustee Program is an agency of the United States Department of Justice that is responsible for overseeing the administration of bankruptcy cases and private trustees. The applicable federal law is found at 28 U.S.C. § 586 and 11 U.S.C. , et seq.In addition to the twenty-one...
, which it established as a trial in some judicial districts to assume roles which formerly belonged to the bankruptcy judge and others, including the selection and oversight of private trustees in individual cases. At that time, the other chapters of the Bankruptcy Code described how bankruptcy worked in districts without United States Trustees; original Chapter 15 modified the text of the other chapters for districts with United States Trustees. Section numbers in original Chapter 15 incorporated the section numbers in the main Code that they modified; for example, section 151325 (a section of original Chapter 15) modified section 1325, which sets the requirements of Chapter 13
Chapter 13, Title 11, United States Code
Chapter 13 of the United States Bankruptcy Code, codified under Title 11 of the United States Code, governs a form of bankruptcy in the United States that allows individuals to undergo a financial reorganization supervised by a federal bankruptcy court. The goal of Chapter 13 is to enable...
plans.
Since the trial program was considered a success, Congress in 1984 ordered the creation of United States Trustees in all states except Alabama
Alabama
Alabama is a state located in the southeastern region of the United States. It is bordered by Tennessee to the north, Georgia to the east, Florida and the Gulf of Mexico to the south, and Mississippi to the west. Alabama ranks 30th in total land area and ranks second in the size of its inland...
and North Carolina
North Carolina
North Carolina is a state located in the southeastern United States. The state borders South Carolina and Georgia to the south, Tennessee to the west and Virginia to the north. North Carolina contains 100 counties. Its capital is Raleigh, and its largest city is Charlotte...
. Since original Chapter 15 now applied in most states, its text was then merged into the main Bankruptcy Code; separate provisions were enacted for Alabama and North Carolina, where other officers of the court assume the role of the United States Trustee.