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Chapter 15 Bankruptcy

Chapter 15 Bankruptcy

What Is Chapter 15 Bankruptcy?

Chapter 15 is a section in the U.S. Bankruptcy Code that was added in 2005 to accommodate cooperation between U.S. courts and foreign courts when foreign bankruptcy procedures address U.S. financial interests.

The section was included response to a United Nations recommendation for cooperation among nations on what it calls "cross-border insolvency."

Grasping Chapter 15 Bankruptcy

The primary goal of Chapter 15 bankruptcy is to advance cooperation among U.S. courts, their named representatives, and foreign courts and to make legal procedures of international bankruptcies more unsurprising and fair for account holders and creditors.

Thusly, Chapter 15 spotlights on jurisdiction. It additionally attempts to safeguard the value of the account holder's assets and, whenever the situation allows, financially salvage a wiped out business.

Chapter 15 permits a representative in a corporate bankruptcy case that has been documented outside the United States (otherwise called a "cross-border insolvency") to get access to the U.S. court system. This is expected to give an efficient and presence of mind mechanism for tending to bankruptcies that include borrowers, creditors, and assets associated with more than one country. The purpose of Chapter 15 is illustrated in the accompanying objectives listed in Title 11, Chapter 15, Section 1501 of the U.S. Code:

  • Advancing cooperation among U.S. courts and parties of interest and the courts of different countries associated with cross-border bankruptcies
  • Laying out a better legal foundation for cross-border investment and trade
  • Accommodating better administration of cross-border bankruptcies that safeguards the interests, everything being equal,
  • Protecting the value of the indebted person's assets
  • Helping financially troubled companies


The number of countries that have adopted their own form of Chapter 15, in view of the United Nations Commission on International Trade Law's "Model Law on International Commercial Arbitration."

The Purpose of Chapter 15

The purpose of Chapter 15, and the Model Law on which it is based, is to give effective mechanisms to dealing with insolvency cases including indebted individuals, assets, petitioners, and different parties of interest including more than one country.

This universally useful is realized through five objectives determined in the statute:

(1) to advance cooperation between the United States courts and parties of interest and the courts and other able specialists of foreign countries associated with cross-border insolvency cases;

(2) to lay out greater legal certainty for trade and investment;

(3) to accommodate the fair and efficient administration of cross-border bankruptcies that safeguards the interests of all creditors and other interested substances, including the indebted person;

(4) to bear the cost of protection and maximization of the value of the debt holder's assets; and

(5) to work with the salvage of financially troubled organizations, consequently protecting investment and safeguarding employment.

Chapter 15 works as the principal door of a foreign representative to the federal and state courts of the United States. When recognized, a foreign representative might look for extra relief from the bankruptcy court or from other state and federal courts and is authorized to bring a full (rather than ancillary) bankruptcy case.

Chapter 15 additionally gives foreign creditors the right to participate in U.S. bankruptcy cases and it prohibits discrimination against foreign creditors (with the exception of certain foreign government and tax claims, which might be represented by treaty).

Chapter 15 History

Chapter 15 was added to federal law as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. It depended on the United Nations Commission on International Trade Law's "Model Law on Cross-Border Insolvency."

A total of 48 countries, including Japan, Canada, China, Australia, the United Kingdom, Russia, Germany, Saudi Arabia, and Mexico, have adopted this law to reduce the risk for creditors and partners of international companies.

Formally alluded to as "Chapter 15, Title 11 of the United States Code," Chapter 15 has its beginnings in Section 304 of the U.S. Bankruptcy Code, which was enacted in 1978. Given the rising frequency of liquidations including more than one jurisdiction, Section 304 was revoked in 2005 and supplanted with Chapter 15, which conveys the title of "Ancillary and Other Cross Border Cases."

The Old Chapter 15

From 1978 to 1986, Chapter 15 had an alternate purpose as it connects with the Bankruptcy Code. During that time, Chapter 15 connected with the United States Trustee Program, a U.S. Department of Justice program that regulates the administration of bankruptcy cases and the private trustees that participate in them.

Chapter 15 in this setting filled in as a trial in certain judicial regions to bear the cost of the trustees' powers once held for bankruptcy judges. The changes were adopted and collapsed into the Bankruptcy Code.


  • Chapter 15 is planned to reduce the risk for creditors and partners of foreign companies.
  • Chapter 15 bankruptcy encourages cooperation among U.S. courts, selected representatives, and foreign courts in bankruptcy cases recorded outside the U.S.
  • The U.S. is among 48 nations that adopted comparable measures in view of a United Nations commission's recommendation on international bankruptcy cases.