Chapter 15 is a special bankruptcy code for international entities and parties. Introduced to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Chapter 15 applies to filings where persons of interest have debts and creditors in more than one country. It is designed to promote fair proceedings for debtors and creditors and cooperation between U.S. and foreign courts.
By filing for bankruptcy under the Chapter 15 code, a foreign entity may seek relief from U.S. bankruptcy courts and other state or federal courts through an approved foreign representative. To secure such a representative, the debtor must undergo a foreign bankruptcy proceeding and provide the necessary documents and petition. Relief provided by U.S. courts under Chapter 15 bankruptcy also gives foreign businesses the chance to revive and avoid permanent closure, which is another of the chapter’s primary purposes.
In order to reduce the risk for debtors, creditors, and stakeholders of international companies, several other countries adopted the same or similar laws, including Canada, Japan, and Mexico.