Impact of Cross-Border Court-to-Court Communications on U.S. Creditors' Rights

This article was inspired by "Singapore-Delaware Courts Adopt Cross-Border Insolvency Guidelines,” which appeared in FCIB’s Week in Review in February 2017.

As U.S. businesses have gone global, so have their customers. U.S. companies selling abroad have been confronted with customers that have filed for relief under their country’s insolvency law. If the customer has a business or assets here in the U.S., he or she might then file either a Chapter 11 or Chapter 15 case in a U.S. bankruptcy court.

Unlike a Chapter 11 case, a Chapter 15 case is not necessarily the “main event.” Yet, even in Chapter 15 cases, U.S. judges still have critical roles to play with respect to, among other things, administering a foreign debtor’s U.S. assets and ensuring U.S. creditors’ rights are fairly and adequately protected. One way to protect the interests of U.S. creditors is pursuant to Section 1525 of the Bankruptcy Code, which encourages communication and cooperation among the courts involved in crossborder proceedings and authorizes U.S. courts to communicate directly with foreign courts.