What Is Chapter 15 Bankruptcy? (2024)

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David Haynes is a full-time attorney experienced in basic bankruptcy concepts, as well as secured transactions, liens, and lawsuits in bankruptcy court. He currently serves as the senior attorney and privacy officer at the Office of Systems Integration in Sacramento. Over the course of the last decade, he has written about complex bankruptcy topics for various publications, including The Balance and the Loyola Los Angeles Entertainment Law Review. He also provides legal advice relating to complex, sensitive, and high-profile IT contracts.

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Updated on February 3, 2022

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Thomas J. Catalano

Reviewed byThomas J. Catalano

Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018.Thomas' experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning.

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Definition

Chapter 15 bankruptcy is legal filing that allows a foreign debtor to file for bankruptcy in the United States court system. It is used for insolvency cases that involve people or businesses with assets in more than one country.

Key Takeaways

Chapter 15 bankruptcy allows a foreign debtor to file for bankruptcy in the United States.
It is used for insolvency cases that involve people or businesses with assets in more than one country.
Chapter 15's primary objectives are to increase international cooperation and legal certainty for businesses and individuals that hold assets in multiple countries.
A Chapter 15 proceeding is generally the secondary bankruptcy proceeding for the foreign individual or entity, with the main one taking place in a foreign country.

Definition and Example of Chapter 15 Bankruptcy

Chapter 15 bankruptcy allows foreign nationals to file for bankruptcy in the U.S. bankruptcy courts if they have assets, property, or business in multiple countries, including the United States. It was added to the Bankruptcy Code in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act. Chapter 15 is the newest adoption of the Model Law on Cross-Border Insolvency, which was created by the United Nations Commission on International Trade Law ("UNCITRAL") in 1997.

Note

Chapter 15 replaced section 304 of the Bankruptcy Code.

Chapter 15 bankruptcy is found in the United States Code, 11 U.S.C. §15. It has five primary objectives:

Cooperation between the courts and parties of interest in the United States with the courts, parties of interest, and other authorities of foreign countries involved in international insolvency cases.
Increased legal certainty for trade and investment.
Efficient and fair administration of cross-border insolvencies while protecting the interests of all creditors and interested parties, including the debtor.
Protect and maximize the value of the debtor's assets.
Facilitate the rescue of financially troubled businesses to protect investment and preserve employment.

A Chapter 15 proceeding is generally the secondary bankruptcy proceeding for the foreign individual or entity. The main proceeding typically takes place in the foreigner's home country.

Note

A foreign company may choose to file a case under Chapter 7 or Chapter 11 of the U.S. Bankruptcy Code, instead of Chapter 15, if itsassets or entanglements with U.S. commerce are sufficiently complex.

How Chapter 15 Bankruptcy Works

A foreign company may choose to file a Chapter 15 proceeding if an insolvency case is pending in another country. When this happens, the petition must prove that the foreign proceeding exists.

After the filing, the bankruptcy court will designate the foreign proceeding as either "foreign main proceeding" or "foreign non-main proceeding," with the difference being that in a non-main proceeding, the debtor does not have its main interests in that country. Upon the recognition of a foreign main proceeding, the automatic stay goes into effect in the United States to protect the assets of the foreign debtor that are within the United States.

Once a foreign entity files for bankruptcy under Chapter 15, the U.S. bankruptcy court can authorize the appointment of a trustee or examiner to act in the other country on behalf of the bankruptcy estate in the United States. Chapter 15 also:

Allows U.S. courts to offer additional aid to foreign representatives when the laws of the foreign country do not violate U.S. laws.
Allows U.S. courts to offer additional assistance to foreign nationals filing bankruptcy cases when the laws of the foreign court may be lacking.
Gives foreign creditors the right to participate in bankruptcy cases in the U.S.
Prevents discrimination against foreign creditors in bankruptcy cases.
Requires notice to foreign creditors in bankruptcy cases filed in the U.S.
Gives foreign creditors the right to file claims in U.S. bankruptcy cases.

The U.S. bankruptcy court is instructed to "cooperate to the maximum extent possible" with foreign courts and entities, so the U.S. court will defer to many actions of the foreign court in Chapter 15 cases. This approach promotes cooperation with foreign nations and courts not only in allowing for a foreign entity to protect its rights in the United Statesbut also to avoid excessive interference in aforeign country's affairs.

Note

Chapter 15 is one of the least-used types of bankruptcy in the United States system. Chapter 9, bankruptcy for municipalities, is also infrequently used.

Notable Happenings

Since it was created, few cases have been filed under Chapter 15 each year.

Chapter 15 Bankruptcy Cases Filed in the U.S.
Year	# of Cases
2005	6*
2006	75
2007	42
2008	76
2009	136
2010	124
2011	58
2012	121
2013	88
2014	58
2015	91
2016	179
2017	86
2018	100
2019	130
2020	236

As of the first quarter of 2021, the highest number of Chapter 15 bankruptcy cases have been filed in 2009, 2016, 2019, and 2020.

During the spring of 2020, a number of foreign companies filed for Chapter 15 bankruptcy, including:

French media company Technicolor SA
Canadian tea distributor DAVIDsTEA
Australian airline Virgin Australia
Canadian circus company Cirque du Soleil Entertainment Group

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Sources

The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.

United States Courts. "Chapter 15 - Bankruptcy Basics: Ancillary and Other Cross-Border Cases." Accessed Feb. 3, 2022.
GovInfo.gov. "US Code 2010: Title 11 - Bankruptcy: Chapter 15 - Ancillary and Other Cross-Boarder Cases." Accessed Feb. 3, 2022.
GovInfo.gov. "US Code 2010: Title 11 - Bankruptcy: Chapter 15 - Ancillary and Other Cross-Boarder Cases: Subchapter IV - Cooperate with Foreign Courts and Foreign Representatives." Accessed Feb. 3, 2022.
American Bankruptcy Institute. "Chapter 15 Quarterly Filings (2005- Present) Ancillary and Other Cross-Border Cases." Accessed Feb. 3, 2022.
Animation World Network. "Technicolor Files for Chapter 15 in US Citing COVID-19 Impact." Accessed Feb. 3, 2022.
DAVIDsTEA. "DAVIDsTEA to Implement Restructuring Plan Under Companies’ Creditors Arrangement Act." Accessed Feb. 3, 2022.
Deloitte. "Virgin Australia Holdings Limited and Subsidiaries Chapter 15 information (United States)." Accessed Feb. 3, 2022.
Cirque du Soleil. "Press Releases: Cirque du Soleil Entertainment Group Announces Comprehensive Plan to Restart Business." Accessed Feb. 3, 2022.

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FAQs

What Is Chapter 15 Bankruptcy? ›

The purpose of Chapter 15, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country.

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What is a Chapter 15 discharge? ›

Chapter 15

hom*osexual conduct is grounds for separation from the Army under the criteria set forth in paragraph 15-3.

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What is the difference between Chapter 11 and Chapter 15? ›

In contrast to a case under Chapter 11 of the Bankruptcy Code, which centralizes a company's debt adjustment efforts in the U.S. and provides for expansive oversight and supervision by a U.S. court, a Chapter 15 recognition proceeding is an ancillary proceeding in which the U.S. court acknowledges the foreign ...

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What is the main goal of bankruptcy? ›

The goals of bankruptcy are to (1) convert the assets of the debtor into cash and distribute it among creditors fairly and (2) give the debtor a fresh start, with such exemptions (property the debtor can keep) and rights as the bankruptcy laws permit.

See Details ›

Why are bankruptcy chapters odd? ›

While the reason for odd numbered chapters is to allow for expansion of the Bankruptcy Code, when a new chapter was added in 2005 by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), it was added at the end, as the next odd numbered chapter – Chapter 15!

What is the Chapter 15 process? ›

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What is a Chapter 14 discharge? ›

This discharge may be given to a soldier upon the following: (1) The soldier's conduct exhibits a pattern of minor military disciplinary. infractions; or. (2) The soldier's conduct exhibits a pattern of discreditable involvement with. civilian authorities or a pattern of conduct prejudicial to good order and discipline.

How does Chapter 15 work? ›

A Chapter 15 case is an ancillary case filed in the United States to serve as a companion to a foreign insolvency proceeding and is initiated by requesting a U.S. bankruptcy court to recognize a foreign proceeding. Without a foreign proceeding, a prospective debtor may not file Chapter 15.

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Do you lose assets in Chapter 11? ›

Plan proposal. The plan of reorganization is at the heart of Chapter 11 bankruptcy. The plan for reorganization allows a business or an individual to keep their assets while repaying some of their debts over time.

Read On ›

What is the downside to filing Chapter 11? ›

Some Loss of Control Over Business Operations

This generally means that activities like selling, purchasing, refinancing, or leasing major capital assets require court approval.

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What can you not do after filing bankruptcy? ›

For example, you can't discharge debts related to recent taxes, alimony, child support, and court orders. You may also not be allowed to keep certain assets, credit cards, or bank accounts, nor can you borrow money without court approval.

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How do you benefit from bankruptcy? ›

BENEFITS OF BANKRUPTCY

No longer be considered a debtor, as bankruptcy is your way out of debt.
Stop garnishments, sheriff sales, and all other collection activities.
Stop creditors who have been harassing you.
Eliminate most, if not all, of a person's unsecured debt including medical bills.

More items...

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Why I should file for bankruptcy? ›

Bankruptcy helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect financially troubled businesses.

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Which chapter is best for bankruptcy? ›

Chapter 7 works very well for many people, especially those who own little property, have predominately credit card balances, medical bills, personal loans, and other debts that get wiped out in bankruptcy.

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Why is Chapter 13 bad? ›

Chapter 13 Bankruptcy is Bad For Your Finances

In addition, you have lost the protection that bankruptcy provides, you've paid filing and court fees and owe the attorney. And your credit score has taken a hit for the next seven years.

Why is Chapter 7 bad? ›

Your credit score might take a hit. Some debts can't be erased in Chapter 7. If you have non-exempt property, you might lose it. Co-signers won't be protected.

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What is the purpose of Chapter 15? ›

The purpose of Chapter 15, and the Model Law on which it is based, is to provide effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country.

View Details ›

What is Chapter 15 military? ›

CHAPTER 15 —MILITARY SUPPORT FOR CIVILIAN LAW ENFORCEMENT AGENCIES. Sec. 271. Use of information collected during military operations.

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What is a Chapter 15 case? ›

Chapter 15 – This chapter of the bankruptcy code allows for the recognition in the U.S. of foreign bankruptcy proceedings and access to domestic judicial proceedings by foreign representatives. Find detailed information for all chapters of bankruptcy on the U.S. Courts Bankruptcy Basics Web page.

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What does discharge mean after bankruptcies? ›

What is a discharge in bankruptcy? A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged.

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