This note explores the development of courts’ refusal to extend comity to foreign representatives who have filed a proceeding under chapter 15 of the U.S. Bankruptcy Code. Congress adopted chapter 15 as part of a comprehensive 2005 bankruptcy reform. It allows foreign entities to receive protection under the U.S. Bankruptcy Code. In most cases, foreign representatives who file a chapter 15 proceeding are involved with ancillary insolvency proceedings outside the United States. There is often a question of how or if a U.S. court overseeing the chapter 15 proceeding will defer to a judgment or process within the foreign ancillary proceeding. In most cases, the court extends comity to respect international cooperation and grants the foreign representative their preferred relief.
However, as chapter 15 proceedings have exploded, courts have encountered compelling reasons to refuse comity to foreign representatives. As the number of chapter 15 proceedings increases, diligent chapter 15 litigants must improve their strategy by understanding when and why a court may refuse to grant comity. This note discusses the issue in two parts. First, it covers the development of transnational insolvency law within the United States, arguing that clarity has remained a central theme throughout. Second, it examines all cases from January 1, 2016-November 30, 2021, in which courts have refused to grant comity to foreign representatives who have filed chapter 15 proceedings. Ultimately, this analysis of recent cases will show that by articulating guiding principles for why and when a court will refuse to extend comity, courts have utilized the comity consideration as an opportunity to provide clarity within this evolving area of law.
Clarity About Comity: How Courts Have Attempted Greater Guidance for Chapter 15 Litigants,
Nw. J. Int'l L. & Bus.