Chapter 15 of the U.S. Bankruptcy Code was enacted in April 2005. It ushered in a new dawn for the recognition of foreign bankruptcy proceedings in the United States. Foreign office holders were given easy access to the debtor-friendly regime of the U.S. Bankruptcy Code, which shields a corporate or individual debtor from the chaotic rush of third-party claims.
In the offshore world, the master/feeder fund structure is common. The ability to liquidate an insolvent fund offshore and use Chapter 15 to shore up its onshore assets for the “foreign main proceeding,” on the basis that the “center of its main interests” (or COMI) is in the offshore jurisdiction, offers a stable environment in which to manage the liquidation process.
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