In our global marketplace, a failed company may have business activities, assets, creditors and potential recovery targets spread among multiple jurisdictions. Many of these distressed foreign companies, having instituted or been placed into insolvency proceedings in home jurisdictions, come to the United States to protect or pursue targeted recovery of their local assets through an ancillary Chapter 15 proceeding. For strategic reasons, some companies choose to avoid the insolvency schemes available in their home jurisdictions and instead attempt to reorganize in the U.S. directly by filing for Chapter 11.
Though Chapter 15 and Chapter 11 are both important tools, they serve different purposes. Chapter 11 is a primary proceeding used to help a company reorganize its debt while avoiding a shutdown of the business. Chapter 15 is a secondary proceeding that allows debtors-in-possession (DIP) and liquidators who have already initiated proceedings in a foreign jurisdiction to gain access to the U.S. court system in furtherance of their primary foreign reorganization or liquidation proceedings.
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