Individuals from around the world have been seeking the American dream for hundreds of years. Whether they are looking for refuge from poverty or violence in war-torn countries, or they want to launch a new business venture, the United States has long been viewed as the pre-eminent place to do it—a land of opportunity where the pursuit of happiness is considered an "unalienable right," and virtually anything is possible.

Thomas Jefferson famously wrote in the Declaration of Independence that "[w]e hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness."

Indeed, the United States has long been a bastion of opportunity for life, liberty, and the pursuit of happiness for its citizens and a beacon to persons all over the world. Immigrants are currently responsible for the formation of a quarter of all new businesses in the United States, according to immigrationimpact.com. "Overall, nearly one-in-five businesses nationwide are owned by immigrants, although this share rises to roughly one-third in California and the District of Columbia, and more than a quarter in New York, New Jersey, and Florida," according to the website. "Perhaps the most well-known examples of immigrant entrepreneurs in the country is Silicon Valley, California, where more than half of all firm founders are immigrants."

Forbes has reported that the United States is home to 45 foreign-born billionaires who have taken the American dream to a whole new level, including Sergey Brin of Google (Russia), business magnate George Soros (Hungary) and Tesla and SpaceX's Elon Musk (South Africa). Yet, no matter what the size of the businesses, the United States provides a plethora of examples of success but also, unfortunately, failure.

Chasing the American Dream

A range of opportunities exist for immigrant entrepreneurs, including incentives from the Department of Homeland Security (DHS), the U.S. Citizenship and Immigration Services (USCIS) and the U.S. Small Business Administration (SBA), among others. Under the employment-based fifth preference immigrant investor classification (EB-5 program), for example, nonresident foreign nationals are eligible to apply for lawful permanent residence in the United States if they make the necessary investment in a commercial enterprise in the United States. The program requires that they must then create or, in certain circumstances, preserve, 10 full-time jobs for qualified U.S. workers, according to the Department of Homeland Security.

The intent of the program, which was established by Congress in 1992, was to stimulate economic development throughout American communities via capital investment by foreign entrepreneurs. Under the program, about 10,000 EB-5 visas are allotted per year for eligible investors. Although DHS recently announced sweeping rule changes regarding EB-5 visas that could affect the ability of individuals to invest in the United States, the investor visa program continues to be an avenue in which foreign investors can work toward their American dream. New rules regarding EB-5 visas, which take effect Nov. 21, 2019, include increasing the minimum amount of cash required to secure an EB-5 investor visa from $500,000 to $900,000, among other changes, which could make the American dream more challenging to achieve.

Immigrant entrepreneurs can also utilize other visas, such as E2 and E1 visas, which allow them to enter and work in the United States based on an investment, and H-1B visas for their employees. H-1B visas are temporary non-immigrant visas that allow companies in the United States to employ workers in specialty occupations that require expertise in fields such as computer technology, mathematics, finance, accounting, architecture, engineering, science or medicine—further enabling the opportunities available to non-citizens.

Other opportunities can be found with the SBA, which assists immigrant entrepreneurs with obtaining resources, lenders, assistance and other services. The SBA also backs loans that are issued through their lending partners to decrease interest rates for business owners, and often works with immigrant entrepreneurs to qualify for financing.

Just a Dream

Immigrant-founded companies actually have a higher survival rate than comparable native-born entrepreneurs' businesses, according to immigrationimpact.com. Nonetheless, the American dreams of some immigrant entrepreneurs will inevitably end in bankruptcy. As the rate of immigrant-owned businesses and foreign direct investment continues to increase in the United States, so do the chances of investors seeking bankruptcy protection. In July 2019, for example, nationwide commercial bankruptcy filings increased 4% over the previous year, according to the American Bankruptcy Institute.

"[I]mmigrant entrepreneurs face disadvantages compared to their native-born counterparts. In addition to language and networking barriers, immigrant entrepreneurs face difficulties accessing reasonably priced-credit, tend to over-concentrate in retail and other low-growth industries, and largely operate small enterprises," according to a report titled "Immigrant Entrepreneurs in Bankruptcy," by Rafael Efrat.

In seeking bankruptcy protection in the United States, there is no citizenship requirement, but the U.S. Bankruptcy Code requires that anyone seeking bankruptcy protection reside or have "a domicile, a place of business, or property in the United States, or a municipality …"

The Bankruptcy Code contains provisions that allow companies owned by noncitizen residents to file for Chapter 11 protection. To be eligible to file bankruptcy proceedings, a company must be incorporated in the United States or possess assets or actual operations within the United States, and have a federal individual taxpayer identification number (ITIN).

Filing for bankruptcy protection does not, generally, impact one's citizenship application. However, in the event that there are any criminal convictions, such as possession of credit cards in other peoples' names, false transfers of assets, instances of tax evasion or falsifying of financial records, the entrepreneur's immigration status could be adversely affected.

Other challenges nonresidents may face associated with seeking bankruptcy protection could lead to being deemed a "public charge." A "public charge" clause has been has been an aspect of U.S. immigration law for more than 100 years as grounds for inadmissibility to the country, but recent changes to U.S. immigration policies have expanded the circumstances under which individuals may be denied citizenship and green cards.

"Under the new standards, replacing guidelines in place since 1999, immigration officials will look at factors including the person's age, health, family status, education, skills, assets, resources, role as a caregiver, and whether the person is using or has used in the past three years one or more of a set of public benefits," according to the Migration Policy Institute. The new rules take effect in October 2019.

The change could impact immigrants' decisions regarding utilizing any sort of public benefits, for fear of being deemed a public charge. As for credit, filing for bankruptcy negatively impacts the filer's credit score and makes it difficult to rebuild existing credit or obtain new credit.

Other issues that could affect nonresident entrepreneurs include logistical matters, such as lack of sufficient financial documents, or paperwork from a home country that may be in a language other than English. The same documents that U.S. citizens must provide also apply to immigrants and legal permanent residents—items such as paycheck stubs, proof of debt, any property deeds, titles to vehicles and documents that show proof of insurance, banking information or any wage garnishments. Lack of these items could pose challenges for immigrant entrepreneurs moving forward.

Immigrant entrepreneurs considering bankruptcy protection should seek the advice of an attorney who is knowledgeable in both immigration and bankruptcy matters—and remember that America is a land where second chances are possible. Despite bankruptcy, immigrant entrepreneurs have the same right to a fresh start, the opportunity to start over, to learn from the hard-learned lessons of past failures and focus on charting a successful path forward, keeping alive the American dream.

Robert J. Rock is a partner in the Albany office of Tully Rinckey PLLC as well as a partner in the Dublin office of Tully Rinckey Ireland, and focuses on international and cross-border issues. He can be reached at [email protected].