Difference between Chapter 15 foreign main and nonmain proceeding
A foreign “main” insolvency proceeding is a foreign proceeding pending in
the country where the debtor has the center of its main interests. The debtor’s registered office or habitual residence (domicile) is presumed to be the center of the debtor’s main interests. A foreign “nonmain” proceeding is a foreign proceeding pending in a country where the debtor maintains an establishment (persistent economic activity).
The distinction is an important one as recognition of a foreign main proceeding provides for certain rights that are not applicable to a foreign nonmain proceeding.
If the U.S. Bankruptcy court recognizes the foreign insolvency proceeding as the main proceeding, the stay of all collection efforts, foreclosures, and lawsuits against the debtor and his or her assets is triggered automatically. In addition, any sales outside the ordinary course need to be approved by the Bankruptcy Court, certain transfers of assets can be avoided and the foreign representative has additional powers. If the foreign proceeding is recognized as a nonmain proceeding, the foreign representative can request powers such as staying collection efforts against debtor’s assets, preventing debtor to transfer his or her assets, interview witnesses, and administering debtor’s assets located in the United States.
Please note that this article does not constitute legal advice. We simplified the law to provide general information about Chapter 15 bankruptcy. If you would like to discuss if Chapter 15 bankruptcy will help in your situation, schedule a consultation with an experienced bankruptcy lawyer in Phoenix at www.calendly.com/irena-3 today or call our office at 480-425-2009.