Vol 15 (2018) - Issue 6

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Innovative Use of Chapter 15 of US Bankruptcy Code Helps Brazilian Debtors Reorganise (In re Oi, S.A., 587 BR 253 (Bankr. SDNY))

Introduction
The US Bankruptcy Court of the Southern District of New York (the 'Bankruptcy Court') recently entered an order in a chapter 15 bankruptcy case granting recognition to a restructuring plan approved by a Brazilian court presiding over the restructuring proceedings of Oi S.A. and certain affiliates. Relying on sections 1507 and 1521(a) of the US Bankruptcy Code, and principles of international comity, the Bankruptcy Court concluded that the Brazilian plan provided for just treatment of all stakeholders, protected claim holders in the United States from prejudice and inconvenience, protected against voidable or preferential transfers of the debtors’ property, and provided a distribution scheme substantially in accordance with the Bankruptcy Code. Recognition by the Bankruptcy Court was critical to implementing the Brazilian plan as it enabled the debtors to issue securities in the US utilising the exemption to registration provided by Bankruptcy Code section 1145. Although this section of the Bankruptcy Code typically applies only in chapter 11 cases, chapter 15 affords the flexibility to utilise provisions like section 1145 to grant 'appropriate relief'. The Oi case thus represents an excellent example of how an ancillary court – here, the Bankruptcy Court – can play a vital role in implementing a cross-border restructuring.