Vol 14 (2017) - Issue 5

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Can Pre-Insolvency Restructurings Be Recognised Under Chapter 15? Abengoa Says Yes

The recognition of foreign proceedings under chapter 15 of the US Bankruptcy Code grants the foreign debtor several protections, including a stay of creditor proceedings against the property of such foreign debtor in the US. But what is a foreign proceeding? In In re Abengoa, S.A., et al., No 16-10754 (KJC) (Bankr. D. Del., Apr. 27, 2016), the United States Bankruptcy Court for the District of Delaware (the 'Bankruptcy Court') held that a judicial confirmation request of a standstill agreement under Spanish law qualified as foreign proceeding and could be recognised under chapter 15. The decision is a positive step towards recognising certain foreign pre-insolvency proceedings and reassures that foreign proceedings need not be identical to US Bankruptcy Code proceedings to be recognised.