Vol 17 (2020) - Issue 4

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Chapter 15: Appointing a Foreign Representative after the Conclusion of the Foreign Proceeding is not a Bar to Recognition

Synopsis
In another decision broadly interpreting certain requirements of chapter 15, the United States Bankruptcy Court for the Southern District of New York clarified certain requirements for chapter 15 recognition. After the debtor, Indonesian telecommunications company PT Bakrie Telecom Tbk ('BTEL') filed its chapter 15 case, certain objecting noteholders (the 'Objecting Noteholders') filed a motion for summary judgment seeking to deny recognition of its Indonesian proceeding (the 'PKPU Proceeding'), alleging that BTEL could not satisfy three requirements for recognition: (1) the property requirement of Bankruptcy Code §109(a); (2) the appointment of a foreign representative under §101(24) and §115(a); and (3) the requirement that the proceeding be 'collective' under §101(23) and 'not be manifestly contrary to U.S. public policy' under §1506. The court declined to grant summary judgment on all three grounds.

Notably, the court concluded the foreign representative requirement was met notwithstanding the fact that the foreign representative was appointed three years after the PKPU Proceeding had closed. The decision signals that a delay in seeking chapter 15 relief, including through the appointment of a foreign representative after the conclusion of the foreign proceeding, may not be fatal for chapter 15 recognition – but it may matter if anything related to the foreign proceeding is still pending.