Vol 21 (2024) - Issue 1

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Whether a Person or Entity Qualifies as a ‘Foreign Representative’ in a Chapter 15 Case is a Matter of US Law, not Foreign Law

Synopsis
In Agro Santino, the United States Bankruptcy Court for the Southern District of New York (the 'Court') granted Agro Santino's (the 'Debtor') chapter 15 petition to recognise its Bulgarian bankruptcy proceeding as a foreign main proceeding. The chapter 15 petition was opposed by the Debtor's largest creditor, who argued that the Debtor failed to satisfy its burden under chapter 15 with respect to its 'foreign representative', who was a Bulgarian attorney appointed by the Debtor after the commencement of the Bulgarian proceeding pursuant to a power of attorney issued by the Debtor's sole manager. Specifically, the creditor argued that the Debtor's foreign representative did not qualify as such under Bulgarian law because the Debtor failed to obtain prior approval of the representative's appointment by the Bulgarian bankruptcy trustee.
The Court overruled the objection and recognised the Debtor's authorised representative as a 'foreign representative' under section 101(24) of the United States Bankruptcy Code (the 'Bankruptcy Code'). The Court reiterated the findings of Ad Hoc Group of Vitro Noteholders v Vitro, S.A.B. de C.V. (In re Vitro S.A.B. de CV), 701 F.3d 1031 (5th Cir. 2012) ('Vitro') that the relevant inquiry was not whether a 'foreign representative' was properly appointed under foreign law, but whether it qualified as a 'foreign representative' under US law – namely, whether it satisfied the requirements under chapter 15, where the relevant inquiry is whether the foreign debtor was authorised to administer the reorganisation or the liquidation of the Debtor's assets or affairs (akin to a debtor in possession in the US).