Vol 21 (2024) - Issue 6

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US Courts May Approve Sales of a Foreign Debtor’s US Assets Free and Clear in a Chapter 15 Case, But May Defer to Foreign Courts to Determine Ownership Disputes of Such US Assets

Synopsis
In In re Goli Nutrition Inc. ('Goli Nutrition'), the Bankruptcy Court for the District of Delaware (the 'Bankruptcy Court') discussed important questions related to the treatment of asset sales in chapter 15 cases. First, can a US bankruptcy court approve a reverse vesting transaction that involves the sale of new stock issued by the debtor pursuant to section 363 of the Bankruptcy Code? Second, is an independent approval of the sale of assets located in the US required, even if the foreign court approved the sale? Third, if there is an ownership dispute regarding assets located in the US, should the US court or the foreign court (where the main proceeding is pending) decide such a dispute?