Vol 23 (2026) - Issue 2

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Chapter 15 Recognition is Not a ‘Rubber Stamp’: Texas Bankruptcy Court Denies Recognition of Two Foreign Proceedings

Synopsis
It has been over twenty years since the implementation of the UNCITRAL Model Law on Cross-Border Insolvency in the United States with the adoption of
chapter 15 of the United States ('US') Bankruptcy Code (the 'Bankruptcy Code'). There has been much case law filling the gaps and while US bankruptcy courts have generally shown significant deference to foreign proceedings, chapter 15 recognition is not a 'rubber stamp' exercise and courts continue to engage in due analysis before recognising foreign proceedings and granting related relief.
In two recent decisions, the United States Bankruptcy Court for the Southern District of Texas (the 'Bankruptcy Court') reaffirmed such approach and denied recognition of a Hong Kong and a Maltese proceeding on the following bases:
In keeping with the Second Circuit – but not the Eleventh Circuit – the Bankruptcy Court held that the requirement of Bankruptcy Code section 109 that the debtor hold a domicile, residence, place of business or property in the US applies in chapter 15, and (i) an attorney retainer deposited nine months after the chapter 15 petition was filed and (ii) potential claims involving assets in foreign jurisdictions and with alleged conduct
occurring nearly 25 years ago failed to satisfy such requirement;
Recognition of a foreign proceeding requires such proceeding to be pending either where the debtor has its center of main interest ('COMI') for a foreign main proceeding, or where the debtor has its establishment for a foreign nonmain proceeding.
In Siu-Fung Ceramics, the Hong Kong personal bankruptcy of the company's former chairman was neither a foreign main or foreign nonmain proceeding where he had resided in the US for years before the chapter 15 petition was filed;
In Geden, the foreign representative's mere recordkeeping and lack of any meaningful liquidation activities did not suffice for either COMI or an establishment.