U.S. Court’s Role in Approving the Sale of U.S. Assets in a Chapter 15 Case

(Excerpt) Chapter 15 cases deal with cross-border insolvency and allow U.S. courts to recognize foreign bankruptcy proceedings and cooperate with foreign courts. Upon recognition of a foreign main proceeding, section 363 of title 11 of the United States Code (the "Bankruptcy Code") will apply to the transfer of U.S. assets. However, the standard for approving a sale under section 363 in a chapter 15 case is not specified. This article analyzes the bankruptcy court decisions on whether chapter 15 requires U.S. courts to conduct their own individual analysis or to defer to the foreign court in approving the sale of U.S. assets under section 363 of the Bankruptcy Code. Part I of this article discusses the principle of comity in chapter 15 and relevant Bankruptcy Code provisions. Part II examines early cases in which U.S. courts determined how much, if at all, they should be promoting comity in chapter 15 cases. Part III reviews the cases in which courts have reaffirmed earlier holdings that U.S. bankruptcy courts must perform their own independent analysis when approving a section 363 sale in a chapter 15 case. Part IV discusses the novel issue of whether U.S. courts must defer to foreign courts to resolve certain issues, such as ownership disputes, before approving a section 363 sale of U.S. assets.