Decision Clarifies Scope of Chapter 15 “Stay” of Non-U.S. Lawsuits

Chapter 15 of the Bankruptcy Code provides for formal “recognition” of a foreign insolvency proceeding and for broad protection of a foreign debtor’s U.S. assets during a debtor’s foreign bankruptcy case. In particular, upon recognition of a foreign debtor’s insolvency proceeding as a “foreign main proceeding,” Chapter 15 provides for application of the U.S. Bankruptcy Code’s “automatic stay” provisions (sections 361 and 362 of the Bankruptcy Code) to the foreign debtor and to its U.S.-based property.