When 9fin wrote about the rise of Chapter 15 as an enforcement mechanism for foreign restructurings, the US courts had signalled unease about engineered COMI and jurisdictional arbitrage. The comments would appear in the occasional dicta of a decision, but the recent opinion in New Fortress Energy has now provided a framework for scrutinizing petitions for Chapter 15 recognition.
Chapter 15 recognition has been contested many times. But NFE was not a case in which a creditor had actually run a challenge. With concern for foreign rules that "push the boundaries of available relief in a Chapter 11 case," Judge Glenn set out his analytical framework to help future courts grapple with the risk that debtors' expansive foreign relief will come at the expense of certain creditors.
Judge Glenn's 57-page memorandum opinion is effectively an objector's playbook written before anyone has fully played the game — the specific game in the NFE opinion being a US-connected issuer using a newly incorporated English affiliate to restructure New York-law debt via a UK restructuring plan. Moving forward, bankruptcy courts facing Chapter 15 petitions can turn to Judge Glenn's framework, framed within the broader advice to be wary of "bankruptcy tourism."
This article...
