April 2018 was a very busy month for the interpretation and application of Chapter 15 in the U.S. Bankruptcy Court for the Southern District of New York. During those four weeks, three Bankruptcy Judges issued opinions focusing on various aspects of Chapter 15 of the U.S. Bankruptcy Code. Chapter 15 was enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, pub. L. 109-8, 119 Stat. 23 (April 20, 2005), which repealed prior §304 of the Bankruptcy Code governing the manner in which Bankruptcy Courts in the United States give recognition to foreign insolvency proceedings for purposes of advancing the doctrine of international comity. Chapter 15 was the United States adoption of the Model Law on Cross Border Insolvency promulgated by the United Nations Commission on International Trade Law (UNCITRAL) in 1997. Not surprisingly, each of these cases focuses on the key underpinnings of Chapter 15; as such they each highlight the fundamental objectives of the statute.
In the case of In re Avanti Communications Group PLC, 18-10458, decided by Judge Martin Glenn on April 9, 2018, the court determined that the principle of comity justified enforcing a scheme of arrangement sanctioned by the UK courts that released non-filed affiliates from their guarantees. This decision actually deviates from decisions rendered in the Fifth, Ninth, Tenth and District of Columbia Circuits which prohibit non-debtor releases in Chapter 11 in their entirety; whereas the Second, Fourth, Sixth, Seventh and Eleventh Circuits may allow for non-debtor releases but only in limited circumstances and require consent. However, the court noted that when reviewing third-party releases in the context of a Chapter 15 case, the analysis should be different and should focus on whether the foreign court had the authority to grant such a release.
