Crossing the Line in Cross-Border Insolvencies

Abstract

This paper explores misconduct by a foreign representative during a chapter 15 cross-border insolvency proceeding — and how courts should respond. The paper begins by discussing when a foreign representative's behavior may warrant judicial action. Then, after explaining how many potential sanctions (some tried and suggested by courts) are inappropriate, the paper proposes a novel solution.

If a foreign representative commits sufficient misconduct, the bankruptcy court should request the foreign court to replace the representative within 28 days. If the foreign court does not comply, the bankruptcy court should dismiss the chapter 15 proceeding. The paper also analyzes legal issues related to the solution's implementation, such as judicial authority, burden of proof, timing, and interim relief.

Keywords: bankruptcy, insolvency, chapter 15, cross border, international, foreign representative, misconduct, sanctions