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Foreign companies with minimal US presence may find it easier than anticipated to access US bankruptcy courts. Recent case law reveals that courts are interpreting eligibility requirements broadly, recognizing even nominal US-based property as sufficient grounds for relief under the Bankruptcy Code.
Foreign companies seeking access to US bankruptcy courts may face a lower threshold than many expect.
In a recent article published in International Corporate Rescue, Kyle Ortiz, Megan Wasson, and Ayla Lima examine a growing body of Chapter 11 and Chapter 15 case law addressing what it takes for a foreign company with little or no US operational presence to obtain relief under the US Bankruptcy Code.
The authors explore how courts have interpreted the Bankruptcy Code's requirement that a debtor have "property in the United States," highlighting decisions that recognize even minimal US-based property, including attorney retainers held in US bank accounts, as sufficient to establish eligibility. The article also analyzes recent rulings addressing venue selection, strategic asset placement, and the developing split among US courts regarding whether these eligibility requirements apply in Chapter 15 recognition proceedings.
Taken together, the cases reflect a consistent judicial reluctance to impose qualitative, quantitative, or timing-based limitations not found in the statutory text, reinforcing the accessibility of the US restructuring framework for foreign debtors.
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