What does it mean for an entity to be a “debtor” under chapter 15, and does it matter whether the entity is a “debtor” under that chapter of the Bankruptcy Code? While these may seem like strange questions with obvious answers, recent case law challenges those notions.

Section 1502 (1) of the Bankruptcy Code defines the term “debtor,” for purposes of chapter 15, as “an entity that is the subject of a foreign proceeding.” That somewhat circular definition is not expressly in sync with the requirements to qualify as a “debtor” under § 109 (a) of the Bankruptcy Code — that is, whether the entity has a domicile, place of business or property in the U.S. In In re Al Zawawi, the U.S. Bankruptcy Court for the Middle District of Florida referenced and expanded the split of authority as to whether a foreign “debtor” under chapter 15 must, in addition to satisfying the requirements of § 1502 (1), meet the § 109 (a) requirements applicable to other Code chapters.

Originally published in ABI Journal - May 2022.