Background: Grupo OAS, a Brazilian construction conglomerate linked to a massive corruption scandal (“OAS”), filed for Chapter 15 creditor protection in the Bankruptcy Court for the Southern District of New York on April 15, 2015, two weeks after entering bankruptcy in Brazil. If “recognized” by Bankruptcy Judge Stuart Bernstein, the Chapter 15 petition would, among other things, essentially bind OAS creditors in the United States to the restructuring terms approved by the Brazilian court overseeing OAS’s reorganization. OAS has approximately $3 billion in liabilities (mostly unsecured debt).
Legal Principles: When a petition for recognition of a foreign proceeding is filed under Chapter 15, actions against the debtor are not automatically stayed as they are under other chapters of the Bankruptcy Code. During this “gap period”—the time between the petition date and the recognition date—the foreign representative of the Chapter 15 debtor may seek provisional relief pursuant to section 1519 of the Bankruptcy Code. Under this section, a court may grant temporary relief during the gap period if it is “urgently needed to protect the assets of the debtor or the interests of creditors”; such relief may include an automatic stay with respect to the debtor’s assets located in the United States.
Please see full publication below for more information.
