In February 2022, I wrote a weblog article entitled Cross-Border Bankruptcy Cases: Chapter 15 of the Bankruptcy Code and Parameters of a Discovery Tool. For the reason that publication of that article, there have been roughly 40 chapter 15 filings in the USA Chapter Courts all through the nation. Two of these instances, Samba v. Int’l Petro. Prods. and Components Co. (In re Black Gold S.A.R.L.), 635 B.R. 517 (ninth Cir. BAP 2022) and Zawawi v. Diss (In re Zawawi), 2022 WL 596836 (M.D. Fla. Feb. 28, 2022), as mentioned within the weblog, Two Latest Chapter 15 Instances Make clear Simply How Low the Bar is for Recognition (obtainable at https://www.faegredrinker.com/en/insights/publications/2022/3/two-recent-chapter-15-cases-clarify-just-how-low-the-bar-is-for-recognition, final visited July 27, 2022), exhibit simply that, the place two reviewing courts reversed chapter courts’ determinations that the necessities of part 1517(a) of the Chapter Code had not been met, and permitting the chapter 15 proceedings to proceed.
Given the current downturn within the cryptocurrency markets and the chapter filings emanating from this downturn, the usage of chapter 15 for cryptocurrency associated firms instituting international insolvency proceedings stays a useful gizmo to guard belongings inside the USA. For instance, on July 6, 2022, Voyager Digital, a New-York primarily based cryptocurrency agency filed for chapter 11 aid within the U.S. Chapter Courtroom for the Southern District of New York. However this was after it had despatched a discover of default to Three Arrows Capital – a Singapore-based cryptocurrency hedge fund – for failing to make funds on loans described as 15,250 bitcoin and $350 million U.S. greenback coin (totaling roughly $650 million). Because of this and apparently different important debt, Three Arrows Capital initiated an insolvency continuing within the British Virgin Islands after which, on July 1, 2022, commenced a chapter 15 continuing within the Southern District of New York, looking for to acknowledge the British Virgin Islands insolvency proceedings. Along with the Voyager Digital debt, it additionally got here to gentle that Three Arrows owes $2.36 billion to Genesis Pacific Pte. Ltd., an affiliate of Genesis World Buying and selling Inc., which payments itself because the world’s largest digital-asset lender.
Whereas the cryptocurrency dominoes proceed to fall from the current downturn in that business (see Celsius), on July 12, 2022, Chapter Choose Martin, overseeing Three Arrows chapter 15 continuing, entered an order freezing Three Arrows’ belongings, at a time when Three Arrows’ principals had disappeared (though they’ve just lately resurfaced). The Three Arrows’ chapter 15 continuing ought to present a viable platform for discovery, together with of its current reappearing principals, whereas these entities left holding the bag try to determine precisely what transpired at Three Arrows and try to hint and recuperate its belongings.
As could also be obvious, chapter 15 proceedings stay a viable software for recognition of international insolvency proceedings, together with these insolvency proceedings involving entities within the cryptocurrency enterprise.