USA Law and Practice Contributed by: Davis Lee Wright, Natalie D. Ramsey, Katherine M. Fix and Rachel Jaffe Mauceri, Robinson & Cole LLP
Dispositions in Dissolutions In state law dissolutions, the individual authorised by the company’s directors to administer the dissolution and wind-up of the company’s affairs will negotiate and consummate asset sales and dispositions in accordance with the company’s plan of dissolution. No judicial approval is required unless the dissolution has been ordered by a court or is subject to judicial supervision. Generally, “free and clear” asset sales are not available. 5.3 The End of the Liquidation Procedure(s) Bankruptcy Rule 5009 provides that a Chapter 7 liq - uidation is closed once the Chapter 7 trustee files a final report with the bankruptcy court detailing, among other things: • the assets liquidated or abandoned; • administrative expenses incurred; • all claims asserted and allowed; • any distributions made to creditors; and • the trustee’s certification that the estate has been fully administered. The bankruptcy court will enter an order closing the Chapter 7 proceeding if no objection to the final report was filed by a party-in-interest within 30 days. 5.4 The Position of Shareholders and 6. Cross-Border Issues in Insolvency 6.1 Sources of International Insolvency Law Foreign, non-US companies may seek recognition of eligible non-US insolvency proceedings by filing a petition under Chapter 15 of the Bankruptcy Code. Once recognised, an ancillary US bankruptcy case commences to assist a foreign court in a foreign insol - Creditors in Liquidation See 2.1 Types of Creditors .
that it conducts business, or holds property located, in the United States. A foreign representative may seek recognition of a foreign main proceeding by filing a petition under Chapter 15. A “foreign representative” means an entity “authorized in a foreign proceeding to administer the reorganization or the liquidation of the foreign debtor’s assets or affairs or to act as a representative of such foreign proceeding” (11 USC Section 101 (24)). A “for - eign proceeding” is a “collective judicial or adminis - trative proceeding in a foreign country… under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation” (11 USC Section 101 (23)). To be eligible to seek recogni - tion under Chapter 15, a non-US entity must have a US-based nexus, such as having assets, property or a place of business in the USA. Upon a Chapter 15 filing, the bankruptcy court con - ducts a hearing to consider an order “recognizing” the foreign proceeding as either a foreign “main” proceed - ing – “a proceeding pending in the country where the debtor has its center of main interest” (or COMI) – or a foreign “non-main” proceeding – “a proceeding other than a foreign main proceeding, pending in a country where the debtor carries out a nontransitory economic activity”. Recognition as a foreign main proceeding (i) triggers the automatic stay to protect the foreign debtor’s USA-based assets and pause any litigation pending against the debtor in US courts, and (ii) allows the foreign representative to operate the debtor’s US business, among other relief. Conversely, recogni - tion as a foreign non-main proceeding means that the bankruptcy court has the discretion to determine what relief will apply. The bankruptcy court may presume a debtor’s COMI is the location of the debtor’s registered office (11 USC Section 1516 (c)), unless the presumption is rebutted. In determining COMI, a US bankruptcy court may also consider which foreign jurisdiction’s laws will apply to most disputes between the debtor and its creditors.
vency proceeding. 6.2 Jurisdiction
Foreign, non-US companies are eligible to commence plenary Chapter 11 or Chapter 7 bankruptcy cases in US bankruptcy courts if the entity can demonstrate
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