12.6 Advantages of Filing for Bankruptcy in the U.S. (i) Debtor-Friendly System: U.S. bankruptcy law offers significant protections to businesses seeking restructuring, including automatic stays, which immediately halt creditor collection actions upon filing. (ii) Chapter 11 Flexibility: Businesses can restructure their debt while maintaining operations, negotiating with creditors, and securing new financing. U.S. Bankruptcy Courts frequently expedite restructurings by approving pre-packaged, pre-arranged or other expedited procedures. (iii) C ross-Border Creditor Protections: The U.S. system provides transparency and strong legal protections that may not exist in other jurisdictions. (iv) Asset Protection Strategies: Investors can use U.S. bankruptcy courts to protect and restructure international business holdings under certain conditions. (v) Free and Clear Asset Sales: Businesses can sell substantially all of their assets free and clear of liens, including on an expedited basis. 12.7 Does a U.S. Bankruptcy Filing Have Effects in Other Countries? A bankruptcy filing in the U.S. does not automatically extend to other countries, but debtors can seek recognition under international treaties and agreements. (i) The UNCITRAL Model Law on Cross-Border Insolvency, adopted by the U.S. through Chapter 15 of the Bankruptcy Code, allows foreign bankruptcy proceedings to be recognized in the U.S. and vice versa. (ii) Many countries have reciprocal agreements or similar frameworks that facilitate cross- border enforcement of bankruptcy rulings, including the United Kingdom, Canada, Australia, Germany, and Singapore. 12.8 Can Foreign Assets Be Included in a U.S. Bankruptcy Filing? U.S. bankruptcy courts have broad jurisdiction and can include foreign assets in a bankruptcy case if they are owned by the debtor. However, the effectiveness of this inclusion depends on cooperation from foreign jurisdictions, as U.S. court rulings do not automatically apply abroad. Creditors may attempt to enforce U.S. bankruptcy rulings internationally, but this requires recognition by foreign courts, which varies by country. 12.9 What If a Foreign Investor Files for Bankruptcy in Another Country? Will the U.S. Recognize It? The U.S. may recognize foreign bankruptcy proceedings through Chapter 15 of the Bankruptcy Code, which governs cross-border insolvencies. Chapter 15 allows a foreign representative to petition a U.S. court to recognize and assist in the enforcement of a foreign bankruptcy.
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