To qualify as a “debtor” under the U.S. Bankruptcy Code, an entity must reside, have a place of business or property in the U.S. It is common for non-U.S. entities that file for chapter 11 protection to rely on the “property” element of §109(a). Property has traditionally been widely construed, with it now being commonly accepted that attorney retainers held on deposit in New York are sufficient to support jurisdiction in the Bankruptcy Court for the Southern District of New York.
In the Chapter 15 case of Berau Capital Resources Pte Ltd. (Case No. 15-11804, October 28, 2015), Judge Glenn pushed this concept of property even further. Although noting that other property existed (namely, an attorney retainer held by its New York counsel) which was sufficient to satisfy the requirements of §109(a), Judge Glenn nevertheless went on to note that “it is apparent that another substantial (and frequently recurring) basis for chapter 15 eligibility exists here” in the form of the dollar denominated notes subject to a New York law governed Indenture appointing a New York based trustee and subject to a New York forum selection clause. Under New York state law, contracts create property rights which are intangible property of the debtor and, per Judge Glenn, satisfy the “property” requirement of §109(a). The case involved a chapter 15 petition filed by a Singaporean company, but, as noted by Judge Glenn in his opinion, the Second Circuit has held that section §109(a) applies equally to chapter 15 petitions as it would to a petition under chapter 11 so there is no reason to believe that a Southern District of New York Bankruptcy Court wouldn’t be satisfied with the same type of property in a chapter 11 case.
It will remain to be seen if other judges follow Judge Glenn’s lead, but this may enable foreign entities even easier access to the U.S. Bankruptcy Court.