A June 2018 Bankruptcy Court decision in the Southern District of New York (SDNY) held that foreign companies with no presence in the U.S. were subject to default judgments.
Foreign-based companies doing business in the U.S., and foreign affiliates of U.S. companies, are routinely counter-parties to a variety of commercial contracts in the U.S. Given the vicissitudes of financial and economic conditions, it is inevitable that such companies will occasionally encounter the insolvency of their counter-party. The insolvency could be pursuant to a Chapter 11 filing in the U.S. Increasingly, insolvencies are pursuant to foreign insolvency proceedings. A foreign insolvency proceeding may precipitate the filing of a Chapter 15 (of the U.S. Bankruptcy Code), which is an ancillary proceeding to assist the foreign insolvency estate regarding U.S. assets, claims and related issues.
Follow the link to read more of the Client Alert, “The Long Arm of the Law: Avoidance Actions Without Borders”, authored by partner David H. Conaway of Shumaker, Loop & Kendrick, LLP.
David Conaway is the Chair of Shumaker’s Bankruptcy, Insolvency and Creditors’ Rights Practice and Co-Chair of Shumaker Global and Shumaker Manufacturing. His focus is representing manufacturing companies regarding a variety of issues involving customers and the supply chain, including commercial and financial contracts, disputes, insolvency; and cross-border transactions, litigation and insolvency. David advises clients and handles matters throughout the U.S. and represents numerous foreign-based clients regarding U.S. issues, and U.S. companies doing business globally.