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. Because the publication of that article, there have been roughly 40 chapter 15 filings in america Chapter Courts all through the nation. Two of these circumstances, 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 Circumstances Make clear Simply How Low the Bar is for Recognition (accessible 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), reveal 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 overseas insolvency proceedings stays a great tool to guard belongings inside america. For instance, on July 6, 2022, Voyager Digital, a New-York primarily based cryptocurrency agency filed for chapter 11 reduction within the U.S. Chapter Court docket 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). On account 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, in search of to acknowledge the British Virgin Islands insolvency proceedings. Along with the Voyager Digital debt, it additionally got here to mild that Three Arrows owes $2.36 billion to Genesis Pacific Pte. Ltd., an affiliate of Genesis International 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 trade (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 not too long ago 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 get better its belongings.
As could also be obvious, chapter 15 proceedings stay a viable device for recognition of overseas insolvency proceedings, together with these insolvency proceedings involving entities within the cryptocurrency enterprise.