|End-of-day quote - 09/23|
Thomas Cook : Selecta Determination Provides Further Guidance On Chapter 15 And Bankruptcy Credit Events
|10/26/2020 | 07:11am|
As discussed in our earlier Commentary, the DC previously considered whether a chapter 15 filing had triggered a bankruptcy on two prior occasions and reached divergent conclusions.
August 2020, the DC determined that Matalan's chapter 15 filing, which sought recognition of an English scheme as a foreign main proceeding, had triggered a Bankruptcy Credit Event. The DC found the relief the company sought, which would automatically include a stay of actions against the company, to be "similar" to a judgment of insolvency or bankruptcy (meeting the requirements of limb (c) of the "bankruptcy" definition).
- In contrast, last September, the DC held that
Thomas Cook'schapter 15 filing did not trigger a Bankruptcy Credit Event. Thomas Cook sought recognition of its own English scheme as a foreign nonmain proceeding and did not seek an automatic stay, and the DC concluded that the relief sought was not similar to an insolvency judgment.
Unlike recognition of a foreign main proceeding, recognition of a foreign nonmain proceeding under chapter 15 of the Bankruptcy Code does not automatically trigger a stay of actions. Whether or not a stay is granted is within the discretion of the court. So the question remaining after the Thomas Cook and Matalan decisions was whether a petition seeking recognition of a foreign nonmain proceeding and a stay would trigger a bankruptcy.
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