By Allen D. Moreland and André F. R. Rocha
On Jan. 23, Brazil adopted the Model Law on Cross-Border Insolvency, which was created by the United Nations Commission on International Trade Law (UNCITRAL) in 1997. This will now allow U.S. insolvencies, debt restructurings and liquidations (so-called “foreign proceedings”) to be formally recognized by Brazilian courts and permit U.S. debtors and their representatives— acting as “foreign representatives”—to bring cases in Brazil to, among other things, enjoin litigation against the U.S. debtor, preserve the U.S. debtor’s assets, and pursue other claims in Brazil consistent with a restructuring or liquidation plan approved by a U.S. bankruptcy judge.
Brazilian debtors and their representatives have enjoyed this right in the U.S. bankruptcy courts since 2005, when the U.S. adopted the Model Law by adding it as Chapter 15 to the Bankruptcy Code. Most Chapter 15 cases in the United States are filed in the Southern District of New York and the Southern District of Florida and a significant number of those Chapter 15 proceedings have been initiated by Brazilian debtors.
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