Comment by Noah R. Banken
Cross-border insolvency is an increasingly prevalent issue in today’s globalized economy, as businesses and individuals engage in transactions that transcend national boundaries. Chapter 15 of the United States Bankruptcy Code provides a framework for addressing these cases of cross-border insolvency by facilitating cooperation between U.S. and foreign courts, ensuring fair and efficient administration, and ultimately protecting the interests of all stakeholders. A chapter 15 case typically serves as a supplementary proceeding to a primary insolvency case initiated in the debtor’s home country, rather than functioning as an independent legal action. To initiate a chapter 15 case, a foreign representative files a petition in a U.S. court seeking formal recognition of the foreign proceeding to ensure cooperation and coordination with the debtor’s foreign bankruptcy case.
While intended to facilitate cooperation and comity to foreign states’ insolvency proceedings by protecting U.S.-based assets from appropriation by individual creditors, a significant legal question has emerged regarding the eligibility requirements for a foreign debtor seeking chapter 15 relief: Must the debtor meet the prescribed residency, domicile, or property—i.e., the U.S. nexus—requirement set forth in § 109(a) of the Bankruptcy Code, which functions as a jurisdictional gatekeeper, or is compliance with chapter 15-specific provisions alone sufficient? This question has created a circuit split, with the United States Courts of Appeals for the Second and Eleventh Circuits adopting conflicting interpretations of the statutory text, legislative intent, and policy objectives underlying chapter 15 as intended by Congress.
In Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), the Second Circuit adopted a “plain meaning” interpretation of the Code when it held that foreign debtors must satisfy § 109(a)’s eligibility requirements. Specifically, the court found that § 103(a), which links general bankruptcy rules to debtor relief chapters, affirms that chapter 1—which includes § 109(a)—“applies ‘in a case under chapter 15,’” language that, on its face, binds chapter 15 to § 109(a)’s criteria. Conversely, the Eleventh Circuit, in Al Zawawi v. Diss (In re Al Zawawi), ruled that chapter 15 has its own self-contained eligibility requirements, and that § 109(a) does not apply to chapter 15 cases. This divergence in judicial interpretations poses practical challenges for practitioners navigating cross-border insolvency cases and undermines the principle of uniformity that is central to the administration of the bankruptcy system, and also raises questions about the broader policy implications of requiring foreign debtors to satisfy U.S.-centric eligibility criteria. It also touches on the overarching issue of statutory interpretation: whether bankruptcy statutes should generally be interpreted from a textual or purposive point of view.
This Comment explores this circuit split in depth, analyzing the statutory and policy arguments that underlie each court’s position. It also presents a novel argument for a uniform interpretation of chapter 15—one that uniquely balances the need for international comity with the practical realities of cross-border insolvency administration. To accomplish this, Part I provides a brief overview of chapter 15, its relationship to the Model Law on Cross-Border Insolvency (Model Law), and the statutory framework relevant to foreign debtor eligibility. Part II offers a background on the relevant bankruptcy provisions and eligibility requirements for foreign debtors. Part III examines the Second Circuit’s reasoning in In re Barnet, including its textualist reliance on the plain meaning of § 103(a) and § 109(a) of the Code, as contrasted with the Eleventh Circuit’s strict adherence to precedent and a purposivist interpretation of chapter 15 in In re Al Zawawi. Part V, then, considers the practical implications of the circuit split, including its impact on international insolvency proceedings and the potential for United States Supreme Court or congressional intervention. Part VI briefly concludes.
About the Author
Noah R. Banken, J.D. 2026, Tulane University Law School; B.A. 2023 Loyola University New Orleans.
Citation
100 Tul. L. Rev. Online 1 (2026) 31