Good Old Chapter 11 in a Pre-Insolvency World:The Growth of Global Reorganization Options

Since its enactment in 1978, chapter 11 of the United States Bankruptcy Code has been the prototype for what a corporate reorganization procedure should look like. And given the broad potential reach of the American Bankruptcy Code—applicable both to assets “wherever located,” and debtors owning only a modest amount of assets in the United States— chapter 11 also seems like it should be a leading tool for restructuring global businesses as well. But we use this short paper to examine why chapter 15 has instead become the preferred tool of global reorganization. While chapter 15 represents a vital part of this new regime, it represents a smaller portion of the overall restructuring architecture as compared with a “pure” chapter 11 restructuring of global businesses. Whether that is good or bad largely depends on where one stands. As we discuss in closing, it is also possible that chapter 11’s time will come, but that largely depends on deep changes in debt markets, which may or may not come to pass. For the present, chapter 15 is clearly dominant in America’s contribution to global restructuring