Foreign Avoidance Action May Be Asserted in U.S. Chapter 15 Case

By: Shintaro Kitayama
St. John's Law Student
American Bankruptcy Institute Law Review Staff

In a case of first impression, the Fifth Circuit, in Condor Insurance Limited v. Petroquest Resources, Inc. (In re Condor Insurance Limited),[1]held that foreign representatives in a chapter 15 proceeding can assert an avoidance action under foreign law in a United States bankruptcy court.[2] The case was initiated when a foreign insurance company’s creditors filed a winding up petition, which is similar to a U.S. chapter 7 proceeding, in Nevis, [3] a small Caribbean island that is part of the Federation of Saint Kitts and Nevis. The Nevis liquidators filed a chapter 15 bankruptcy proceeding in Mississippi and sought to recover the assets under Nevis avoidance law. [4]  The Fifth Circuit held that section 1521(a)(7) allows a U.S. bankruptcy court to offer avoidance relief under foreign law.[5]

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