A decision by the US District Court for the Northern District of
California earlier in 2018 has potentially important implications
for the future recognition of foreign insolvency proceedings in the
US.
There is no consensus among US courts whether they have the
power to recognize a foreign insolvency proceeding if the foreign
debtor has no US footprint in terms of assets or business
operation. In In re Forge Group Power Pty, Ltd., 2018 WL
827913 (N.D. Cal. 2018), the district court ruled that a US
footprint is a threshold criterion, but nevertheless vacated the
bankruptcy court's order denying recognition to an Australian
liquidation proceeding -- despite the bankruptcy court's
finding that the foreign debtor's purported US footprint was
illusory. If followed by other courts, this decision could open the
door for more foreign debtors to seek US recognition by potentially
rendering meaningless any US footprint requirement.
