What is the “chapter 15” of bankruptcies in the USA, triggered by the Americans

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After opening its request for judicial recovery in Brazil last week, Americanas informed, this Wednesday (25), that it also went to the United States Justice to extend its recovery process to the country.

This was done through “Chapter 15”, or “Chapter 15”, the relatively new chapter of US bankruptcy law intended to deal with international judicial recovery proceedings, originating in other countries.

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For now, this does not mean that Americanas is opening its own judicial recovery process in the United States, but rather that it is extending the effects of its judicial recovery requested in Brazil to the assets it owns there.

The main effect of this device, in practice, is that the company’s creditors are also prevented from accessing or blocking its assets in the United States to try to settle the debts they owe to it.

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This is one of the main effects of a recovery process, with the objective of preventing the company from emptying its cash and its bankruptcy, and facilitating the path towards the recovery of the business.

It is also what makes it possible to order the renegotiation of the debt, putting all creditors to negotiate together, alongside the company, common conditions for payments due to all, without one having an advantage over the others.

transnational negotiations

Chapter 15 was added in 2005 to the US bankruptcy law, the “Bankruptcy Code”.

The chapter is intended to cover, in the American territory, the processes of transnational recoveries, that is, that occur in more than one country.

“One of the most important purposes of Chapter 15 is to promote cooperation and communication between US courts and interest parties with foreign courts and interest parties in international cases,” explains the US Federal Court on its website.

The mechanism replicates, in American law, the Model Law on Transnational Insolvency, prepared by the United Nations Commission on International Commercial Law (Uncitral, in English) and which, as its name implies, serves as a model for countries to adopt. it in its laws.

Created in 1997, Uncitral’s model law was intended to support the growing volume of corporate insolvency cases involving multinationals, as the internationalization of business in the global economy advanced.

The idea of ​​the law is to facilitate international cooperation processes between courts in different countries, allowing access to them by companies and creditors headquartered elsewhere.

Oi and Odebrecht, the two largest judicial reorganizations ever registered in Brazil, are Brazilian companies that resorted to Chapter 15 in the North American courts in the processes of restructuring their debts.

With declared debts of more than R$ 40 billion, Americanas became the fourth largest judicial recovery in the country, behind Samarco, in addition to leaders Odebrechet and Oi.

This Wednesday (25), the retailer also released the complete list of its creditors, a list of 7,720 employees, suppliers and banks to whom, together, the company owes R$ 41.2 billion.

Source: CNN Brasil

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