What the Geden and Siu-Fung Selections Imply for Recognition Technique
The Southern District of Texas Chapter Courtroom not too long ago underscored the significance of rigorously implementing Chapter 15 eligibility. In its Geden and Siu-Fung choices, the courtroom reasserted its impartial responsibility to scrutinize overseas recognition requests, offering constructive steering on the steps overseas representatives ought to take to strengthen their Chapter 15 filings. The rulings supply sensible classes for making certain compliance with U.S. chapter legislation necessities and navigating potential recognition challenges.
Key Takeaways
• Overseas representatives within the S.D. Texas should fulfill part 109(a) of the Chapter Code (corresponding to by funding United States counsel retainers previous to the Chapter 15 petition date) to be eligible for Chapter 15 reduction.
• To ascertain middle of major pursuits (“COMI”) or enterprise “institution” recognition beneath Chapter 15, overseas representatives should exhibit, within the foreign-proceeding nation, precise liquidator exercise indicative of a plenary officeholder (for COMI recognition) or precise enterprise operations affecting the related economic system (for institution recognition).
• Chapter 15 recognition could also be unavailable with respect to a person debtor who, after graduation of his or her overseas continuing, strikes (with out demonstrable unhealthy religion) to a brand new nation.
Chapter 15 in a Nutshell
Chapter 15 of the Chapter Code is the statutory incorporation of the United Nations Mannequin Regulation on Cross-Border Insolvency (which has been adopted in additional than 60 nations). The aim of Chater 15 is “to offer efficient mechanisms for coping with circumstances of cross-border insolvency,” together with facilitating cooperation between United States courts and overseas courts and authorities concerned in cross-border insolvency circumstances. 11 U.S.C. § 1501(a).
The first mechanism to facilitate such cooperation is recognition and enforcement by United States courts of overseas insolvency judgments entered in certainly one of two eligible proceedings:
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a “overseas major continuing . . . pending within the nation the place the debtor has the middle of its major pursuits[,]”; or
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a “overseas non-main continuing . . . pending in a rustic the place the debtor has an institution.”
11 U.S.C. § 1502(4)-(5).
Topic to part 1506’s seldom-applied “public coverage exception,” after discover and a listening to, a U.S. Chapter Courtroom “shall” enter an order recognizing a overseas major continuing or overseas non-main continuing. 11 U.S.C. § 1517(a)(1).
Recognition typically offers highly effective instruments (together with entry to part 362(a) keep protections, discovery mechanisms, and different reduction), making Chapter 15 a cornerstone of cross border insolvency technique. Importantly, Chapter 15 eligibility, together with COMI, is usually measured as of the petition date.
Two Current Opinions and Three Chapter 15 Denials
Against that backdrop, Decide Alfredo Pérez of the USA Chapter Courtroom for the Southern District of Texas not too long ago issued two thorough and prolonged opinions denying recognition in three liquidation proceedings, one in Malta and two in Hong Kong:
• In re Geden Holdings, Ltd., 674 B.R. 732 (Bankr. S.D. Tex. 2025) (Malta); and
• In re Siu-Fung Ceramics Holdings Restricted, No. 24-33299, 2026 WL 382424 (Bankr. S.D. Tex. Feb. 10, 2026) (Hong Kong).
Whereas some could initially view these choices as signaling a stricter method or grounds to venue store elsewhere, as an alternative, they illustrate the courtroom’s impartial responsibility to police Chapter 15 eligibility and keep away from the notion that United States chapter courts allow recognition “a free-for-all..” The selections additionally present helpful steering for future profitable Chapter 15 petitions.
1. Geden Holdings
Geden concerned a Maltese-registered delivery enterprise. In June 2017, a Maltese courtroom decided that the enterprise was bancrupt and that it should be dissolved and wound up (the “Geden Liquidation”). The preliminary court-appointed liquidator resigned in 2018, and his alternative was not appointed till December of 2023 (the “Maltese Liquidator”). Throughout that hole, though there seems to have been little to no liquidation exercise in Malta, the property was concerned in Pennsylvania state courtroom litigation. That litigation lasted years, each within the trial courtroom and on attraction, and the property was finally unsuccessful. Three months after his attraction concluded, in April 2025, the Maltese Liquidator filed for Chapter 15 reduction within the Southern District of Texas. He requested recognition of the Geden Liquidation beneath part 1517 of the Chapter Code, apparently to acquire the advantages of the part 362(a) keep.
The part keep can be both:
- robotically triggered beneath part 1520 of the Chapter Code, if the Geden Liquidation was acknowledged as a “major continuing” (based mostly on Malta being the debtor’s COMI); or
- imposed within the discretion of the chapter courtroom beneath part 1521 of the Chapter Code, if the Geden Liquidation was acknowledged as a “non-main continuing” (based mostly on the debtor having operated a enterprise institution in Malta).
Decide Pérez denied the Maltese Liquidator’s request for Chapter 15 recognition, discovering that the liquidator had not carried his burden of proving that, on the time the Chapter 15 petition was filed, Malta was both: (a) the debtor’s COMI, or (b) a spot the place the debtor operated a enterprise institution. Whereas there was apparently no conclusive proof offered that the debtor’s COMI was outdoors of Malta, the courtroom was unable to search out that the debtor’s COMI was in Malta as a result of the Maltese Liquidator failed to determine that he had ever paid taxes, initiated litigation, convened creditor conferences, sought discovery, or contacted the debtor’s administrators and officers throughout the pendency of the Malta Liquidation. Accordingly, the Courtroom discovered that the Geden Liquidation was not a overseas major continuing.
For a similar causes, plus the dearth of any proof that the Maltese Liquidator performed any enterprise for the debtor in Malta (aside from record-keeping and property upkeep), the Courtroom was unable to search out enterprise institution recognition in Malta. Accordingly, the Courtroom held that the Geden Liquidation was not a overseas non-main continuing and denied its recognition. The Maltese Liquidator appealed. On the time of this writing, the events to the attraction submitted their briefs, however the district courtroom has not issued its determination.
2. Siu-Fung Ceramic Holdings
In Siu-Fung, sure officeholders (for ease, collectively, the “Hong Kong Liquidators”) appointed within the Hong Kong liquidation and chapter proceedings of (a) Sui-Fung Group (the “Sui-Fung Group Liquidation”) and (b) its prior proprietor, Mr. Siu-Fung Seigfried Lee (the “Lee Liquidation”) – – which proceedings have been commenced in 2000 and 2001 respectively – – sought Chapter 15 recognition of the 2 liquidations in July 2024. Earlier than touchdown in the USA chapter courtroom, the Hong Kong Liquidators and Mr. Lee engaged in 24 years of litigation, a lot of which apparently concerned investigations by the Hong Kong Liquidators, undertaken with Hong Kong Courtroom approval, that Mr. Lee allegedly stymied. Mr. Lee left Hong Kong in 2016 and took up unabated residency in the USA in 2017. Presumably, the Hong Kong Liquidators’ technique in submitting the Chapter 15 petitions was, no less than partly, to avail themselves of the efficient discovery instruments obtainable to overseas representatives beneath the Chapter Code and Federal Guidelines of Chapter Process.
- (*15*)Sui-Fung Group’s Chapter 15
Whereas Decide Pérez discovered that Sui-Fung Group’s COMI was Hong Kong and the Sui-Fung Group Liquidation was a overseas major continuing, he nonetheless denied the Hong Kong Liquidators’ request for Chapter 15 recognition of the Sui-Fung Group Liquidation. The courtroom held that part 109(a) of the Chapter Code utilized and that, to be a debtor beneath Chapter 15, the overseas consultant was required to show that the Sui-Fund Group “resides or has a domicile, a office, or property in the USA.” In doing so, Decide Pérez acknowledged the rulings in In re Barnet, 737 F.3d 238 (2nd Cir. 2013), which held that satisfaction of part 109(a) was a situation to Chapter 15 reduction, and In re Al Zawawi, 97 F.4th 1244 (eleventh Cir. 2024), which apparently held that satisfaction of part 109(a) was not a situation to Chapter 15 reduction. Nevertheless, Decide Pérez adopted Barnet (and different related authorities), explaining: “this Courtroom needn’t reinvent the wheel to reach on the identical conclusion that the textual content of the [Bankruptcy] Code on its face unambiguously states part 109(a) [of the Bankruptcy Code] applies to Chapter 15.” Siu-Fung, 2026 WL 382424, at *14. For instance, Decide Pérez cited part 103(a), which expressly states that Chapter 1, which incorporates part 109(a), applies to Chapter 15. Id.; 11 U.S.C. § 103(a). (Whereas not the speedy focus of this alert, we be aware the March 2, 2026, determination in In re Venus Capital Administration Co., et al., No. 26-10709, ECF No. 30 (Bankr. D. R.I. Mar. 2, 2026), the place the chapter courtroom for the District of Rhode Island apparently adopted Zawawi, however nonetheless discovered the presence of ample property in the USA to fulfill part 109(a), together with a authorized retainer, for functions of granting recognition.)
The one potential path for the Hong Kong Liquidators to fulfill part 109(a) of the Chapter Code was to argue that the debtor held property in the USA on the Chapter 15 petition date. The Hong Kong Liquidators asserted that the debtor held the next property in the USA: (1) a retainer paid to United States counsel after the Chapter 15 petition date, and (2) potential causes of motion. Though overseas representatives routinely use retainers paid to United States counsel as a legally acceptable means for satisfying the necessities of part 109(a) of the Chapter Code, Decide Pérez discovered that the retainer at subject (even when in any other case eligible, because the supply of the funds appeared unclear), was not in the USA on the Chapter 15 petition date. With respect to potential causes of motion, the Hong Kong Liquidators acknowledged that the claims they held have been “conceptual” and would come up from actions associated to property outdoors the USA. Whereas Decide Pérez didn’t rule out the chance that, in one other case, causes of motion may represent property inside the USA for functions of satisfying part 109(a), he reasoned that the proof was too speculative to assist such a discovering on this case. As such, he held that the Hong Kong liquidator didn’t fulfill the necessities of part 109(a) and denied recognition of the Sui-Fung Group Liquidation.
Like his determination in Geden, Decide Pérez dominated the proof didn’t assist a discovering that the Lee Liquidation was both a overseas major continuing or a overseas non-main continuing. Briefly, the proof confirmed that Mr. Lee left Hong Kong in 2016 and has been dwelling in the USA repeatedly since 2017. As of the Chapter 15 petition date, there was no proof that Mr. Lee meant to ever return to Hong Kong or that he was conducting any enterprise actions in Hong Kong that might assist a discovering that his COMI or office institution was Hong Kong. As such, Decide Pérez held that the Lee Liquidation was neither a overseas major continuing nor a overseas non-main continuing and denied the Hong Kong Liquidators’ request for recognition of the Lee Liquidation.
Conclusion
In Geden and Sui-Fung, Decide Pérez utilized his impartial responsibility to guage every of the overseas representatives’ recognition requests. These weren’t simple calls in an setting that usually appears hostile to any findings which will negatively have an effect on the discussion board and venue choice choices of debtors and, in these circumstances, overseas representatives.
Furthermore, Decide Pérez seems to have given overseas representatives a roadmap to success. Overseas representatives could set up {that a} continuing is a overseas major continuing in the event that they undertake liquidator-type actions, together with assembly with stakeholders, investigating claims, and growing potential cost plans. Alternatively, overseas representatives could show that the overseas continuing is a non-main continuing for institution recognition by displaying that the property is participating in impactful enterprise exercise the place such overseas continuing is pending.
Lastly, for all of the ink spilled and litigation consumed, the Sui-Fung Group Liquidation would doubtless have been eligible for Chapter 15 had the events successfully funded a retainer in the USA previous to submitting the petition (simply as Decide Pérez identified many Chapter 15 petitioners usually and efficiently do).
It could really feel unsatisfying to some that recognition of the person Lee Liquidation was denied as a result of the debtor moved to the USA. Nevertheless, had the Hong Kong Liquidators funded the pre-petition retainer for Sui-Fung Group, the outcomes for each circumstances may need been completely different. Certainly, the Hong Kong Liquidators could have been capable of acquire most, if not all, of the invention sought from Mr. Lee via the Sui-Fung Group Chapter 15 case, regardless of the denial of recognition within the Lee Chapter 15 case. Furthermore, regardless of the denial of recognition within the Lee Chapter 15 case, there could also be efficient options to Chapter 15 obtainable to the Hong Kong Liquidators for ultimately acquiring the invention (and different reduction) they search from Mr. Lee, together with probably beneath 28 U.S.C. § 1782.
In sum, the Geden and Sui-Fung choices proceed to assist the integrity of Chapter 15 administration in the USA.
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