3 Strikes Against Chapter 15

The Southern District of Texas Bankruptcy Court recently underscored the importance of carefully implementing Chapter 15 eligibility. In its Geden and Siu-Fung decisions, the court reasserted its independent duty to scrutinize foreign recognition requests, providing constructive guidance on the steps foreign representatives should take to strengthen their Chapter 15 filings. The rulings offer practical lessons for ensuring compliance with U.S. bankruptcy law requirements and navigating potential recognition challenges.

Key Takeaways

• Foreign representatives in the S.D. Texas must satisfy section 109(a) of the Bankruptcy Code (such as by funding United States counsel retainers prior to the Chapter 15 petition date) to be eligible for Chapter 15 relief.
• To establish center of main interests (“COMI”) or business “establishment” recognition under Chapter 15, foreign representatives must demonstrate, in the foreign-proceeding country, actual liquidator activity indicative of a plenary officeholder (for COMI recognition) or actual business operations affecting the relevant economy (for establishment recognition).
• Chapter 15 recognition may be unavailable with respect to an individual debtor who, after commencement of his or her foreign proceeding, moves (without demonstrable bad faith) to a new country.

Chapter 15 in a Nutshell

Chapter 15 of the Bankruptcy Code is the statutory incorporation of the United Nations Model Law on Cross-Border Insolvency (which has been adopted in more than 60 countries). The purpose of Chater 15 is “to provide effective mechanisms for dealing with cases of cross-border insolvency,” including facilitating cooperation between United States courts and foreign courts and authorities involved in cross-border insolvency cases. 11 U.S.C. § 1501(a).

The primary mechanism to facilitate such cooperation is recognition and enforcement by United States courts of foreign insolvency judgments entered in one of two eligible proceedings:

1. a “foreign main proceeding . . . pending in the country where the debtor has the center of its main interests[,]”; or

2. a “foreign non-main proceeding . . . pending in a country where the debtor has an establishment.”

11 U.S.C. § 1502(4)-(5).

Subject to section 1506’s seldom-applied “public policy exception,” after notice and a hearing, a U.S. Bankruptcy Court “shall” enter an order recognizing a foreign main proceeding or foreign non-main proceeding. 11 U.S.C. § 1517(a)(1).

Recognition often provides powerful tools (including access to section 362(a) stay protections, discovery mechanisms, and other relief), making Chapter 15 a cornerstone of cross border insolvency strategy. Importantly, Chapter 15 eligibility, including COMI, is generally measured as of the petition date.

Two Recent Opinions and Three Chapter 15 Denials

Against that backdrop, Judge Alfredo Pérez of the United States Bankruptcy Court for the Southern District of Texas recently issued two thorough and lengthy 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 Limited, No. 24-33299, 2026 WL 382424 (Bankr. S.D. Tex. Feb. 10, 2026) (Hong Kong).

While some may initially view these decisions as signaling a stricter approach or grounds to venue shop elsewhere, instead, they illustrate the court’s independent duty to police Chapter 15 eligibility and avoid the perception that United States bankruptcy courts permit recognition “a free-for-all..” The decisions also provide useful guidance for future successful Chapter 15 petitions.

1. Geden Holdings

Geden involved a Maltese-registered shipping enterprise. In June 2017, a Maltese court determined that the enterprise was insolvent and that it must be dissolved and wound up (the “Geden Liquidation”). The initial court-appointed liquidator resigned in 2018, and his replacement was not appointed until December of 2023 (the “Maltese Liquidator”). During that gap, although there appears to have been little to no liquidation activity in Malta, the estate was involved in Pennsylvania state court litigation. That litigation lasted years, both in the trial court and on appeal, and the estate was ultimately unsuccessful. Three months after his appeal concluded, in April 2025, the Maltese Liquidator filed for Chapter 15 relief in the Southern District of Texas. He requested recognition of the Geden Liquidation under section 1517 of the Bankruptcy Code, apparently to obtain the benefits of the section 362(a) stay.

The section stay would be either:

• automatically triggered under section 1520 of the Bankruptcy Code, if the Geden Liquidation was recognized as a “main proceeding” (based on Malta being the debtor’s COMI); or
• imposed in the discretion of the bankruptcy court under section 1521 of the Bankruptcy Code, if the Geden Liquidation was recognized as a “non-main proceeding” (based on the debtor having operated a business establishment in Malta).

Judge Pérez denied the Maltese Liquidator’s request for Chapter 15 recognition, finding that the liquidator had not carried his burden of proving that, at the time the Chapter 15 petition was filed, Malta was either: (a) the debtor’s COMI, or (b) a place where the debtor operated a business establishment. While there was apparently no conclusive evidence presented that the debtor’s COMI was outside of Malta, the court was unable to find that the debtor’s COMI was in Malta because the Maltese Liquidator failed to establish that he had ever paid taxes, initiated litigation, convened creditor meetings, sought discovery, or contacted the debtor’s directors and officers during the pendency of the Malta Liquidation. Accordingly, the Court found that the Geden Liquidation was not a foreign main proceeding.

For the same reasons, plus the lack of any evidence that the Maltese Liquidator conducted any business for the debtor in Malta (other than record-keeping and property maintenance), the Court was unable to find business establishment recognition in Malta. Accordingly, the Court held that the Geden Liquidation was not a foreign non-main proceeding and denied its recognition. The Maltese Liquidator appealed. At the time of this writing, the parties to the appeal submitted their briefs, but the district court has not issued its decision.

2. Siu-Fung Ceramic Holdings

In Siu-Fung, certain officeholders (for ease, collectively, the “Hong Kong Liquidators”) appointed in the Hong Kong liquidation and bankruptcy proceedings of (a) Sui-Fung Group (the “Sui-Fung Group Liquidation”) and (b) its prior owner, Mr. Siu-Fung Seigfried Lee (the “Lee Liquidation”) - - which proceedings were commenced in 2000 and 2001 respectively - - sought Chapter 15 recognition of the two liquidations in July 2024. Before landing in the United States bankruptcy court, the Hong Kong Liquidators and Mr. Lee engaged in 24 years of litigation, much of which apparently involved investigations by the Hong Kong Liquidators, undertaken with Hong Kong Court approval, that Mr. Lee allegedly stymied. Mr. Lee left Hong Kong in 2016 and took up unabated residency in the United States in 2017. Presumably, the Hong Kong Liquidators’ strategy in filing the Chapter 15 petitions was, at least in part, to avail themselves of the effective discovery tools available to foreign representatives under the Bankruptcy Code and Federal Rules of Bankruptcy Procedure.

• Sui-Fung Group’s Chapter 15

While Judge Pérez found that Sui-Fung Group’s COMI was Hong Kong and the Sui-Fung Group Liquidation was a foreign main proceeding, he nevertheless denied the Hong Kong Liquidators’ request for Chapter 15 recognition of the Sui-Fung Group Liquidation. The court held that section 109(a) of the Bankruptcy Code applied and that, to be a debtor under Chapter 15, the foreign representative was required to prove that the Sui-Fund Group “resides or has a domicile, a place of business, or property in the United States.” In doing so, Judge Pérez acknowledged the rulings in In re Barnet, 737 F.3d 238 (2d Cir. 2013), which held that satisfaction of section 109(a) was a condition to Chapter 15 relief, and In re Al Zawawi, 97 F.4th 1244 (11th Cir. 2024), which apparently held that satisfaction of section 109(a) was not a condition to Chapter 15 relief. However, Judge Pérez followed Barnet (and other similar authorities), explaining: “this Court need not reinvent the wheel to arrive at the same conclusion that the text of the [Bankruptcy] Code on its face unambiguously states section 109(a) [of the Bankruptcy Code] applies to Chapter 15.” Siu-Fung, 2026 WL 382424, at *14. As an example, Judge Pérez cited section 103(a), which expressly states that Chapter 1, which includes section 109(a), applies to Chapter 15. Id.; 11 U.S.C. § 103(a). (While not the immediate focus of this alert, we note the March 2, 2026, decision in In re Venus Capital Management Co., et al., No. 26-10709, ECF No. 30 (Bankr. D. R.I. Mar. 2, 2026), where the bankruptcy court for the District of Rhode Island apparently followed Zawawi, but nevertheless found the presence of sufficient assets in the United States to satisfy section 109(a), including a legal retainer, for purposes of granting recognition.)  

The only potential path for the Hong Kong Liquidators to satisfy section 109(a) of the Bankruptcy Code was to argue that the debtor held assets in the United States on the Chapter 15 petition date. The Hong Kong Liquidators asserted that the debtor held the following assets in the United States: (1) a retainer paid to United States counsel after the Chapter 15 petition date, and (2) potential causes of action. Although foreign representatives routinely use retainers paid to United States counsel as a legally acceptable means for satisfying the requirements of section 109(a) of the Bankruptcy Code, Judge Pérez found that the retainer at issue (even if otherwise eligible, as the source of the funds appeared unclear), was not in the United States on the Chapter 15 petition date. With respect to potential causes of action, the Hong Kong Liquidators acknowledged that the claims they held were “conceptual” and would arise from actions related to assets outside the United States. While Judge Pérez did not rule out the possibility that, in another case, causes of action could constitute property within the United States for purposes of satisfying section 109(a), he reasoned that the evidence was too speculative to support such a finding in this case. As such, he held that the Hong Kong liquidator failed to satisfy the requirements of section 109(a) and denied recognition of the Sui-Fung Group Liquidation.

• Mr. Lee’s Chapter 15

Like his decision in Geden, Judge Pérez ruled the evidence did not support a finding that the Lee Liquidation was either a foreign main proceeding or a foreign non-main proceeding. In short, the evidence showed that Mr. Lee left Hong Kong in 2016 and has been living in the United States continuously since 2017. As of the Chapter 15 petition date, there was no evidence that Mr. Lee intended to ever return to Hong Kong or that he was conducting any business activities in Hong Kong that would support a finding that his COMI or place of business establishment was Hong Kong. As such, Judge Pérez held that the Lee Liquidation was neither a foreign main proceeding nor a foreign non-main proceeding and denied the Hong Kong Liquidators’ request for recognition of the Lee Liquidation.

Conclusion

In Geden and Sui-Fung, Judge Pérez applied his independent duty to evaluate each of the foreign representatives’ recognition requests. These were not easy calls in an environment that often seems hostile to any findings that may negatively affect the forum and venue selection decisions of debtors and, in these cases, foreign representatives.

Moreover, Judge Pérez appears to have given foreign representatives a roadmap to success. Foreign representatives may establish that a proceeding is a foreign main proceeding if they undertake liquidator-type activities, including meeting with stakeholders, investigating claims, and developing potential payment plans. Alternatively, foreign representatives may prove that the foreign proceeding is a non-main proceeding for establishment recognition by showing that the estate is engaging in impactful business activity where such foreign proceeding is pending.

Finally, for all the ink spilled and litigation consumed, the Sui-Fung Group Liquidation would likely have been eligible for Chapter 15 had the parties effectively funded a retainer in the United States prior to filing the petition (just as Judge Pérez pointed out many Chapter 15 petitioners regularly and successfully do).

It may feel unsatisfying to some that recognition of the individual Lee Liquidation was denied because the debtor moved to the United States. However, had the Hong Kong Liquidators funded the pre-petition retainer for Sui-Fung Group, the results for both cases might have been different. Indeed, the Hong Kong Liquidators may have been able to obtain most, if not all, of the discovery sought from Mr. Lee through the Sui-Fung Group Chapter 15 case, despite the denial of recognition in the Lee Chapter 15 case. Moreover, despite the denial of recognition in the Lee Chapter 15 case, there may be effective alternatives to Chapter 15 available to the Hong Kong Liquidators for eventually obtaining the discovery (and other relief) they seek from Mr. Lee, including potentially under 28 U.S.C. § 1782.

In sum, the Geden and Sui-Fung decisions continue to support the integrity of Chapter 15 administration in the United States.