3 Chapter 15 Rulings in 4 Days Reinforce the Integrity of U.S. Chapter 15 Administration

In our March Alert, 3 Strikes Against Chapter 15: What the Texas Geden and Siu-Fung Decisions Mean for Recognition Strategy, we discussed two important decisions by Judge Alfredo Pérez of the U.S. Bankruptcy Court for the Southern District of Texas denying Chapter 15 recognition as to three debtors. We noted that some of the grounds for denial may have been avoidable with different pre-petition planning. Even so, we concluded that the decisions, which were grounded in the court’s stated independent judicial review, did not warrant alarm and should not prompt Chapter 15 venue shopping.

Between May 8 and May 11, 2026, bankruptcy courts in Massachusetts, Delaware, and Texas issued decisions in three Chapter 15 cases. As discussed below, those decisions appear to reinforce both Judge Pérez’s Geden and Sui-Fung rulings and the conclusions we reached in our prior Alert.

Key Takeaways

• The Massachusetts Zheleznyak decision reinforces that Chapter 15 recognition may simply be unavailable for an individual debtor who relocates to a new country without evidence of bad faith, requiring the use of other cross-border enforcement mechanisms.
• The Delaware Cannabist decision underscores the role of independent judicial review, but readers should be cautious about extrapolating beyond the case’s specific facts and fully negotiated procedural posture to other cannabis-related bankruptcy filings.
• The Texas DEMAR filing confirms that Chapter 15 remains active in Texas, and the court’s preliminary ruling to preserve the status quo pending the final recognition hearing was sensible under the circumstances.

Chapter 15 Summarized

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

The primary mechanism for that cooperation is recognition and enforcement by U.S. courts of foreign insolvency proceedings that fall into one of two categories:

1.  a “foreign main proceeding . . . pending in the country where the debtor has the center of its main interests[,]” (the debtor’s so-called “COMI”); or

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

11 U.S.C. § 1502(4)-(5).

The location of the debtor’s COMI or establishment (i.e., Chapter 15 eligibility) is determined as of the petition date. Subject to section 1506’s rarely invoked “public policy exception,” and after notice and a hearing, a U.S. bankruptcy court “shall” enter an order recognizing a foreign main 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.

Three Chapter 15 Orders in Four Days

Against that backdrop, between May 8 and May 11, 2026, bankruptcy courts in Massachusetts, Delaware, and Texas issued three Chapter 15 rulings involving foreign proceedings pending in Russia, Canada, and Mexico:

• In re Alexander Zheleznyak, No. 26-10554, Docket No. 42 (Bankr. D. Mass. May 8, 2026) (Russia);
• In re The Cannabist Company Holdings, Inc., No. 26-10426, Docket No. 82 (Bankr. D. Del. May 9, 2026) (Canada); and
• In re DEMAR Instaladora y Constructora, A.A. de C.V., No. 26-90523, Docket No. 22 (Bankr. S.D. Tex. May 11, 2026) (Mexico).

As discussed below, recognition was denied in Zheleznyak, granted on a final basis (with reservations) in Cannabist, and granted on an interim basis in DEMAR. In our view, each result is consistent with Judge Pérez’s rulings in Geden and Sui-Fung. Rather than signaling any systemic concern, these decisions collectively reinforce the integrity of Chapter 15 administration in the United States without encouraging venue shopping.

1. In re Alexander Zheleznyak (Russia/Massachusetts Chapter 15)

Alexander Zheleznyak co-founded Russia’s Probusiness Bank. The bank’s license was revoked in 2014, and it was declared bankrupt shortly thereafter. Zheleznyak, a Russian and Israeli citizen, left Russia in 2016 and never returned. He was declared bankrupt in Russia, in absentia, in 2019. Although he lived in Israel for a period, by March 16, 2026 (the date his Russian bankruptcy trustee filed the Chapter 15 petition), he resided in Newton, Massachusetts. As of the petition date, he: (a) directly or indirectly owned real estate and other assets in the United States, (b) was a registered attorney in Russia but had not received any income from work as an attorney in Russia since 2019, and (c) owned property in Russia.

Judge Elizabeth Katz concluded that, as of the Chapter 15 filing, Russia was neither Zheleznyak’s COMI nor the location of a business establishment. Accordingly, his Russian bankruptcy qualified as neither a foreign main proceeding nor a foreign non-main proceeding. Under Bankruptcy Code section 1516(c), an individual’s “habitual residence” is presumptively his or her COMI, and the Russian trustee did not allege that Zheleznyak habitually resided in Russia on the petition date. The court rejected the argument that this presumption was rebutted by Zheleznyak having maintained a law license in Russia, earned income from work as an attorney in Russia prior to 2020, and/or owned property in Russia.

Judge Katz also held, as a matter of law, that the petitioner bears the burden of proving a business establishment and that the debtor must be conducting business in the country in which the foreign proceeding is pending. The court found that the same factors cited above (the Russian law license, pre-2020 income, and/or property) did not establish ongoing business activity in Russia on the Chapter 15 petition date.

2. In re The Cannabist Company Holdings, Inc. (Canada/Delaware Chapter 15)

According to the foreign representative’s recognition motion, the underlying commercial enterprise involves a “vertically integrated cannabis cultivation, manufacturing, and retail business in eight U.S. states where medical or adult-use cannabis is legal under state law.” The U.S. operating subsidiaries, who are not debtors in the United States nor Canada, are ultimately owned by Cannabist Company Holdings, Inc. (“Holdings”), a publicly traded company. Holdings and its subsidiary, The Cannabist Canada Company (together, the “Debtors”): (a) are obligors on $180 million of debt governed by Canadian law; (b) filed for relief under Canada’s Companies’ Creditors Arrangement Act; (c) on March 24, 2026, obtained an Initial Order from the Canadian court that, among other things, granted injunctive relief protecting the non-debtor U.S. subsidiaries from creditor enforcement; and (d) filed for Chapter 15 recognition in the U.S. Bankruptcy Court for the District of Delaware on March 25, 2026.

The only objections to recognition came informally from the U.S. Trustee and formally from East West Bank (the “Bank”), which apparently holds real estate mortgages issued by certain non-debtor U.S. subsidiaries. No party appears to have disputed that, on the Chapter 15 petition date, the Debtors’ COMI and/or business establishments were in Canada. The Bank nevertheless objected, arguing that: (a) the automatic stay under section 362(a) of the Bankruptcy Code cannot apply to non-debtors, and (b) section 1506 of the Bankruptcy Code bars recognition because the enterprise’s underlying cannabis cultivation, manufacturing, and sales activities contravene U.S. federal law, specifically the Controlled Substances Act (“CSA”).

On May 8, 2026, the foreign representative submitted a proposed order granting recognition that had been negotiated with the U.S. Trustee and the Bank, and the court entered that order on May 9, 2026. Although the order does not appear to alter the injunction previously granted to the non-debtors, it includes a narrowly tailored reservation of rights allowing the Bank to resume litigating its objection, with any resulting ruling limited so as not to affect recognition as to any other parties. Reports widely characterized the ruling as “landmark,” largely because the Debtors are involved in the cannabis industry and there is a long list of cannabis-related debtors who have previously been denied bankruptcy relief in U.S. courts. Although Judge Brendan Shannon did not issue a separate memorandum decision, it is difficult to imagine that he would have granted recognition if, in exercising his independent judgment, he had concluded that the Canadian proceedings were manifestly contrary to U.S. public policy under section 1506 of the Bankruptcy Code.

3. In re DEMAR Instaladora y Constructora, A.A. de C.V. (Mexico/Texas Chapter 15)

According to the foreign representative’s recognition motion, DEMAR Instaladora y Constructora, A.A. de C.V. (“DEMAR”) is incorporated and operates in Mexico. In September 2025, two creditors commenced an involuntary bankruptcy proceeding in Mexico (a “Concurso”) against DEMAR. After a court-appointed officer concluded that DEMAR was failing to meet its obligations, the Mexican court approved the opening of a “conciliation” phase on March 23, 2026, and issued a stay of proceedings against the debtor. At the same time, two separate lawsuits were pending in the District Court for the Southern District of Texas (Houston), and creditors were pursuing garnishment of more than $17.5 million DEMAR held in a deposit account at Amegy Bank in Houston. On April 23, 2026, DEMAR’s shareholders passed a resolution appointing two individuals as foreign representatives with authority to file for Chapter 15. On May 6, 2026, the foreign representatives filed a chapter 15 petition in the Bankruptcy Court for the Southern District of Texas, together with requests for preliminary and final recognition relief.

On May 11, 2026, Judge Christopher Lopez held an emergency hearing on DEMAR’s request for preliminary recognition, which included a request to stay creditor enforcement. No written objections were filed, although at least one party raised concerns about the petition. At the conclusion of the hearing, the court ruled from the bench and granted preliminary recognition of DEMAR’s Concurso proceeding, stayed the litigation pending in the district court, and froze the funds on deposit at Amegy Bank pending a final hearing on recognition. The court entered an order to the same effect, finding, among other things, a substantial likelihood that DEMAR’s Concurso would ultimately be recognized as a foreign main proceeding (meaning that its COMI is in Mexico).

Conclusions

Although Judge Katz did not cite the portion of Judge Pérez’s Sui-Fung decision denying recognition of Mr. Siu-Fung Seigfried Lee’s Hong Kong proceeding, Zheleznyak reached the same result for the same basic reason: by the Chapter 15 petition date, the individual debtor had long resided in the United States and was no longer conducting ongoing business in the country where the foreign insolvency proceeding was pending.

In Cannabist, one can reasonably infer that Judge Shannon exercised independent judicial review in considering whether the non-debtor affiliates’ U.S. cannabis operations so tainted the Canadian debtors that the Chapter 15 petitions sought relief manifestly contrary to U.S. law and concluded they did not. That said, as Judge Wiles observed in Chapter 15 case In re Mega Newco, Ltd., No. 24-12031 (MEW), 2025 WL 601463, at *4 (Bankr. S.D.N.Y. Feb. 24, 2025), delicately balanced and negotiated outcomes may warrant different treatment from similar cases in which major stakeholders are litigating hardline positions. Without further analysis from the court, we would hesitate to read Cannabist as announcing a broad rule for cannabis-related filings, whether under Chapter 15 or otherwise.

Finally, although the ruling in DEMAR is preliminary and preserves all parties’ rights for the final recognition hearing, both the case and the ruling are significant. Based on a PACER search, it appears to be the first contested Chapter 15 case filed since Judge Pérez’s February 10, 2026, rulings in Sui-Fung (with one uncontested case filed in the interim). Although the foreign representatives likely could have developed a way to establish venue in New York or Delaware, they did not. Judge Lopez’s ruling was fact-based and pragmatic, preserving the status quo and protecting due process pending the final recognition hearing.

As we concluded in our March Alert, the Zheleznyak, Cannabist, and DEMAR decisions continue to support the integrity of Chapter 15 administration in the United States.