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< Return to Home Page ST&G Files First Chapter 15 Business Case Under New Bankruptcy Reform Act November 4, 2005 On November 7, 2005, ST&G became the first firm in the country to file a petition under the new Chapter 15 of the 2005 Bankruptcy Reform Act. Chapter 15 is a new section of the US Bankruptcy Code that is modeled after the United Nations' Model Law on Cross-Border Insolvency, and designed to improve the handling of cross-border insolvency cases. The purpose of Chapter 15 is to permit the representative of a commercial debtor appointed in a foreign bankruptcy proceeding involving the debtor to seek recognition from U.S. Bankruptcy Courts. Upon the court granting recognition, the automatic stay of section 362 applies to enjoin all litigation pending in the United States to which the foreign debtor is a party. The foreign representative, if he can made additional showings, may obtain relief that will assist in the administration of the foreign proceeding.
This historic Chapter 15 case was filed on behalf of TriGem Computer, Inc. of South Korea, which is one of the world's largest makers of computers. After experiencing financial difficulties, TriGem became the subject of a reorganization case under South Korea's CRA, which is similar to chapter 11 in the US. Since TriGem also has creditors in the US, ST&G was retained by the Receiver appointed for TriGem in its CRA case to file the Chapter 15 case on behalf of TriGem principally to have the automatic stay enjoin vexatious litigation that was pending against TriGem in the U.S.
At a hearing held on December 7, 2005, the bankruptcy court granted the chapter 15 petition of the foreign representative and, immediately thereafter, entered its order recognizing TriGem's corporate reorganization proceeding in Korea as a foreign main proceeding under chapter 15 of the bankruptcy code, thereby staying the commencement or continuation of all litigation against TriGem in the United States. Subsequently, the TriGem Receiver may decide to use Chapter 15 for broader purposes.
ST&G's filing of the first ever business Chapter 15 case under the new bankruptcy law is yet another instance of the way in which ST&G leads the pack in bankruptcy innovation.
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