Experts Revive Ch. 16 Proposal to Curb ‘Bankruptcy Tourism’ (Law360 Bankruptcy Authority)

A group of experts that advises Congress on bankruptcy matters is making a renewed push for a new chapter of the Bankruptcy Code to combat an increase in what one judge has called “bankruptcy tourism,” as debtors are increasingly looking abroad to avoid costly Chapter 11 filings. The National Bankruptcy Conference first proposed the new bankruptcy chapter in 2014, taking aim at the “holdout problem,” where a single dissenting creditor could prevent an out-of-court restructuring because of the requirements of the Trust Indenture Act. There was initial interest following two lower court rulings in New York restricting out-of-court restructurings, and in December 2015, a draft of the proposed Chapter 16 statute was submitted to Congress. The conference is planning to meet with congressional staffers about the proposal in the fall, said Daniel Glosband, a conference member and of counsel with Goodwin.

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