Cross-border debtors gain another tool to use against dissident creditors seeking to disrupt foreign restructuring proceedings.

Introduction -

In In re Ocean Rig UDW Inc., et al., Case No. 17-10736, a creditor challenged the authority of the Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) to prohibit creditors from filing involuntary bankruptcy petitions against the chapter 15 debtors prior to the Bankruptcy Court’s entry of a recognition order. The creditor argued that an involuntary bankruptcy case was necessary to preserve value for creditors in the form of alleged causes of action against insiders, which causes of action would be released in the debtors’ foreign restructuring proceedings.