Delaware District Court Affirms Chapter 15 Recognition Order Enforcing Nonconsensual Third-Party Releases
In U.S. Int'l Dev. Fin. Corp. v. Crédito Real S.A.B. de C.V., SOFOM, E.N.R. (In re Crédito Real S.A.B. de C.V., SOFOM, E.N.R.), 677 B.R. 192 (D. Del. 2026), appeal filed, No. 26-2356 (3d Cir. June 5, 2026), the U.S. District Court for the District of Delaware affirmed a bankruptcy court order granting chapter 15 recognition to a Mexican "concurso mercantile" proceeding and enforcing nonconsensual third-party releases approved by the Mexican court. Agreeing with the bankruptcy court that the releases were not manifestly contrary to U.S. public policy, the district court concluded: "It is well settled that U.S. bankruptcy courts can give effect to foreign orders in recognized foreign proceedings pursuant to the authority granted in Chapter 15, even when those orders contain relief unavailable under U.S. law. [The appellant's] arguments misconstrue the Supreme Court's narrow holding in [Harrington v. Purdue Pharma, L.P.], applicable in Chapter 11 cases, as well as the statutory framework of Chapter 15 and its core policy objectives. Accordingly, I will affirm the Enforcement Order." The ruling has been appealed to the U.S. Court of Appeals for the Third Circuit.
Procedures, Recognition, and Relief Under Chapter 15
Chapter 15 was enacted in 2005 to govern cross-border bankruptcy and insolvency proceedings. It is patterned on the 1997 UNCITRAL Model Law on Cross-Border Insolvency (the "Model Law"), which has been enacted in some form by more than 50 countries.
Both chapter 15 and the Model Law are premised upon the principle of international comity, or "the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." Hilton v. Guyot, 159 U.S. 113, 164 (1895).
Under section 1515 of the Bankruptcy Code, the representative of a foreign debtor may file a petition in a U.S. bankruptcy court seeking "recognition" of a "foreign proceeding." Section 101(24) of the Bankruptcy Code defines "foreign representative" as "a person or body, including a person or body appointed on an interim basis, authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor's assets or affairs or to act as a representative of such foreign proceeding."
"Foreign proceeding" is defined in section 101(23) of the Bankruptcy Code as:
[A] collective judicial or administrative proceeding in a foreign country, including an interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation.
More than one bankruptcy or insolvency proceeding may be pending with respect to the same foreign debtor in different countries. Chapter 15 therefore contemplates recognition in the United States of both a foreign "main" proceeding—a case pending in the country where the debtor's center of main interests ("COMI") is located (see 11 U.S.C. § 1502(4))—and foreign "nonmain" proceedings, which may be pending in countries where the debtor merely has an "establishment" (see 11 U.S.C. § 1502(5)). A debtor's COMI is presumed to be the location of the debtor's registered office, or habitual residence in the case of an individual. See 11 U.S.C. § 1516(c). An establishment is defined by section 1502(2) as "any place of operations where the debtor carries out a nontransitory economic activity."
Upon recognition of a foreign "main" proceeding, section 1520(a) of the Bankruptcy Code provides that certain provisions of the Bankruptcy Code automatically come into force, including: (i) the automatic stay preventing creditor collection efforts with respect to the debtor or its U.S. assets (section 362, subject to certain enumerated exceptions); (ii) the right of any entity asserting an interest in the debtor's U.S. assets to "adequate protection" of that interest (section 361); and (iii) restrictions on use, sale, lease, transfer, or encumbrance of the debtor's U.S. assets (sections 363, 549, and 552).
Following recognition of a foreign main or nonmain proceeding, section 1521(a) provides that, to the extent not already in effect, and "where necessary to effectuate the purpose of [chapter 15] and to protect the assets of the debtor or the interests of the creditors," the bankruptcy court may grant "any appropriate relief," including a stay of any action against the debtor or its U.S. assets not covered by the automatic stay, an order suspending the debtor's right to transfer or encumber its U.S. assets, and "any additional relief that may be available to a trustee," with certain exceptions.
Under section 1521(b), the court may, "at the request of the foreign representative, entrust the distribution of all or part of the debtor's assets located in the United States to the foreign representative or another person, including an examiner, authorized by the court," if the court is satisfied that the interests of U.S. creditors are sufficiently protected.
Section 1522(a) provides that the bankruptcy court may exercise its discretion to order the relief authorized by section 1519 (authorizing certain pre-recognition relief) or 1521 "only if the interests of the creditors and other interested entities, including the debtor, are sufficiently protected."
"Sufficient protection" within the meaning of section 1521(b) has three elements: (i) just treatment of all creditors; (ii) protection of U.S. creditors against prejudice and inconvenience arising from having to assert their claims in the foreign proceeding; and (iii) distribution of the assets of the foreign debtor's estate in accordance with the priorities established under U.S. law. See In re Markus, 610 B.R. 64, 76 (Bankr. S.D.N.Y. 2019), aff'd 620 B.R. 31 (S.D.N.Y. 2020) (citing In re Atlas Shipping A/S, 404 B.R. 726 (Bankr. S.D.N.Y. 2009)); see also In re ENNIA Caribe Holding N.V., 596 B.R. 316, 322 (Bankr. S.D.N.Y. 2019) (noting that a determination of sufficient protection "requires a balancing of the respective parties' interests").
Section 1507(a) of the Bankruptcy Code provides that, upon recognition of a main or nonmain proceeding, the bankruptcy court may provide "additional assistance" to a foreign representative "under [the Bankruptcy Code] or under other laws of the United States." However, the court must consider whether any such assistance, "consistent with principles of comity," will reasonably ensure that: (i) all stakeholders are treated fairly; (ii) U.S. creditors are not prejudiced or inconvenienced by asserting their claims in the foreign proceeding; (iii) the debtor's assets are not preferentially or fraudulently transferred; (iv) proceeds of the debtor's assets are distributed substantially in accordance with the order prescribed by the Bankruptcy Code; and (v) if appropriate, an individual foreign debtor is given the opportunity for a fresh start. See 11 U.S.C. § 1507(b).
Section 1506 of the Bankruptcy Code sets forth a public policy exception to the relief otherwise authorized in chapter 15, providing that "[n]othing in this chapter prevents the court from refusing to take an action governed by this chapter if the action would be manifestly contrary to the public policy of the United States." However, section 1506 requires a "narrow reading" and "does not create an exception for any action under Chapter 15 that may conflict with public policy, but only an action that is 'manifestly contrary.'" In re Fairfield Sentry Ltd., 714 F.3d 127, 139 (2d Cir. 2013); accord In re ABC Learning Ctrs. Ltd., 728 F.3d 301, 309 (3d Cir. 2013) (the public policy exception should be invoked only under exceptional circumstances concerning matters of "fundamental importance" to the United States).
The public policy exception is applicable "where the procedural fairness of the foreign proceeding is in doubt or cannot be cured by the adoption of additional protections" or where recognition or other chapter 15 relief "would impinge severely a U.S. constitutional or statutory right." In re Qimonda AG Bankr. Litig., 433 B.R. 547, 570 (E.D. Va. 2010).
A foreign bankruptcy regime need not be identical to U.S. bankruptcy law to justify foreign main or nonmain recognition. See In re Platinum Partners Value Arbitrage Fund L.P., 583 B.R. 803, 815 (Bankr. S.D.N.Y. 2018) ("[I]t is well-established that comity does not require that the relief available in the United States be identical to the relief sought in the foreign bankruptcy proceeding; it is sufficient if the result is comparable and that the foreign laws are not repugnant to [U.S.] laws and policies.").
Validity of Third-Party Releases in Chapter 11 Plans
Section 524(e) of the Bankruptcy Code provides that, "[e]xcept as provided in subsection (a)(3) of this section [making the discharge injunction applicable to actions to collect against community property], discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt." Even so, chapter 11 plans confirmed by bankruptcy courts in certain circuits commonly included provisions that either release or exculpate various nondebtors from certain liabilities.
Chapter 11 plan releases can provide for the relinquishment of both prepetition and postpetition claims belonging to the debtor or nondebtor third parties (e.g., creditors or shareholders) against various nondebtors.
Although it is generally accepted that a chapter 11 plan can release nondebtors from claims of other nondebtors if the release is consensual, the U.S. Supreme Court, in Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024), significantly limited the availability of nonconsensual third-party releases in chapter 11 by ruling that no provision of the Bankruptcy Code other than section 524(g) (providing for the creation of a trust for the payment of asbestos personal injury claims) authorizes a chapter 11 plan to release the claims of nonconsenting creditors against nondebtor entities absent full satisfaction of such claims.
In so ruling, the majority reasoned that:
The "catchall" provision in section 1123(b)(6) of the Bankruptcy Code, stating that a chapter 11 plan "may" also "include any other appropriate provision not inconsistent with the applicable provisions of this title," must be construed narrowly in light of its surrounding context and read to "embrace only objects similar in nature" to the specific examples preceding it, all of which deal with the relationship between a debtor and its creditors, rather than the "radically different" power to discharge the debts of a nondebtor without the consent of affected creditors;
The proponents of a chapter 11 plan cannot evade the Bankruptcy Code's general limitation that a discharge applies only to debtors who place "substantially all of their assets on the table" and its exclusion from discharge of debts based on "fraud" or those alleging "willful and malicious injury" simply "by rebranding the discharge a 'release'"; and
If lawmakers had intended "to reshape traditional practice so profoundly" in the Bankruptcy Code, compared to its predecessor statutes, by "extending to courts the capacious new power the plan proponents claim, one might have expected them to say so expressly somewhere" in the Bankruptcy Code itself.
The majority emphasized that nothing in its ruling should be construed to call into question consensual releases in a bankruptcy reorganization plan, and it further declined to express a view on what qualifies as a consensual release, observing that those releases pose different questions and may rest on different legal grounds. Similarly, the majority declined to pass upon a plan that provides for full satisfaction of claims against a nondebtor. The majority also expressly cabined its ruling to the situation before it, noting that "we hold only that the [B]ankruptcy [C]ode does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor without the consent of affected claimants." Id. at 206.
Recognition and Enforcement of Nondebtor Releases in Chapter 15 Cases
In a chapter 15 case, unlike in a chapter 11 case, a U.S. bankruptcy court is not asked to confirm a plan of reorganization or liquidation. However, the court may be asked to recognize and enforce a plan, composition with creditors, scheme of arrangement, or court order sanctioned or issued by a foreign court presiding over a foreign debtor's main proceeding. Such a plan or order may enjoin creditors from suing or otherwise proceeding against parties other than the foreign debtor. In such a case, whether a release or injunction should be enforced by a U.S. bankruptcy court is a more nuanced issue.
For example, in In re Metcalfe & Mansfield Alternative Investments, 421 B.R. 685 (Bankr. S.D.N.Y. 2010), U.S. Bankruptcy Judge Martin Glenn, to provide "additional assistance" in a chapter 15 case involving a Canadian debtor, enforced a Canadian court's order confirming a restructuring plan that contained nondebtor releases and injunctions, even though it was uncertain whether a U.S. court would have approved the releases and injunctions in a case under chapter 11 of the Bankruptcy Code. Judge Glenn reasoned that such uncertainty was of little consequence in the case before him, which involved not the propriety of nondebtor injunctions and releases in a plenary bankruptcy case but, rather, a request to enforce a foreign judgment in a chapter 15 case.
The court concluded that "principles of enforcement of foreign judgments and comity in chapter 15 cases strongly counsel approval of enforcement in the United States of the third-party nondebtor release and injunction provisions included in the Canadian Orders, even if those provisions could not be entered in a plenary chapter 11 case." Id. at 696.
By contrast, in Vitro S.A.B. de C.V. v. ACP Master, Ltd. (In re Vitro S.A.B. de C.V.), 473 B.R. 117 (Bankr. N.D. Tex.), aff'd, 701 F.3d 1031 (5th Cir. 2012), the bankruptcy court ruled that releases of nondebtor affiliates included in a Mexican debtor's reorganization plan were unenforceable as contrary to U.S. public policy. On appeal, the U.S. Court of Appeals for the Fifth Circuit ruled that the prohibition of such releases under Fifth Circuit precedent (citing Pac. Lumber) did not necessarily mean that a U.S. bankruptcy court could not enforce them under section 1507 as a permissible form of "additional assistance" not otherwise available under the Bankruptcy Code or U.S. law.
However, the Fifth Circuit concluded that the bankruptcy court did not abuse its discretion in refusing to enforce the nonconsensual releases where affected creditors were not given any alternative means to recover and would receive only a tiny fraction of what was owed to them, and where the votes in favor of the Mexican debtor's reorganization plan comprised largely insider votes (which are not counted as acceptances under chapter 11 pursuant to section 1129(a)(10) of the Bankruptcy Code). Because it concluded that relief was not warranted under section 1507 and would not be available under section 1521, the Fifth Circuit did "not reach whether the [Mexican reorganization] plan would be manifestly contrary to a fundamental public policy of the United States" within the meaning of section 1506. Id. at 1070.
In In re Sino-Forest Corp., 501 B.R. 655 (Bankr. S.D.N.Y. 2013), Judge Glenn employed a similar rationale as in Metcalfe in recognizing and enforcing as a form of "additional assistance" under section 1507 a Canadian court-approved settlement containing a global release provision. In addition, he noted that, in the Second Circuit, "where the third-party releases are not categorically prohibited, it cannot be argued that the issuance of such releases is manifestly contrary to public policy" within the meaning of section 1506. Id. at 655 (citing In re Metromedia Fiber Network, Inc., 416 F.3d 136, 141 (2d Cir. 2005)).
In In re Avanti Commc'ns Grp. PLC, 582 B.R. 603 (Bankr. S.D.N.Y. 2018), Judge Glenn entered an order under chapter 15 of the Bankruptcy Code enforcing a scheme of arrangement sanctioned by a court in England that included nonconsensual third-party releases. Judge Glenn determined that such releases should be recognized and enforced consistent with principles of "comity" and cooperation with foreign courts inherent under chapter 15.
After examining the requirements of sections 1507 and 1521 of the Bankruptcy Code, Judge Glenn concluded, among other things, that: (i) affected creditors were afforded due process consistent with U.S. standards; (ii) third-party nondebtor releases, particularly for affiliate guarantors of debt adjusted by a scheme of arrangement, are common under English law (and are often enforced in the Second Circuit in chapter 15 proceedings); and (iii) if the scheme were not recognized and enforced in the chapter 15 case, creditors could be prejudiced and the ruling could "prevent the fair and efficient administration of the [r]estructuring."
Judge Glenn distinguished Vitro. In particular, he pointed out that the Mexican reorganization plan in Vitro was supported by a significant number of insider votes, in contrast to Avanti, where the scheme received essentially unanimous consent from all impaired creditors.
In In re Agrokor d.d., 591 B.R. 163 (Bankr. S.D.N.Y. 2018), Judge Glenn enforced a settlement agreement containing a third-party release approved by creditors in a Croatian restructuring proceeding even though it restructured English-law debt in violation of the "Gibbs Rule." Unlike in Vitro, Judge Glenn reasoned, the settlement agreement (and release) in Agrokor was approved by substantially more than the two-thirds threshold required under Croatian law, excluding "insider" affiliate votes.
In In re PT Bakrie Telecom TBK, 2021 WL 1439953 (Bankr. S.D.N.Y. Apr. 15, 2021), Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York entered an order recognizing an Indonesian "suspension of payments proceeding" under chapter 15. However, the court refused to grant a foreign representative's request for "additional relief" in the form of enforcement of an Indonesian court order approving a restructuring plan because the order included third-party releases (a non-standard practice under Indonesian law). According to the court, there was "nothing in the record about the justification for any third-party release" or any indication "the foreign court considered the rights of creditors when considering this third-party release."
In In re Americanas S.A., 2024 WL 3506637 (Bankr. S.D.N.Y. July 22, 2024), Judge Michael Wiles of the U.S. Bankruptcy Court for the Southern District of New York entered an order and decision recognizing and enforcing under chapter 15 a Brazilian debtor's bankruptcy plan that permitted nonconsensual third-party releases, without, however, any legal analysis or mention of Purdue.
In In re Odebrecht Engenharia e Construção S.A., 669 B.R. 457 (Bankr. S.D.N.Y. 2025), Judge Glenn addressed an objection raised by the U.S. Trustee to language in a proposed order recognizing a Brazilian restructuring plan. The U.S. Trustee argued the language, which was absent from the Brazilian plan itself, could be construed as a nonconsensual third-party release. Judge Glenn addressed whether nonconsensual third-party releases are authorized in chapter 15 post-Purdue. Judge Glenn reasoned that sections 1521 and 1507 structurally differ from section 1123(b)(6).
Furthermore, Judge Glenn found that the public policy exception in section 1506 does not bar nonconsensual third-party releases in chapter 15 cases, pointing to the majority's statement in Purdue that "[b]oth sides of this policy debate may have their points" as evidence that such releases are not "manifestly contrary to" U.S. public policy.
Judge Glenn specifically held that section 1521 authorizes courts to issue orders containing nonconsensual third-party releases in support of a foreign debtor's plan, declining to conduct a full analysis of section 1507 as an independent source of authority. He also held that no meaningful difference exists between enforcing a third-party release found in a foreign plan and issuing an order containing one in support of a foreign plan—signaling a willingness to broaden the scope of chapter 15 beyond mere enforcement of foreign orders.
In In re Altice France S.A., No. 25-11349 (Bankr. S.D.N.Y. Sept. 30, 2025), Judge Wiles, in contrast to Judge Glenn's decision in Odebrecht, sua sponte refused to approve third-party release language in the chapter 15 recognition order that was not already in a "sauvegarde" plan approved by a French court. Judge Wiles stated that, in chapter 15 cases, U.S. bankruptcy courts "should be enforcing the French plan, not adding to it." Judge Wiles required the parties to strike the release language before entering the recognition order.
Finally, in In re NFE Global Holdings Limited, 2026 WL 2032660 (Bankr. S.D.N.Y. July 14, 2026), two affiliates of New Fortress Energy, Inc., a New York-based Delaware corporation, filed restructuring cases in 2026 under the UK Companies Act 2006 seeking to implement debt swap plans. One of the debtors had been incorporated in the United Kingdom immediately before filing its restructuring proceeding specifically for the purpose of obtaining approval of a UK restructuring plan for which it could later seek enforcement in the United States under chapter 15. The plans included nondebtor releases and exculpation provisions.
After the plans were approved by a UK court (with the overwhelming support of creditors), the debtors' foreign representative filed chapter 15 petitions in the United States seeking recognition of the UK restructuring proceedings and enforcement of the plans. Judge Glenn granted the (unopposed) recognition petitions and enforced the UK restructuring plans, including the releases and exculpation provisions. According to Judge Glenn, "COMI tourism" is not by itself a basis to deny chapter 15 recognition and enforcement. He also held that enforcement of the restructuring plans, including the release and exculpation provisions, was within his discretionary authority under chapter 15, adequately protected the right of creditors, and was not manifestly contrary to U.S. public policy.
Crédito Real
Crédito Real, S.A.B. de C.V., SOFOM, E.N.R. (the "debtor") was one of Mexico's largest nonbank financial lending institutions, with customers located predominantly in Mexico and elsewhere in Latin America, and in the United States. The debtor is incorporated in Mexico, with its headquarters located in Mexico City. The debtor holds direct or indirect equity interests in entities located in the United States, Honduras, Panama, Turks and Caicos, Costa Rica, Nicaragua, Guatemala, and El Salvador.
In early June 2022, after failed restructuring discussions with creditors, an ad hoc group of unsecured creditors (the "ad hoc group") filed an involuntary chapter 11 petition against the debtor in the U.S. Bankruptcy Court for the Southern District of New York (the "U.S. bankruptcy court").
On June 28, 2022, one of the debtor's shareholders commenced a liquidation proceeding (the "Mexican proceeding") for the debtor in a Mexican court, which appointed a liquidator for the company.
On July 14, 2022, a foreign representative for the debtor filed a petition in the U.S. bankruptcy court seeking recognition of the Mexican proceeding under chapter 15 of the Bankruptcy Code.
Proceedings were adjourned in the U.S. bankruptcy court to give the parties an opportunity to pursue settlement discussions. Those discussions were successful, after which the debtor, the Mexican liquidator, and the ad hoc group entered into a restructuring support agreement (the "RSA") to implement a global restructuring.
In accordance with the terms of the RSA, the debtor, on October 6, 2023, filed a prepackaged restructuring proceeding ("concurso") in the Mexican court (the "Mexican prepack"), which in November 2023 entered a judgment (the "concurso judgment") commencing the "conciliation stage" of the Mexican prepack. The concurso judgment included injunctive relief designed to preserve the debtor's assets from creditor collection efforts. Notice of the judgment was duly published and provided to creditors.
In March 2024, the Mexican court issued a judgment (the "recognition judgment") confirming the ranking and classification of creditor claims. In August 2024, the Mexican court approved a restructuring plan for the debtor (the "concurso plan"), finding in its order (the "prepack order") that the plan had been approved by the holders of approximately 57% of the unsecured claims against the debtor, that the plan satisfied all of the requirements of Mexican bankruptcy law, and that the plan did not violate Mexican public policy.
Under the concurso plan, all of the debtor's assets will be transferred to a trust created to liquidate the debtor's assets and distribute the proceeds to creditors (including U.S. creditors) in accordance with statutory priorities under Mexican bankruptcy law. The concurso plan includes release and exculpation provisions shielding from liability, with certain exceptions, various third parties involved in negotiating and implementing the debtor's restructuring, including the ad hoc group, the Mexican liquidator, the debtor's former directors and officers, an indenture trustee for the debtor's U.S.-dollar-denominated bonds, and various related parties. The provisions also barred creditors from suing the released parties or the debtor for any actions or omissions during the bankruptcy proceeding, except for previously undisclosed actions taken by the debtor that damaged or impaired the bankruptcy estate.
Such releases are customary in Mexican settlement agreements and are permitted by Mexican bankruptcy law.
The United States International Development Finance Corporation (the "DFC"), a U.S. government agency that invests in development projects primarily in lower- and middle-income countries, opposed the concurso plan and appealed the concurso order, arguing that the nonconsensual third-party releases were not permitted under Mexican law.
On February 7, 2025, the foreign representative filed a petition in the U.S. bankruptcy court seeking recognition of the Mexican prepack under chapter 15 and recognition and enforcement of the concurso plan and the concurso order in the United States. The DFC objected to the recognition petition, arguing that the releases in the concurso plan violated sections 1507 and 1521(a) of the Bankruptcy Code because nonconsensual third-party releases are not "appropriate relief" available under the Bankruptcy Code or "additional assistance" that a U.S. bankruptcy court can provide or enforce in a chapter 15 case. DFC also argued that the releases were manifestly contrary to U.S. public policy and therefore prohibited by section 1506 of the Bankruptcy Code.
The U.S. bankruptcy court granted the petition for chapter 15 recognition and enforcement. See In re Crédito Real, S.A.B. de C.V., SOFOM, E.N.R., 670 B.R. 150 (Bankr. D. Del. 2025), aff'd , 677 B.R. 192 (D. Del. 2026).
Initially, the court noted that the "broad grants of discretion" given to a U.S. bankruptcy court under section 1521(a) and 1507 "are limited in multiple ways"—principally under the public policy restriction set forth in section 1506. However, the court emphasized, declining chapter 15 relief under section 1506 is "an extraordinary act," and the provision should be "narrowly interpreted" to prohibit relief that violates "the most fundamental policies of the United States." Id. at 162 (citations omitted).
According to the U.S. bankruptcy court, under section 1506, "the Court's discretion to enforce orders of a foreign court is circumscribed by fundamental policies of fairness." It also emphasized that relief granted in a foreign bankruptcy proceeding for which chapter 15 recognition is sought need not be identical to relief available in a U.S. bankruptcy case. Rather, the court explained, as a matter of international comity, a U.S. bankruptcy court must look to the fairness of the foreign proceeding. If the foreign proceeding is fundamentally fair in accordance with established standards, a U.S. court should enforce a foreign court's judgment as a matter of comity. Id.
The U.S. bankruptcy court rejected DFC's argument that the Supreme Court's analysis of section 1123(b) of the Bankruptcy Code in Purdue alters the way that courts should interpret sections 1521(a) and 1507. According to DFC, because the Supreme Court in Purdue concluded as a matter of statutory construction that the "catchall" provision in section 1123(b)(6) must be interpreted to limit permissible chapter 11 plan provisions to the kinds of provisions specifically authorized by the other subsections of section 1123(b), the "catchall" relief authorized by sections 1521(a) and 1507 should similarly be limited to the kinds of relief authorized elsewhere in those provisions, which, like section 1123(b), do not address third-party relationships.
The U.S. bankruptcy court concluded that the plain language of sections 1521(a) and 1507 demonstrates that DFC is "incorrect for multiple reasons." The court explained that, although section 1521(a) sets forth a list of some of the forms of relief the court can grant upon chapter 15 recognition, that list is preceded by language indicating that the court may grant "any appropriate relief, including," but not limited to, the listed examples, and subject to specified exceptions, which do not include the enforcement of third-party releases in a foreign restructuring plan. "It is well settled," the court wrote, "that enforcement of a third-party release contained in a foreign plan is appropriate under [section 1521(a)]. Id. at 167 (citing In re Arctic Glacier Int'l, Inc., 901 F.3d 162 (3d Cir. 2018); Avanti, 582 B.R. at 618).
Similarly, the U.S. bankruptcy court explained, section 1507 "affords courts a broad grant of authority to provide relief" while setting out express limitations, including the "specific limitations stated elsewhere in [chapter 15]." This instruction, the court wrote, differs from section 1123(b)(6)'s directive to examine the preceding subsections "to contextualize appropriate relief because chapter 15 covers a broader array of topics than subsections [1123(b)](1)-(5), which is limited to matters concerning and connected to the debtor." Id. at 168.
In addition, the court emphasized, section 1507(b) sets forth a list of considerations that courts must examine when determining whether to provide "additional assistance," most of which focus on whether relief would be "consistent with principles of comity" and the just treatment of creditors, the protection of U.S. creditors, the prevention of voidable transfers, the equitable distribution of assets in accordance with the Bankruptcy Code, and providing the debtor with an opportunity for a fresh start.
According to the U.S. bankruptcy court:
By adding this list of considerations, Congress again established boundaries for courts in granting relief under chapter 15 and directed courts on how to determine if it is appropriate to grant relief. And again, these express prohibitions provide a more explicit and fuller picture of the broad relief a court may grant, as compared to that in section 1123(b)(6), and they direct a court to focus on principles of comity when considering granting the relief. Because comity is central to chapter 15, the relief granted in the foreign court does not have to be available in U.S. courts under chapter 11…. In other words, U.S. courts do not have to reject relief solely because it would be unavailable in the United States. However, there must be metrics to assess whether the proposed relief is appropriate. Section 1507(b) solves that problem by providing these considerations while prioritizing comity to foreign courts.
As with section 1521, section 1507 thus differs from section 1123(b) because section 1123(b) does not expressly establish specific boundaries; instead, it directs courts to look to the rest of the Bankruptcy Code to determine whether a provision is appropriate. Because Congress expressed specific prohibitions, courts do not need to read further into its words like they do for section 1123(b)…. The plain language of section 1507 (and section 1521) already enumerates the boundaries unambiguously.
Id. at 169 (footnotes omitted).
The U.S. bankruptcy court accordingly ruled that, because the Mexican prepack provided all of the protections set forth in section 1507(b), section 1507 permits the court to enforce the relief granted in the Mexican prepack, including the releases in the concurso plan.
Even if the language of sections 1521 and 1507 were ambiguous, the court emphasized, the provisions' legislative history and rules of statutory construction confirm that U.S. lawmakers intended to give U.S. bankruptcy courts the power to enforce nonconsensual third-party releases authorized under foreign bankruptcy laws as a matter of comity, which is a pillar of chapter 15. Id. at 170.
Finally, the U.S. bankruptcy court held that the third-party releases in the concurso plan were not manifestly contrary to U.S. public policy. According to the court: (i) the Mexican prepack comported with U.S. standards of procedural fairness; (ii) the concurso plan did not violate any constitutional or statutory rights; (iii) U.S. courts have frequently recognized Mexican concurso plans as "being the product of a fair process"; (iv) the concurso plan's release, which was the product of arm's-length negotiations among the debtor, its creditors, and shareholders, is customary and valid under Mexican law; (v) the concurso plan was approved by a majority of creditors; (vi) in approving the concurso plan, to which DFC did not object on the basis of the release, the Mexican court found that the plan complied with Mexican law and did not violate the public interest or the interest of any individual creditor because the terms of the plan applied to all creditors equally; and (vii) DFC failed to identify any constitutional or statutory right impinged by the concurso plan. Id. at 171–73.
The U.S. bankruptcy court rejected DFC's argument that nonconsensual third-party releases violate U.S. public policy in accordance with Purdue. Such releases, the court explained, are authorized in asbestos bankruptcy cases, and in Purdue, the Supreme Court observed that Congress could have authorized such releases in other chapter 11 cases, even though it has not done so. According to the bankruptcy court, "[l]ack of specific availability in U.S. courts does not equate to manifest contrariness in U.S. public policy, especially where, as here, the contested relief is available in other contexts and could be made available more broadly by a simple act of Congress." Id. at 174.
DFC appealed the U.S. bankruptcy court's decision to the U.S. District Court for the District of Delaware.
The District Court's Ruling
The district court affirmed the U.S. bankruptcy court's recognition order, holding that the bankruptcy court did not err in enforcing the nonconsensual third-party releases included in the concurso plan. Crédito Real, 677 B.R. at 196.
Chief U.S. District Judge Colm F. Connolly agreed with the U.S. bankruptcy court that chapter 15 authorizes bankruptcy courts to recognize and enforce foreign orders that include nonconsensual third-party releases based on principles of comity. The district court also held that the Supreme Court's analysis in Purdue addressed the scope of permissible plan provisions under chapter 11, not recognition of and assistance to foreign insolvency proceedings under chapter 15. According to Judge Connolly, "Congress designed Chapter 15 to allow courts to flexibly assist foreign proceedings in ways tailored to their specific legal and factual contexts, not to replicate the exact structure of Chapter 11." Id. at 201–02.
The district court held that both sections 1521 and 1507 of the Bankruptcy Code authorize U.S. bankruptcy courts to enforce foreign restructuring orders and plans with nonconsensual third-party releases. Judge Connolly explained that sections 1521(a) and 1521(a)(7) authorize U.S. bankruptcy courts to exercise broad discretion in granting "any appropriate relief" upon recognition of a foreign proceeding, consistent with the purposes of chapter 15 and principles of comity, provided that the interests of creditors, other interested entities, and the debtor are sufficiently protected.
Because the U.S. bankruptcy court considered the procedural and substantive fairness of the Mexican prepack, including the protections afforded to creditors and other interested parties, the district court concluded that the bankruptcy court did not abuse its discretion in granting relief under section 1521. The district court accordingly held that "section 1521 empowers courts to facilitate outcomes in foreign proceedings that promote fairness, comity, and the efficient resolution of cross-border insolvencies." Id. at 202–03.
Although the district court held that section 1521 authorized enforcement of the concurso plan, the court went on to explain that section 1507 independently permits bankruptcy courts to enforce nonconsensual third-party releases. According to Judge Connolly, section 1507 "reflects Congress's intent to grant bankruptcy courts broad discretion to recognize and assist foreign proceedings, even when the relief exceeds what is typically available under Chapter 11, so long as basic principles of comity, fairness, and U.S. public policy are respected." Id. at 203.
The court again focused on the fairness of the Mexican prepack to determine that the bankruptcy court did not err in granting "additional assistance" in enforcing the concurso plan. The district court rejected DFC's argument that comity was merely optional in the section 1507 analysis, concluding that such an interpretation would "frustrate the statutory purpose of Chapter 15 and render section 1507 meaningless." Id. at 203–04.
Finally, the district court upheld the bankruptcy court's conclusion that enforcement of the concurso plan's nonconsensual third-party releases was not manifestly contrary to U.S. public policy. Judge Connolly explained that section 1506 "provides a narrow remedy for genuine threats to core U.S. constitutional or statutory rights, as opposed to mere discrepancies between domestic and foreign law." Id. at 205. The court rejected DFC's argument that Purdue established that nonconsensual third-party releases fundamentally violate U.S. public policy. Rather, the district court reasoned, "[t]he Supreme Court's acknowledgment of the policy arguments supporting such releases undermines DFC's claim [that nonconsensual third-party releases] are manifestly contrary to fundamental U.S. policy." Id. at 205.
On May 29, 2026, DFC appealed the district court's decision to the U.S. Court of Appeals for the Third Circuit; the appeal was docketed as No. 26-2356 on June 5, 2026.
Outlook
In the wake of the Supreme Court's ruling in Purdue, chapter 15 remains a potential vehicle for obtaining U.S. recognition and enforcement of foreign orders and restructuring plans that include nonconsensual third-party releases, even where comparable relief would not be available in a domestic chapter 11 plan. That result is consistent with chapter 15's statutory purpose of facilitating cooperation between U.S. and foreign courts and respecting foreign insolvency laws and proceedings, subject to chapter 15's protections for creditors and U.S. public policy.
Going forward, debtors are likely to continue turning to chapter 15 to obtain U.S. recognition and enforcement of foreign orders and restructuring plans that include nonconsensual third-party releases. In determining whether to grant such relief, U.S. bankruptcy courts will focus on whether sufficient evidence was submitted regarding whether the foreign proceeding was fair, whether creditors received appropriate protections, whether the requested relief is consistent with principles of comity, and whether enforcement would be manifestly contrary to U.S. public policy.
The Third Circuit now has an opportunity to add to the developing appellate guidance on this important question, alongside the Fifth Circuit's decision in Vitro.
