New York Bankruptcy Court Denies Motion to Terminate Chapter 15 Recognition and Dismiss Chapter 15 Case
Corporate restructurings are not always successful for many reasons. As a consequence, the bankruptcy and restructuring laws of the United States and many other countries recognize that a failed restructuring may be followed by a liquidation or winding-up of the company, either through the commencement of a separate liquidation or winding-up proceeding, or by the conversion of the restructuring to a liquidation. Chapter 15 of the Bankruptcy Code expressly contemplates that the status of a recognized foreign proceeding may change, and that a U.S. bankruptcy court presiding over a chapter 15 case has the power and flexibility to modify relief granted to a foreign representative as part of a chapter 15 case to account for such changed circumstances.
In In re Oi S.A., No. 23-10193 (LGB), 2025 WL 2806591 (Bankr. S.D.N.Y. Oct. 1, 2025), the U.S. Bankruptcy Court for the Southern District of New York considered whether chapter 15 recognition of a debtor's Brazilian restructuring proceeding should be terminated and the case dismissed due to the debtors' financial deterioration and inability to satisfy its restructuring plan obligations after entry of the recognition order. The court denied the motion, concluding that: (i) recognition of the Brazilian proceeding and a court-approved restructuring plan for the debtors should not be terminated under section 1519(d) of the Bankruptcy Code—according to the court, the sole authority for revocation of chapter 15 recognition—because, among other things, the restructuring proceeding was still pending, the debtors might still need relief authorized under chapter 15, and the debtors' prospects for reorganizing under a hypothetical chapter 11 case were uncertain at best; and (ii) no provision of the Bankruptcy Code authorizes the dismissal of a chapter 15 case.
Recognition of Foreign Bankruptcy Cases 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). Chapter 15's stated purpose is "to provide effective mechanisms for dealing with cases of cross-border insolvency" with the objective of, among other things, cooperation between U.S. and non-U.S. courts.
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."
The basic requirements for recognition under chapter 15 are outlined in section 1517(a), namely: (i) the proceeding must be "a foreign main proceeding or foreign nonmain proceeding" within the meaning of section 1502; (ii) the "foreign representative" applying for recognition must be a "person or body"; and (iii) the petition must satisfy the requirements of section 1515, including that it be supported by the documentary evidence specified in section 1515(b). If these requirements are satisfied, "an order recognizing a foreign proceeding shall be entered." 11 U.S.C. § 1517(a).
"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." Unlike with the determination of COMI, there is no statutory presumption regarding the determination of whether a foreign debtor has an establishment in any particular location. See In re British Am. Ins. Co., 425 B.R. 884, 912 (Bankr. S.D. Fla. 2010).
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).
After recognition of a foreign proceeding, section 1521(a) authorizes the bankruptcy court, upon the request of the foreign representative, and "where necessary to effectuate the purpose of [chapter 15] and to protect the assets of the debtor or the interests of the creditors," to grant a broad range of relief designed to preserve the foreign debtor's assets or otherwise to assist the court or other entity presiding over the debtor's foreign proceeding.
Pursuant to sections 1520(c) and 1528, the foreign representative can also commence a full-fledged bankruptcy case under any other chapter of the Bankruptcy Code as long as the foreign debtor is eligible to file for bankruptcy in the United States under that chapter (including that the debtor has U.S. assets). This means, among other things, that a foreign representative has standing in a bankruptcy case filed for the debtor under another chapter to prosecute avoidance and recovery claims that the foreign representative could not have prosecuted in a chapter 15 case. See 11 U.S.C. §§ 1521(a)(7) and 1523(a).
Certain provisions in other chapters of the Bankruptcy Code apply in chapter 15 cases pursuant to section 103(a) of the Bankruptcy Code, which provides that "[chapter 1], sections 307, 362(o), 555 through 557, and 559 through 562 apply in a case under chapter 15."
Modification or Termination of Chapter 15 Recognition or Other Relief
Section 1522(a) of the Bankruptcy Code provides that the bankruptcy court may grant relief under section 1519 or 1521, or may modify or terminate relief, but "only if the interests of the creditors and other interested entities, including the debtor, are sufficiently protected."
Under section 1522(c), "[t]he court may, at the request of a foreign representative or an entity affected by relief granted under section 1519 or 1521, or at its own motion, modify or terminate such relief."
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."
Section 1517(d) provides that "[t]he provisions of this chapter do not prevent modification or termination of recognition if it is shown that the grounds for granting it [as set forth in section 1517 (a)] were fully or partially lacking or have ceased to exist." However, before doing so, the court must "give due weight to possible prejudice to parties that have relied upon the order granting recognition."
Relief under section 1517(d) is discretionary. See In re Loy, 448 B.R. 420, 438 (Bankr. E.D. Va. 2011) ("The actual language dictates that the subchapter's provisions 'do not prevent modification or termination,' which indicates that, although revisiting a recognition determination is not mandatory, it is within the Court's discretion to do so."). However, the provision limits the court's exercise of such discretion to cases where either: (i) the basis for recognition was flawed in some way; or (ii) the grounds for recognition have ceased to exist. See In re Cozumel Caribe, S.A. de C.V., 482 B.R. 96, 107 (Bankr. S.D.N.Y. 2012).
Section 1517(d) was patterned on Article 17(4) of the Model Law, which provides that "[t]he provisions of articles 15, 16, 17 and 18 [governing recognition of a foreign proceeding] do not prevent modification or termination of recognition if it is shown that the grounds for granting it were fully or partially lacking or have ceased to exist." Model Law Art. 17(4); see also In re Bear Stearns High-Grade Structured Credit Strategies Master Fund, Ltd., 389 B.R. 325, 332 (S.D.N.Y. 2008) (noting that the legislative history of section 1517(d) confirms that the provision "closely tracks article 17 of the Model Law, with a few exceptions").
Additional guidance regarding the meaning and application of section 1517(d) can be found in UNCITRAL's Guide to the Enactment and Interpretation of the Model Law, which provides that:
Modification or termination of the recognition decision may be a consequence of a change of circumstances after the decision on recognition, for instance, if the recognized foreign proceeding has been terminated or its nature has changed (e.g. a reorganization proceeding might be converted into a liquidation proceeding) or if the status of the foreign representative's appointment has changed or the appointment has been terminated.
See U.N. Comm'n on Int'l Trade. L., UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation (2014) § 165.
As noted by the bankruptcy court in In re Oi Brasil Holdings Coöperatief U.A., 578 B.R. 169 (Bankr. S.D.N.Y. 2017), appeal dismissed, 2020 WL 605930 (S.D.N.Y. Feb. 7, 2018) ("Oi Brasil"), "[s]ection 1517(d) allow[s] courts to adjust their rulings based on changed circumstances, which exhibit[s] 'a policy that the recognition process remain flexible, taking into account the actual facts relevant to the court's decision rather than setting an arbitrary determination point.'" Id. at 203 (quoting British American, 425 B.R. at 910); accord Loy, 448 B.R. at 440 (stating that "recognition determinations are malleable, and, as facts warrant in a specific case, the court may revisit recognition"); In re Ernst & Young, Inc., 383 B.R. 773, 781 (Bankr. D. Colo. 2008) ("Chapter 15 allows the recognition determination to be modified or terminated in the future."); see also In re Comair Ltd., 2023 WL 1971618 (Bankr. S.D.N.Y. Feb. 12, 2023) (after a debtor's South African "rescue proceeding" was converted to a liquidation, and the debtor's "rescue practitioners" were replaced with provisional liquidators, the U.S. bankruptcy court that had previously recognized the rescue proceeding under chapter 15 granted the liquidators' motion to amend the recognition order to recognize the liquidation, and to substitute them as the debtor's foreign representatives).
To determine whether the grounds for granting chapter 15 recognition "have ceased to exist," the court "must examine what has changed since entry of the [recognition order]." Oi Brasil, 578 B.R. at 222. In doing so, the court "may consider new evidence and it is not limited to considering only the evidence that was or ought to have been available at the time the court granted recognition." Loy, 448 B.R. at 439.
Dismissal or Closure of Chapter 15 Cases
Section 305 of the Bankruptcy Code—titled "Abstention"—provides as follows:
(a) The court, after notice and a hearing, may dismiss a case under this title, or may suspend all proceedings in a case under this title, at any time if—
(1) the interests of creditors and the debtor would be better served by such dismissal or suspension; or
(2)(A) a petition under section 1515 for recognition of a foreign proceeding has been granted; and
(B) the purposes of chapter 15 of this title would be best served by such dismissal or suspension.
(b) A foreign representative may seek dismissal or suspension under subsection (a)(2) of this section.
11 U.S.C. § 305; see also 11 U.S.C. § 1529(4) (authorizing a bankruptcy court, in attempting to coordinate a chapter 15 case or a foreign proceeding with a case filed under another chapter of the Bankruptcy Code, to "grant any of the relief authorized under section 305"). However, section 305 is not one of the provisions made applicable to chapter 15 cases by section 103(a) of the Bankruptcy Code.
Unlike cases under chapters 7, 9, 11, 12, and 13, except arguably in section 1529(4), chapter 15 does not include a provision specifically authorizing the dismissal of a chapter 15 case. See 11 U.S.C. §§ 707, 930, 1112, 1208, and 1307. This has created some confusion regarding the source of authority for dismissing a chapter 15 case. Some courts have held or assumed that a chapter 15 case can be dismissed under section 305(a)(2). See, e.g., In re Black Gold S.A.R.L., 635 B.R. 517, 532 n.9 (B.A.P. 9th Cir. 2022) ( "Section 305(a)(2) provides, in relevant part, that the court may dismiss or suspend a chapter 15 case at any time if: (A) a petition for recognition of a foreign proceeding has been granted; and (B) the purposes of chapter 15 would be best served by such dismissal or suspension. Section 1529(4) additionally provides that "the court may grant any of the relief authorized under section 305."); In re B.C.I. Finances Pty Ltd., 671 B.R. 669, 678–79 (Bankr. S.D.N.Y. 2025 (stating that section 305(a)(2) "authorizes the court to abstain from hearing a chapter 15 case, after entry of a recognition order, if "the purposes of chapter 15 … would be best served by such dismissal or suspension"); In re Estrategias en Valores, S.A., 601 B.R. 550, 553 (Bankr. S.D. Fla. 2019) ("Pursuant to section 305(a), the Court may dismiss a chapter 15 case after it has been recognized if 'the purposes of chapter 15 of this title would be best served by such dismissal or suspension.'"), aff'd, 2020 WL 13614259 (S.D. Fla. Apr. 13, 2020); In re Octaviar Admin. Pty Ltd, 511 B.R. 361, 368 (Bankr. S.D.N.Y. 2014) (denying a motion to dismiss a second chapter 15 petition filed on behalf of a foreign debtor under section 305(2) after an appellate court affirmed the bankruptcy court's recognition order in the first chapter 15 case because the debtor was eligible for chapter 15 relief); In re Gerova Fin. Grp., Ltd., 482 B.R. 86, 93 (Bankr. S.D.N.Y. 2012) (suggesting that section 305(a)(2) provides authority for dismissing a chapter 15 case under appropriate circumstances); In re Comercial V.H., S.A. de C.V., 2012 WL 4051882, at *2 (Bankr. D. Ariz. Sept. 13, 2012) (assuming that section 305(a)(2) applies to dismissal or suspension of a chapter 15 case, but ruling that "suspension or dismissal of the chapter 15 case, pursuant to § 305, is inappropriate under the circumstances and in consideration of the purpose of chapter 15 to assist the foreign representative to realize assets").
However, other courts disagree that dismissal of a chapter 15 case is authorized under section 305. See, e.g., British American, 488 B.R. at 240 ("Section 305 is not included in the list of Bankruptcy Code sections applicable in chapter 15. Thus, a chapter 15 case itself is not subject to abstention under section 305. However, a foreign representative in a recognized foreign main proceeding may file a plenary case for the debtor under another chapter of title 11 pursuant to section 1528. Section 305 does apply in such a plenary bankruptcy case filed by a foreign representative. Section 305(a)(2) provides an additional basis for abstention from the plenary case when that plenary case no longer serves the purposes of chapter 15.").
In addition to authorizing termination of chapter 15 recognition, section 1517(d) of the Bankruptcy Code provides that a chapter 15 case may be closed in the manner specified in section 350, which provides that the court "shall" close a bankruptcy case "after an estate has been fully administered and the court has discharged the trustee." Rule 5009(c) of the Federal Rules of Bankruptcy Procedure ("Rule 5009(c)") sets forth the requirements for closing a chapter 15 case after the foreign representative has filed a report detailing the results of his or her activities and stating that the case has been fully administered. However, although Rule 5009(c) applies to bankruptcy cases under all chapters, section 350—like section 305—is not made applicable to chapter 15 cases by section 103(a). Nevertheless, some courts have authorized closure of a chapter 15 case under section 350. See, e.g., In re OneTRADEx, Ltd., 645 B.R. 184, 188 (Bankr. S.D.N.Y. 2022); In re Lupatech S.A., 611 B.R. 496, 503 (Bankr. S.D.N.Y. 2020); In re CGG S.A., 579 B.R. 716, 721 (Bankr. S.D.N.Y. 2017).
In Oi, the bankruptcy court addressed both recognition order revocation and dismissal of a chapter 15 case.
Oi
Brazil-based Oi Group is one of the world's largest telecommunications services companies. Oi Group and its affiliates have been involved in two judicial reorganization (recuperaçã judicial or "RJ") proceedings under Brazilian bankruptcy law. The 2016 RJ proceeding resulted in the confirmation of an RJ plan in 2018 by a Brazilian court. In July 2018, Oi Group's foreign representatives obtained recognition of the 2016 RJ proceeding and enforcement of the 2018 RJ plan under chapter 15 from the U.S. Bankruptcy Court for the Southern District of New York. See In re OI S.A., No. 16-11791 (SHL) (Bankr. S.D.N.Y. July 9, 2018) (ECF No. 280).
Due to continuing economic pressure on their operations, Oi Group amended the 2018 RJ plan in October 2020. The 2016 RJ proceeding concluded in December 2022, and the U.S. bankruptcy court closed the corresponding chapter 15 case in February 2023.
The Oi Group filed a second RJ proceeding on March 1, 2023. In anticipation of the filing, the Oi Group's foreign representative ("FR") filed a second chapter 15 petition in the U.S. bankruptcy court on February 8, 2023, seeking provisional relief pending the court's decision on recognition. In March 2023, the U.S. bankruptcy court recognized the 2023 RJ proceeding under chapter 15 as a foreign main proceeding, concluding that each of the Oi Group debtors involved had its COMI in Brazil.
On May 28, 2024, the Brazilian court confirmed yet another plan of reorganization for the Oi Group debtors (the "2024 RJ plan"). The U.S. bankruptcy court later recognized and enforced the 2024 RJ plan.
Because the 2024 RJ plan was based on overly optimistic projections, Oi Group management explored various restructuring options that required various modifications to the plan, including the amendment of certain payment terms, updated cash flow projections, and a stay of creditor collection efforts.
On July 7, 2025, the Oi Group's FR filed a motion seeking termination of the U.S. bankruptcy court's March 2023 recognition order and dismissal of the 2023 chapter 15 case. According to the FR, the reasons warranting the filing of the 2023 chapter 15 case "no longer exist," the Oi Group debtors do not need any further chapter 15 relief, termination of recognition and dismissal would permit a restructuring of nearly $5 billion in the debtors' obligations in chapter 11, creditors that relied on the recognition order would not be harmed by termination and dismissal, and the Oi Group cannot "restructure appropriately" in Brazil.
In particular, the FR argued:
- The proposed amendments to the 2024 RJ plan were inadequate to restructure the Oi Group's obligations, and Brazilian bankruptcy law does not offer any suitable alternatives for restructuring debts incurred by the companies after the commencement of the 2023 RJ proceeding;
- Because Brazilian bankruptcy law prohibits a company from filing a new RJ proceeding for five years following the confirmation of an RJ plan, and the Oi Group debtors' RJ plan was confirmed in May 2024, the debtors cannot commence a new RJ proceeding;
- Brazilian bankruptcy law provides only two options for restructuring the obligations of a company before the expiration of that five-year post-plan confirmation period—namely, amendment of a confirmed RJ plan or conversion of the case to a liquidation proceeding;
- The plan amendments proposed for the Oi Group debtors are insufficient to address their liquidity problems; and
- Brazilian bankruptcy law does not permit amendment of the 2024 RJ plan to restructure a "considerable portion" of their debts because, among other things, a plan cannot be amended to modify, defer, or discharge post-filing debts and certain categories of pre- and post-petition liabilities, and obligations under executory contracts and leases must be paid in full.
According to the FR, although the 2023 RJ proceeding could be converted to a judicial liquidation, conversion would destroy value and lead to job losses. Instead, the FR explained, a chapter 11 filing in the United States on behalf of the Oi Group could restructure their post-petition and executory contract obligations. By terminating recognition of the 2023 chapter 15 case and dismissing the case, the FR argued, those obligations could be restructured in chapter 11, even though they could not be restructured in chapter 15 pursuant to section 1528 of the Bankruptcy Code. Section 1528 provides that the effects of a chapter 11 case commenced on behalf of a foreign debtor after recognition of its foreign main proceeding are "restricted to the assets of the debtor that are within the territorial jurisdiction of the United States," with certain exceptions. Therefore, the FR contended, if recognition in the 2023 chapter 15 case were rescinded and the case dismissed, section 1528 would not impede restructuring of the debtors' Brazilian obligations under chapter 11.
In the alternative, the FR argued that terminating the recognition order is appropriate under sections 1507 (as described above, authorizing a U.S. bankruptcy court to provide a broad range of post-recognition "additional assistance") and 105(a) of the Bankruptcy Code, which provides that "[t]he court may issue any order, process, or judgment necessary or appropriate to carry out the provisions of [the Bankruptcy Code]." According to the FR, sections 1507 and 105(a) authorize the bankruptcy court to terminate recognition because doing so would maximize value for all stakeholders, improve liquidity, maintain employment, and ensure a fair and orderly alternative to liquidation.
The FR also argued that dismissal of the chapter 15 case was warranted under sections 305 and 1521 of the Bankruptcy Code because dismissal is in the best interests of all stakeholders and the purposes of chapter 15 would be best served by dismissal.
Two creditors of the Oi Group debtors (the "objectors") opposed the FR's motion, arguing that the grounds for chapter 15 recognition still exist, and that terminating the recognition order would both prejudice them and offend the principles of international comity underpinning chapter 15. According to the objectors: (i) they would be prejudiced by dismissal of the chapter 15 case because they provided post-petition financing to the debtors relying upon the recognition order and the order enforcing the terms of the 2024 RJ plan; and (ii) terminating the recognition order would offend principles of comity because it would permit a chapter 11 filing on behalf of the debtors, thereby usurping the Brazilian court's extensive, ongoing administration of the debtors' 2023 RJ proceeding.
On July 9, 2025, after certain creditors objected to the proposed amendments to the 2024 RJ plan, the Brazilian court appointed a "watchdog," and directed the watchdog, a court-appointed trustee, and the public prosecutor to comment on the proposed plan amendments. In their subsequent reports, those entities found that the debtor companies were unable to satisfy their payment obligations (including obligations under the 2024 RJ plan) and questioned the legality of certain of the plan's provisions. On July 18, 2025, the Brazilian court directed the Oi Group debtors to address these concerns.
Before the Brazilian court issued a final ruling on the proposed plan amendments, an appellate court issued a report recommending that the U.S. bankruptcy court defer any ruling on the FR's termination/dismissal motion pending the Brazilian court's ruling on the proposed plan amendments. In August 2025, the Brazilian court and the Brazilian appellate court issued orders that, among other things: (i) stayed creditor collection efforts for the plan obligations subject to the proposed plan amendments; (ii) directed the Oi Group debtors to prepare a report detailing a plan to avoid disruption of public services in the event that the companies were liquidated; and (iii) stated that continuation of the 2023 chapter 15 case is necessary and essential for the effectiveness of the 2023 RJ proceeding.
On September 19, 2025, the FR filed a motion for an order closing the chapter 15 case under sections 350 and 1517(d) of the Bankruptcy Code and Rule 5009(c).
The Bankruptcy Court's Ruling
The U.S. bankruptcy court denied the FR's motion for an order terminating recognition of the debtors' chapter 15 cases.
U.S. Bankruptcy Judge Lisa G. Beckerman explained that courts in the Second Circuit "have not fully identified when the grounds for granting a recognition order have ceased to exist." Oi, 2025 WL 2806591, at *10. However, she noted, in Oi Brasil, the bankruptcy court emphasized that "the recognition process must be sufficiently flexible to achieve the goals of Chapter 15," and concluded that section 1517(d) provides its own "discretionary standard" for determining whether to terminate chapter 15 recognition that entails examination of more than the conditions for recognition set forth in section 1517(a). Judge Beckerman accordingly concluded that, in addition to the conditions for recognition specified in section 1517(a), "the general circumstances of a given restructuring appear relevant to a court considering whether to modify or terminate recognition under Section 1517(d)." Id. at *11.
First, the U.S. bankruptcy court found that even though the purpose of the 2023 RJ proceeding might only be "supervisory," the proceeding is still a pending "foreign proceeding" under foreign bankruptcy law relating to the adjustment of debts, as required by section 1517(a), and the debtors were attempting to amend the court-sanctioned 2024 RJ plan.
Next, the court explained that since chapter 15 recognition of the 2023 RJ proceeding, the Oi Group has implemented certain key aspects of the 2024 RJ plan, completed the debt restructuring contemplated by the plan, appointed new directors and management, and completed certain asset sales contemplated by the plan. However, Judge Beckerman noted, the Oi Group's liquidity has "deteriorated significantly" since entry of the chapter 15 recognition order.
The U.S. bankruptcy court concluded that these changed circumstances did not justify termination of recognition. Instead of seeking such relief to reflect the now "supervisory" status of the 2023 RJ proceeding, Judge Beckerman emphasized, the FR wanted to terminate the recognition order "to free itself of the strictures imposed by Section 1528 for a hypothetical future chapter 11 proceeding." Id. at *13. She rejected the argument that deterioration of the Oi Group's liquidity justified termination of recognition, given that the companies commenced the 2023 RJ proceeding, among other reasons, to address their liquidity problems.
Judge Beckerman found that pending disputes in the 2023 RJ proceeding indicated that termination of recognition was unwarranted. She also noted that the FR's request to terminate recognition because the debtors no longer needed chapter 15 relief was procedurally improper. Contrary to Rule 5009(c), Judge Beckerman explained, the FR had not filed a final report stating, among other things, that the purpose of the FR's appearance in the U.S. bankruptcy court had been completed. According to Judge Beckerman, terminating the recognition order because the debtors do not require further chapter 15 relief "would be an end run" around the goals of Rule 5009(c) and related section 350 of the Bankruptcy Code "to expedite disposition of the case and ensure fair treatment of all interested parties." Id. at *14 (quoting In re Lupatech, S.A., 611 B.R. 496, 503 (Bankr. S.D.N.Y. 2020)).
The U.S. bankruptcy court ruled that the FR's reliance on other provisions of the Bankruptcy Code as authority for termination—namely, sections 1507 and 105(a)—or Rule 60 of the Federal Rules of Civil Procedure, which governs requests for relief from a judgment or order, was misplaced because section 1517(d) "is the exclusive standard governing the modification or termination of a recognition order." Id.
The U.S. bankruptcy court also denied the motion to dismiss the chapter 15 case. In so ruling, the court concluded that, even though section 305(a)(2) expressly states that a bankruptcy court may dismiss or suspend all proceedings in a chapter 15 case, "[t]he text of [the Bankruptcy Code] and legislative history … suggest that the only way to reconcile Sections 103(a), 305, 1528, and 1529 is to hold that Section 305 does not provide for the dismissal of a chapter 15 case." Id. at *17.
Judge Beckerman explained that section 305 is not among the provisions of the Bankruptcy Code made applicable in chapter 15 cases by section 103(a). She acknowledged that section 1529 of the Bankruptcy Code provides that, "[i]f a foreign proceeding and a case under another chapter of [the Bankruptcy Code] are pending concurrently regarding the same debtor, the court …, [i]n achieving cooperation and coordination under sections 1528 and 1529, … may grant any of the relief authorized under section 305." Id. (quoting 11 U.S.C. § 1529(4) (emphasis added)). According to Judge Beckerman, despite the express reference to section 305 in section 1529(4), "[t]he context of Section 1529 … shows that this reference does not make Section 305 applicable to the dismissal or suspension of chapter 15 cases themselves." Id. Instead, she explained, section 1529(4) applies only if cases are concurrently pending with respect to a foreign debtor under both foreign bankruptcy law and another chapter of the Bankruptcy Code, as permitted under section 1528. Thus, Judge Beckerman reasoned, under section 305, a U.S. bankruptcy court may dismiss or suspend only cases filed by a foreign debtor's FR under a chapter of the Bankruptcy Code other than chapter 15. Id. at **17–18.
According to Judge Beckerman, this interpretation is supported by 28 U.S.C. § 1334(c)(1), which provides that, "[e]xcept with respect to a case under chapter 15 …, nothing in this section prevents a district court in the interest of justice or in the interest of comity with State courts or respect for State law, from abstaining from hearing a particular proceeding arising under [the Bankruptcy Code] or arising in or related to a case under the [Bankruptcy Code]." Given the express "carveout" or "excepting clause" for chapter 15 cases in section 1334(c)(1), the judge noted, some courts have interpreted the provision as authorizing abstention from a particular proceeding, whereas section 305 authorizes abstention from an entire bankruptcy case. Id. at *18.
However, the U.S. bankruptcy court determined that section 305 similarly does not apply to dismissal of chapter 15 cases:
The Excepting Clause must be read in the context of subsection (c)(1). The Excepting Clause modifies a clause that permits abstention with respect to a particular proceeding that arises under title 11 or arises in or relates to a case under title 11. Subsection (c)(1) does not permit abstention with respect to the title 11 case itself…. Therefore, the phrase, "[e]xcept with respect to a case under chapter 15 of title 11," must mean that abstention is not permitted with respect to particular proceedings that arise under the chapter 15 case or arising in or are related to a chapter 15 case. Subsection (c)(1) does not permit abstention from a title 11 case itself, so the Excepting Clause does not permit abstention of a chapter 15 case either.
Id. at *19 (citation omitted).
In addition, Judge Beckerman emphasized, dismissing a chapter 15 case under section 305 while a debtor's foreign bankruptcy case is still pending would be inconsistent with chapter 15's purpose to "provide effective mechanisms for dealing with cases of cross-border insolvency" because it would prevent a U.S. bankruptcy court from providing the cooperation and coordination with foreign bankruptcy courts upon which chapter is premised. Id. at *20 (quoting 11 U.S.C. § 1501(a)).
The U.S. bankruptcy court also rejected section 1521(a) as authority for dismissing or suspending a chapter 15 case because "appropriate relief … necessary to effectuate the purpose of [chapter 15]" likewise does not include dismissing or suspending a chapter 15 case.
In particular, the court explained that dismissing the Oi Group's chapter 15 cases would be inconsistent with the express objectives of chapter 15, including cooperation between U.S. and foreign courts and related functionaries and the fair and efficient administration of cross-border cases to protect all stakeholders. Id. at *21 (discussing 11 U.S.C. § 1501(a)). Among other things, Judge Beckerman noted that: (i) the Brazilian appellate court requested that the chapter 15 cases remain open to assist in the administration of the 2023 RJ proceeding; (ii) dismissal would not necessarily promote the fair and efficient administration of the cross-border bankruptcy cases because it was not clear whether the FR would actually file a chapter 11 case for the debtors, or whether such a case would be successful; and (iii) because the debtors might be successful in amending the 2024 RJ plan to issue new debt instruments, the FR might require additional relief from the U.S. bankruptcy court under chapter 15 to enforce those obligations. Id. at *22.
The U.S. bankruptcy court also determined that dismissal of the chapter 15 cases would not protect and maximize the value of the debtor's assets or facilitate the rescue of a financially troubled business, thereby protecting investors and employees. According to Judge Beckerman, dismissal would leave the Brazilian bankruptcy court and the parties to the 2023 RJ proceeding without any way to seek relief in the United States should it be necessary, and the prospects for successfully dealing with the Oi Group debtors' outstanding obligations and disputes over various issues in chapter 11 were "simply uncertain." Id. at *23.
Outlook
The bankruptcy court's ruling in Oi provides useful guidance regarding the standard to be applied to request for revocation of a chapter 15 recognition order based on circumstances that have changed since entry of the recognition order. The decision also suggests, contrary to the conclusion reached by many other courts, that neither section 305(a)(2) nor any other provision of the Bankruptcy Code authorizes the dismissal of a chapter 15 case.
Key takeaways from the decision include: (i) section 1517(d) is the exclusive standard governing the modification or termination of a chapter 15 recognition order; (ii) a U.S. bankruptcy court has considerable discretion in assessing whether chapter 15 recognition should be terminated due to changed circumstances; and (iii) section 305(a) does not apply to dismissal of chapter 15 cases in which recognition has been granted, but is limited to cases under other chapters.
Although the bankruptcy court's interpretation of section 305(a)(2) may be correct, the language of the provision does not on its face appear to limit such relief to dismissal or suspension of proceedings in non-chapter 15 cases.
The bankruptcy court in Oi did not address the FR's motion to close the 2023 chapter 15 case. On October 7, 2025, that motion was adjourned to a date to be determined. Given the court's findings regarding the termination/dismissal motion, it may be disinclined to conclude that closure is warranted under the circumstances.
