U.S. Bankruptcy Court Recognizes Bar Date Orders Entered in Canadian Asbestos Case
The Situation: Companies continue to explore creative solutions to resolve mass tort liability. While U.S. chapter 11 can be an effective tool to resolve such liability, the costs of chapter 11 and the evolving judicial landscape with regard to longstanding bankruptcy practice have pushed companies to explore alternative restructuring options, including leveraging foreign restructuring regimes coupled with recognition and enforcement proceedings under U.S. chapter 15.
The Result: On September 3, 2026, the U.S. Bankruptcy Court for the Southern District of New York issued a decision in the chapter 15 case of In re Asbestos Corp. Ltd., Case No. 25-10934 (LGB), granting recognition and enforcement of claims bar date orders entered by the Superior Court of Quebec in Asbestos Corporation Limited's ("ACL") proceeding under Canada's Companies' Creditors Arrangement Act ("CCAA") despite objections from U.S. asbestos claimants. The opinion also flagged several concerns for the Canadian Court and the parties.
Looking Ahead: Canada's CCAA (coupled with U.S. chapter 15) is increasingly becoming a potential restructuring option for companies to resolve asbestos or mass tort liabilities in the United States and abroad.
Introduction to 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).
Upon satisfaction of certain statutory requirements for recognition of a foreign "main" proceeding (as was the case in the ACL chapter 15 proceeding), the automatic stay under section 362 of the Bankruptcy Code comes into force to protect the foreign debtor and its assets in the United States from creditor collection efforts. Once foreign main recognition is granted, section 1521(a) of the Bankruptcy Code authorizes the bankruptcy court to grant the foreign representative "any appropriate relief" and "any additional relief that may be available to a trustee … where necessary to effectuate the purpose of [chapter 15] and to protect the assets of the debtor or the interests of the creditors." Section 1522(a) permits the court to grant discretionary relief under section 1521(a) "only if the interests of the creditors and other interested entities, including the debtor, are sufficiently protected"—i.e., (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).
Similarly, section 1507(a) of the Bankruptcy Code provides that the bankruptcy court may provide "additional assistance" to a foreign representative "under [the Bankruptcy Code] or under other laws of the United States." 11 U.S.C. § 1507(a). 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).
Chapter 15 contains a narrow public policy exception under section 1506, which prohibits relief otherwise available in chapter 15 where it would be "manifestly contrary" to the public policy of the United States. 11 U.S.C. § 1506. 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).
The ACL Opinion
Judge Lisa Beckerman's decision in the ACL chapter 15 proceeding is a significant development at the intersection of chapter 15 and mass tort restructuring. The ACL foreign representative requested the U.S. bankruptcy court recognize and enforce bar date orders, including one applicable to existing asbestos claimants issued by the Canadian Court in ACL's CCAA proceeding—the first CCAA case to involve asbestos claimants. Op. at 1-3. The foreign representative also sought recognition of claims review and adjudication orders, but the court did not rule on this relief. Id. at 2, 10.
A chapter 7 trustee for the estate of National Services Industries, Inc. pending in the Bankruptcy Court for the District of Delaware, Case No. 12-12057, and various U.S. asbestos claimants (the "Asbestos Parties") mounted a multi-pronged objection to recognition of the bar date orders: they argued that bar dates are disfavored in U.S. asbestos bankruptcies (where section 524(g) trust mechanisms are the norm and many cases proceed without bar dates), that the claims filing process offered insufficient protections for U.S. claimants, and that the bar date order was manifestly against U.S. public policy. Id. at 5-6, 8.
Rejecting each of these arguments, Judge Beckerman acknowledged that bar dates are not the norm in U.S. asbestos chapter 11 cases, in part because of the section 524(g) trust framework, but found that bar dates are "not unheard of" in asbestos cases and "not uncommon" in other mass tort bankruptcies. Id. at 6. Applying the "sufficient protection" standard of section 1522(a) and drawing on the principle that U.S. and Canadian courts "share the same common law traditions and fundamental principles of law," the court found that the Canadian Court had afforded the U.S. asbestos claimants a full and fair opportunity to be heard. Id. at 4-5. Importantly, the court emphasized that the Canadian Court carefully considered and ruled on the U.S. asbestos claimants' objections before entering its bar date order, and the claimants did not seek leave to appeal that order. Id. at 4. The court also rejected the section 1506 public policy argument, holding that differences between U.S. and Canadian law regarding the treatment of asbestos claimants in restructuring proceedings do not render a Canadian bar date order "manifestly against" U.S. public policy. Id. at 8-9. The court also noted that Congress could have expressly precluded bar dates for asbestos claimants in chapter 11 and chose not to do so. Id. at 8.
Notably, before Judge Beckerman's decision, Judge Martin Glenn overruled similar objections to foreign main recognition raised by the Asbestos Parties that the absence of protections afforded to asbestos claimants under section 524(g) of the Bankruptcy Code and public policy concerns precluded recognition, reasoning that such arguments were premature. In re Asbestos Corp. Ltd., Case No. 25-10934 (MG), Dkt. No. 141 (Oct. 30, 2025), aff'd, Case No. 25-cv-09889, Dkt. No. 51 (S.D.N.Y. Sept. 9, 2026) (opinion forthcoming).
The court also used the opinion to air practical concerns directed at the Canadian proceeding, including extending a cure window for deficiently-filed claims and encouraging greater transparency regarding the claims adjudication process. Id. at 7-8. These concerns, however, did not alter Judge Beckerman's determination that the statutory requirements for chapter 15 relief had been satisfied. Id. at 9-10.
Implications for Asbestos and Mass Tort Restructurings
The ACL opinion carries several implications for the growing number of cross-border asbestos and mass tort restructurings. First, the decision confirms that bar date orders are permissible in asbestos-related insolvency proceedings—even when such orders would be atypical in a U.S. chapter 11—so long as claimants receive adequate notice and an opportunity to be heard. Second, the opinion reinforces chapter 15 as a viable avenue for foreign debtors to enforce orders that could be contested or unavailable in a chapter 11 context, provided the foreign proceeding meets the "sufficient protection" threshold and does not run afoul of the narrow public policy exception. Third, the court's careful reservation of the claims adjudication issues—and its pointed commentary on more fulsome disclosure to claimants—signals that the U.S. bankruptcy court will nonetheless act as an oversight mechanism at each stage, offering foreign representatives a path to enforcement but ensuring protections for U.S. creditors.
Three Key Takeaways
- Bar dates in asbestos and mass tort restructurings enable debtors to narrow claims on the front end. The ACL opinion confirms bar dates can apply in asbestos insolvency proceedings, even though they are uncommon in chapter 11 cases under section 524(g), helping define the claim population and streamline restructuring. Notably, the CCAA bar date order covers only existing, diagnosed claimants—not future claims. How the CCAA proceeding addresses future claims remains a key issue to watch.
- Chapter 15 can be a useful tool for resolving mass tort liability, enabling U.S. recognition of foreign court orders that might be unusual in domestic chapter 11 proceedings. Judge Beckerman's reasoning aligns with Judge Glenn's earlier opinion declining to require section 524(g) protections for recognizing the CCAA proceeding. Consistently, U.S. bankruptcy courts have held that chapter 15 authorizes recognition of non-consensual third-party releases approved by foreign courts.
- Chapter 15 does not permit U.S. bankruptcy courts to relitigate issues determined by foreign courts. Judge Beckerman recognized the Canadian Court's orders once chapter 15's requirements were met—even while flagging concerns—underscoring that foreign restructuring regimes like the CCAA can address mass tort liabilities through a more streamlined process than chapter 11.
