By David L. Eaton (Kirkland & Ellis LLP) and Aaron J. David (Paul, Weiss, Rifkind, Wharton & Garrison LLP)*
When faced with a Chapter 15 foreign representative seeking discretionary post-recognition relief on behalf of a foreign debtor, courts have struggled to decide whether the requested relief falls under § 1507(a), referring to “additional assistance” and subject to the factors enumerated in § 1507(b), or under § 1521, affording “appropriate relief” under the balancing test in § 1522. Because both provisions seem to enable courts to provide discretionary relief, but subject to different standards, courts and commentators have lamented the difficulty of assessing “where section 1521 ends and where section 1507 begins.”
In our view, the problem is illusory. We revisit Chapter 15 in light of the “language and design of the statute as a whole” to argue that § 1507 has been misinterpreted. On our reading, §1507 is not, itself, a source of discretionary relief, but rather sets out principles to guide courts in granting any discretionary relief, including under § 1521. Specifically, § 1507(a) allows courts to employ applicable non-bankruptcy law in fashioning discretionary relief, and § 1507(b) imposes standards that preserve pre-Chapter 15 jurisprudence governing such relief. Interpreting § 1507 this way clarifies that § 1521 is the true source of discretionary relief, but that it should be employed against the background principles of § 1507.
The full article was published in the ABI Journal and is available here.
*David Eaton is a recently retired partner of Kirkland & Ellis LLP. Aaron David is an associate at Paul, Weiss, Rifkind, Wharton & Garrison LLP. The article reflects the views of authors, and does not represent the views of Kirkland & Ellis or Paul, Weiss.