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Can Non-Citizens and International Corporations File Bankruptcy in the United States?

Posted on Apr 8, 2014 in Bankruptcy, Business Bankruptcy

America is still a magnet to people from all over the world. People come to America both legally and illegally. Chicagoland has one of the broadest immigrant and first-generation populations in America. Chicago is also a magnet for many corporations with international headquarters. Many corporations and individuals find their way to Chicago from Mexico, China, Puerto Rico, Ukraine, and Poland, just to mention a few. Unfortunately, some fall on hard financial times. The individual or company then confronts a few difficult questions. Does a bankruptcy case need to be filed? Where can the case be filed? What assets, if any, are protected from creditors? These questions lead to another important question, can a non-U.S. Citizen file bankruptcy in the United States? Bankruptcy, and the rights and protections provided for in the Bankruptcy Code, are a part of a citizen’s Constitutional rights. Article I, Section 8, Clause 4 of the Constitution of the United States provides “The Congress shall have Power To . . . establish . . . uniform Laws on the subject of Bankruptcies throughout the United States . . . .”

Fortunately, unauthorized immigrants and legal non-U.S. Citizen residents can access this important Constitutional right. According to section 109 of the Bankruptcy Code, “only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under this title.” A debtor is not defined by their immigration or citizenship status. Despite the clarity of this section of the Bankruptcy Code, this area of Bankruptcy law is difficult to fully comprehend. You will need to consult a bankruptcy attorney to fully understand the impact a bankruptcy filing will have on your assets and liabilities. If you live in Chicago, but do not have a green card or worker’s visa, you can still be eligible for bankruptcy protection in Chicago.

Many non-U.S. Citizens can take advantage of Chapter 15 to the Bankruptcy Code. Chapter 15 assists debtors with assets and liabilities in multiple countries to file a main bankruptcy case in one country (e.g., the country of their residence) and then initiate ancillary proceedings in other countries where the debtor has assets. Chapter 15 of the Bankruptcy Code and the European Union’s Regulation on Insolvency are based in large part on the Model Law on Cross-Border Insolvency issued by United Nations Commission on International Trade Law (UNICTRAL). Many countries around the world have endorsed or entered laws or regulations identical to, or substantially similar to the Model Law. If you are a citizen of one of the countries that has adopted or endorsed the UNICTRAL’s Model Law, you will have an easier time identifying and forcing your creditors to recognize and accept your international bankruptcy filing.

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