A Note by Christopher Stella
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Since chapter 15 of the Bankruptcy Code was enacted in 2006, there have been debates about when the public policy exception found in 11 U.S.C. § 1506 should apply to deny recognition of a foreign proceeding, law, or court order. Although some critics have made strong arguments in favor of a broad application of section 1506, the general rule among courts is to sparingly apply section 1506 and presume that recognition is proper. Despite the general rule in favor of recognition, courts have found some situations where section 1506 does apply. For instance, courts have applied section 1506’s public policy exception when core bankruptcy principles have been violated, or where statutory rights have been impinged. But courts have not fully addressed whether it would be proper to apply the public policy exception in a case where a foreign debtor’s … Read the rest
