affecting U. S. persons where the foreign court had made no factual determination of whether it had personal jurisdiction over such persons, among other things. 8
Section 1506 Remains Narrowly Applied in the Wake of Purdue Pharma
In Harrington v. Purdue Pharma L. P. 9, the U. S. Supreme Court ruled that chapter 11 plans may not release non-debtor third parties from creditors’ claims without those creditors’ consent. Would that mean that foreign plans with nonconsensual third-party releases could not be enforced in the U. S. through chapter 15 based on the public policy exception? Two courts denied such interpretation.
In re Crédito Real involved the recognition of a Mexican Concurso plan containing nonconsensual third-party releases approved by a Mexican court. 10 An objection argued, among other things, that recognition of nonconsensual third-party releases would be“ manifestly contrary” to U. S. public policy. 11 The Delaware Bankruptcy Court disagreed, finding the Mexican proceeding to be fundamentally fair, 12 and that enforcement of such releases would not contravene a fundamental U. S. policy because Congress specifically authorized nonconsensual third-party releases in asbestos-related bankruptcies through section 524( g) of the Bankruptcy Code. 13
A similar result was reached in In re Odebrecht by the Bankruptcy Court for the Southern District of New York, which recognized and enforced a recuperação judicial plan( a Brazilian
8
See In re Nexgenesis Holdings Ltda., 662 B. R. 406( Bankr. S. D. Fla. 2024).
9
See Harrington v. Purdue Pharma L. P., 603 U. S. 204( 2024).
10
In re Crédito Real, S. A. B. de C. V., SOFOM, E. N. R., No. 25-10208( TMH), 2025 WL 977967, at * 156( Bankr. D. Del. Apr. 1, 2025), aff’ d, No. 25-371-CFC( D. Del. Mar. 31, 2026).
11
Id. at 160.
12
Id. at 171 – 72( noting that Mexican rulings generally are recognized by U. S. courts).
13
Id. at 173( citing Purdue, 603 U. S. at 222); see also 11 U. S. C. § 524( g). judicial reorganization proceeding) approved by a Brazilian court over the U. S. Trustee’ s objection that it contained impermissible third-party releases. 14 The court adopted the Crédito Real reasoning and also emphasized that parties may lose rights in chapter 15 that they would otherwise have under the Bankruptcy Code or U. S. law. 15 Other Developments Recent decisions further confirm that courts will not invoke the public policy exception to deny recognition simply because the foreign proceeding implicates U. S. federal law concerns or lacks equivalent U. S. statutory protections. In re Asbestos Corp. Ltd. 16 involved a public policy exception challenge to the recognition of a Canadian proceeding of an asbestos mining company. Asbestos claimants objected on the basis that Canada lacks the protections provided by Bankruptcy Code section 524( g), which provides specific protections for present and future claimants in asbestos-related bankruptcies. While leaving open the issue of plan recognition and enforcement, the court granted recognition of the Canadian proceeding and extended the automatic stay, holding that the absence of comparable protections under Canadian law“ fails to meet the public policy exception.” 17 Meanwhile, a recent decision granted recognition to a cannabis company’ s foreign proceeding despite the ongoing U. S. federal prohibition of cannabis and the inability to restructure such businesses under plenary proceedings of the U. S. Bankruptcy Code. 18 continued on page 56
14
In re Odebrecht Engenharia e Construcao S. A.- Em Recuperacao Jud., 669 B. R. 457, 477( Bankr. S. D. N. Y. 2025).
15
Id. at 474.
16
See In re Asbestos Corp. Ltd., 674 B. R. 855, 866( Bankr. S. D. N. Y. 2025).
17
Id. at 877.
18
In re The Cannabist Co. Holdings Inc., No. 26-10426( BLS), Docket No. 82, Order Granting Recognition of Foreign Main Proceeding and Request for Certain Related Relief( Bankr. D. Del. May 9, 2026)( granting recognition to Canadian insolvency proceeding
21