1.3.1. Ancillary Proceedings

One of the innovations introduced by the Bankruptcy Code 1978 is the provision for

foreign representatives to commence 'proceedings ancillary to foreign proceedings'. '•'

Ancillary proceedings allow a United States court to act in aid of, and auxiliary to,

foreign insolvency proceedings without full domestic proceedings having to be opened.

In ancillary proceedings a foreign representative may request, and United States

courts may take, a wide range of measures in order to assist foreign proceedings. These

measures come under three headings: Courts may assist a foreign representative by

enjoining any action against the debtor or the debtor's property; by ordering the

turnover of the debtor's property to the foreign representative; and, finally, by ordering

other appropriate forms of relief. 1

The range of possible measures by which courts may lend assistance i s extremely broad.

I f the restraining of creditor action, including that of secured creditors, and the turnover

of assets are already extensive powers, the catch-all provision 'other appropriate

r e l i e f leaves the court essentially free to choose the exact type of relief.- '' Furthermore,

courts may subject any granti ng of relief to specific conditions. Lor instance, the court

is not limited to a choice between either the unconditional surrender of local assets

to the foreign representative or the denial of any control by the representative over

such assets but may opt for a middle position. " Accordingly, on occasion courts have held t h a t ' I p ] ursuant to Section 304( b ) , the C ]ourt is free to broadly mould appropriate

relief in near blank fashion'."

Ancillary proceedings, and therefore assistance, are relatively widely available to foreign

representatives. '" Both the characterisation of a 'foreign proceeding' as an insolvency

proceeding, as well as the international jurisdiction of the foreign court (necessary for

ancillary relief) are broadly defined. ' A 'foreign proceeding' for the purposes of the

Code is a proceeding, whether judicial or administrative and whether or not under

bankruptcy law 'tor the purpose of liquidating an estate, adjusting debts by composition,

extension, or discharge, or effecting reorganisation'. With regard to the international

jurisdiction of the foreign court,.section 101 ( 2 3 ) provides that the proceedings

must take place in the courts of a foreign country in which the debtor's domicile,

residence, principal place of business, or principal assets were located at the commencement

of such proceeding. Further aiding the availability of relief i s the fact that

the foreign representative is guaranteed jurisdictional immunity for any other purpose

than the ancillary proceedings. Foreign representatives might otherwise decide that

the potential costs outweigh the potential benefits of seeking assistance, since they

would not only run the risk of being denied assistance but also of being subjected to

the jurisdiction of the court.