Recent amendments to United States insolvency legislation have introduced changes that creditors – including foreign businesses with US-based counterparties – cannot afford to overlook. The revisions alter how insolvency proceedings are initiated, how creditor claims are ranked, and what remedies remain available once a debtor enters a formal restructuring process. For international companies operating through a Delaware LLC (a limited liability company formed under Delaware corporate legislation) or any other US entity, the window to act is narrow.
The amendments took effect in early 2025 and apply to insolvency proceedings filed in US federal courts. They modify creditor priority rules, tighten the timeline for submitting a proof of debt (a formal claim filed by a creditor in US insolvency proceedings). Additionally. Expand the circumstances under which a restructuring plan can be confirmed without unanimous creditor consent. International businesses holding claims against US debtors must review their creditor positions and file documentation before applicable bar dates pass.
This alert identifies which business categories are affected, outlines the compliance deadline, and sets out five immediate actions for international companies with exposure to US insolvency proceedings.
What changed – and when it took effect
US federal insolvency legislation underwent a series of amendments in the first quarter of 2025. The core changes fall into three categories.
Creditor priority and proof of debt procedures. The amended rules shorten the period within which creditors must file a proof of debt after receiving notice of insolvency proceedings. Previously, foreign creditors received an extended filing window. Under the revised rules, that extension has been reduced. A creditor that misses the bar date loses the ability to participate in distributions – regardless of the validity of the underlying claim.
Confirmation of restructuring plans without full creditor consent. The amendments expand the conditions under which a restructuring plan can be crammed down on dissenting creditor classes. US District Court judges now have broader discretion to confirm plans that treat dissenting unsecured creditors less favourably, provided certain statutory conditions are met. This directly limits the leverage that minority creditors previously held in plan negotiations.
Role of the liquidator and administrator in cross-border proceedings. For foreign companies with US assets. The amendments clarify the standing of a foreign liquidator (an officeholder appointed to wind up a company's affairs) or administrator (an insolvency officeholder managing a debtor's assets during restructuring) to participate in US proceedings. Recognition requirements under Chapter 15 of US insolvency legislation have been tightened. Foreign officeholders must now file additional documentation to obtain recognition, and the timeframe for that process has changed.
Who is affected – threshold criteria and business categories
The amendments affect a broad range of parties. International companies should assess their exposure against the following categories.
- Foreign creditors holding unsecured claims against US-incorporated entities, including Delaware LLCs and corporations registered in other US states.
- Foreign companies with cross-border lending arrangements governed by US law, where the borrower is subject to US insolvency proceedings.
- Investors in US-issued debt securities regulated by the SEC (US Securities and Exchange Commission), particularly where the issuer has entered or is approaching insolvency proceedings.
- Foreign entities acting as foreign main proceeding officeholders – including any foreign liquidator or administrator seeking recognition of non-US insolvency proceedings in a US federal court under Chapter 15.
- Parties to commercial contracts containing arbitration clauses administered by JAMS (Judicial Arbitration and Mediation Services) or the AAA (American Arbitration Association), where the counterparty has entered insolvency proceedings. The stay on proceedings triggered by insolvency now applies more broadly to pending AAA arbitration and JAMS arbitration proceedings.
The threshold for triggering these new rules is the filing of insolvency proceedings in a US federal court after the effective date of the amendments. All proceedings filed from early 2025 onward are subject to the revised regime. For ongoing proceedings filed before that date, certain transitional provisions apply – but the narrowed creditor timelines already affect many pending cases.
For a detailed assessment of your creditor position in ongoing or anticipated US insolvency proceedings, contact us at info@ferrazwhitmore.com.
What to do now – immediate actions for international companies
The risk of inaction is concrete. A creditor that fails to file a proof of debt by the bar date is barred from receiving any distribution. A foreign officeholder that misses the updated recognition deadline may find US assets outside its reach. The following five actions should be completed without delay.
1. Audit your US-counterparty exposure. Identify all commercial relationships with US entities – including Delaware LLCs and other US-incorporated counterparties – where insolvency proceedings have been filed or are a credible risk. Review all outstanding receivables, loan agreements, and security interests against this list.
2. Check bar dates for all active proceedings. If a US debtor has already filed for insolvency, obtain the court-issued claims bar date immediately. Under the amended rules, the window for foreign creditors is shorter than many international businesses assume. Missing this date is irreversible. Engaging a US insolvency and restructuring lawyer to monitor docket filings is advisable for any creditor with material exposure.
3. Review restructuring plan terms and voting rights. If a restructuring plan has been proposed, assess whether your creditor class is impaired and whether you have been assigned to a class with other dissenting creditors. The expanded cram-down provisions mean that dissent alone will not block confirmation. Consider whether negotiating plan treatment is more effective than formal opposition.
4. Assess the impact on pending arbitration proceedings. If you have an active arbitration before JAMS or AAA involving a debtor that has entered insolvency proceedings, review whether the automatic stay applies to that proceeding. The broadened stay provisions under the amended legislation may suspend your arbitration. Seek relief from the stay promptly if continuation is necessary to preserve your position.
5. Coordinate cross-border proceedings where a foreign officeholder is involved. If your company or a counterparty has insolvency proceedings pending in another jurisdiction. Additionally. US assets are in scope, initiate the Chapter 15 recognition process without delay. The revised documentation requirements for foreign liquidators and administrators are more demanding. Delays in recognition can result in US assets being distributed before the foreign proceeding has any claim over them.
International businesses facing corporate disputes in the United States alongside an insolvency situation should also assess whether creditor rights can be protected through parallel litigation or settlement strategies before the debtor's assets are absorbed by the insolvency estate.
For companies with exposure in other jurisdictions, the creditors meeting procedures and claim-filing requirements vary significantly. Our alert on insolvency law amendments in Brazil covers parallel developments across the Americas region that may affect creditors operating in both markets simultaneously.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising clients across 46 jurisdictions on insolvency and restructuring matters, cross-border creditor enforcement, and commercial dispute resolution. Our team combines Portuguese civil law expertise with English common law tradition to advise on US insolvency proceedings, Chapter 15 recognition, creditor rights strategy, and restructuring plan analysis. We work with international creditors, foreign liquidators and administrators, institutional investors, and in-house legal teams who need coordinated advice across multiple legal systems. As an international law firm serving clients who need a lawyer in the United States with cross-border capabilities, we provide practical, results-oriented counsel at each stage of a US insolvency process. To discuss your exposure under the amended US insolvency regime, reach out to info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.