Poor court coordination across bankruptcy jurisdictions globally creates uncertainty in the protection of debtor’s value and creditor recoveries. Such judicial inefficiency can impede firms from acquiring foreign assets and sourcing capital internationally. To evaluate the extent to which global insolvency cost drives cross-border capital flows, we exploit the introduction of Chapter 15 to the U.S. Bankruptcy Code in 2005, which aims to facilitate coordination between U.S. and foreign courts for multinational bankruptcy proceedings. We find that firms in countries with greater utilization of Chapter 15 are more (less) likely to acquire (divest) U.S. targets after its enactment. In contrast, these firms are not more likely to acquire their domestic or non-U.S. foreign targets. Chapter 15 adoption results in greater debt capacity–firms expand their capital sources and supply chains globally. Our results suggest that mitigating frictions arising from global insolvency proceedings can be an important driver for cross-border capital flows and the growth of multinational firms.