United States' Bankruptcy Jurisdiction Over Foreign Entities: Exorbitant or Congruent?
Journal of Corporate Law Studies (Forthcoming)
40 Pages Posted: 16 Feb 2017
Date Written: February 16, 2017
Alarmed at the ease with which global bankruptcy jurisdiction can be engineered in the United States through a combination of the Bankruptcy Code’s low bar to entry and the worldwide effects of a bankruptcy case, critics argue that the US promotes abusive bankruptcy forum shopping and harmful imposition of US norms on overseas stakeholders. This paper advances a revised account of US bankruptcy jurisdiction over non-US debtors from a distinctively Anglo-American standpoint. The paper’s central thesis is that critics overemphasize formal jurisdictional rules and pay insufficient attention to how US courts actually exercise jurisdiction in practice. It compares the formal law ‘on the books’ in the US and UK for determining whether or not a domestic insolvency or restructuring proceeding relating to a foreign debtor can be maintained in each jurisdiction and provides a functional account of how US bankruptcy jurisdiction over foreign entities is exercised in practice using the concept of jurisdictional congruence as a benchmark. While American and British approaches to abusive forum shopping are on different legal cultural paths, the paper also identifies reasons for thinking that they are trending towards rough functional equivalence influenced, at least in part, by the US’s commitment to the UNCITRAL Model Law. In sum, the paper lays foundations for further critical reflection on the roles that judges, practitioners and the ‘centre of main interests’ principle play in configuring the market for international bankruptcy case filings and in facilitating and regulating forum shopping in that market. Through the lens of legal development, it also presents some practical and policy challenges for universalism, international insolvency law’s dominant theory.
Keywords: Bankruptcy, corporate insolvency, cross-border insolvency, forum shopping, jurisdiction, chapter 11
JEL Classification: K20, K41
Suggested Citation: Suggested Citation