Contents

Preface v

I. Introduction 1

A.Nature of International Insolvencies 1

B.Universality vs. Territoriality 3

II. Domestic Cases and Proceedings with Transnational Aspects 7

A.Domestic Subject-Matter Jurisdiction for Main Case 7

1.Assets in the United States 8

2.Foreign Affiliates 9

3.Sharing Jurisdiction: District and Bankruptcy Courts 9

B.Creditors Abroad 10

C.Assets Abroad 11

1.Extraterritorial Application of U.S. Bankruptcy Laws 13

2.Reach of the Automatic Stay and the Discharge Injunction 15

3.Exercising Avoidance Powers 19

4.Debtor in Possession 21

5.Foreign Proceeding to Assist Domestic Case 22

III.Foreign Cases with Domestic Aspects 25

A.Ancillary Proceedings Under Section 304 26

1.Features of a Section 304 Proceeding 26

2.Powers of the Court 32

3.Nature of Foreign Proceeding 34

4.Order of Distribution of Estate Assets 35

5.International Comity 36

6.Choice of Venue 43

7.Procedure 44

B.Personal Jurisdiction Over Domestic Parties 47

C.Declining to Exercise Domestic Jurisdiction 48

1.Abstention 49

2.Forum Non Conveniens 51

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International Insolvency

IV. International Conventions and Other Sources of International Bankruptcy Law 53

A.UNCITRAL Model Law on Cross-Border Insolvency 55

1.Definitions 57

2.Application of the Model Law 59

3.Access of Foreign Representatives and Creditors to Courts 60

4.Recognition of Foreign Proceeding and Relief 61

5.Cooperation and Communication with Foreign Courts and Foreign Representatives 65

6.Concurrent Proceedings 66

B.North American Free Trade Agreement (NAFTA) 68

1.General Principles 69

2.Procedural Principles 70

C.European Union Regulation on Insolvency Proceedings 75

1.Jurisdiction and Choice of Law 78

2.Recognition of Main Proceedings 80

3.Secondary Proceedings 81

4.Receiving Information and Filing Claims 83

5.Entry into Force and Retroactivity 84

D.Concordat 85

E.Protocols 88

V. Procedural Issues in Transnational Insolvency Cases 91

A.Appropriate Venue for the Transnational Case 91

B.Notice to Creditors 92

C.Communication Between Judges 93

D.Conflict of Laws in International Insolvency Cases 94

E.Distribution to Creditors 96

Appendices

A.Cross-Border Insolvency Concordat 99

B.UNCITRAL Model Law on Cross-Border Insolvency 119

C.European Union Regulation on Insolvency Proceedings 133

iv

Preface

This monograph was conceived by the International Law Relations Committee of the National Conference of Bankruptcy Judges while Judge Marcia S. Krieger was chair of the committee. The purpose of this monograph is to provide a ready reference for federal judges, including federal bankruptcy judges, on the law governing insolvency cases with transnational dimensions and, where appropriate, to provide some guidance. With the growing internationalization of economic relations and business empires, these issues arise with increasing frequency in the federal courts.

This monograph summarizes the statutory and case-law authority on international insolvency. The sources of law on this subject are undergoing rapid change. While U.S. statutes and case law traditionally have been the primary sources of law in this area, they are being supplemented by a model law in many countries and by regulation in the European Union.

About the Authors

The authors are U.S. bankruptcy court judges: Samuel L. Bufford, Central District of California; Louise DeCarl Adler, Southern District of California; Sidney B. Brooks, District of Colorado; and Marcia S. Krieger, District of Colorado. They serve on the International Law Relations Committee of the National Conference of Bankruptcy Judges.

The authors are grateful to the many people who assisted in the preparation of this monograph. Judge Bufford is especially grateful to his wife Julia Metzger, who endured the long evenings and weekends while Judge Bufford was writing the lion’s share of the monograph. Judge Bufford also acknowledges particularly the able assistance provided by his law clerks Chelsea Sneed, Rafael Zahralddin, and Deana Chuang, and by his judicial assistant Gloria Fouse. Judge Adler gratefully acknowledges the assistance of her law clerk Ole Oleson and judicial extern Raquel Koch in preparing her portion.

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