Universalism and Choice of Law
Penn State International Law Review, Vol. 23, No. 3, 2005
14 Pages Posted: 20 Oct 2015
Date Written: January 3, 2004
Abstract
This Article sets forth a basic structure for a choice-of-law analysis in a multinational bankruptcy case. The analysis distinguishes between two distinct, yet often conflated, issues, (1) the law governing a specific claim and (2) the law governing the distribution of the proceeds of the insolvency proceeding. The distinction is critical because the first issue is typically governed by nonbankruptcy law, while the second is governed by bankruptcy law.
Using a recent United States’ case (Lernout) as an example, the Article demonstrates how a court failed to distinguish between these choice of law issues. The failure resulted in the application of United States’ bankruptcy law rather than the bankruptcy law of the debtor’s center of main interests. The Article concludes that courts in universalist bankruptcy jurisdictions, such as the United States, should be committed to a choice of law framework that envisions a unified distribution to creditors through liquidation or reorganization.
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