The rise of a global economy has itself given rise to a very practical question: What happens when a business with cross-border debt, assets, and business relationships faces insolvency?
Where commercial insolvency is concerned, firms with cross-border business relationships face essentially the same issues as their domestic counterparts – but with one additional consideration. Unlike their domestic counterparts, cross-border firms operating under judicial protection while they reorganise or liquidate must also consider the question of how best to extend that protection as far as their business interests.
This very practical, economic question implicates a number of fundamental, philosophical ones: For example, should national borders afford some creditors of a cross-border firm a legal or judicial advantage over others? Should debtors be able to ‘forum shop’ in advance by registering or incorporating in debtor-friendly jurisdictions, or by ‘parking’ assets in jurisdictions beyond the reach of creditors?
This article seeks a far more modest goal: To trace the broad outlines of cross-border insolvency practice in one of the world’s leading insolvency jurisdictions – the US. More specifically, it will address the question of how US law and US Bankruptcy Courts treat the business interests of those insolvent debtors who are reorganising or liquidating beyond the reach of domestic US insolvency law.
This 2013 article is accessible here. Republished with kind permission of Chase Cambria Company (Publishing) Ltd.