Cooperation in International Bankruptcy : A Post-Universalist Approach

This article examines the several competing systems proposed for international cooperation in the bankruptcy cases of multinational companies and concludes that a cooperative form of territoriality would work best. Universalism, the system that currently dominates the scholarship, diplomacy, and jurisprudence of international bankruptcy, holds that the courts of the multinational company's "home country" should have worldwide jurisdiction and apply its own law to the core issues of the case. Universalism is unworkable because it would require that countries permit foreign law and courts to govern wholly domestic relationships and because the of "home countries" of multinational companies are so ephemeral and manipulable that the resulting system would be unpredictable. Modified universalism, secondary bankruptcy, and Rasmussen's corporate charter contractualism are similarly flawed. Territoriality, a system in which each country has jurisdiction over that portion of the multinational company that is within its borders, provides what is potentially the best foundation for international cooperation. Though a system of cooperative territoriality potentially requires multiple filing and prosecution of claims, cooperation among courts and administrators with respect to particular reorganizations and liquidations, and international agreements to control fleeing assets, it offers the best hope for a workable, worldwide system