ABSTRACT
Modified universalism holds as its central postulates that (1) the reorganization of an enterprise ought to be administered in, and conducted under the law of the jurisdiction that is the enterprise’s center of main interest (COMI); and (2) that secondary or ancillary proceedings should assist the main proceeding when necessary. There is, unfortunately, a central paradox within modified universalism laid bare by jurisdictional competition and forum shopping: the goal of centralization and coordination – essential to value maximization – is in tension with the due process values associated with fairness to creditors and preserving creditor expectations. The wedge between coordination and due process is driven home by jurisdictional competition for cases – the market for bankruptcy. Where complex enterprises are involved, the choice of forum can carry with it favorable treatment for particular stakeholders, or the ability to preserve private benefits for management.
This essay will proceed in four steps. First, it will explain and build a case for ‘Global Erie’: a cross border insolvency architecture that respects realizable territorial priority as an entitlement baseline but facilitates a procedurally universal global administration of the debtor. This section largely recaps previous work. Second, it will develop and explore the problem of pernicious procedural competition by looking at two examples: (1) in the US, Purdue Pharma, and (2) more generally the problem of third-party releases and quick sales. Third, it will develop the concept of recognition push-back and explore why preserving opportunities for such push-back might be necessary to limit the effects of pernicious jurisdictional competition. Fourth, and finally, it will identify several features of the MLEG that address this problem appropriately and others in the MLEG and MLJ that raise concerns.
Janger, Edward J, Global Erie and Its Limits: Channeling Jurisdictional Competition for Procedure (March 31, 2022). Texas International Law Journal, volume 56, p 181, 2022, Brooklyn Law School, Legal Studies Paper No 706.
First posted 2022-04-04 13:00:38
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