A Comment on Universal Proceduralism

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Professor Janger’s proposal of universal proceduralism seeks a middle ground between territorialism and universalism in international insolvency cases by placing administration of the case in one main proceeding while dividing the debtor’s assets into local pools, each governed by local priority rules. Not only is this concession to localism unnecessary, but it rests upon two conceptual errors. It ties local law to the assets that happen to be seized locally, rather than identifying legitimate local interests that should be served in a global set of proceedings. Because multinational creditors generally claim in all significant local proceedings, his approach prefers local distribution rules but may not prefer local creditors and leaves deserving local creditors to suffer in cases where circumstances have landed more substantial assets elsewhere. It also relies upon a substance-procedure distinction that is as clumsy here as it is elsewhere in the law. His leading examples of the distinction are readily shown to illustrate the impossibility of separating, for example, the control effects of the bankruptcy moratorium (which may require determining the substance of the claim) from its purely procedural aspects. Finally, this approach attempts to avoid forum shopping while opening the way for forum stashing, encouraging irresponsible debtors to switch their assets to haven jurisdictions with management friendly laws.