Chapter 15 Cross-Border Insolvency Means Comity And Cooperation; Not Necessarily Comedy And Concern

After taking the last train into the small Italian town of Vernazza, my travelling party soon came to realize that our booked inn had given away our rooms and that there were no available rooms in town and no more trains out. Facing language barriers, cultural barriers, and the real risk that we may be stuck overnight on the streets in a foreign place, it appeared we were without remedy. After much anxiety, an older lady, realizing our distress, mumbled some Italian to us and signaled for us to follow her to the basement where she would allow us to stay. Relief, protection, and gorgeous views out over the Mediterranean Sea!

Today, more likely than not, your business or business client is engaged in international business, whether it is foreign operations and ventures, importing or exporting products, or investments in foreign businesses. There is an allure to these international endeavors and potentially big profits too. Many find international business to be natural extensions of their domestic interests but also realize that there are common and unique risks. One of the principle risks concerns cash flow and insolvency, and foreign businesses are not immune from these risks and in some nations may be more prone to them. Add on cultural, language, and legal barriers that differ from understood American practices and an insolvent foreign business or trade partner quickly becomes a real anxiety to domestic businesses and their executives, especially if a Chapter 15 bankruptcy proceeding is filed or threatened. Do I send someone abroad, hire foreign counsel, and deal with unfamiliar courts to pursue collection of my claims or to protect my own assets and interests? You and your business or business client may feel stuck with no place to go and no train out.

A year after impressing upon a young nation the idea of judicial review in Madison v. Marbury, Chief Justice John Marshall in Murray v. Schooner Charming Betsy, 6 U.S. 64, 118 (1804), tread softly into international law and held that "an act of congress ought never to be construed to violate the law of nations if any other possible construction remains." Thus, comity of nations became a real and present concern for American courts attempting to adjudicate issues commingling domestic and foreign interests. Comity simply means civility or courtesy and it implies collective solutions and cooperation amongst interests.

Nothing is less civil that a pack of dogs fighting over the last scraps...