Vanderbilt Journal of Transnational Law


Ulrich Huber

First Page



In addition to giving a fresh start to the debtor, a primary goal of bankruptcy law (at least of liquidation bankruptcy) is to distribute equally the debtor's assets to his creditors. Although the Bankruptcy Reform Act of 1978 and its 1984 Amendments (collectively "the Code") provide many ways of achieving this goal in domestic bankruptcies, these methods often prove to be of little help when a debtor's assets are located in more than one country.

Equality of creditors regardless of their origin, however, is considered essential for the development of international trade. International trade has grown substantially, if not explosively, in recent decades. The issue of creditor equality has gained in importance because, along with the growth of international commerce, the number of transnational bankruptcies has increased. Because few treaties address this subject, primarily municipal law governs transnational bankruptcies. Therefore, an analysis of United States municipal law regarding the equal treatment of creditors in bankruptcy cases crossing borders is appropriate.

This article contains two main parts (Sections II and III), which examine the issue of creditor equality from opposing points of view. Section II considers the Code's treatment of assets of a foreign debtor located within the United States and analyzes sections 304 through 306 of the Code. Section III discusses the problems arising when a United States debtor owns assets located abroad.