Circuit Splits Choice-of-Law Determinations in Bankruptcy Court
by: Hon. Judith Wizmur
U.S. Bankruptcy Court; New Jersey
Bankruptcy courts often address causes of action and claims arising under or governed by state law. Often presented is the question of which state’s laws to apply. To be discussed here is the further question raised: How does a bankruptcy court make a choice-of-law determination?
In answering this question, the circuits have split. Some circuit courts have viewed choice-of-law determinations for a federal court having bankruptcy jurisdiction as a matter of substantive state law. In such instances, those courts have held that the federal court must employ the choice-of-law rule of the applicable forum state (“state rule”). Other courts have held that federal courts sitting in bankruptcy have the independent discretion to make choice-of-law determinations (“federal rule”). A third group of courts have sidestepped the issue by deciding either that the substantive choice-of-law outcome in each case would be the same under either the state or federal rule, or that the contractual choice-of-law provisions chosen by the parties must be honored.
Read the full article. (Materials from the 2006 Mid-Atlantic Bankruptcy Workshop)
Minutes from 2006 Winter Leadership Conference
On Dec. 1, 2006, the Asset Sales Committee met jointly with International Committee in Scottsdale, Ariz., at ABI's Winter Leadership Conference. Conducting the meeting on behalf of the Asset Sales Committee were Committee Co-Chairs David Peress and Weston Anson, who recently initiated a request for potential topics for the educational program at the upcoming Annual Spring Meeting utilizing the committee's listserve. Several excellent proposals were made and Mr. Peress indicated that more ideas are welcome and that ABI's Vice President of Education, Bob Keach, has reached out to all of the committees seeking input not only for the Annual Spring Meeting but for regional meetings as well.
The committee continues to publish a quarterly e-newsletter, which offers an excellent opportunity for committee members to publish articles or promote new ideas related to asset sales. Mr. Peress commended Gary Jacobson for his excellent work as editor of the e-newsletter and suggested that members with proposed content contact either the co-chairs or Mr. Jacobson directly. In addition, the committee has completed the Intellectual Property Handbook edited by Mr. Anson and Geoff Berman. The ABA has accepted the Handbook for publication, and it is currently being reviewed by ABI as a potential joint-publisher. The Handbook is expected to be published early next year.
Following announcements on behalf of the International Committee, Mr. Anson and Josefina Fernandez McEvoy, co-chair of the International Committee, moderated the presentation, titled Collins & Aikman Europe and Other Cross-Border Asset Sales: A Tale of Two Venues. The panel speakers were Thomas Zambelli of Kroll Zolfo Cooper, chief restructuring officer for Collins & Aikman Inc.; David L. Eaton of Kirkland & Ellis LLP, lead U.S. and European counsel for Collins & Aikman Inc.; and Fernando Torres of CONSOR, lead European intellectual property valuator for Collins & Aikman Inc. The panel discussed some of the challenges faced by the management and professionals employed in the Collins & Aikman chapter 11 bankruptcy case and its U.K. administration. In particular, the panel focused on the conflicts and strategy employed by the respective parties in connection with the sale of Collins & Aikman's European assets and the steps taken to protect the interests of the Collins & Aikman estate in the intellectual property and intangible assets embedded within those European assets. A detailed PowerPoint presentation accompanied the panel discussion.