U.S. Judges Export Bankruptcy Knowledge

Understand the complexities and nuances of the Bankruptcy Code to better advise clients and prepare for court.

By Daniel Gill

The National Conference of Bankruptcy Judges has a standing committee dedicated to enhancing relationships with foreign judicial systems, specifically in the field of insolvency and liquidation law—the International Judicial Relations Committee.

Currently chaired by Judge Thomas B. McNamara, U.S. Bankruptcy Judge for the District of Colorado, the IJRC has a colorful past and a wideopen future.

Three judges told Bloomberg BNA about their trips to countries like Thailand, Algeria, Egypt, and Afghanistan, where the judges trained local arbiters and mediators and even helped draft insolvency laws for these nations.

Committee members are sitting federal bankruptcy judges, McNamara told Bloomberg BNA. It meets about once a month (or more frequently as needed).

Although there are currently about five judges on the committee, membership has been as large as 25 at some points in the past 12 years.

Mission

The committee seeks to develop relationships between the members of the bankruptcy bench (and the NCBJ) and foreign judiciary focusing on insolvency. Every year, the committee invites one to three foreign judges to attend the annual meeting of the NCBJ.

In the past five to six years alone, the committee has hosted judges or justices from Singapore, Ireland, England, the Dominican Republic, the Bahamas, Brazil, Canada, Spain, Germany, the Netherlands, New Zealand, and Slovenia, McNamara said.

Judge Elizabeth Stong, of the Bankruptcy Court for the Eastern District of New York and a former chair of the IJRC, noted that judges also visited from Argentina, Algeria and Pakistan. “It’s an incredible privilege to bring non-U.S. judges to the NCBJ,” Stong told Bloomberg BNA.

One purpose is to “help establish relationships for possible future cross-border cases,” McNamara said.

Chapter 15 of the Bankruptcy Code is designed for the U.S. court to assist an insolvency pending principally in another country. That chapter expressly allows the U.S. bankruptcy judge to discuss the case with the foreign tribunal, pursuant to 11 U.S.C. §1525.

Another goal is to facilitate education. For example, the NCBJ annual meetings usually involve a panel on foreign or cross-border case issues, with the visiting judges participating in the panel.

Promoting Technical Assistance

While the focus is primarily on foreign concerns arising in the United States bankruptcy courts, the committee has served as a launching pad for U.S. judges to go abroad. They offer expertise and experience, and sometimes help other nations develop their own insolvency law jurisprudence.

NCBJ member judges often help train or provide guidance and consulting services to foreign judiciary and legislative bodies.

Judge Michael G. Williamson, U.S. Bankruptcy Judge for the Middle District of Florida, for example, told Bloomberg BNA in a Feb. 26 email that he has made at least 18 trips abroad since 2002.

Most recently, he helped draft bankruptcy laws for Afghanistan from scratch, visiting the country repeatedly since 2007.

Williamson, like the other judges who spoke with Bloomberg BNA, isn’t compensated for his work abroad with the committee.

“I’ve never asked for any compensation,” he told Bloomberg BNA in a March 3 email. “I consider this work an extension of my work as a federal judge. Plus how often do you get to go to places like Kabul, Jalalabad, Herat, and Mazur-e-Sharif and write a bankruptcy law for a country?” he said.

Judge A. Jay Cristol, Bankruptcy Judge for the Southern District of Florida, has frequently gone abroad. For example, he lent his expertise to Thailand, whose insolvency laws were previously created under the British model, with a “debtor-be-damned mentality,” he told Bloomberg BNA.

That country had little idea what to do with reorganizing insolvent companies, and Cristol helped educate Thai legislators on the U.S. Chapter 11 concept. Within a couple years, Thailand had created a bankruptcy court of its own, with laws and a specialized court “similar to ours,” Cristol said.

Cristol is a huge proponent of Chapter 11, which protects companies (or individuals) from creditors while they seek to reorganize their debt or liquidate pursuant to a plan which must be approved by the bankruptcy court. When compared to the return they might get in a Chapter 7 liquidation, creditors can stand to do much better through a reorganization plan, Cristol said.

Besides lending his expertise to foreign nations, Cristol also hosts visiting judges and legislators to help give them a taste of the American bankruptcy system. For example, Cristol has entertained visitors from Russia, the Ukraine, Thailand, Armenia, Tanzania and Malawi.

Judge Elizabeth Stong has had similar experiences. As the former chair of the IJRC for 10 years, she and the committee welcomed judges visiting from around the world

Stong has worked extensively in North Africa and the Middle East, visiting, lecturing and teaching in Algeria, Egypt, Jordan, Lebanan, Oman and Yemen. For example, she led a training session with Egyptian judges on mediation and conciliation techniques and practices.

Stong told Bloomberg BNA that the U.S. judicial system is held in “enormously high regard and with deep respect” around the world.

She noted that other countries are impressed with the U.S. bankruptcy system’s focus on transparency and disclosure and rapidity of responsiveness, as well as its focus on preservation (or even creation) of value.

To contact the reporter on this story: Daniel Gill in Washington at dgill@bna.com

To contact the editor responsible for this story: Jay Horowitz at JHorowitz@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Try Bankruptcy on Bloomberg Law