Corporate Formalism in a Global Economy

Cross-border insolvency cases are at the cutting edge of international litigation of all kinds. They are generating remarkable developments in doctrine and in systems cooperation. In re Nortel importantly develops a new and important approach to corporate groups that may compel pro rata distribution of certain assets to all creditors of the group while avoiding any overall equitable subordination or piercing of the corporate veil. Yet the case also demonstrates that deference to the corporate form within an integrated group of corporations can result in very expensive litigation, especially in multinational cases. A major issue that results is allocation of group value among creditors. Procedurally, Nortel’s achievements in a value-maximizing global sale of assets and joint judicial proceedings across national borders represent a rejection of territorialism and reveal the enormous advantages of modified universalism in cross-border cases.