The European Union goes Comi-tose: hazards of harmonizing corporate insolvency laws in the global economy.

One advantage of territorialism is more favorable treatment for local creditors, because assets will be distributed to a smaller pool of creditors. (92) However, foreign creditors may also benefit from laws derived from this theory, because they may have the ability to pick and choose the best forum and the most favorable laws for them to make claims against a debtor. (93) Disadvantages of this theory, however, seem to be more numerous. (94) For example, territorialism makes reorganization more difficult for domestic debtors with assets distributed in foreign jurisdictions unless the laws of a given jurisdiction allow for the shifting of assets across borders. (95) Another disadvantage is the increased costs of bankruptcy due to the need to engage in parallel insolvency cases in multiple jurisdictions to maximize recovery for all creditors. (96)

2. Universalists Sing in Harmony

Universalism, on the other hand, comes in two forms: pure and modified. (97) Under a pure form of universalism, all proceedings for a single debtor would be held in a single jurisdiction and would distribute all assets to both local and foreign creditors. (98) A goal of this method is to distribute assets to creditors within various countries as evenly and fairly as possible without favoring local creditors. (99) The main argument for universalism in this form is harmonization. (100)

Realizing that perfect harmonization within a single legal regime may not be feasible, proponents of universalism acknowledge the utility of a modified form of universalism. (101) Thus, the modified form calls for a main proceeding in the "home country" of the debtor with the assistance of secondary or ancillary proceedings held in other jurisdictions. (102) One problem with this theory is the very idea of secondary or ancillary proceedings. (103) Foreign courts working together on sensitive areas of law heavily influenced by local public policy may impede certain creditor rights, such as seizure of assets. (104) However, the most relevant problem of modified universalism within the context of forum shopping and jurisdictional battles is not the existence of concurrent proceedings, but how to define the home country or COMI to determine which proceeding is the main proceeding.

III. A LOOK AT THE PATIENT'S CHART: FAMILY HISTORY

As most countries begin to provide corporate debtors with the option to reorganize rather than liquidate, insolvency laws around the world appear to be heading in the same direction. (105) This section will trace the ancestry of a few relevant jurisdictions to point out that, while insolvency laws and procedures may now be similar, the policies behind the procedures have not developed concurrently and may achieve far different results. (106) The roots of traditional Western insolvency law may be traced back to ancient Roman law around 450 B.C. (107) During this era, a debtor was liable for his debts "with his life and body." (108) If a man could not pay his debts, he could be enslaved, imprisoned, or even executed. (109) By 326 B.C., early insolvency laws had moved toward the notion that proper recovery of debts should be made against the debtor's property rather than his life. (110) This school of thought led to the liquidation of the debtors' assets by creditors. (111) Venditio bonorum, an early example of such a liquidation procedure, was in existence by 118 B.C. (112) However, this form of full scale liquidation was considered a criminal and defamatory measure against the debtor and was initiated by the creditors. (113)

By 17 A.D., communities began to allow cessio bonorum, a form of assignment of the debtor's estate for the benefit of his creditors. (114) Such a procedure provided recovery for the creditors while avoiding defamation to the debtor. (115) In rare circumstances, debtors were able to reduce their debt through a procedure called remissio, also known as a composition. (116) While recovery upon the person of the debtor--such as execution or imprisonment--was never abolished completely, recovery upon the debtor's estate became the norm. (117)

The early influence of Roman law on Western European legal institutions declined with the fall of the Roman Empire in 476 A.D. (118) Roman legal influence continued in the background until a rediscovery of ancient Roman insolvency laws in the twelfth century. (119) By the fourteenth century, ancient Roman notions of insolvency were evident in northern Italian merchant cities using distractio bonorum. (120) Meanwhile, in other Western European nations, such as England, creditors used individual remedies to recover debts. (121) By the fifteenth and sixteenth centuries, local or regional laws began to have substantially different effects on the development of each region's insolvency jurisprudence. (122) While the revival of early Roman law led to the use of ancient tenants for the insolvent, (123) the effects of these regional and local laws on insolvency law during the Medieval era began the decline of a coherent and global rule of insolvency law and the creation of different variations of local insolvency laws. (124)

A. Uncle Italy

During the thirteenth and fourteenth centuries in Italy, creditors began using formal bankruptcy proceedings, presumably to prevent the first attaching creditor from taking all the debtor's assets. (125) These proceedings were criminal in nature and could have resulted in severe consequences if a court determined that a debtor's insolvency developed fraudulently. (126) Throughout the fifteenth, sixteenth, and seventeenth centuries, most parts of Italy practiced forms of compositions and liquidation for the benefit of both creditors and debtors. (127)

In 1861, Italy enacted a uniform code to harmonize Italian laws, including Italian insolvency laws. (128) During the twentieth century, Italian insolvency laws underwent minor changes allowing for compositions in more cases (129) but eventually preferred liquidation proceedings. (130) In 1942, Italian insolvency law introduced the amministrazione controllata procedure to prevent automatic liquidation. (131) In 1979, because most large enterprises within Italy were either directly or indirectly owned by the state, the Italian government began the practice of reorganization in extreme cases. (132) Using this practice, creditors' rights were respected only to the extent possible, and creditors did not take an active role in the process. (133) This practice demonstrated a sudden change in the trend of Italian insolvency policy. (134) Rather than favoring the creditor or debtor specifically, the practice demonstrated that the government was taking a regulatory role, potentially for the benefit of the Italian economy. (135)

B. Aunt England and Cousin Ireland

To fully understand the policy behind Ireland's insolvency laws, it is helpful to consider the development of insolvency laws in England. (136) English insolvency laws did not formally begin to develop until the late thirteenth century. (137) From the thirteenth through the sixteenth centuries, English insolvency laws developed to allow creditors to seize debtors' land, profits, and chattels, while also allowing creditors to imprison debtors in most cases. (138) Early laws did, however, provide for some protection of debtors' assets, such as the inability of creditors to levy upon the debtors' oxen and beasts of plough. (139) By 1705, debtors could obtain a discharge of his or her debts through a formal bankruptcy proceeding. (140) However, a debtor did not have the option to voluntarily petition for such a discharge until 1844. (141) It was not until 1825 that England began to recognize a modern form of composition that required approval from a large majority of creditors. (142) The development of English insolvency law formed the basis for more modern bankruptcy developments. (143)

By the late 1800's, the English Company Law governed corporate insolvencies through extensive winding up provisions. (144) Today, Ireland's insolvency legislation comprises the Companies Acts of 1963-2001. (145) Under this act, both creditors and debtors may petition for compulsory liquidation should the debtor become insolvent. (146) However, the most common ground for presenting a petition for compulsory liquidation is the company's inability to pay its debts, and such a petition is usually presented by a creditor. (147) This trend demonstrates Ireland's continuing hostility to debtors and a preference of payment to creditors in favor of a fresh start for the debtor. (148)

C. The American Step-Child

The ancestry of American bankruptcy is very similar to Ireland's insolvency ancestry. (149) The framers of the U.S. Constitution included a provision permitting Congress to make American bankruptcy laws uniform throughout the states, but the first bankruptcy laws in America merely emulated existing English law. (150) The federal government did not use this power to unify American bankruptcy and insolvency laws for most of the eighteenth and nineteenth centuries. (151) Thus, some early American colonies and states were more liberal in providing relief to debtors than was England, and each state was able to regulate creditor-debtor relationships according to local state policy. (152) A notable deviation from English policy in the eighteenth century was the Americans' almost unanimous view that insolvency should not be punishable by death. (153)