Personal Jurisdiction in the Bankruptcy Context: A Need for Reform

This Article analyzes and evaluates the debate concerning a bankruptcy court\u27s ability to assert personal jurisdiction over a foreign entity. Additionally, this Article advocates that the Bankruptcy Rules be amended to conform to the new federal long-arm statute, FRCP 4. More specifically, this Article asserts and demonstrates that: (1) the current status of the law in bankruptcy cases regarding personal jurisdiction is uncertain; (2) prior to the 1993 amendments to FRCP 4, some courts improperly broadened the jurisdiction of bankruptcy courts by allowing them to assert power over defendants by focusing on a defendant\u27s nationwide contacts as opposed to contacts with the forum state; and (3) in light of the new expansion of FRCP 4, Congress should enact a parallel version of the federal long-arm statute in Rule 7004(e).Part I of this Article outlines the Supreme Court\u27s standard on personal jurisdiction, thereby exploring the nature of service of process and personal jurisdiction, both in general civil litigation and in bankruptcy litigation. Part II of this Article analyzes and distinguishes the approaches courts have utilized in assessing whether bankruptcy courts may use aggregate nationwide contacts when asserting jurisdiction over a foreign defendant. Finally, Part III of this Article recommends that Rule 7004 be updated to reflect changes in the amended version of FRCP 4. By enacting the federal long-arm statute in FRCP 4(k)(2), Congress closed a loophole through which foreign defendants were permitted to conduct business in the United States while evading legal responsibility for their actions in the United States. As a result, the Bankruptcy Rules should follow the trend the 1993 amendments to FRCP 4 began by closing this parallel loophole in the bankruptcy context. Explicit expansion of Rule 7004(e)\u27s scope, to encompass foreign defendants as amenable to service under a federal long-arm statute, would prevent the existing judicial error in interpretation from continuing. Personal Jurisdiction, Bankruptcy, Rule 700