bankruptcy court and failure to file a complete list of creditors as well as other asserted grounds for dismissal are discussed:

. . . Since, as a practical matter, rehabilitation in the United States depended upon the approval of a plan in Switzerland, Finabank realistically had no choice but to delay the filing of a plan of arrangement in the bankruptcy court.

We do not take issue with the bankruptcy court's finding that the need to frustrate the attachments caused Finabank to file its chapter XI petition. But that alone does not establish an absence of intent to seek rehabilitation. And, in view of the objective of the Bankruptcy Act of insuring equal distribution of assets among general creditors, such filings should not be discouraged, even under chapter XI. See In re Israel-British Bank (London) Ltd., 536 F.2d 509 (2 Cir.) at 513.

It also must be borne in mind that Finabank, in seeking relief under the Bankruptcy Act in aid of its Swiss proceeding, had no practical alternative to a chapter XI petition. Straight bankruptcy would have conflicted with the Swiss rehabilitation proceeding. We conclude that the bankruptcy court was clearly erroneous. see Bankruptcy Rule 810, in finding that Finabank never intended to pursue its chapter XI proceeding for purposes of rehabilitation. We hold therefore that the first ground of the bankruptcy court's inherent power dismissal lacked the necessary underpinning.

Finabank, for the specific purpose of avoiding preferential attachments, has invoked our Bankruptcy Act to obtain an administration of assets located in this country ancillary to an administration of assets located in its foreign domicile. This type of proceeding is contemplated explicitly by Bankruptcy Act § 2a (1). 11 U.S.C. 11(a)(1) (1970). That section, by providing a jurisdictional underpinning in property located in this country, fosters in international situations one of the basic purposes of the Act. i.e. equal distribution among creditors. The Act also permits the United States segment of such an international proceeding, whether a reorganization or a straight bankruptcy, to function essentially as an instrument to set aside preferences. Under $§ 2a (22), 11 U.S.C. 11 (a) (22) (1970), and Bankruptcy Rule 119, the bankruptcy court may exercise its discretion to dismiss the proceeding, or, after setting aside any preferences, to suspend the proceeding and permit assets located in this country to be administered pursuant to the domiciliary proceeding.

Recently, in construing § 4a of the Act, we stressed the importance of promoting the goal of equality of distribution of assets in the international context. In re Israel-British Bank (London) Ltd.. supra, 536 F.2d at 513. In our view, achievement of this goal, contemplated specifically in §§ 2a (1) and 2a (22), requires in the instant case, first, recognition of the fact that international bankruptcies can raise problems not contemplated by the Act, and then, some flexibility in responding to those problems consistent with the

strong public policy which is at the core of the Act. Cf. Nadelmann, "Compositions-Reorganizations and Arrangements-In The Conflict of Laws," 61 Harv. L. Rev. 804, 835 (1948).

Flexibility in the international context, of course, should not come at the expense of the orderly administration of the Act. Ordinarily the scheduling requirements must take precedence even if preferences thereby are allowed to survive. Otherwise, the administrative and equitable purposes of the scheduling requirements themselves would be frustrated.

The instant case, however, is not an ordinary one. Aside from the policy considerations mentioned above, it differs in two material respects from those cases in which the requirement of a complete list of creditors has been strictly enforced. The debtors in those cases all sought relief from that requirement either without giving any compelling reason why they should be relieved from the statutory burden of producing the information or without offering any substitute means of satisfying the purpose of the requirement. At the evidentiary hearing on the remand which we order here, Finabank may be able to comply in both respects.

As for Finabank's reason for seeking relief from the creditors list requirement, its purpose is not to obtain some advantage over its creditors. It seeks to protect them. Nor is it attempting to pass on to a trustee the task of straightening out badly kept records. Finabank is constrained by the criminal law of its domicile.

As for a substitute to satisfy the creditors list requirement, since this is a bankruptcy proceeding in aid of a corresponding proceeding abroad, a list of creditors does exist. According to Finabank, the identities and claims of the secret depositors are in the possession of the Swiss court. It suggests two possible ways of coordinating the proceeding in this country with that in Switzerland to achieve the substantial equivalent of a complete list of creditors. First, 2a (22) and Rule 119 might be utilized. The bankruptcy court would take jurisdiction, set aside the attachments, and then suspend the proceeding and permit the assets located in this country to be administered in the Swiss proceeding. Under the second alternative, there would be a full administration in this country, coordinated with the Swiss proceeding. The Swiss court would notify the depositors who then would elect whether to appear in the proceeding here. Pro rata distribution would be achieved eventually by marshalling of assets in Switzerland which take into account the recoveries of the creditors who appear here.

We do not pass on the viability of these alternatives at this stage. Both require further factual and legal development upon remand. . . . Suffice it to say that Finabank has proposed alternatives to the list of creditors which on their face appear to have a fair chance of satisfying the objectives of that requirement. But the bankruptcy court did not consider them.

We hold that neither § 324 (1) nor Rule 11-11 preclude consider ation of such alternatives in this case. . . .

We hold that Finabank's petition was not inherently defective at the time it was filed and that the dismissal under the inherent power of the bankruptcy court was [in] error.

III. OTHER ASSERTED GROUNDS FOR DISMISSAL

(A) Bankruptcy Act § 2a (22) and Rule 119

FNBB urges as an alternate ground to sustain the dismissal of the petition the bankruptcy court's discretion under § 2a (22) and Rule 119. It relies on the provision of the Rule that suspension or dismissal be considered with "regard to the rights and convenience of local creditors." It contends that the "rights" protected by the dismissal were preferential claims of FNBB and Chase pursuant to their attachments, together with the claims which two other American parties had interposed in CBI's interpleader action. ... The bankruptcy court agreed with this view of the meaning of local creditors' "rights", citing Disconto Gesellschaft v. Umbreit. 28 U.S. 570, 582 (1908), for the proposition that a country "first protect [s] the rights of its citizens in local property before permitting it to be taken out of the jurisdiction for administration in favor of those residing beyond its borders." The district court, which also agreed, added that the dismissal would permit the Americans to recover "without having to rely on Swiss bankruptcy procedures which are enmeshed with the Swiss bank secrecy laws." We disagree with this construction of § 2a (22) and Rule 119.

Section 2a (22) was not intended to be the instrument by which jurisdiction over a foreign domiciliary grounded in § 2a (1) could be undercut for the purpose of validating preferential transfers to United States nationals. Section 2a (22) was enacted as an administrative reform. It was designed to avoid needless duplication of effort by courts and creditors in those cases where an ancillary proceeding in this country could be coordinated with or entirely dismissed in favor of a domiciliary proceeding abroad. See S. Rep. No. 1954, 87th Cong.. 2 Sess. (1962), reprinted in [1962] U.S. Code Cong, & Ad. News 2603: H.R. Rep. No. 1208, 87th Cong. 1 Sess (1961). The construction of local "rights" most consonant with this objective was suggested by Professor Nadelmann nearly thirty years ago. In exercising its discretion the district court is to guard against forcing American creditors to participate in foreign proceedings in which their claims will be treated in some manner inimical to this country's policy of equality. See Nadelmann, "Compositions-Reorganizations and Arrangements—In the Conflict of Laurs", 61 Harv. L. Rev. 804, 829-30 (1948): Revised Report of The National Bankruptcy Conference Special Committee on Insurance Companies and Foreign Banks, at 12, 13-14 (1976).

We hold that the construction of $ 2a (22) urged by FNBB would impose a substantive impact on § 2a (1) which Congress did not intend, and that neither $ 2a (22) nor Rule 119 support the bankruptcy court's dismissal.

IV. PROCEEDINGS ON REMAND

We reverse the judgment dismissing the petition and remand the case to the district court with instructions to refer the case to the bankruptcy court for an evidentiary hearing on the present viability of an administration under the Bankruptcy Act in this

country. We were advised at the argument of the instant appeal that Finabank went into liquidation in Switzerland during the pendency of this appeal. Earlier questions regarding Finabank's failure to file a plan therefore appear to be moot. The problem presented by the Swiss banking secrecy laws however remains alive. The bankruptcy court should ascertain what those laws require at this stage of the proceedings. If they are applicable, the court should consider, in accordance with this opinion, the alternative procedures suggested by the parties to ascertain whether they satisfactorily fulfill the function of the list of creditors.

586 F.2d 917-922. (Footnotes omitted.) For the complete text of the opinion, see 16 International Legal Materials 1367-1375 (1977).

For further information concerning In re Israel-British Bank (London), Ltd., see the 1976 Digest, Ch. 15, § 4, pp. 793-795.