The question is not whether applicable state law should be used by a federal court sitting in bankruptcy. It obviously should, unless there is some conflict between the state's law and the goals of bankruptcy. The question is whether the twin aims of Erie apply. Is there a reason for uniformity between the federal procedural common law used in bankruptcy and the law used by a forum state court, even if the relevant state supreme court does not care whether its law is used?
The role of the twin aims in bankruptcy is a puzzle because federal bankruptcy jurisdiction is exclusive, so there is arguably no problem of forum shopping. In addition, a federal court sitting in bankruptcy has jurisdiction over all of the debtor’s property, no matter where it is located, and nationwide service of process is available. So it can entertain a state law action or issue even though the matter could not have been entertained by a forum state court.
Once again, it is hard to answer this question unless we know where the twin aims come from. This question counts as underexplored, not unexplored, by the way. There are a few articles out there on the topic, generally focused on whether Klaxon applies in bankruptcy, a matter about which there is a circuit split.
(Parallel posted on Prawfsblawg.)