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Bankruptcy Venue Reform Bill
On Jan. 8, 2018, Senators John Cornyn (R-TX) and Elizabeth Warren (D-MA) introduced the Bankruptcy Venue Reform Act of 2018, which is designed to prevent forum shopping in Chapter 11 bankruptcy cases, a practice that has resulted in a concentration of bankruptcy cases in a few districts.
The stated purpose of the bill is to force individual debtors and corporations to file Chapter 11 bankruptcy petitions in their true home districts to allow small businesses, employees, retirees, creditors, and other stakeholders to fully participate in these cases.
The Bankruptcy Venue Reform Act would require individual Chapter 11 debtors to file for bankruptcy in the district where their domicile, residence, or principal assets in the United States is located. In the case of corporate Chapter 11 debtors, they would have to file in the district where their principal assets or principal place of business in the United States is located. They would no longer be permitted to file simply on the basis of their state of incorporation. It would also prevent debtors from filing for bankruptcy in another district simply because an affiliate of the debtor has filed there, and require courts to transfer or dismiss cases filed in the wrong district.
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