Bankruptcy Venue Reform Act of 2021

[RememberSchiff]

Venue (forum) shopping "has become harder to ignore, as Purdue, the National Rifle Association, the Boy Scouts of America, and other large organizations maneuver to get the court—and the judge—that they believe will most benefit them, without regard to their base of operations."

“The bankruptcy system is supposed to work for everyone, but in many cases it works only for the powerful,” House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) said during a July 28 hearing on corporate abuse of bankruptcy law. “And too often it works best for big corporations and the very wealthy who have not even filed for bankruptcy.”

Judges’ predilections and where proceedings are held can have large ramifications for bankruptcy plan payouts. Once largely considered to be an esoteric legal strategy affecting deep-pocket creditors, the forum-shopping issue also has had profound effects on recent cases with large bases of working- and middle-class claimants, such as the Boy Scouts of America.

Three bankruptcy judges out of 375 heard 57% of all large public company Chapter 11 cases in 2020, according to David Lieberman of Webster, Chamberlain & Bean LLP.

The Boy Scouts, which filed in Delaware, is based in Texas. The NRA filed for bankruptcy in Texas despite being headquartered in Virginia and incorporated in New York.

House Bill H.R. 4193 would require Chapter 11 proceedings to take place at the location of the debtor’s principal place of business or main assets.

https://www.congress.gov/117/bills/hr4193/BILLS-117hr4193ih.pdf

Good write-up including pros and cons in following source:

https://news.bloomberglaw.com/us-law-week/purdue-pharma-bankruptcy-spotlights-court-venue-shopping-battle

All that said, legislative bills to address bankruptcy venue shopping have been attempted before, nearly every session - Bankruptcy Venue Reform Act of 2011, ...of 2017,...of 2018,  ..of 2019, ...

Edited July 30, 2021 by RememberSchiff
grammar

[fred8033]

Venue shopping though isn't just an issue for big companies.  Even in these threads, we've heard lots of discussions for victims to justify pulling in their claims.  Example I've seen is the CO and scout who are in SOL blocked states, but their once a year camp was located in an open state.  Should victims be required to file where the majority of the relationship was?  Or where they live?  or where the majority of the incidents were?  

I don't like venue shopping either, but selective focus is wrong too.

I'd like to see a consistent approach across all levels.  

[SiouxRanger]

Forum shopping is a discussion topic in elementary civil procedure in law schools. Not promoting or discouraging it, explaining what it is.