I have barely unpacked my suitcases, and yesterday the Commercial Law League of America (CLLA) announced that a bankruptcy venue reform bill will be proposed this week in the U.S. Senate. The bill will to seek to change the venue rules for filing Chapter 11 business cases. If you want to view the CLAA’s press release, it is available here. (The CLLA previously supported S.314 (109th Congress 2005-2006) and H.R.2533 (112th Congress 2011-2012), which were not enacted.)
A Very Old Debate
The venue rules were already a long-standing topic of debate when I began practicing law over 20 years ago. In fact, the argument has been ongoing for roughly 40 years. And it has not dramatically changed over the decades. Rather, it is a debate that periodically ebbs and flows in public discourse.
If you’re a newcomer to the conversation, the gist of the debate is this.
- On one hand, some people argue that current law gives debtors too much leeway in deciding where to file bankruptcy, allowing them to “shop” for favorable venues.
- On the other hand, some people argue that existing venue laws work, allowing debtors the flexibility to choose a venue that provides them with the best opportunity to reorganize and maximize estate value.
The Significance of the Venue Debate
Why does this matter? Because the District of Delaware and the Southern District of New York attract the largest share of Chapter 11 filings. In fact, they have attracted more than 75% of large public company filings since 2010.
What to Expect Next?
The bill was introduced on January 8, 2017. More information is available in my follow up post.
Stayed tuned as I track the proposed bill and provide updates on the latest developments.