Bankruptcy Venue Reform Act
The American Bankruptcy Institute 11/10/21 e-newsletter reports that:
A Bipartisan Coalition of Attorneys General Support the US Congress passing, and President Biden signing into law, the Bankruptcy Venue Reform Act The National Association of Attorneys General (NAAG) sent a letter yesterday to Congress signed by 43 attorneys general in support of the Bankruptcy Venue Reform Act of 2021. Venue reform has long been needed, to require corporations, LLCs and partnerships to file bankruptcy in the State which is the principal place of business of the corporation, LLC or partnership, instead of having the option of filing bankruptcy in the State where the entity is incorporated.
A high percent of corporations nationwide are incorporated in Delaware, and therefore, under present bankruptcy venue law, can file bankruptcy in Delaware, even when the only contact the corporation has with Delaware is that the corporation is incorporated in Delaware, and the corporation’s principal place of business is in a state other than Delaware.
The present bankruptcy venue law allows many corporations to “venue shop”, to file bankruptcy in Delaware (a state where the Bankruptcy Court is known to be VERY debtor favoring), instead of being required to file bankruptcy in the Bankruptcy Court of the State in which the corporation has the corporation’s principal place of business.