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1 1 (December 11, 2019)

handle is hein.crs/govbhzw0001 and id is 1 raw text is: Congress Considers Making it Harder to File for Bankruptcy in New York or Delaware Updated December 11, 2019 Commentators, citing the significant concentration of business bankruptcies filed in New York and Delaware to the exclusion of other jurisdictions, have debated for several decades whether Congress should reduce the flexibility that many companies currently enjoy when selecting where to file for bankruptcy. Critics maintain that the current bankruptcy venue rules-many of which offer large companies a wide range of forums in which they may permissibly file for bankruptcy-encourage debtors to file for bankruptcy in courts that favor debtors and their attorneys to the detriment of creditors and other stakeholders. Supporters of the existing venue rules, by contrast, argue that concentrating large business bankruptcies in a few forums allows judges and attorneys in those jurisdictions to develop extensive expertise and experience with complex bankruptcy matters, benefiting debtors, creditors, and stakeholders alike. Past Congresses have reacted to this debate by proposing to restrict the venues in which a business entity may validly file for bankruptcy. Most recently, the 116th Congress introduced the Bankruptcy Venue Reform Act of 2019 (H.R. 442 1), which aims to prevent the practice of forum shopping in business bankruptcy cases. This Sidebar situates this bill within the ongoing debate over the bankruptcy venue rules and analyzes several ways Congress could influence where businesses file for bankruptcy. Bankruptcy Venue 28 U, S.C° § 1408 currently allows a debtor to file for bankruptcy in any bankruptcy court where the debtor's (1) principal place of business, (2) principal assets, (3) domicile (which, in the case of a corporate debtor, is its state of incorporation), or (4) residence has been located during the 180-day period preceding the bankruptcy filing. Section 1408 further authorizes debtors to file for bankruptcy in any district in which a bankruptcy case concerning the debtor's affiliate, general partner, or partnership is pending. Section 1408 thereby provides large business entities a range of options when deciding where to file for bankruptcy. Current law permits (but does not require) a court to transfer a bankruptcy case to a different forum in some cases, such as when the debtor improperly filed the case in a venue not authorized by 28 U.S.C. § 1408, or when the court determines that transferring the case is in the interest of justice or for the convenience of the parties. However, a party seeking to transfer a bankruptcy case bears the burden to Congressional Research Service https://crsreports.congress.gov LSB10063 GRS }NStGHT Prepaed for Membeivs and Cornm ittees o4 Co q _gress ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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