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1 1 (January 18, 2018)

handle is hein.crs/govearw0001 and id is 1 raw text is: Congressional ______ *. Research Servicea Informing the legislative debate sin e 1914___________________ Should Federal Law Restrict Where a Company May File Bankruptcy? January 18, 2018 Commentators, citing the large 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 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 bankruptcy-encourage debtors to forum-shop for jurisdictions 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 small number of forums allows judges and attorneys in those jurisdictions to develop extensive expertise and experience with complex bankruptcy matters, thereby benefiting debtors, creditors, and stakeholders alike. These debates form the backdrop for the Bankruptcy Venue Reform Act of 2018 (S. 2282), a bill that would restrict the venues in which a business entity may validly file bankruptcy. This Sidebar situates this bill within the ongoing policy debate over the bankruptcy venue rules and analyzes how the bill could potentially affect the bankruptcy system if ultimately enacted. Bankruptcy Venue In its current form, 28 U.S.C. @ 1408 allows a debtor to file bankruptcy in any bankruptcy court in which the debtor's (1) principal place of business; (2) principal assets; (3) domicile (i.e., its state of incorporation); or (4) residence has been located during the 180-day period preceding the bankruptcy filing, or in any district in which a bankruptcy case concerning the debtor's affiliate, general partner, or partnership is pending. As a result of 28 U.S.C. @ 1408, corporations and other large business entities often have several options when deciding where to file bankruptcy. For instance, as the Government Accountability Office noted in a September 2015 report, a company headquartered in Los Angeles may be incorporated in Delaware, maintain its assets in New York, and have affiliates with pending bankruptcy proceedings in Chicago, allowing the company to file bankruptcy in any of these locations. Although the Federal Rules of Bankruptcy Procedure sometimes permit a court to transfer a bankruptcy case to a district other than the one the debtor has selected-such as when the debtor improperly filed the Congressional Research Service https://crsreports.congress.gov LSB10063 CRS INSIGHT Prepared for Members and Committees of Congress

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