On January 8, 2018, Senators John Cornyn (R-TX) and Elizabeth Warren (D-MA) introduced the Bankruptcy Venue Reform Act of 2017. The bill would require that individual debtors file in the district where their domicile, residence, or principal assets are located, and would require corporate debtors to file in the district in which their principal assets or their principal place of business is located.
Currently, corporations are permitted to file in their places of incorporation or in districts where their affiliates have pending bankruptcy cases. This means that many cases are filed in the District of Delaware, where more than half of U.S. publicly-traded companies are chartered, or in the Southern District of New York, which “benefits from [New York City’s] status as a dominant financial center,” according to Reuters. Statistics released by USCourts.gov indicate that in the one year period ending September 30, 2017, the Southern District of New York saw 587 chapter 11 filings, making up 8% of total filings nationwide. Similarly, the District of Delaware saw 435 chapter 11 filings, or 6% of total filings over the same period.
In a joint press release, Senator Cornyn noted that the bill is meant to “clos[e] the loophole that allows corporations to ‘forum shop’ for districts sympathetic to their interests.” Bankruptcy Courts would be required to transfer or dismiss cases filed in the wrong district, which would prevent debtors from “cherry-picking courts that they think will rule in their favor,” according to Senator Warren. Delaware Governor John Carney (D), Representative Lisa Blunt Rochester (D-Del.), and Senators Chris Coons (D-Del.) and Tom Carper (D-Del.) have released a joint statement in opposition to the bill.