Letter to Congress regarding amendments to 28 U.S.C.§1408 which governs the laying of venue for bankruptcy cases (August 2011)
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REPORT
VIA OVERNIGHT MAIL
Re: Possible Business Bankruptcy Venue Amendments
Dear Senators and Representatives:
We understand that one or more amendments to 28 U.S.C. § 1408, which governs the laying of venue for bankruptcy cases, may be introduced in Congress with the intent of radically altering and restricting the choice of venue rules for business bankruptcy cases. We write on behalf of the Committee on Bankruptcy and Corporate Reorganization of the Association of the Bar of the City of New York to register our strong opposition to any such amendments.
Our committee is largely comprised of lawyers who practice regularly in courts throughout the country. Our members represent both debtors and creditors in business bankruptcy cases involving public and private companies and other entities. Collectively, we have been involved in the restructuring of myriad entities in varied industries and areas of the country. Members of our committee have been involved in nearly every major business bankruptcy filed in recent years. Our work on behalf of our clients directly touches the lives and impacts the economic well-being of the many employees, shareholders, investors and others who are affected when a company files for bankruptcy protection. It is on the basis of this experience that we oppose any modifications intended to further restrict the existing business bankruptcy venue rules.
As we understand them, the potential amendments would take away the right of corporations to seek bankruptcy protection in their state of incorporation or where an affiliate is located and would effectively require that all corporate bankruptcy cases be filed in the jurisdiction where the parent company of a corporate family is physically headquartered or holds its principal assts. Such a proposal would force courts to ignore the often more important considerations examined under current law, such as (a) the location of the principal operating subsidiaries and whether the parent company itself is a mere holding company with no operations of its own, (b) the interests of justice and the convenience of parties who will need to appear during the proceedings to protect their interests and (c) the interests of the state of incorporation.
