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“Confessions” of a Forum Shopper – A Debtor’s View of Venue Choice

By Andrew Dietderich (Sullivan & Cromwell LLP)

Andrew Dietderich

Corporate debtors can decide if, when and how to file for chapter 11. Recently, there is a great deal of concern about their ability to decide where. In a series of two articles for the ABI Journal, I explain as debtor’s counsel the practice of responsible forum shopping and argues that it is, on balance, a social good.

 Motivated by recently introduced legislation that would force domestic debtors to file chapter 11 only in the jurisdiction of their headquarters, Part I warns that mandating a single venue for a corporate debtor will impede legitimate restructurings and hurt companies and workers. There are important reasons why a distressed domestic corporation may need to file away from its headquarters: examples from my own experience include the need to preserve critical corporate contractual assets and to protect rank-and-file employee severance.  

 Since U.S. bankruptcy law necessarily varies from place to place around the country, someone has to decide what particular version of bankruptcy law should apply to each case given its unique factual context and reorganization purpose.  As with many other chapter 11 decisions, the board of directors of the debtor is the least worst alternative.   

Of course, there are some legitimate concerns with the current system of modified venue choice.  But the venue reform legislation proposed in Congress is too blunt of an instrument.  It is uninformed by experience in the trenches reorganizing distressed business and, if passed, would hurt some of the people it aims to help. Part I appears in the September issue of the ABI Journal, available here.

Part II of the series addresses international forum shopping—specifically the use of chapter 11 by non-U.S. debtors with minimal U.S. contracts—appears in the October issue of the ABI Journal.

Written by:
Editor
Published on:
December 7, 2021

Categories: UncategorizedTags: Bankruptcy, Bankruptcy Courts, Bankruptcy Reform

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