Rep Buck and Rep Lofgren Introduce Biparty Legislation to End Forum Shopping Corporate Bankruptcy
Washington – Today Representative Ken Buck (CO-04) and Representative Zoe Lofgren (CA-19) introduced the Bankruptcy Venue Reform Act of 2021, legislation requiring Chapter 11 bankruptcy proceedings to take place where the principal establishment where the main assets of the company are located.
“Under current US law, companies that file for Chapter 11 bankruptcy have the option of ‘shopping’ and potentially choosing a court that has rendered lenient decisions in similar cases. Our bill will force companies that file for Chapter 11 bankruptcy to go through these procedures in the forum where they are primarily located rather than going to court across the country. This will eliminate the ability of companies to tip the scales of justice and ensure that the case is heard by a court familiar with all relevant stakeholders ”, said Rep. Buck.
“The outcome of a Chapter 11 bankruptcy proceeding can have a profound impact on the local community where a company is based. It is simply unfair that corporations can play with the bankruptcy system by choosing a remote court where there is a cottage industry to further their interests. Justice is best served when business bankruptcies are adjudicated locally, with convenient access to courts for local employees, retirees and creditors, and a judge who knows the affected community, ” said representative Lofgren.
The text of the Bankruptcy Venue Reform Act of 2021 is linked here.