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Bankruptcy Venue Reform Act of 2021
12/31/2022, 4:58 AM
Summary of Bill HR 4193
Under the proposed legislation, bankruptcy cases would be required to be filed in the district where the debtor's principal place of business or principal assets are located. This would help ensure that bankruptcy cases are heard in a more appropriate and fair venue, rather than being strategically filed in jurisdictions that may be more lenient or advantageous to the debtor.
The bill also includes provisions to prevent the manipulation of venue selection through the use of shell companies or other tactics. It aims to promote transparency and fairness in the bankruptcy process, ultimately benefiting creditors, debtors, and the overall integrity of the bankruptcy system. Overall, the Bankruptcy Venue Reform Act of 2021 seeks to improve the efficiency and fairness of the bankruptcy process by addressing concerns related to venue selection. It aims to create a more level playing field for all parties involved in bankruptcy cases and prevent abuse of the system for personal gain.
Congressional Summary of HR 4193
Bankruptcy Venue Reform Act of 2021
This bill limits where a non-individual debtor (e.g., a corporate debtor) may file for bankruptcy.
Specifically, these debtors must file in the district court for the district in which the principal place of business or principal assets of the debtor are located. Such a debtor may also file in a district where there is a pending bankruptcy case concerning an affiliate that has a certain level of control or ownership of the debtor (e.g., if the affiliate is a controlling shareholder of the debtor), if that pending case is in a proper venue under this bill.
Under current law, these debtors may also file where they are domiciled (i.e., incorporated) or where there is a bankruptcy case pending concerning an affiliate, general partner, or partnership.
For certain debtors who are issuers of securities, their principal place of business is defined in the bill as the address of the entity's principal executive office as provided in specified Securities and Exchange Commission filings.
