Federal lawmakers on Thursday proposed a bill that would require companies to file for chapter 11 bankruptcy in a courtroom close to their principal place of business, rather than where they are incorporated.
The bipartisan bill, called the Bankruptcy Venue Reform Act of 2019, hopes to spread bankruptcy cases throughout the US to ensure that employees, small businesses and local employees are able to fully and fairly participate in the proceedings.
Current federal law allows companies to file for bankruptcy protection either where they are incorporated or where they operate much smaller affiliates. Most often, bankruptcy cases have been decided in either Delaware or New York. Supporters of the existing law argue that the experienced judges in popular venues like Delaware can better handle complicated issues.
Delaware Governor John Carney reiterated that companies from around the country choose to incorporate in Delaware specifically because of the expertise and experience of Delawares judges, attorneys and business leaders.
Experienced bankruptcy courts and judges are critical to ensuring that restructurings preserve the underlying businesses and save jobs. Altering the venue laws that have been in place for decades and replacing them with restrictions undermines well-settled principles of corporate law, threatens jobs, and hurts our economy.
Representatives Zoe Lofgren (D-CA) and Jim Sensenbrenner (R-WI) introduced the bill.