Lofgren Introduces Bipartisan Bill to End Corporate Gaming of America's Bankruptcy System

WASHINGTON, D.C. — On Thursday, March 26 Reps. Zoe Lofgren (D-CA) and Ben Cline (R-VA) introduced the Bankruptcy Venue Reform Act, bipartisan legislation which requires that Chapter 11 bankruptcy proceedings take place where the principal place of business or principal assets of the corporation are located.

"Corporations currently have the ability to file for Chapter 11 bankruptcy and then potentially choose courts that have issued lenient rulings to hear their cases," said Rep. Lofgren (CA-18). "Bankruptcies should be adjudicated locally in a court familiar with all the affected stakeholders, not in some court all the way across the country. Our bipartisan Bankruptcy Venue Reform Act is commonsense legislation that will prevent corporations from venue shopping and tipping the scales of justice."

“Large corporations should not be able to manipulate the bankruptcy system to their advantage while workers, small businesses, and local communities are left behind. Venue shopping erodes trust in the process and shuts out the very people most affected by these decisions. Requiring Chapter 11 cases to be filed where a company is primarily located is a commonsense step to ensure greater transparency, fairness, and accountability for everyone involved,” said Rep. Cline (VA-06).

The bill has the support of the Commercial Law League of America, the Boston Bar Association, the Maryland-D.C. Creditors Bar Association, the Business Law Section of the Florida State Bar, and the Business Law Section of the California Lawyers Association.

“California is home to more large companies than virtually any other state, yet current bankruptcy venue rules allow those companies to drag their employees, vendors, and small creditors into courtrooms in Delaware or New York," said Christopher Hughes and Soyeun Choi, Co-Chairs of the Business Law Section of the California Lawyers Association. "California businesses and the workers and communities that depend on them have paid a real price under bankruptcy venue rules that prioritize the preferences of corporate debtors and their counsel over the needs of local stakeholders. The CLA Business Law Section strongly supports this reform, which would restore meaningful access to justice for the stakeholders who need it most.”

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