Emphasizing that those affected by a court proceeding should have convenient
access to the proceeding, Boston Bar Association President Lisa C. Goodheart
today announced that the BBA endorses Chapter 11 Bankruptcy Venue Reform Act of
2011, H.R. 2533. The Bill proposes changes to the current venue rules for
commencing Chapter 11 bankruptcy cases in order to limit "forum-shopping."
In early September, Chief Judge Frank J. Bailey of the
United States Bankruptcy Court for the District of Massachusetts, testified
before Congress in
support of the legislation. The bill was endorsed by the BBA's governing Council
following a presentation by BBA Bankruptcy Section Co-Chairs John Morrier of
Casner & Edwards and Doug Gooding of Choate Hall & Stewart.
"We are convinced that as a general matter, the consequences of a
corporate bankruptcy are often most profound in the community in which the
debtor's principal place of business is located," said BBA President Lisa C.
Goodheart. "Requiring that a corporate bankruptcy take place locally ensures
that the distinct needs of the most directly affected community are not
overlooked or, worse, ignored by a group of professionals who live and work
hundreds, if not thousands, of miles away."
Under current rules, companies with large operations and vast numbers of
employees in Massachusetts are eligible to file their bankruptcy cases in either
the Southern District of New York or the District of Delaware because they are
either incorporated in those jurisdictions or follow affiliates which are
eligible to file there. For example, Massachusetts-based Friendly's filed for
bankruptcy protection in Delaware, on the same day that the company announced 30
restaurant/store closings in the Bay State -- resulting in a raft of
layoffs and other impacts in Massachusetts.
The legislative proposal endorsed by the BBA would require a Chapter 11
debtor to file a bankruptcy petition in the district where either the debtor's
principal place of business or principal assets are located. H.R. 2533 seeks to
limit Chapter 11 filings in jurisdictions where a particular debtor has little
or no presence.