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Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.

The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)

Jurisdiction: Venue
IDNameGroupOtherCode
Sec
Cross
Ref
Problem ReferencedProposed Solutions
NBRC-
0005
Richard L. HaeusslerLaw Offices of Richard L. Haeussler. Sole practitioner who represents chapter 7 & 13 Debtors.
1408(1)1409Irvine Company was able to file in Michigan despite the fact that all of its creditors and business were located in Irvine, CA.Congress should exclude state of incorporation as permitted venue.
NBRC-
0025
Robert B. MillnerPast-Co-Chair ABA Bankr. Insol. Comm. & Sonnenschein Nath & Rosenthal
1408(1)
Bankruptcy venue should be amended to eliminate place of incorporation as possible venue. Often no meaningful contacts in place of incorporation. Imposes a burden and inconvenience on creditors.Place of incorporation as well as residence and domicile as possible venues for fictitious entities including corporations. Should return to former Bankruptcy Rule 116(a) of the Act which distinguished between fictitious entities and individuals in establishing permitted venues.
NBRC-
0028
Jeffrey L. SolomonAdvocacy Vice Chair of General Practice, Solo & Small Firm Section of ABA
1408(1)
Place of incorporation venue causes the disenfranchisement of smaller and regionally located creditors. No principled basis to retain place of incorporation as valid venue.Adopts proposal of ABA Insol. Comm. - Return to rule under Act that distinguished between fictitious entities for bankruptcy venues.
NBRC-
0030
Francis L. CarterBankruptcy Practitioner - Coll Davidson Carter Smith Salter & BarkettJuly Invited participant - Small Business Working Group.1408(1)
Bankruptcy Venue should be amended to eliminate place of incorporation as a permitted venue.Agrees with ABA proposal to adopt Rule under Act to distinguish between fictitious and nonfictitious entities for venue purposes.
NBRC-
0034
Andrew R. TurnerAttorney at Conner & Winters.
1408(1)
Bankruptcy venue in state of incorporation is often an inconvenient forum to smaller creditors.Eliminate place of incorporation as a valid venue option.
NBRC-
0035
Jon D. SchneiderAttorney. Goodwin, Procter & Hoar
1408(1)
Current venue statute is being abused and leading to poor public perception of bankruptcy process. Promotes competition among courts as to which one will be most favorable to debtors and fee friendly. Perception of debtor-friendly courts where fees are excessive. Burdens on smaller creditors is less of a consideration. Perception is that bankruptcy is a "hidden, confused, and unfair process."Debtor's attorney should be required to file an affidavit as to the specific basis for venue and the court should have an obligation to decide whether venue is proper immediately at the commencement of a case. Procedural reform is required to prevent further abuses.
NBRC-
0036
John A. LapinskiAttorney; Clark & Trevithick
1408(1)
Current venue statute permits forum-shopping; is unfair to creditors; increases the cost of bankruptcies and has led to a wide public perception of abuse and unfairness in the bankruptcy system.Section 1408(1) should be amended to eliminate place of incorporation or organization as permitted venue for filing of bankruptcy by corporations and other fictitious entities.
NBRC-
0037
Paul G. JarvisAttorney; Law Office of Paul G. Jarvis
1408(1)
Very burdensome for small creditors to enforce claims in distant forums, such as Delaware.Section 1408(1) should be amended to eliminate place of incorporation as a valid bankruptcy venue.
NBRC-
0038
Dennis P. RawlinsonAttorney; Miller, Nash, Wiener, Hager & Carlsen LLP. Co-Chair of the Creditors' Rights Subcomm. of ABA Bankr. & Insolv. Committee
1408(1)
Committee members have unanimously concluded that the current venue options (place of incorporation) for fictitious entities has led to abuse and inequities. Unfair prejudice against creditors who are disenfranchised and burdened with extra expense to protect rights in a far-away forum.Supports position that venue for fictious entities should be limited to principal place of business and principal assets. Understands that this was the practice prior to 1978 and prevents abuses and inequities, including forum shopping.
NBRC-
0047
Haynes & Boone, L.L.P.Private law firm
1408(1)
Current statute has led to blatent forum-shopping by debtor-corporations. Location is geographically inconvenient forum for most creditors. Costly to bear expense of opposing debtor's choice of forum. Administrative costs are higher due to distant forum. Current statute upsets delicate balance between debtors and creditors.State of incorporation should be eliminated as a potential bankruptcy venue for debtors other than individuals. No discussion of affiliate or subsidiary filing.
NBRC-
0048
Robert E. ShawMitchell, Neubauer, Shaw & Hanson, P.C.
1408(1)
Burden of current venue provisions falls disproportionately on smaller and rural creditors. No mention of affiliate filings.Eliminate place of incorporation as a valid bankruptcy venue for bankruptcy filings of corporations and other fictitious entities.
NBRC-
0049
Jack M. ZackinChair, Bankruptcy Law Section NJ State Bar Ass'n
1408(1)
Current venue provisions create judicial inefficiency, higher administrative costs, and lead to a perception of abuse and unfairness in the bankruptcy process by fostering forum shopping. No mention of affiliate filing problems.Eliminate place of incorporation as a valid bankruptcy venue for corporations and other fictitious entities.
NBRC-
0050
Regan WhitworthAttorney; Balyeat Law Offices, P.C.
1408(1)
Current venue provisions are "unjust." Arguing for amendment in the interests of "justice" as any change in the statute would have little effect on clients in Montana.Stronger reform, requiring a bankruptcy filing where the principal assets are located. If unclear, then where principal place of business is located. Elimination of "domicile" and "residence" in determining venue for a corporate petition is a sensible, modest reform.
NBRC-
0051
Gary E. KlausnerAttorney; Robinson, Diamant, Brill & Klausner. Chair ABA task force on Ch. 11 practice.
1408(1)
Current venue statute encourages forum shopping, increases costs to the estate, and makes creditor participation difficult.Wholeheartedly supports proposal to change venue to exclude place of incorporation as a venue for fictitious entities.
NBRC-
0052
Francis L. CarterAttorney; Coll, Davidson, Carter, Smith, Salter & BarkettInvited Participant to Small Business & Single Asset Working Group Meeting.1408(1)
Current venue statute is the source of "much mischief" by permitting debtors to seek a bankrutpcy forum far away from their creditors.Simple amendment to eliminate place of incorporation as a bankruptcy venue for corporations and other fictitious entities would solve this problem.
NBRC-
0053
Herbert KatzAttorney; Gilchrist & Rutter
1408(1)
Current venue statute permits forum-shopping, is unfair to creditors, increases the cost of bankruptcies, and has led to widespread perception of abuse and unfairness in the system.Statute should be amended to eliminate place of incorporation as a valid bankruptcy venue for corporations and other fictitious entities.
NBRC-
0054
Jeffrey L. SolomonAdvocacy Vice-Chair of Gen. Practice, Solo & Small Firm ABA Section
1408(1)
No principled basis to retain place of incorporation or organization as a basis for venue. Utilization of this provision has led to unfair and unacceptable abuses of the bankruptcy system.Amend statute to eliminate place of incorporation or organization as a valid bankruptcy venue.
NBRC-
0055
Benjamin C. AckerlyAttorney; Hunton & Williams
1408(1)
Proliferation of bankruptcy cases in Bankr. Ct. in DE is an example of how the current venue provisions are used to inconvenience creditors. Increases cost of bankruptcy and delays resolution, ultimately harmful to creditors.Amend statute to prevent a corporation or partnership from filing for bankruptcy in the state where it is organized or incorporated.
NBRC-
0056
Marsha D. GalinskyAttorney; Sheppard, Mullin, Richter & Hampton, LLP
1408(1)
Current venue provision permits forum shopping, is unfair to creditors, and increases the cost of bankruptcies.Eliminate place of incorporation or organization as a bankruptcy venue for cases filed by corporations and other fictitious entities.
NBRC-
0057
Bruce C. BaileyAttorney; Chambliss & Bahner, PLLC
1408(1)
Why should a Philadelphia Ltd. Partnership whose sole asset is a Wyoming shopping center be permitted to file in Phila. and require all of the WY creditors to appear in a distant, costly forum in order to protect their rights Result is that only the largest secured creditors are able to protect their rights.Eliminate any provision for venue in a location that is simply the debtor's state of incorporation or organization. Venue should be limited to principal assets or place of business.
NBRC-
0058
Joseph H. Huston, Jr.Attorney; Stevens & Lee
1408(1)
ABA's proposed change for venue provisions is based on a flawed assumption: the burden on creditors varies from case to case and it depends entirely on whose ox is gored. In many cases, however, quite the contrary is true: national businesses have national creditor pools and thus a filing in any venue but the creditor's home venue would be "disenfranchising" and "burdensome." Especially in the case of Delaware where a complex restructuring would require extensive application of DE Corp. law, the whole process would benefit from having courts and practitioners familiar with DE law involved in the process.To be sure, forum shopping occurs and some hardship may result. The remedy may lie in the broad equitable powers or an amendment less absolute than the one proposed. To indulge the ABA's view would call into question the general venue provisions of 1391(c) that provide for far more forum shopping against a corporate defendant.
NBRC-
0059
Howard J. Beck, Jr.Attorney; Gentry Locke Rakes & Moore
1408(1)
Latitude given to corporate or partnership entities to file for bankruptcy in the place of incorporation or organization increases potential for forum shopping and inconveniences creditors.Venue statute should be amended to limit possible venues to principal place of business or principal location of assets.
NBRC-
0060
Tony G. PowersAttorney; Rogers & Hardin
1408(1)
Supports ABA (bankruptcy and insolvency committee of the litigation section) effort to revise bankruptcy venue provisions. Current statute, in the context of the nationwide availment of the benefits of DE corp., creates the judicial equivalent of a "rotten borough" for bankruptcy filings by corporate debtors. Imposes undue burdens on creditors and further impairs the ability of smaller creditors to protect their claims.Statute should be amended consistent with the ABA position.
NBRC-
0061
Dorothy H. WimberlyAttorney; Stone, Pigman, Walther, Wittmann & Hutchinson, LLP
1408(1)
Harrah's Jazz, entity which holds the contract for the casino in the state of LA, filed for bankruptcy in DE despite the fact that majority of creditors except bondholders were located in LA. Political pressures convinced Harrah's to transfer its case. Such agreement is the exception rather than the rule.Statute should be revised to eliminate place of incorporation or organization as a basis of venue for filing bankruptcy cases.
NBRC-
0062
Rebecca R. DriggsAttorney; Muth, Casebolt, Germaine & Driggs
1408(1)
Represents landlords. A retailer's ability to file for bankruptcy in a location that has little or nothing to do with its operations significantly increases the cost of litigation to landlords and their ability to exercise their rights under the bankruptcy code. While the present statute is good for lawyers in DE, it is not good for the economy or for the majority of bankruptcy practitioners.The only basis for bankruptcy venue should be place of principal business or location of principal assets.
NBRC-
0063
Martha L. Passalaqua on behalf of Shapiro & MilesAttorney; Shapiro & Miles
1408(1)
Recently, firm has seen several instances of venue abuse by debtors. Even in the case of a single-asset or multiple asset entity, current statute permits a filing in another state. These bankruptcies are most likely filed in bad faith. By filing in another state, these debtors are able to forestall foreclosure even longer, while the debtor continues collecting rent. In most cases it is nearly impossible for the creditor to adequately protect all of its interest. General public and the taxpayers are most affected by these unscrupulous debtors.Amend section 1408(1) to prevent forum shopping.
NBRC-
0064
Steven B. Towbin on behalf of D'Ancona & PflaumAttorney; D'Ancona & Pflaum
1408(1)
Recurrent situation is where a retailer with extensive operations in Chicago is able to file in another forum based on place of incorporation. Ch. 11 debtors in DE or NY frequently fail to pay rent or common maintenance charges to out of state landlords pending the assumption or rejection of their leases notwithstanding section 365(d) with the knowledge that there is rarely enough money involved for an IL landlord to incur the costs to litigate in a foreign forum. Even with amounts as much as $50-$60,000 at stake, clients will forego statutory rights instead of paying for travel and local counsel costs.Return to past practice under former bankruptcy rule 116(a) that distinguished between corporate entities and individuals for venue puposes.
NBRC-
0065
Henry J. KaimAttorney; Sheinfeld, Maley & Kay
1408(1)
Commencement of a case in a jurisdiction that is distant from all aspects of a corporation's operations imposes a burden on creditors and increases the expenses incurred by a bankruptcy estate. The fact that the current statute permits the opportunity for forum shopping is as obvious as it is unhealthy. The integrity of the bankruptcy system is not well-served by the present venue statute.Return to practice under former bankruptcy rule 116(a) which did not permit fictitious entities to file in their place of domicile or residence.
NBRC-
0066
Bruce BennettAttorney; Hennigan, Mercer & Bennett
1408(1)
Current statute is unfair and promotes inefficiency. It is unfair to creditors and other parties in interest that have dealt with the debtor at its principal place of business or the location of its principal assets. When this provision is considered together with the affiliate rule which permits related cases to be filed in the venue selected by the first member of the corporate group to seek relief, the potential for abuse is enormous.Eliminate place of incorporation or organization as a basis of venue for cases commenced by corporations and other fictitious entities.
NBRC-
0067
H. Slayton Dabney, Jr.Attorney; McGuire Woods Battle & Boothe, LLP
1408(1)
Current statute permits abusive forum shopping.Supports amendment of 1408(1).
NBRC-
0068
Donald A. WorkmanAttorney; Foley & Lardner
1408(1)
Present venue statute has led to abuse and is unfair. Disenfranchises creditors who are merely seeking to exercise their rights, particularly hard hit are small creditors. Leads to an overall perception of unfairness in the bankruptcy laws.Supports the position taken by the Bankruptcy & Insolvency Committee of the ABA Litigation Section. Eliminate place of incorporation or organization as a basis of venue for corporations and other fictitious entities.
NBRC-
0069
Andrew W. CaineAttorney; Pachulski Stang Ziehl & Young
1408(1)
Current provision permits forum shopping, is unfair to creditors, and increases the cost of bankruptcies.Eliminate "place of incorporation or organization" as a basis for bankruptcy venue in cases filed by corporations and other fictitious entities. This amendment will fairly limit the alternatve venues available to corporate debtors.
NBRC-
0070
Gerald F. MunitzAttorney; Winston & Strawn
1408(1)
Venue has become a strategic consideration in chapter 11 cases. By permitting state of incorporation filing, debtors have greater ability to pick a "debtor-friendly" forum to enhance their prospects for reorganization than are other, usually smaller, debtors. Unnecessary venue options promote the filing of ch. 11 cases because a debtor may not be as daunted by the process in an overly favorable forum.Eliminate residence or domicile as valid venues for corporate and partnership debtors.
NBRC-
0070
Gerald F. MunitzAttorney; Winston & Strawn
1408(2)
The "affiliate rule" gives large ch. 11 debtors an even greater advantage than the state of incorporation option. Permits a parent to follow a debtor/affiliate into a bankruptcy forum with no contacts other than the affiliate's pending case.Identical considerations as those for amendment of 1408(1) favor elimination of the "affiliate rule." Returns to the practice under ch. X whereby a subsidiary could commence a case, or have a case commenced against it in a forum where a corporate parent's case is pending but not vice versa.
NBRC-
0071
Stephen ChrystieAttorney; Chrystie & Berle
1408(1)
Current statute is patently unfair. Permits corporations to file in a jurisdiction where it has no contacts except place of incorporation or organization. Unfair to creditors, who are unlikely to have done business with the debtor in the place of incorporation, and increases the cost of bankruptcies.Eliminate place of incorporation or organization as a basis for bankrutpcy venue for corporations and other fictitious entities.
NBRC-
0079
Philip B. SchwartzChair; Business Law Section Florida Bar Association
1408(1)
No supported reason to retain place of incorporation/organization as a basis for bankruptcy venue of corporations and other fictitious entities. Present use of this provision has led to abuse and unfairness in the abnkruptcy system.Current venue statute should be amended to eliminate place of incorporation/organization as a basis for venue for corporations and other fictitious entities.
NBRC-
0126
Kathleen S. McElroyCreditors' Attorney in Florida
1408(1)
Present statute has led to abusive forum shopping by corporations and other fictitious entities.In light of these abuses, section 1408(1) should be amended to eliminate place of incorporation or organization for fictitious entities.
NBRC-
0127
Brian HolmanAttorney; White & Case
1408(1)
Current venue statute permits disproportionate number of filings in Delaware. No complaints concerning the Delaware bar or the Delaware courts. Advised before the filing which judge would be assigned to the case and the dates and times of important hearings. Understands that in an effort to promote efficiency, sometimes the court will review the merits of a pending motion with counsel for the parties in advance of any hearing on the motion. Complaint is that Delaware was selected as the venue because the Delaware bankruptcy court is notorious for overruling any objections to a debtor's reorganization efforts.Bankruptcy cases should be filed only in venues having a reasonable relationship to the reorganization effort. Section 1408(1) should be amended.
NBRC-
0128
Andrew HerronAttorney; Kelley, Drye & Warren, LLP
1408(1)
None stated.Supports amendment of the venue statute of the bankruptcy code to eliminate place of incorporation or organization as a basis of venue.
NBRC-
0134
Paul S. AronzonAttorney; Milbank, Tweed, Hadley & McCloy
1408(1)
Believe that the fundamental and historical purposes of limitations on the venue of actions in the federal district courts -- to protect defendants from litigating in inconvenient forums and to promote the logical distribution of cases in the federal court system -- apply as well to the rules for the venue of bankruptcy cases. Due Process considerations: concerned with convenience of parties that have not chosen the forum. Proper venue in big cases serves to further public participation in and the accountability of the judicial process.Proposed revision would go a long way towards making the bankruptcy venue provisions consistent with the recent and very substantial congressional revisions of 28 U.S.C. § 1391 which no longer refer to place of incorporation as a potential venue for suit against a corporate defendant. Are the contacts with the forum sufficient to establish in personam jurisdiction. Place of incorporation is insufficient in bankruptcy to establish minimum contacts. Eliminating a corporation's ability to establish bankruptcy case venue in a remote forum based solely upon place of incorporation will work no prejudice on the nation's economic enterprises and strikes an equitable balance among the competing commercial and public interests that are contending in any big bankruptcy case. Encourages the NBRC to adopt a proposal to amend 1408(1) to eliminate place of incorporation to congress.
NBRC-
0135
N. Dwight CaryAttorney; Murphy, Weir & Butler
1408(1)
Opposed to any amendment to the venue provisions under section 1408(1). Delaware courts are efficient, practical, predictable, and even-handed. Not at all suprised that certain constituencies want to eliminate DE as a venue option in certain large (and lucrative and prestigious) cases. If the same efficiency and competency could be found in other venues, I would probably be indifferent to the proposal. No venue offers the speed and certainty of DE. Some creditors may not prefer to see cases move quickly and efficiently, while others may only seek to keep bankruptcy business close to home.The fact is that large and complex cases are often filed in DE today because the reorganization process in DE works. I hope that the NBRC will not heed the call of those who would confine ch. 11 to the unworkable, prolonged and procedural nightmare that has become in many (though not all) jurisdictions. Rather than eliminate DE as a competitor, bankruptcy courts around the country should emulate the example set by DE and administer superior jurisprudence. In the meantime, unless DE remains an available forum, many creditors will suffer unnecessary losses and delays, and many innocent employees and others will lose their jobs.
NBRC-
0144
David A. BurnsAttorney; Baker & Botts
1408(1)
Current venue provision works to the detriment of our creditors. Difficult to deal with bankruptcy cases that arise in distant forums. Particularly true for small creditors. Large creditors must hire local counsel resulting in an extra layer of expense. Small creditors are especially hard hit and cannot afford to even challenge a debtor's choice of venue.The code should be amended to limit venue options for fictitious entities to principal place of business or location of principal assets.
NBRC-
0144
David A. BurnsAttorney; Baker & Botts
1408(2)
Affiliate rule also expands (unjustifiably) the venue choices of a large corporation and permits it to file a peition in a distant forum.The affiliate rule should be amended to prohibit forum shopping by large corporate debtors who file based on the venue of an affiliate's case.
NBRC-
0145
Gerald F. MunitzAttorney; Goldberg, Kohn, Black, Rosenbloom & MoritzInvited Participant - J&P working group - NBRC 0070.1408(1)
Venue Rule should be changed, but not to principal place of business or principal assets.Venue should be limited to place of principal office. A rule based on a debtor's main headquarters would also correspond to the EU insolvency statute. Requiring a bankruptcy case to be filed in that district comports with basic concepts of federal jurisdiction as well as commercial expectations.
NBRC-
0145
Gerald F. MunitzAttorney; Goldberg, Kohn, Black, Rosenbloom & MoritzInvited Participant - J&P working group - NBRC 0070.1408(2)
Affiliate rule if left unchanged will permit the same forum-shopping that any amendment to section 1408(1) would change.Affiliates should be able to follow the parent corp.'s filing but not vice versa. A mandatory affiliate transfer rule (as proposed by the NCBJ) would help alleviate the multiple forum rule.
NBRC-
0146
Max TuckerAttorney; Winstead, Sechrest & Minick, PC
1408(1)
Current venue provisions prejudice creditors who transact business with debtor in same vicinity as debtor's business operations. These creditors are put to great inconvenience and expense when access to bankruptcy court becomes necessary. If a trustee is appointed and has to have an office in the place of domicile (§ 321) such trustee is put in the awkward position of administering assets thousands of miles away.Commission should recommend that Congress eliminate domicile and residence as a basis for venue to corporate and partnership debtors.
NBRC-
0147
Bill WallanderAttorney; Winstead, Sechrest & Minick, PC
1408(1)
Current venue provisions prejudices creditors who transact business with debtor in same vicinity as debtor's business operations. These creditors are put to great inconvenience and expense when access to bankruptcy court becomes necessary. If a trustee is appointed and has to have an office in the place of domicile (section 321) such trustee is put in the awkward position of administering assets thousands of miles away.Commission should recommend that Congress eliminate domicile and residence as a basis for venue to corporate and partnership debtors.
NBRC-
0163
Francis A. MonacoAttorney; Walsh and MonzackAddressed Commission on issue of Venue at meeting in San Diego.1408(1)
Permitting corporations to file in place of incorporation is not inherently wrong, especially in the case of large national corps. Section 1412 can handle those instances where venue is improper. Misconceptions about 1412 motions exist: Not easy motions to make; DE court will not refuse to transfer cases because a case has grown roots; if creditors were so dissatisfied with the venue, why aren't more transfer motions made.Venue proposal will cause more problems than it solves. Debtor's should have maximum flexibility where to file a bankruptcy case. Venue in section 1408 should not be changed since it does not represent a problem in the first instance. Section 1412 can solve any problems that may arise. Commission should not succumb to pressure by certain parties.
NBRC-
0165
David E. PetersonAttorney; Lowndes, Drosdick Doster Kantor & Reed, PA
1408(1)
Current venue statute places an undue burden on creditors and gives the debtor an unfair advantage over creditors. No defensible reason to permit place of incorporation filings when no operations exist in the state.Amend venue provisions to eliminate place of incorporation filings.
NBRC-
0166
Robert U. SattinAttorney; Reid & Reige
1408(1)
Venue will never be based solely on corporate headquarters as long as lawyers perceive that bankruptcy judges accord different treatment and interpretation to significant provisions of the bankruptcy code such as third party releases, extensions of exclusivity, sales free and clear, etc.Suspicious of a change of venue statute that is motivated and directed at one venue. I oppose any efforts to change the venue provisions based on elimination of place of incorporation.
NBRC-
0172
Judy A. O'Neill on behalf of Dykema Gossett, PLLCAttorney
1408(1)
Current venue statute has been abused by debtors and works to the disadvantage of creditors, who are often located near the debtor's principal place of business or where the debtor's principal assets are located.Amend the venue statute to prohibit business debtors from filing where they are domiciled.
NBRC-
0173
Alan GoverPartner - Weil, Gotshal & Manges, LLP
1408(1)
Opposes any amendments to the venue statute that would prohibit venue based on place of incorporation. No justification exists for creating classifications of corporate domicile/"citizenship" for bankruptcy cases that are different from other federal civil cases. The proposed changes to the venue statute overlook the fact that most corporations' choice of state for incorporation is based primarily on that state's taxation, regulation and corporate governance laws, and not in the interest of maximizing venue "hospitality." Futher, bankruptcy judges sitting in the state of incorporation are more versed on state law issues that may arise with corporate debtors. A greatest assets or "quantum of business activity" test would not prevent forum shopping and would be difficult to administer. "Anti-Delaware" aspects of the proposed venue amendment are unjustified, as Delaware judges are as objective as judges from any other jurisdiction.By allowing courts to consider on their own or by motion when changes in venue are warranted, the current law already provides an adequate mechanism for correcting errors, and thus does not need to be amended.
NBRC-
0189
Marcia L. Goldstein, on behalf of NY City Bar Assoc., Comm. on Bankruptcy & Corp. ReorganizationChair, Comm. on Bankruptcy and Corp. Reorganization


Abolition of the "Affiliate Rule," which establishes venue based on the jurisdiction in which an affiliate files, would create delays and increase costs in the prosecution of multi-debtor bankruptcy cases.In light of the potential negative impact of abolishing the "Affiliate Rule," the NBRC should not consider the rule's merits without further study.
NBRC-
0201
D. J. BakerAttorney
28 U.S.C. § 1408
Underlying assumption to the corporate venue proposals is the mistaken belief that debtors are flocking to file in Delaware because of the allegedly pro-debtor leanings of the Delaware bankruptcy courts. In reality, creditors also flock to Delaware, not because of preferential treatment or lack thereof, but because Delaware bankruptcy courts are known to be extraordinarily efficient at moving large cases through the sometimes protracted Chapter 11 process. In fact, the author's experience has been that debtors and creditors filing in Delaware each win and lose disputed hearings with essentially the same frequency encountered in other districts. Moreover, Delaware courts have developed a critical mass of rulings and practice that affords all parties a high degree of predictability, a quality valued by debtors and creditors alike. Delaware judges also work extremely hard and treat those appearing before them with every possible consideration.Opposes proposed changes to the corporate venue provisions. Assumptions that Delaware courts are "pro-debtor" are erroneous and misleading. Instead of limiting access to Delaware bankruptcy courts, we should be concentrating on replicating the efficiency of those courts in other districts.
NBRC-
0202
Gary S. Jacobson, on behalf of the Business Bankruptcy Law Committee of the New York County Lawyers Assoc.AttorneyMemo on corporate venue proposals28 U.S.C. §§ 1408, 1408(2)
Author attaches a seven-page memorandum from the Business Bankruptcy Law Committee of the New York County Lawyers' Association on the proposed corporate venue amendment to 28 U.S.C. § 1408. In summary, the memorandum concludes that the current corporate venue provisions, which allow jurisdiction based solely on state of incorporation, invite debtor forum shopping and result in unfairness to other parties in interest. This section is the primary source of forum shopping, and thus § 1408(2), which provides venue based on the pendancy of a subsudiary's case, need not also be eliminated. Any forum shopping that is permitted under § 1408(2) is outweighed by the efficiency and consistency that this section provides.Strongly supports amendment which would eliminate venue based solely on the state of incorporation. However, the author opposes amending the provision that allows venue based on pendancy of a subsidiary's case.
NBRC-
0203
Amy M. Tonti, on behalf of the Allegheny Co. Bar Assoc.'s Bankruptcy & Commericial Law SectionChair, Allegheny County Bar Assoc. (ACBA), Bankruptcy and Commerical Law SectionSummary of ACBA's recommendations28 U.S.C. § 1408
Corporate venue should not be based merely on state of incorporation or an affiliate's filing. Rather, venue should be based only on the principal place of business or the principal place of assets.Supports deleting state of incorporation and the affilitate's filing as a primary basis for venue, and urges that principal place of business and principal place of assets be preserved as the basis for venue. Venue should be discretionary in the district where there is a pending case under Title 11 concerning such persons, affilates, general partner, or partnership as long as: (a) the venue has a "reasonable" relationship to the reorganization effort of the subsequent cases to be filed in that venue; and (b) the intial case was not filed primarily to obtain jurisidiction in that venue for the subsequent filings.
NBRC-
0204
A. Thomas DeWoskinAttorney
28 U.S.C. § 1408
Permitting corporate venue based solely on state of incorporation encourages forum shopping, and in cases where the state of incorporation is distant from the principal place of business, hinders efforts of local press and creditors who wish to participate in a meaningful fashion. In short, many large corporations register in Delaware merely as a "gimmick which enables the [d]ebtor to avoid bad press in the local media."28 U.S.C. § 1408 should be amended to provide that a corporate debtor may not file for bankruptcy in its state of incorporation unless this state is also its principal place of business or principal assets.
NBRC-
0230
Regan Whitworth, on behalf of Balyeat Law Offices, P.C.Attorney
1408(1)
Author supports the position of the Bankruptcy and Insolvency Committee of the Litigation Section of the American Bar Association with regard to corporate jurisdiction. "An even stronger reform, requiring that corporate petitions be filed where the corporation's principal assets are located (and only if that is not easily determined, where the corporation's principal place of business is located) would be fully justified."Bankruptcy Code should be amended to eliminate "domocile" and "residence" in determining venue for corporate bankruptcy petitions.
NBRC-
0231
Judith Elkin, on behalf of the Business Reorganization and Bankruptcy Section of Haynes and Boone, L.L.P.Section Chair; Attorney
1408(1)
Current version of the bankruptcy venue statute has inadvertantly led to blatant, abusive forum shopping by debtor-companies. The statute has unfairly tipped the balance between creditor rights and debtor interests in the debtors' favor. Futher, no countervailing policy reasons exist for why the state of incorporation should be an optional filing venue.Corporate venue statute should be amended to delete "residency" or "domicile" as a venue option.
NBRC-
0232
Jack M. Zackin and Gerald Gline, on behalf of the Bankruptcy Law Section of the New Jersey State Bar AssociationChair - New Jersey State Bar Association Bankruptcy Law Section, and Chair - Committee on Bankruptcy Code Reform, respectively
1408(1)
No principled basis exists to retain the place of incorporation or orgaization as the basis for venue. The corporate venue provision creates judicial ineffciency, increases the costs of administering bankruptcy cases and fosters a perception of abuse and unfairness in the bankruptcy system by promoting forum shopping.Return to the provisions of Bankruptcy Rule 116(a), which distinguished between ficticious entities and individuals in establishing appropriate venues. This former rule did not allow ficticious business entities to file in their place of domicile or residence, absent other significant contacts with that state.
NBRC-
0233
Robert E. Shaw, on behalf of Mitchell, Neubauer, Shaw & Hanson, P.C.Attorney
1408(1)
Author supports the American Bar Association's position on corporate venue. The current venue provisions encourage forum shopping and do not provide a level playing field.Bankrupcy venue provisions shold be amended to eliminate place of incorporation or organization as a basis of venue for filing of bankrupcy cases by corporations and other ficticious entities.
NBRC-
0234
Gary E. KlausnerPartner - Robinson, Diamant, Brill & Klausner; Chairman - Task Force on the Economics of Chapter 11 Practice, Bankruptcy Committee of the Business Law Section of the ABA; past President - Financial Lawyers Conference
1408(1)
Existing corporate venue provision results in substantial hardship to creditors and increases the cost of bankruptcy cases. No reasons exist for permitting a corporation to file in their place of incorporation where they are not otherwise conducting business or have assets or creditors. Rather, the corporate venue provision results in forum shopping.Supports the proposed amendment to § 1408(1) eliminating place of incorporation or organization as a basis of corporate venue.
NBRC-
0250
Jon D. Schneider, P.C.Attorney
28 U.S.C. § 1408
Current corporate venue provisions encourage abuse and forum shopping, and are contributung to a poor public perception of the bankruptcy process.Supports corporate venue amendment which would restrict business bankruptcy filings to the entity's principal place of business or location of its principal assets. In addition, the debtor's attorney should be required to file an affidavit as to the specific basis for venue and the court should have an obligation to decide whether venue is proper immediately at the commencement of the case.
NBRC-
0251
Francis L. CarterAttorney
28 U.S.C. § 1408(1)
Corporate venue statute is a source of much mischief for debtors seeking a venue of convenience far from their creditors.Supports proposed corporate venue amendment to delete place of incorporation or organization as a basis of venue for corporate filing.
NBRC-
0254
Dennis P. RawlinsonCo-Chair, Creditors' Rights Subcommittee of the Bankruptcy & Insolvency Committee of the Litigation Section of the ABA
1408(1)
Current corporate venue statute has led to abuse and inequities, and creates unfair prejudice against creditors who are disenfranchised and burdened with extra expense to protect their rights in an out-of-state, distant forum.Supports amendment to require corporations and other ficticious entities establish venue based on their principal place of business or principal location of assets.
NBRC-
0255
Marsha D. GalinskyAttorney
1408(1)
Current corporate venue provision is patently unfair to creditors, permits forum shopping, and increases the costs of bankruptcies.Supports amendment to eliminate place of incorporation or orgaization as a basis of venue for corporate bankruptcy filings.
NBRC-
0256
Bejamin C. AckerlyAttorney
1408(1)
Corporate venue statute is used by debtors to inconvenience its creditors, who typically are situated where the assets or principal place of business are located. The result is increased cost and delayed resolution of cases.Suuports amendment to eliminate the provision permitting a corporate or partnership debtor to file its in domicile or residence.
NBRC-
0258
Paul G. JarvisAttorney
1408(1)
Corporate venue statute is extremely burdensome to creditors, particularly small creditors pursuing their claims and remedies in a court located in distant jurisdiciton.Wholeheartedly supports amendment to eliminate place of incorporation as a possible site of corporate venue.
NBRC-
0259
John A. LapinskiAttorney
1408(1)
Existing venue provisions permit forum shopping, are unfair to creditors, and have lead to a wide-spread perception of abuse and unfairness in the bankruptcy system.28 U.S.C. § 1408(1) should be amended to eliminate place of incorporation or organization as a basis of venue for corporations and other ficticious entities.
NBRC-
0260
Andrew R. TurnerAttorney
1408(1)
Bankruptcy venue statute permits forum shopping. The state of incorporation is often an inconcenient forum, escpecially for smaller creditors, and often bears no reasonable realtion to the business and financial affairs of the debtor.Supports proposed amendment to business venue statute.
NBRC-
0266
Bruce C. BaileyAttorney
14081(1)
Corporate venue provisions place undue burden on creditors. Consequently, the only creditors able to participate in the bankruptcy are the largest secured creditors.Supports amendment to eliminate any provision for venue in a location that is simply the debtor's state of incorporation or orgnization.
NBRC-
0267
Joseph H. Huston, Jr.Attorney
28 U.S.C. § 1408(1)28 U.S.C. § 1391(c)Proposed corporate venue amendment is based on a flawed assumption, namely, that the current statute unfairly disenfranchises or burdens creditors when, for example, Delaware corporations with non-Delaware headquarters commence proceedings in Delaware. On the contrary, the creditor class tends to be national in scope and thus a filing in any venue other than a creditor's home court would be disenfranchising and burdensome.Opposes proposed corporate venue amendment. The remediy to the forum shopping that occasionally occurs lies in the broad, equitable powers or the bankruptcy courts, or a less absolute amendment.
NBRC-
0281
Jeffrey L. SolomonAdvocacy Vice Chair of General Practice, Solo and Small Firm Section of the American Bar Association
1408(1)
Current corporate venue provisions cause the disenfranchisement of smaller, regionally based creditors and parties in interest in cases filed in areas which are geographically remote from the debtor's true place of business.Supports the proposed amendment to eliminate place of incorporation or organization as a basis for venue in cases filed by corporations and ficticious entities.
NBRC-
0282
Robert B. MillnerFormer Co-Chair; Bankruptcy and Insolvency Committee, Litigation Section - American Bar AssociationBankruptcy and Insolvency Committee's memorandum on venue provisions1408(1)
No prinipled basis exists to retain place of incorporation/organization as a basis for corporate venue. Moreover, the present use of this venue provision has led to the wide-spread perception of abuse and unfairness in the bankruptcy system. The author attaches a memorandum on this issue by the ABA Bankruptcy and Insolvency Committee.Bankruptcy venue statute should be amended to eliminate place of incorporation/organization as basis of venue for corporations and ficticious entities.
NBRC-
0303
Commercial Law League of AmericaCommercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: whether Congress should restrict the venue options for corporate debtors by eliminating the option basde on place of incorporation Should Congress curtail the ability of a parent corporation to follow its subsidiary into a venue that would otherwise be unavailableThe CLLA believes that this issue should receive top priority, and that the Code should amended so that venue is permitted only where the corporation has a real and tangible connection.
NBRC-
0305
John E. AcuffAttorneyCover letter from Senator Fred Thompson enclosing this letter from a constituent

Author represents a small Tennessee company who is a creditor in the chapter 11 case of a Texas debtor. The author complains that his clients cannot participate in the bankruptcy because they cannot afford to litigate in such a distant venue.Bankruptcy Code should be amended so that creditors who cannot afford the expense of participating in bankruptcies filed in distant venues are not altogether prevented from partcipating in the bankruptcy.
NBRC-
0312
John B. Scott, Jr.AttorneyCover letter from Senator Howard Heflin, enclosing this letter from his constituent

Current provisions governing how nationwide jurisdiction is conferred for preference claims give undue advantage to chapter 7 trustees and chapter 11 debtors-in-possession. Creditors often settle for a relatively modest percentage on their preference claim in order to avoid the time and expense of having to defend a case in somebody else's "briar patch."In the ongoing efforts to achieve the proper balance between debtor and creditor, some consideration should be given toward putting the parties on more equal footing with regard to nationwide jurisdiction.
NBRC-
0318
Paul Mignini, Jr., Mary E. Wysocki and Charles M. TatelbaumPresident-National Association of Credit Management ("NACM"), Chair-NACM Government Affairs Committee, and NACM Legislative and Bankruptcy Counsel, respectively
28 U.S.C. § 157
NACM sought the input of all NACM members with respect to proposed changes to the bankruptcy laws. The NACM Government Affairs Committee, without discussing the rationales for their suggestions, prepared the proposals below.NACM's Government Affairs Committee concludes that § 157 should be amended to provide: (1) in an action to avoid a preferential transfer where the amount of the transfer is $3,000 or less, the adversary proceeding may be only commenced in a Bankruptcy Court in a district where the transferee maintains a regualr place of business.
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material

Current venue provisions promote forum shopping.Code should be amended to place additional restrictions on venue options because the exercise of more discretion by the bankruptcy court will permit the proper transfer of cases.
NBRC-
0363
Francis A. Monaco, Jr.For Walsh & Monzack, P.A.
28 U.S.C. § 1408(1)
Allowing a corporation to file a chapter 11 petition in the district of the state where it is incorporated is not inherently wrong, especially given the nationwide operations of large corporations. Geographically distant parties will always be inconvenienced by a chapter 11 filing, no matter where it is filed. And, to the extent that a case truly does not belong in a certain jurisdiction, 28 U.S.C. § 1412 will remedy that problem. The proposed venue amendment will actually cause more problems than it solves because it would decrease the debtor's flexibility to choose the most appropriate forum.Opposes proposed amendment to the corporate venue provisions.
NBRC-
0365
Robert U. SattinAttorney
28 U.S.C. § 1408(1)
Delaware courts are among the most professional and civil bankruptcy courts in which to appear, and Delaware judges frequently agree to changes in venue when necessary. As such, changes in the corporate venue provisions which are aimed at the Delaware courts are unnecessary.Opposes any efforts to change the venue provisions based on elimination of place of incorporation.
NBRC-
0379
Janie Locke AndersonReporter, The Bankruptcy Strategist
28 U.S.C. § 1408(1)
In this article entitled "Determining the Proper Venue for a Bankruptcy Case," the author provides a review of issues relating to the determination of venue. In particular, she notes that ficticious entities do not necessarily have meaningful contacts with their residence, while individual debtors often do, and often do not have the resources to travel to distant venues.In recognition of this "common sense distinction" between entities and individuals, the author recommends that the venue provisions be amended to delete the reference to domocile or residence as a basis for determining venue for ficticious entities.
NBRC-
0447
David R. ThompsonJudge; Chair, Judicial Conference of the United States, Committee on the Administration of the Bankruptcy SystemAlthough the letter refers to a copy of the Center's report, none was attached to this copy of the letter. A copy of the Committee's resolution is attached.28 U.S.C. §1408
NBRC invited the input of the Judicial Conference Committee on the Administration of the Bankruptcy System regarding a proposal to amend 28 U.S.C. §1408, the bankruptcy case venue stature, to prohibit corporate debtors from filing for relief in a district based solely on the debtor's state of incorporation or based solely on an earlier filing by a subsidiary in the district. The Committee requested that the Federal Judicial Center conduct a study to provide empirical information and analysis pertaining to the question.The Committee determined that the data now available do not clearly support the need for any statutory change. The Committee resolved to share the Center's report and to continue to monitor scholarship and argument on this subject.
NBRC-
0594
Kathleen P. MarchU.S. Bankruptcy Judge, Central District of CaliforniaOpinion written by Judge Kathleen P. March in the case of In Re Kevin Mitchell and Kevin Mitchell vs. Fukuoka Daiei Hawks Baseball Club and Ryuzo Setoyama dated February 26, 1997; Letter from Judge Eugene R. Wedoff to Judge Kathleen March dated March 17, 1997

When a lawsuit related to a bankruptcy case is pending in a federal District Court, can that lawsuit be removed to a federal District Court Alternatively, can a case be removed from District Court to a Bankruptcy Court using 28 USC §1452 The Manual for Bankruptcy Judges notes there is a split in authority on this issue.28 USC §1452 should be amended to make clear that cases cannot be removed from District Court to District Court, or from District Court to Bankruptcy Court.
NBRC-
0819
Neal R. AllenAttorney


Author is responding to Proposal #2 of Elizabeth Holland's memorandum of 6/1/97. This proposal would require the trustee to bring a preference action in the district where the creditor resided if the debt amounted to or the value of the property transferred was less than $10,000.00." "In the case of small preferences, where more work is necessary and the prospects of recovery are less, the trustee would be required to go to a distant forum to attempt to recover. For larger preferences, he would be allowed to litigate in his 'home court'. The result would be that small preferences against distant debtors would rarely if ever be pursued." "In its concern to protect distant small trade creditors (who are assumed to have limited resources), the proposal overlooks the fact that the Cahpter 7 trustee himself has limited resources."Nothing specific.
NBRC-
1138
Amy M. TontiChair, Bankruptcy and Commercial Law Section, The Allegheny County Bar AssociationRecommendations of the Allegheny County Bar Association's Bankruptcy and Commercial Law Section to the National Bankruptcy Review Commission.28 U.S.C. 1408
Author submits the Recommendations of the Allegheny County Bar Association's Bankruptcy and Commercial Law Section to the National Bankruptcy Review Commission."The Section recommends that the venue provisions be modified by deleting the state of incorporation and the affiliate as a primary basis for venue while preserving the principal place of business and principal place of assets as the basis of venue."
NBRC-
1163
Richard L. HaeusslerAttorney


No discussion of this topic, only the statement given below."I have previously indicated that I believe that the state of incorporation provision should be limited or deleted."
NBRC-
1167
David B. StrattonMember at Large, Deleware State Bar Association
1408
The Deleware State Bar Association submits various points for consideration by the NBRC as it prepares to consider the proposed changes to 28 U.S.C. §1408 which would eliminate state of incorporation as a proper venue in corporate bankruptcy filings."...the proposed change in the venue statute should not be considered until academic studies of the issue are available to the Commission; the proposed change is not well-advised or supported by the Commission's analysis; and the proposed change does not address directly the substantive concerns of some of the Commissioners, which could be better addressed if those issues themselves were studied and changes recommended."
NBRC-
1168
Joseph R. Biden, Jr.U. S. Senator, Delaware; Ranking Member, Committee on the Judiciary, United States Senate


"I am writing to express my strong opposition to the Commision's proposal to eliminate place of incorporation as a basis for venue in bankruptcy.""I strongly urge you and your colleagues to reject this ill-advised proposal."
NBRC-
1175
Robert A. ColtonChair, Business Law Section of the Florida Bar


The Section supports the Commission's recommendations on venue. "...Congress should eliminate place of incorporation as a venue option under 28 U.S.C. §1408(1) for corporations and partnerships. Additionally, the so-called "affiliate rule" contained in 28 U.S.C. § 1408(2) should also be amended to preclude a debtor's affiliate(s) from filing a petition in the same venue as the debtor's case unless that venue would be avalid venue for the affiliated entity pursuant to 28 U.S.C. § 1408(1)."



 

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