Attorney General Ken Paxton led a letter signed by 42 attorneys general in support of the Bankruptcy Venue Reform Act of 2019. The Act will prevent forum shopping during bankruptcy litigation, providing much needed protection to consumers, workers, retirees, shareholders, and small business vendors who are currently harmed by the one-sided right for corporate debtors to choose whichever court they prefer.
“It is imperative that we protect our citizens by affording them fair trials and accessible venues,” said Attorney General Paxton. “Some scrupulous corporations have gotten away with manipulating bankruptcy cases in their favor by filing in districts specifically chosen to benefit themselves. It is time to even the playing field and end the practice of corporate venue shopping.”
Currently, individuals can only file bankruptcy in their district of residence. However, corporations reserve the right to file bankruptcy lawsuits in any district in which they are incorporated, have their principle place of business or assets, or in any district where an affiliate – no matter how small – has been filed. This leaves corporations with a wide choice of possible venues, which can be manipulated to their own advantage.