Bankruptcy Law: Venue Reform (as of 3/8/18)

The MSBA adopted a position in support of venue reform in 2016: Resolved that the MSBA supports legislation to change the venue provisions of 11 USC sec. 1408 to require Ch. 11 cases to be filed in the district where principal assets or principal place of business are located.  The MSBA supports change that would stop the venue shopping that enables so many chapter 11 cases to be filed in Delaware and the Southern District of New York and away from districts in which companies are headquartered.  

Over the years, many of Minnesota’s companies have filed in Delaware and the Southern District of New York, meaning that it is impractical and more expensive for Minnesota creditors and employees to observe and monitor the proceedings.  Doing so would entail traveling to a distant place (that has nothing to do with the Minnesota business) and hiring counsel local to the proceedings.  It also means that Minnesota considerations get much less attention than would be the situation if the proceedings occurred in the location of the company headquarters.

MSBA member Jim Baillie is leading our effort to pass this legislation. There is momentum this year at the U.S. Senate. Other bar associations are adopting positions in support of the bill and advocating at the Senate. Senator Tina Smith has agreed to co-sponsor the bill; Senator Klobuchar is undecided. 

A letter of support from state attorney generals is being drafted, and Minnesota Attorney General Lori Swanson will be asked to sign on.