Press Releases
11/09/2021
Attorney General Tong Leads Coalition Supporting Bankruptcy Venue Reform Act
(Hartford, CT) – Attorney General William Tong today co-led a letter to Congress signed by 43 attorneys general in support of the Bankruptcy Venue Reform Act of 2021. The bipartisan legislation would end “forum shopping” and prevent corporations from choosing to file for bankruptcy in whichever district is believed to be more favorable.
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 principal place of business or assets, or in any district where an affiliate – no matter how small – has been created or located. This leaves corporations with a wide choice of possible venues, which can be manipulated to their own advantage.
“Forum shopping undermines the integrity of our bankruptcy system and needs to end. Corporations should file for bankruptcy wherever their principal assets or place of business is located, not wherever they hope to secure most favorable treatment,” said Attorney General Tong.
If passed, the Bankruptcy Venue Reform Act of 2021 will:
• Limit where businesses may file bankruptcy by ensuring that they will do so in a jurisdiction in which their “principal assets” or their “principal place of business” are located; and
• Require rules to be prescribed to allow all governmental attorneys to appear without charge and without being required to associate with local counsel.
In the letter, the attorneys general contend that passage of the legislation will:
• Reduce forum shopping in the bankruptcy system.
• Strengthen the integrity of, and build public confidence and ensure fairness in, the bankruptcy system.
• Help consumers and other parties to be represented in court without undue burden.
• Level the playing field for state attorneys general to guard their states’ financial interests and enforce consumer protection laws.
The letter was led by Attorney General Tong, Maryland Attorney General Brian Frosh, Ohio Attorney General Dave Yost, and Texas Attorney General Ken Paxton, and signed by the attorneys general of Alaska, Arizona, Arkansas, California, Colorado, District of Columbia, Georgia, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, and Wisconsin.
Assistant Attorney General Brendan Flynn and Michael Wertheimer, Deputy Associate Attorney General & Chief of the Consumer Protection Section assisted the Attorney General in this matter.
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Media Contact:
Elizabeth Benton
elizabeth.benton@ct.gov
Consumer Inquiries:
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