According to UCLA lawprof Lynn LoPucki, about 60 percent of recent big corporate bankruptcies have been filed in courts away from the companies’ hometowns. Although not all motives for selecting a distant bankruptcy venue are improper, forum-shopping can assist incumbent managers in finding a court that will cede them broad control during a reorganization (including the payment of large “retention” bonuses), while lawyers and other professionals may seek to steer filings into courts that are indulgent about approving fee requests. Among the losers: many creditors, which in some cases may include the companies’ workers. An opponent dismisses the charges as “baseless and offensive”, but some judges agree that the indictment holds merit. The Southern supermarket chain Winn-Dixie filed in New York City, then after a furor agreed to move the proceedings to its home state of Florida. (Pamela A. MacLean, “Forum Shopping Alleged in Chapter 11 Cases”, National Law Journal, May 3). See, among other posts, Mar. 8, 2004. More: Larry Ribstein (Jun. 22) has some thoughts on the market for jurisdiction-shopping.
Winn-Dixie, up North
According to UCLA lawprof Lynn LoPucki, about 60 percent of recent big corporate bankruptcies have been filed in courts away from the companies’ hometowns. Although not all motives for selecting a distant bankruptcy venue are improper, forum-shopping can assist incumbent managers in finding a court that will cede them broad control during a reorganization (including […]
Comments are closed.