Attorney General William Tong has taken on a co-leadership role in a coalition of 43 attorneys general calling on Congress to pass the Bankruptcy Venue Reform Act of 2021.
According to a letter sent to congressional leaders, Tong and his fellow attorneys general said the bipartisan legislation would end the concept of “forum shopping” which allows businesses to choose what they perceive to be the most favorable district for filings. balance sheet.
Unlike individuals who can only file for bankruptcy in their residential area, corporations can file either in their area of ​​incorporation, where they have their principal place of business or assets, or where an affiliated office has been established or located.
If passed, the Bankruptcy Venue Reform Act of 2021 would restrict bankruptcy filings by companies in the jurisdiction where their “principal assets” or “principal business establishment” are located.
Attorneys general added that the legislation would also help consumers and other parties to be represented in court without undue burden and help states protect their financial interests and enforce their consumer protection laws.
“Forum shopping is undermining the integrity of our bankruptcy system and must stop,†Tong said. “Companies should file for bankruptcy where their main assets or establishment are located, not where they hope to get the most favorable treatment. “
